Archive for the 'Department store retailing' Category

Macy’s reshuffles the merchant deck

Macy’s new CEO Jeff Gennette announced yesterday the hiring of a new president (with background at eBay and Home Depot) and the restructuring of its merchant organization. The company also announced plans to grow its private brand penetration from 29% to 40%. Here’s my comment from a recent RetailWire discussion:

I’ll start with this point: Growing private-brand penetration from 29% to 40% will only drive Macy’s sales if the company gets the merchandise content right. I’d argue that there are already too many private brands and lack of clarity between them, especially in women’s apparel. Macy’s execs may be able to tell the difference, but I doubt the average shopper can define what Karen Scott vs. Style & Co. vs. Charter Club (and so forth) really stand for. Let’s face it: Most stores trying to grow their private label business are doing it as a margin play, not a loyalty tool, and it’s often moved the sales needle in the wrong direction.

As to the new hires and restructuring: It’s clear that Macy’s is doubling down on omnichannel with the hiring of Mr. Lawton. It’s also clear that streamlining its merchant organization is meant to bring more speed to the decision-making process. Let’s see if the new team can tackle those “clarity of offer” problems after all.

Second quarter sales show a pulse

The stock market did not react well to most stores’ second quarter earnings, but there were hints of improvement from most retailers. My comment below (from RetailWire) focuses on Nordstrom in particular but several other stores show signs of figuring out omnichannel too:

The results of Nordstrom’s Anniversary Sale (and the “less bad” sales reports from Macy’s and Kohl’s) may point toward a stronger second half than expected. It’s too early to tell if we’re seeing a full-fledged revival of women’s apparel sales (still reported as a weak spot on Kohl’s earnings call), but the Nordstrom numbers are encouraging.

I shopped the Anniversary Sale in a couple of markets, and you’d be hard pressed to find a robust sale offering in men’s or women’s — so there must have been some traffic-driven regular-price selling in the mix. Hats off to Nordstrom for sticking to its promotional discipline, and for continuing to ride the success of its Rack and e-commerce businesses.

Discounting finds the cosmetics department

A topic near to my heart, from a recent RetailWire panel discussion:

Speaking as a former buyer of cosmetics (going back to 1980) and then as a merchandise manager with oversight of the category, the beauty business has been the last refuge of full-price selling in department stores. But the temptation to put these goods on sale has migrated from discount stores and mass merchants to those department stores — with the added impact of Sephora, Ulta and online sales. And like anything else related to price promotion, retailers will find it hard to stop taking this particular drug once they start.

A long time ago, cosmetics fed off the traffic that the traditional department stores enjoyed. Then they became “headquarters” businesses in their own right given the strength of brands like Lauder, Clinique and Lancome. Eventually customers were trained to “wait for the gift-with-purchase,” just as they were trained to “wait for the sale” elsewhere in the store.

Those legacy brands are aging, just like the legacy department stores that carry them. This pattern is being repeated throughout the retail industry and the entire CPG world. So the conventional wisdom — that discounting cosmetics will only commoditize the business — may be true but may not be relevant anymore.

Sears to sell Kenmore through Amazon

“If you can’t beat ’em, join ’em” seems to be the theme of Sears Holdings’s latest decision. It will be selling Kenmore-branded appliances through Amazon, as the online giant expands its footprint into new categories. Here’s my take, from RetailWire:

If Sears’s goal now is to monetize its assets, then the decision to sell its Kenmore brand through Amazon was a good one. Kenmore, after all, is the strongest brand left in the Sears toolbox. And the Alexa tie-in is smart, too, no matter whether it originated with Amazon or Sears (or its appliance suppliers).

But the move raises a white flag, too: It signals that Sears’s own physical and online footprint is barely relevant anymore. If you can buy a Kenmore dishwasher from Amazon (including delivery, installation and warranty service), why would you bother finding a Sears store as it continues to shrink its store count?

Can JCP be a player in toys?

JCPenney recently announced an expansion of its toy business, in time for holiday 2017 selling. RetailWire panelists weighed in on the topic, and here’s my take:

Toys are a double-edged sword for softlines retailers like Penney and Kohl’s who want to strengthen their children’s offerings. It’s hard to avoid carrying toys, but it’s also hard to compete against the dominant space of the discounters and big-box stores. (Not to mention the low margins.) Customers have come to expect the best selection and prices from market leaders like Amazon, Walmart and Target.

The broader risk to JCP is that it becomes a “bunch of stuff” with the addition of new categories (from appliances to toys, from bikes to electronics). Just because the store has square footage to burn doesn’t mean that overassortment is a winning long-term play.

Sears opens appliance/mattress stores

RetailWire panelists discussed Sears’ plans to open stores specializing in nothing but major appliances and mattresses. While this may have been a solid strategy 20 years ago, count me as a skeptic given Sears’ issues today:

It’s hard to picture anything solving the Sears problem at this point. The company just announced the closure of a mall anchor here in Milwaukee (after closing another anchor over a year ago), leaving it with just one full-line store here. I’m sure the story is being duplicated around the country, at the same time that Sears has been closing (not opening) appliance-only franchise stores.

Sears’ legitimate franchise in appliances is evaporating as it continues to shrink its footprint and sell off its key brand (like Kenmore). The appliance space is crowded with competitors, now including major investments by Amazon and JCPenney. And who needs another place to buy mattresses, especially given the growth of online sales?

JCP today, fitness center tomorrow?

The Simon development group is taking a three-level JCP store — soon to close at Southdale Center outside Minneapolis — and redeveloping the space as a fitness center. I’m among the RetailWire panelists discussing this smart “reinvention” strategy that can be applied to malls around the country:

Creating a fitness center out of an existing mall anchor is a creative way to reinvent excess real estate — instead of waiting for another retail tenant or tenants to energe (unlikely) in today’s overspaced environment. I’ve been in the JCP store in question and it was grossly overspaced for the volume it probably generated during the last few years.

Students of retail history (and Minnesota natives like me) know that Southdale was the first fully enclosed regional mall in the U.S. It served its purpose as a retail mecca — and community center — for many years, but the mix of anchors and nearby competition from Mall of America has made it less relevant in its current form. So the Simon team deserves credit for finding new reasons for people to come to Southdale and other malls like it.