Posts Tagged 'JCP'

Two comments on omnichannel

Here are a couple of RetailWire posts on the subject of whether e-commerce is eating into brick-and-mortar retail. The first comment was published after stores reported year-end sales:

“Omnichannel” retailers like Macy’s, JCP and Target are still heavily dependent on their physical footprint. Each store reported rapid e-commerce growth (from 17% in Penney’s case to 30% at Target), yet each of them also reported total comparable-sales declines in the low single digits. So it’s clear that the combination of brick-and-mortar and omnichannel isn’t driving sales yet.

All of these stores and others have opportunities to improve their assortments, customer service and overall store experience. Omnichannel initiatives like BOPIS and “ship from store” have put even more strain on retailers’ ability to execute these “Retail 101” issues better. But until they do, their overall sales will continue stuck in neutral.

The second comment was published today:

“Cannibalization” may be the wrong term, because retailers with true omnichannel strategies need to think about how to grow the overall pie. Continuing to think about business silos (e-commerce vs. brick-and-mortar) will stand in the way of a consistent overall approach to the business.

But there’s no doubt that brick-and-mortar is losing its relevance, as seen in the growing number of chains closing locations or throwing in the towel altogether. To go back to the question of how to grow the overall pie…why isn’t that happening? Why aren’t strategies like BOPIS (intended to drive traffic to stores) driving incremental sales?

These aren’t easy questions to answer, but I continue to believe that the operating demands of turning a physical store into a mini-distribution center are eroding the service-centric reasons why consumers shop in those stores in the first place.

“Cannibalization” may be the wrong term, because retailers with true omnichannel strategies need to think about how to grow the overall pie. Continuing to think about business silos (e-commerce vs. brick-and-mortar) will stand in the way of a consistent overall approach to the business.

But there’s no doubt that brick-and-mortar is losing its relevance, as seen in the growing number of chains closing locations or throwing in the towel altogether. To go back to the question of how to grow the overall pie…why isn’t that happening? Why aren’t strategies like BOPIS (intended to drive traffic to stores) driving incremental sales?

These aren’t easy questions to answer, but I continue to believe that the operating demands of turning a physical store into a mini-distribution center are eroding the service-centric reasons why consumers shop in those stores in the first place.

 

 

 

 

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.

Unconventional choices in the CEO succession race

Kohl’s recently announced that its “chief customer officer,” Michelle Gass, is taking over the helm of the merchandise organization. This puts her in position to become the chain’s next CEO, despite her relative lack of “general merchandise” background. (She spent most of her career at Starbucks.) She may compete against the “chief operating officer” to be named, who will have oversight of stores and logistics. It’s an interesting recent topic for discussion at RetailWire:

Kohl’s has had only three CEOs in the past 35 years, and all of them have been promoted from within. (Full disclosure: I worked for Kohl’s for 24 years, until 2006.) So it’s important for the company’s board to be thoughtful about the most important decision it can make, and to weigh the merits of store-operations vs. merchandising backgrounds…among other things.

The broader question facing huge national retailers (and not just those who are publicly traded) is how to identify the right forward-looking skill set for an effective CEO. Is it simply the traditional retail background of “merchant” or “store”? Or do more intangible skills like leadership, brand building and change management in an omnichannel world matter more today?

Among recent examples, JCPenney went for the more conventional choice of a CEO with a strong background in store operations. Target, on the other hand, opted for a CEO from the CPG industry with less grounding in a traditional retail career path. The next few years will be interesting to watch at both companies, but the early read is that Brian Cornell is acting like the change agent Target needed.

Sears: Does anybody care?

Sears entrance

I took this picture outside a Sears store anchoring the Southridge Mall near Milwaukee. It’s a Simon mall including a Macy’s, JCP, Kohl’s and Bon Ton store among its tenants, and the biggest mall by square footage in Wisconsin. The other anchors remodeled all or parts of their stores when Macy’s opened here a couple of years ago.

This is the sight that greets shoppers walking into Sears from the parking lot. (And there is a duplicate poster on the opposite side of the door, looking just the same.) I know that Outdoor Life is an active/casual brand at Sears, and the poster (upon close inspection) is meant to look like a map — I guess. But it doesn’t even fit the frame — unless I’m missing something and that’s intentional, too. Would you assume that at least somebody on the store’s management team is looking at the outside of the store and might try to fix this? (Or a regional manager? Anybody?) If they don’t care about the outside of the store, how about the tired old interior?

This is a small example of the problems that are dragging down Sears, despite its best efforts to tout tactics like layaway, in-store pickup, Sears Your Way, and so forth. The bottom line is that the store experience, from merchandise content to presentation, still matters.

And one more thing, speaking of Sears Your Way: Why does the same Samsung digital point & shoot wifi camera cost $150 at Sears but $90 on Amazon? How does Sears plan to make its omnichannel strategy work if it’s totally uncompetitive?

Should Penney stop reporting monthly sales?

Two related questions under discussion at RetailWire today: First, is Penney’s announcement that it will stop reporting monthly comp sales the smart thing to do? Second, is JCP moving fast enough on store closures? Here are my thoughts on both issues:

Given the volatility of this stock, and the wild swings up or down at the hint of any news, now is not the right time to discontinue comp-store sales reports each month. More transparency is called for, not less. The vagueness of the December sales comments (compared to the November report) ought to be a lesson to JCP.

To the question about being overstored, the answer is, “Absolutely.” Closing about thirty low-volume locations (judging by several small-town stores being closed here in Wisconsin) barely scratches the surface. If JCPenney wants to convince investors that it’s on the right track, it will take a greater commitment to expense reductions for this downsized company, not just a push toward higher gross margins.

JCP reverses course (again) on its pricing strategy

JCP has become a favorite topic among RetailWire panelists, and no wonder: The missteps involved in the execution of its “reinvention” strategy will be fodder for textbooks and case studies for years to come. Today’s discussion concerns the reversal of Penney’s pricing policy at least for its private-label goods. (The company is marking these goods higher in order to run them on sale.) Here’s my take on the latest JCP change in tactics:

Based on my reading of JCPenney’s announcement earlier this week, the chain plans to raise prices on private brand goods (such as JCP, Worthington, Arizona and so on) in order to put them on sale. Meanwhile, it plans to continue its strategy of comparing branded goods’ prices to their MSRP. This is a “half-pregnant” pricing strategy that will only confuse the bargain-hunting consumer even further. And if JCP jacks up the prices of private label merchandise too far (for example, pricing a $6 tee at $10 in order to promote it at 40% off), its credibility goes out the window.

Is this enough to turn the tide? It’s hard to tell, but clearly the volume drop in 2012 made the original strategy unsustainable in terms of driving sales and margins. Even though the comp-store comparisons ought to be a walk in the park during 2013, it really depends on whether the new shops and merchandise content resonate both with the core bargain-hunter and the Millennial trend consumer that JCP wants to attract.

Should JCP go private?

From a recent RetailWire discussion: There are plenty of ideas being kicked around to “save” JCPenney from what seems like an inevitable downward spiral. Among these: Going private, or spinning off some of the company’s real estate assets. Here’s my opinion:

Going private might have been a smart idea for JCP at the beginning of 2012, to take the spotlight away from the company’s quarterly results while it began its “reinvention” process. It might also have preserved some of Ron Johnson’s credibility, which has been eroded by his upbeat pronouncements to “the street” in the face of terrible numbers.

I’m no financial expert, but at this point going private would be a question mark. Can the company afford to be saddled with more debt through an LBO, given its weakened operating model? (Low sales, high expenses, poor margins.) And would investors who bought into the vision (at $20, $30 or higher per share) support going private at such a depressed share price? (Again, I’m sure that other panelists with more

expertise will weigh in on this idea.) As to a REIT spinoff, this has echoes of what Bill Ackman tried to engineer with Target several years ago. If the top 300 doors are the only ones worth salvaging, is the company worth saving — or are the high-volume locations the key attraction in an acquisition?