Archive for the 'DIY Retailers' Category

New management at Lowe’s

Marvin Ellison recently left JCPenney (see comments above) to take over the chairmanship at Lowe’s. This is probably a better fit, given his background at Home Depot, and he was quick to reorganize the C-suite. My comment (on RetailWire) raises the question of whether these were the right steps to take:

Mr. Ellison is finishing his second week on the job, so it’s premature to judge the reorganization or anything else he’s done. The newly created positions (stores and supply chain) may be needed but they appear from the outside to be more operations-oriented than customer-facing. It’s too early to tell whether this kind of approach is meant to improve operating margins or to truly recapture some of the market share being won by Home Depot. That may take a deeper dive into Lowe’s strategy than what we’re seeing so far.

Is stingy inventory management costing sales?

There is some recent reporting (about Home Depot and other retailers) that stores are trying to keep their inventory levels very lean, and are willing to send customers to their websites if their shopping trips end with an out-of-stock. I addressed this problem recently on RetailWire:

I’ll use myself as an illustration of why the answer to the headline question is “yes”: Over the holiday weekend I had three separate transactions with Amazon (for K-cups, indoor spotlights and a new laptop battery) that saved me three different shopping trips. I had the assurance that the items were in stock, would show up quickly and would be priced competitively. It’s not just the price and the convenience of the transaction, but also the assurance that the items are in stock.

This is a powerful rebuttal to the brick-and-mortar model, especially as more stores try to keep up with Amazon by offering too much selection in a limited amount of space. Retailers have forgotten the maxim of “Narrow and deep,” and find it more and more difficult to stay in stock on such a broad array of SKU’s. (In fact, Target has had this problem for years.) This is one more way in which “omnichannel” has turned into a double-edged sword for many retailers — and not the growth driver it was imagined to be.

Menards says “Thanks, Obama”?

Menards, the Wisconsin-based DIY chain, announced that it’s postponing the opening of a new location in Ohio pending the results of the Presidential election. Apparently the family-owned business is hopeful for a different regulatory environment…or something. (The Menard family has donated generously to Republican candidates.) As you might imagine, this topic brought forth all kinds of reactions among RetailWire panelists, depending on their side of the aisle. I’ll let my comments speak for themselves:

It seems to me that the home improvement/DIY sector has done nicely since the Great Recession. I guess Mr. Menard’s memory is short regarding the housing bubble, the unemployment rate above 10%, and so forth.

As I’ve mentioned before, I worked for Kohl’s from 1982 (18 stores) to 2006 (750 stores and much higher now). Kohl’s has opened stores during Republican and Democratic administrations, in times of economic boom and bust, and when the regulatory environment varied greatly. (Remember that the Americans with Disabilities Act was passed by Bush 41, and brought some sweeping design changes to the retail landscape.)

My point: If your company has a valid strategy, go for it. In the meantime, run for office if you want to use your megaphone more effectively.

JCP finally names a new CEO

Just a few days after JCPenney held its “analysts’ day” in New York — and left unanswered the question of succession planning — it announced yesterday the appointment of Marvin Ellison, the senior store executive at Home Depot, to succeed Mike Ullman next year. Here’s my comment from today’s RetailWire discussion:

There is some comparison being made between Mr. Ellison and Brian Cornell, the new CEO at Target. Mr. Cornell was also praised for his operational background (especially given Target’s data breach and missteps in Canada). But he also identified merchandise categories that will help Target the brand differentiate itself from more “consumables”-oriented competitors.

Yes, Mr. Ellison is faced with some operational challenges — and, in particular, he needs to attack the store count and bloated SGA more aggressively. (This was a big unanswered question at the JCP analysts’ meeting last week.) And “blocking & tackling” becomes more important in an omnichannel environment, with competitors like Amazon who are experts at logistics.

But, at the end of the day, any new leadership at JCP needs to redefine the meaning of the brand without repeating the mistakes of the Ron Johnson era. Right now, JCP is in an “error correction” mode, but turning back the clock to 2010 can only get you so far. Let’s see if Mr. Ellison is up to the task.

Home Depot cleans up its own security breach

A recent data breach at Home Depot has been in the news, because the scope of the problem was even bigger than what Target reported last year. It’s too early to tell what sort of impact this will have on HD’s business, but not too early for RetailWire panelists to speculate:

It’s hard to know whether consumers have become numbed to “data breach” stories, and therefore Home Depot will take a smaller sales hit than Target. Part of the issue with Target was its visibility, the timing during holiday season, and the former CEO’s decision to describe the possible reach of the problem as broadly as possible — against the advice of his own team. Home Depot seems to be taking a more low-key approach to the problem, and I do expect them to catch some flak about why this happened after April when they had months to respond effectively to the issues at Target.

Hurricane Sandy: What effect on the economy?

From RetailWire, some speculation earlier this week about the effects of Sandy on the retail industry. (The first comment, below, discusses ways in which retailers and service providers can provide much-needed relief to customers right now.) Here’s my take:

Second question first: Altruism is good business as well as the right thing to do. It becomes an easy decision for retailers and service providers to offer help to people in need…including their own customer base. I heard Danny Meyer discussing being able to open his upper Manhattan Shake Shack locations — in order to distribute free food yesterday — even though his downtown restaurants are closed for the immediate future.

As to the effects on the retail industry, Sandy’s effects and footprint are so huge that there will absolutely be an impact on short-term sales as well as logistical issues. Longer-term, the biggest benefit (as usual after an event like this) will hit the sellers of food, “necessities” and home repair products.

Some corporate cowardice from Lowes

Lowes recently received plenty of publicity (mostly negative) for backing out as a sponsor of the reality show¬†“All-American Muslims.” Apparently Lowes and other sponsors succumbed to the threat of boycott from various pressure groups. I agree with several RetailWire panelists who feel Lowes mishandled this situation at several points along the way:

Not for the first time, this issue treads on hot-button politics as well as marketing “best practices.” The correct action from Lowes would have been to ignore the xenophobia in the first place, once it made the decision to sponsor the show. At this point the PR damage is done, so it would be pointless for Lowes to reverse its position. But succumbing to this sort of pressure in our multicultural society is a slippery slope, indeed.

Do appliances make sense for Walmart?

RetailWire panelists recently discussed a new venture by Walmart to pump up its comp-store growth. My point of view:

Appliances make sense in the same way that an expanded assortment of electronics have helped Walmart capture market share from Best Buy and other competitors. But the category requires commitments to floor space and trained customer service. What business does Walmart plan to exit in order to make room for appliances, and what is the volume risk?

Bottom line: Walmart has the sheer number of stores and formats that allows it to experiment with new categories, and online groceries seem like a natural extension of its food business. But here’s a word of caution: Until Walmart can convincingly return to its position as the low price leader — instead of being beaten by Target, Amazon and others — no amount of experimentation will help it recover lost sales momentum. If Walmart plans to sell appliances, it had better plan to beat Sears, Lowes and Home Depot on price every day.

Home Depot spends on handheld technology

From a recent Retail Wire comment about Home Depot, which is equipping its sales associates with handheld devices:

Apple stores have been using handheld technology for years, and the surprise is that other retailers (from DIY to discounters) have been so slow to react. This is a great technology for tracking inventory and especially for getting customers out the door more quickly (better than, say, self-checkout). It’s easy to see other, sales-driving uses for handheld technology — such as issuing “instant coupons” to customers using a database that can pull up their purchase preferences from their phone numbers. $60 million seems like a modest investment in this kind of technology.

Martha Stewart meets Home Depot

A brief comment on today’s Retail Wire blog about the new agreement between Martha Stewart Living and Home Depot stores. New categories like home decor and office organization will start appearing soon at Home Depot under the Martha umbrella. My opinion? It’s a good move:

A good move for both companies: It gives the Martha Stewart brand a more credible outlet (by far) than Kmart, and it gives Home Depot a strong umbrella for launching new product categories. Moving into organization and other “soft home” businesses also helps Home Depot push back against Lowe’s more upscale brand positioning. Finally, it looks like one more step in the continued irrelevance of Kamrt.