Is there a market for “ultra-fast” fashion?

RetailWire panelists weighed in on the growing trend toward “ultra-fast” fashion. If the short lead times of fast fashion retailers (think Zara) aren’t short enough, how about two to four weeks from concept to delivery? And what sacrifices need to happen as a result? Here’s my comment:

Retailers have been too slow reacting to the fast-fashion capability of companies like Zara and Forever 21. These two companies (and a few others) have brought great supply chain management and data science to the art of getting relevant product to their customers quickly. But the key word here is “relevant”: Does a two-week lead time offer enough chance to test and reorder in depth?

Cost is another factor: Ultra-fast retailers will probably have to pay a premium for manufacturing labor close to their stores (especially in the U.S.), even if there is some offsetting saving on transportation. Fast turnaround makes sense if your store needs Stanley Cup championship jerseys tomorrow, but for the majority of goods a little extra time is worth the investment.

Thoughts on Macy’s self-service shoe and cosmetics departments

RetailWire panelists just took on the subject of a new test at Macy’s, in which its shoe and cosmetics departments are being converted to “assisted self-service” instead of the traditional associate-driven model. In the case of shoes, Macy’s is getting more of its inventory out of the stockroom and bulked out on the floor, with apparent early success. I’m raising a caution flag, however:

It’s hard to tell whether the reconfigured shoe department is meant to be a sales driver or an expense saver. JCP recently reconfigured a store that I visited to mass out its shoe inventory — DSW-style — instead of depending on salepeople to find the right size in the back. (And these associates are often paid a commission, just like cosmetics salespeople.) But it gets to the heart of what Macy’s wants to be. As Art put it, are they trying to be JCP or Kohl’s? Are they finding the hidden costs of “omnichannel” (BOPIS and so forth) to be unsustainable for a traditional department store?

And one more issue: By abandoning the Nordstrom model (where the salesperson is trained to bring out three pairs of shoes when the customer asks to look at one), Macy’s may in the long run walk away from the sales and margin potential of “upselling” that shoe and cosmetics departments should be known for. A declaration of victory may be premature.

Is the era of brick-and-mortar growth dead?

The wave of store closures this year (and beyond) casts a shadow over traditional brick-and-mortar retailing, but it’s premature to declare it a dead end for companies that still have growth prospects. Here’s my RetailWire commentary on the issue:

In business school many years ago, I took a retailing class from a marketing professor who often said, “There’s no such thing as ‘over-stored,’ but under-retailed.” Obviously the glut of square footage is an even bigger problem than in 1977, given the development of exurban sprawl, big box stores, new mall formats, retail consolidation, and (of course) e-commerce. But the teacher’s point still has relevance today.

Some stores continue to have a good chance to expand their physical footprint. (There has been recent comment, here and elsewhere, about chains like Zara and Uniqlo being opportunistic about picking up others’ sites.) But growth for its own sake means nothing without a clear brand identity, coherent merchandising and smart use of technology to drive loyalty and omnichannel initiatives.

JCP pursues B2B opportunities

Here’s a new RetailWire comment on Penney’s announcement that it is going after B2B opportunities with hotel operators, property developers, etc. to place its home goods in these kinds of facilities. It’s another example of CEO Marvin Ellison taking a page from his Home Depot playbook:

I’d be less concerned about the borrowings from Home Depot if I didn’t see improvements on the softlines side happening at the same time. There’s evidence (at least to these eyes) that the new merchant team at JCP is making some headway especially in women’s apparel, where the assortments and brand identity look crisper than they have for awhile.

That being said, the B2B initiative is a puzzle to me. Penney may see it as a volume opportunity — and a branding opportunity to place its private-label home goods inside hotel rooms, etc. But will hotel operators and franchisees be interested in dealing with a middleman, if they already source their linens and towels through the buying power of brands like Hilton, Marriott, etc.?

Should customers pay extra for service?

RetailWire recently posted an online discussion — about whether customers will pay an upcharge for customer service — that triggered plenty of comment. My perspective follows, and it is based on the idea that there is more than one way to define “service”:

To answer the question, you have to define “customer service” differently for different kinds of retailers. Customer service at Nordstrom means “high touch” and the SG&A cost of providing it is covered by high merchandise gross margins (or it should be). Conversely, expectations of “customer service” at Target are totally different — shoppers expect store shelves to be well-stocked and checkout lines to be efficient. Again, this lower-expense model is reflected in tighter merchandise margins.

My point? Customers are already paying for the “customer service” they seek in the stores they choose, based on the “cost of goods sold” that they are willing to pay. Any surcharge imposed by retailers to meet or exceed these expectations (hidden or otherwise) would be a bad idea.

Another frontier for Amazon to cross?

Amazon is reportedly scaling up its infrastructure in order to tackle the major appliance and furniture markets. Panelists weighed in on RetailWire about the challenges and opportunities, and I see the upside:

I commented a couple of weeks ago that Amazon had not yet made big inroads into the major appliance market — but obviously they are headed in this direction, along with furniture. To some degree IKEA has already figured out how to generate furniture sales not tied to its showrooms, so it’s clearly an opportunity for Amazon too. No doubt that they will figure out the logistics of bulky products but this still seems like a business where customers want to “kick the tires” — so perhaps Amazon ought to test showrooms in their early test markets.

Is omnichannel really less cost-effective?

CNBC recently ran a story (linked below) about the relative costs of brick-and-mortar, e-commerce and omnichannel retail. Their results were surprising and I expressed my skepticism on a recent RetailWire post:

I was skeptical about the analysis when I saw it reported on CNBC last week. Does the study factor in the efficiencies that might be achieved by leveraging physical stores’ payrolls and inventory levels? Does it continue to look at the silos of brick-and-mortar and e-commerce as separate expense centers? Are some retailers with negotiating leverage with the big freight carriers able to achieve cost efficiencies through ship-from store and also save operating expense in their e-commerce distribution centers?

I’m also skeptical as a longtime (1982-2006) employee of Kohl’s, which is pushing its omnichannel initiatives hard. Kohl’s has always managed its expenses carefully, even in down times, and I doubt they would be pursuing omnichannel aggressively if it were truly an SG&A-buster.

http://www.cnbc.com/2017/04/19/think-running-retail-stores-is-more-expensive-than-selling-online-think-again.html

Can JCP leverage its Sephora success?

It’s probably note the first time (on RetailWire or elsewhere) that I’ve talked about Sephora at JCP. It’s clearly a win and continues to be rolled out or expanded in more and more locations. So how does Penney use it to attract new shoppers and convert them to JCP loyalists? Here are some recent thoughts:

When Mike Ullman (formerly of LVMH) partnered with Sephora (owned by LVMH), he realized that JCP needed a critical mass of cosmetics even though the legacy department store brands like Clinique, Estee Lauder and Lancome wouldn’t sell Penney. (Lancome is now part of the Sephora assortment.) At the same time, Sephora was growing as a mall-based alternative to the anchor stores’ beauty departments with a unique approach to open-sell layout and fresh assortments. It’s turned out to be a win for both companies, especially as those traditional department store anchors lose share and traffic.

Certainly omnichannel is another opportunity for JCPenney, as Amazon continues its inroads into the beauty business. But perhaps the biggest unmet opportunity for JCP is to convince the (younger) Sephora customer in the store to buy more apparel, shoes and accessories on her visits to the beauty department.

And to add some recent comments posted after a store visit, there is visible sign of improvement in JCP’s assortments:

I’ve been critical for several years of JCP’s women’s assortments — too many brands, too many styles, too much overlap between brands. But credit where due: I shopped a Penney store in the past couple of weeks on behalf of a consulting client, and I saw a marked improvement in key item focus and brand clarity. Shoes were merchandised in a more effective way, and fashion jewelry looked improved too (although not yet handbags).

Penney promoted its men’s GMM last year to the head merchant position, and if what I saw is any indication, he’s got things heading in the right direction. It’s a small sample size but perhaps a leading indicator. JCP isn’t going to solve its sales problems until it figures out how to drive its apparel business, no matter how well it’s doing with Sephora or even major appliances.

What can retailers learn from the United fiasco?

Like everybody else, RetailWire panelists enjoyed a chance to speak out about the well-reported United Airlines incident, in which an overbooked passenger was dragged off the plane. The question I try to answer, below, is “What can retailers learn from this?”:

Consumers have choices of retailers, just as they (often) have choices of airlines and other service providers. One of the lessons that any customer-facing business ought to take away from the United fiasco is the need to empower employees to look past the policy manual when it’s time to exercise some good judgment. (In the case of United, it would have been easier to seek volunteers for rebooking instead of working from a mandatory list.) Policies are meant to protect a retailer’s assets and to manage risk, but they shouldn’t turn into a roadblock to common sense.

And the second lesson learned: If your company hasn’t learned the power of viral social networking by now, you’d better get your communications act together fast. Above all, don’t blame the consumer for your own missteps.

CVS vs. Walgreens: Who’s easier to shop?

Upon reading a RetailWire discussion about new store merchandising initiatives at CVS, I weighed in with some recent observations of my own:

Given a switch of insurers last January, I’m shopping less at Walgreens and more at CVS. I’ve always had a problem with the navigation issue at Walgreens: It’s just as difficult to find things in my newly remodeled neighborhood store as it was before. And the overassortment of categories having nothing to do with health and wellness may be good for Walgreens’ position as the “neighborhood convenience store,” but it certainly doesn’t help the customer figure things out.

The competing CVS is noticeably easier to shop, with wider aisles and better directional and product signage. If the company takes its execution to the next level — as reported — it could be part of a broader competitive advantage over Walgreens.