Archive for the 'Promotional strategies' Category

Has overpromotion hit a wall?

The topic of whether department stores (and other retailers) are overpromoting is always a provocative one at RetailWire. Here are my recent thoughts on the subject:

JCPenney makes a good cautionary tale about what happens when a promotional department store tries to go “cold turkey” on its sale events. LIke it or not, the customer has been trained to wait for sales for a long time (Gimbels, anyone?) but the difference now seems to be the frequency of margin-busting sale events and extra discounts. JCP’s experience may have scared other retailers away from cleaning up their promotional calendars and risking a volume meltdown.

Certainly retailers like Amazon and Costco drive plenty of volume without being especially promotional. But they operate with different margin requirements (and expense structures) than the typical department or specialty store. So I’m not sure there is an easy answer to the question — but it’s clear that the overpromotion is not driving sales growth.

Target’s Marimekko promo in the rearview mirror

Here’s a RetailWire post from awhile ago, before Target kicked off its spring limited-edition promotion of Marimekko-designed apparel and home goods. This turned out to be less successful than some of the others (Missoni, for example). Have customers gotten burned by the chronic outages of these promotions, or did they simply not like the product? Here are some early thoughts — keeping in mind that it didn’t sell out quickly:

I’ll use Target as an example of a store more committed to the occasional “wow” experience than everyday blocking and tackling. The upcoming Marimekko is bound to draw traffic to Target stores and the website, and to sell out quickly. But the company has been plagued by stock-outs for many years, and finally is in a position to address its supply chain problems with the hiring of an Amazon executive.

Yes, sometimes loyalty needs the “wow” factor, or a strong value proposition. But it more often takes consistent execution to move a customer from merely “satisfied” to committed. Just ask Amazon how good execution has worked to grow its Prime membership.

Macy’s is looking for a new CMO

Chief Marketing Officer, that is…after letting go a 32-year veteran of the company. RetailWire panelists took the chance to discuss whether Macy’s needs an insider or outsider to fill the position. (And one panelist added that Macy’s could use a new head merchant, too.) Here’s my point of view:

This may be a good opportunity for Macy’s to look at its stale marketing (and especially its sales promotion) with a fresh set of eyes. Macy’s is in a promotional rut where all of its print sale events look exactly the same (red and black, coupons, a bunch of boxes on every page) and the customer is bombarded by the same kinds of overlapping offers they are used to seeing from Penney or Kohl’s. Surely Macy’s has an opportunity to use its promotional tactics as part of an overall re-branding strategy. (What is “The Magic of Macy’s,” anyway?) Without knowing the inside candidates, I’d look outside first.

JCPenney sells “goods for a penny”

RetailWire panelists recently had a chance to discuss a new promotion at JCPenney (buy one item, second for a penny) and what it says about JCP’s growth prospects. I wouldn’t read too much into it:

For those with a long memory (meaning that we remember JCP before the Ron Johnson era), this is something of an echo of Penney’s Anniversary Sales. JCP occasionally ran “second item for a penny” during these events and as Black Friday doorbusters. It’s the equivalent of “buy one, get one free” and is a good tool for selling key items bought in depth at a cost where you can still make money at 50% off.

The campaign will drive sales, traffic and sampling of private label goods — all important tactics for JCP in the short term. But pay more attention to the strategic steps that Mr. Ellison has taken in the past six months — especially in areas like IT, omnichannel and logistics. These won’t be as visible as new marketing and promotional tactics but will pay dividends in the future if Penney can keep its sales momentum moving.

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.



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