Archive for the 'Promotional strategies' Category

Do Macy’s problems foretell the “death of the department store”?

…or is it just plain bad execution? (A recent visit to Macy’s huge anchor at the Mall of America would suggest so; it was a mess.) Here’s my opinion as posted recently on RetailWire:

Macy’s sales problems didn’t start in the fourth quarter; their same-store trend has been flat to down for awhile. While I agree that the store closings and layoffs will trim some fat from their operating model, what drives Macy’s is top-line sales.

The company is dealing with a stale promotional platform and an increasingly confused point of view in its merchandise assortments. At the same time, its service standards are challenged by the re-engineering of its brick-and-mortar stores to be omnichannel fulfillment centers.

Until Macy’s addresses these issues (all central to its brand identity), the expense cuts and the rollout of its off-price strategy are likely to produce only marginal improvements.

The marathon before Christmas

There was plenty of comment in late December about Kohl’s decision to stay open from Thursday the 17th through Christmas Eve…without a break. Here’s my recent comment from a RetailWire panel discussion:

I’ll start with my usual full disclosure, that I worked for Kohl’s from 1982 to 2006. I gather that the company timed its extended hours to the opening of Star Wars, which has been a big focus of its merchandising this holiday season. But in 2016 (because of the leap year), Christmas falls two days later on the calendar. Does this mean that Kohl’s will need to up the ante and stay open for over 220 hours straight? In some ways this reminds me of retailers’ war over Black Friday hours (opening earlier and earlier and eventually on Thanksgiving itself), except that Kohl’s doesn’t have much company in this tactic.

The economics probably make sense, especially if Kohl’s (like other stores) has overnight crews emptying trailers or restocking shelves. And the added demands of omnichannel (processing BOPIS and ship-from-store orders) mean that overnight teams can focus on “task” while daytime teams can keep the register lines moving. As to the strain on personnel, that’s a different question entirely: The week after Christmas is at least as stressful on store management (dealing with both returns and clearance) as the week before.

Will the Men’s Wearhouse/Joseph A. Bank marriage ever work?

Shotgun marriage is more like it; the combination of these two men’s brands may have seemed like a good idea at the time but the promotional strategies (among other things) are proving incompatible. Here’s a recent comment I added to a RetailWire discussion:

First things first: Both companies (whether owned together or separately) need to do a better job identifying and cultivating their target consumer. Men’s Wearhouse has always struck me as having a younger, more updated brand position while Jos. A. Bank appeals to an older, more traditional consumer. The merger of the two companies has not made this brand positioning any clearer in the last year.

Second: Retailers that try to “abandon ship” on a high/low promotional strategy often pay a steep price. (Just ask JCPenney.) I think there is a valid argument that Jos. A. Bank carried their “deals” to extremes (who wants to buy four suits at a time?), but there isn’t much doubt that the tactic drove sales among loyal customers. Men’s Wearhouse has a lot of work to do, in order to fix this problem.

Black Friday 2015 observations

Many RetailWire panelists and others have commented on the relative lack of mall traffic, on the day after Thanksgiving. While some of this can be blamed on the rapid growth of both e-commerce sales and Thursday openings, I still lay part of the blame on merchandise content. In short, the lack of newness in women’s apparel is hurting sales right now, and not just on Black Friday:

One mall doesn’t make a big sample size, but the Simon mall that I shopped on Friday morning is anchored by Macy’s, JCP, Sears, Bon Ton and Kohl’s. So it’s a good place to look for areas of common ground. I noted the same thing that many observers saw nationwide: Mall traffic was not impressive around 10am on Friday, at what should be the height of “doorbuster” sales.

Yes, the growth of omnichannel, Thursday openings and weeklong “doorbusters” (instead of for a few hours on Friday morning) have all affected After Thanksgiving volume. But these tactics didn’t just start in 2015…they have been gaining strength for the past several years. So how to account for the visible dropoff on Friday? I believe it still comes down to merchandise content, especially in the women’s apparel areas that have been troubled all year. In my observation, this was consistently the quietest area of the stores.

That being said, it’s too early to write off the weekend (or the season) until somebody adds together the brick-and-mortar numbers with the e-commerce sales and what is likely to be a robust Cyber Monday (or “Cyber Week”) this year.

Is there still a back-to-school “surge”?

RetailWire panelists had a chance recently to comment on the “trend” of later and flatter BTS sales. I don’t think this is a new phenomenon by any means:

From my experience, the so-called surge of Back-to-School business turned into a smaller wave a long time ago. It’s driven in part by national retailers in markets where schools open from early August to post-Labor Day. But in particular it’s driven by consumers’ long-established pattern of buying closer to need: When your child outgrows her Nikes, it doesn’t matter whether it says March or August on the calendar.

There are other factors pushing apparel purchases past the opening of school: First, young shoppers’ desire to see what others are wearing — and fast fashion retailers’ ability to satisfy that desire. And, second, the change of seasons (to cooler weather) seems to happen later and later, pushing the “need to buy” incentive well past the first day of school.

“Everything on sale”: Reality or illusion?

When state regulators get in the way of retailers’ promotional calendars — to attempt the establishment of “real” regular prices — it provokes a lot of commentary. Here’s an example from a recent RetailWire discussion. My point is that promotional department stores’ prices are more carefully monitored than the average shopper might think:

The barrage of promotional events, often with weeklong sales overlapped by one-day sales and so forth, has created the impression that “everything is always for sale” in many promotional department stores, and it’s a powerful marketing tool. But I’m guessing that a study of the actual number of days items are on or off sale might paint a different picture.

Most of the stores mentioned in the story have to deal with the reality of various states’ regulations, especially when they operate coast-to-coast. So there is probably a science applied to the establishment of regular prices, followed by a strict calendar of “on sale” and “off sale” days.

As a hypothetical, just because Macy’s puts a private-label polo shirt into every one of its “one day sales” doesn’t mean that the goods are on sale 365 days a year. And just because they do sell goods at “regular price” some of the time, doesn’t mean they can compel customers to pay full price for them.

Who holds the cards in the “free shipping” game?

The major package carriers (UPS and FedEx) have made clear to their retail customers that their pricing will need to go up for holiday 2015, to help cover the growing costs of so-called “free shipping” offers, late shopping deadlines, and so forth. The question is: Who pays? Here’s my point of view from a recent RetailWire discussion:

There is no such thing as “free shipping,” no matter how aggressvely the service is pushed by e-commerce and omnichannel retailers. Somebody ends up paying for shipments that are too close to shopping deadlines like Christmas, or too bulky in the first place. So it’s understandable that the big carriers (UPS and FedEx) need to think harder about the impact on their own shareholders.

The question becomes whether retailers have any negotiating leverage against the two giant carriers, or whether they are willing to pass along costs to their customers even in the form of higher prices (so they can continue to offer “free shipping”). There will be a lot of back-and-forth between retailers and delivery companies before agreements are reached, so the initial volley by UPS and FedEx may not be the last word.



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