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Reflecting on the impact of IKEA

Most of the obituaries of IKEA’s recently deceased founder focused on his background, but RetailWire panelists reflected instead on what the store’s operating model has meant to the world of retail. Here are my thoughts on IKEA’s impact and the store experience:

IKEA revolutionized furniture and home furnishings retailing in several ways. It developed a low-cost operating and sourcing culture that passed along savings to its customers, developing an almost cult-like global reputation in the process. For all the jokes about the difficulty of assembling IKEA furniture, there is no doubt that millions of customers own home furnishings of decent quality that would once have been out of reach.

As to the in-store experience, I shopped the IKEA at the Mall of America last summer and it seemed noticeably easier to navigate than I remembered. (And yet I worked my way through the entire store.) Maybe IKEA has taken seriously the critique that its shoppers are like lab mice lost in a maze.

And yes to the meatballs…but don’t miss the lingonberry preserves near the checkout lanes!


Macy’s drops out of the Plenti program

Macy’s was one of the charter members of the Plenti loyalty program, where shoppers could earn points by buying gas at Mobil, renting a car from Alamo, and so forth. Here’s a quick RetailWire comment about the move, which rightfully places the spotlight on Macy’s own Star Rewards program:

As a Macy’s shopper, I was confused by the purpose of the Plenti program and wasn’t sure of the benefits. I wasn’t necessarily interested in some of the other brands participating in the program, and it “muddied the waters” of the Star Rewards program. I’m sure that I wasn’t alone, and Macy’s is right to focus on revamping Star Rewards with more personalized, data-driven rewards for its best customers.

Will an off-price concept fix H&M?

H&M is jumping on the off-price bandwagon with a new concept called Afound, with the objective of liquidating its goods more effectively. (It’s also a hot segment with a lot of new players over the past few years.) Here’s my comment from a recent RetailWire discussion about what really ails the company:

I’m not sure that another off-price brand in an increasingly overcrowded market is a long-term solution to H&M’s problems. They need to address a few core problems in their existing stores first, as the article points out:

1. How does H&M move faster in the product development cycle, to compete more effectively against Zara and even Forever 21?
2. How does the company figure out a more effective liquidation strategy for its existing stores, instead of leaning on a new concept?
3. How does H&M play catch-up on omnichannel, considering it was late to the party?

H&M stores have always avoided the chaotic, “treasure hunt” feel of a typical Forever 21 store — and with a bigger focus on basic, affordable “wear to work” apparel for budget-minded shoppers. But this has come at the cost of becoming boring and predictable, compared to Zara’s unbeatable speed to market.

Online grocery sales gaining share quickly

It should come as no surprise (except, perhaps, to traditional grocery chains) that online sales are the fastest growing segment of the industry. Today’s RetailWire panel reflects on whether the major players are ready for this trend. Here’s my opinion:

The wave of online sales that has swamped general merchandising is now catching up to the grocery industry. This shouldn’t come as a surprise to food retailers after watching other industry segments caught flat-footed. It’s only now that general merchandisers have developed omnichannel strategies that are helping them turn a corner.

The key for grocery retailers is to reach the customer where he or she wants to shop. This may mean home delivery or it may mean BOPIS — and it may also mean a simpler shopping experience in-store with less overassortment to choose from. Rest assured that Amazon is going to deliver a more convenient experience (with higher in-stock levels) while traditional food retailers are still trying to figure out if there is a threat.

Can Macy’s claim a turnaround?

Today’s RetailWire panel focused on Macy’s 2017 holiday results, where they reported a 1% gain for the season. Despite the optimism of their executive chairman Terry Lundgren, most panelists agree with me that the celebration is premature:

As the article points out, Macy’s comp sales of 1 percent paled in comparison to J.C. Penney and Kohl’s, in a season where brick-and-mortar retailers did better than expected. So they actually lost market share during a robust shopping season, and probably ran behind in their physical stores if you assume that most of their growth came from e-commerce.

It’s hard to point out much good news in these numbers, other than being “less bad” than year-to-date. The large number of store closures doesn’t appear to have driven sales to remaining locations, and the jury is still out on the wisdom of the Backstage store-within-a-store strategy. In this panelist’s opinion, it does little to enhance the brand image of the rest of the store.

Amazon Go…it’s a go!

After a long period of testing, Amazon Go is finally opening its doors to the public. Its first C-store location in Seattle has already received a lot of attention for its technological leap, where the shopper can walk out the door and pay for purchases without stopping at a register. Here’s my comment on RetailWire:

I assume the long gestation period was needed to test not only the technology but also the merchandise content. From the descriptions of Amazon Go, it is more focused on fresh and ready-to-eat food than a typical C-store and devotes less space to categories like candy, chips and so forth. It will be interesting to read some on-the-ground reporting about what the store actually looks and feels like.

I expect Amazon to be patient with the concept, because some customers simply won’t be comfortable right away with a cashier-less environment. At least for now, human interaction in any kind of store (including a C-store) is part of the equation unless you’re an early adapter of the Amazon Go tech experience.

Retailers’ comfort level with change

Hiring people comfortable with the fast pace of change, and able to adapt to uncertainty, has always been a critical part of the retail equation. On RetailWire, I add this point about how technology is speeding the pace of change:

Technology and the growth of e-commerce have accelerated the pace, but retailing has always needed attract talent who are comfortable with change. An attitude of “We’ve always done it this way” or “This worked last year” is the kiss of death when most retailers’ fate is in the hands of their customers. While retailers don’t want to be purely reactive and tactical, they do need to attract associates with the sense of urgency needed to move quickly.