Posts Tagged 'Linens ‘n’ Things'

End of the line for Toys “R” Us?

Big retail news of the day (as discussed at RetailWire) is the announcement that Toys “R” Us is throwing in the towel. Here’s my post-mortem:

It’s unlikely that Toys “R” Us is going to stay afloat, and this is a big deal for those who follow the recent history of retailing. They were among the first “category killer” stores with broad assortments of a single category in a big-box format. There have been others (Linens ‘N Things, Sports Authority, etc.) but this one stands out. If you see reporting on “the Amazon effect,” it’s more complicated than that.:

It’s tough to survive in a highly seasonal business like toys given the growth of e-commerce and the dominance of discounters in the same category. And there has been a generational change, where many of today’s kids are interacting with technology (smartphone apps, streaming video games) instead of the toys of a short time ago.

And one more lesson learned: A mountain of private-equity debt doesn’t help. On this point, an added thought from a more recent RetailWire discussion:

TRU was partly the victim of private-equity debt burdens, but also made its own mistakes. This is an example of a big box store with too much square footage — in a seasonal business facing robust competition from discounters and Amazon — failing to adapt.

There is probably enough brand equity remaining to salvage the business, provided that Storch and team rethink the model. (And get rid of that debt load.) Maybe an online-only play is the place to start, instead of trying to recapture the past.

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Can Circuit City make a comeback?

Whoever bought the Circuit City brand after the store’s demise a few years ago plans to revive it — both as an e-commerce site and as a re-engineered brick-and-mortar store. The question in front of RetailWire panelists: Does the world need a revived Circuit City? (Or, as their headline put it, “Can Circuit City come back from the dead?”) Here’s my skeptical point of view:

This reminds me of the Linens-N-Things saga, in which the brand survives as an e-commerce site but its physical stores are long gone. There simply wasn’t the need for two similar big box concepts, so Bed Bath & Beyond turned out to be the survivor. (But BBBY stock price has fallen sharply in the past five years, like many retailers, as it faces increased competition from Amazon and others.)

It’s hard to see what value Circuit City brings to the table at this point — except as a web-only play. Does a small-footprint “experiential” store offer something different from Best Buy or Apple? (Especially now that Best Buy is removing CD’s from its physical stores, it’s easy to see that they will roll out more engaging and productive uses of that space.) The Circuit City brand was already “damaged goods” because of bad decisions they made to reduce customer service and in-store expertise.

Target makes a convenient target

Many critics of Target are overreacting, first in one direction and then the other, about their “consumables” strategy. Target was criticized for its lack of food and basics, and is now being roasted for having too many groceries. Long-term, this is an appropriate strategy for Target as long as its larger store formats can deliver well-priced and well-edited assortments of fresh and other foods.

The bigger short-term issue at Target is the merchandising of discretionary products. As one analyst pointed out yesterday, Target’s home business (one of its “legacy” businesses) is losing share even though the closing of Linens N’ Things should have helped. And Target’s softlines business (especially women’s) lacks a “core basic” element along with a clear point of view among its private brands.

Can Target be “fixed”? Of course, with some old-fashioned attention to its core assortments at the same time that it continues to build upon its “consumables” strategy.

 

Bed Bath & Beyond: The strong get stronger

Lots of ideas (at RetailWire) about why Bed Bath & Beyond is enjoying particular success right now. Here’s my point of view:
Bed Bath & Beyond has a big niche practically all to itself — much in the same way that Best Buy “owns” the specialty electronics business despite plenty of competitors in the same space. BB&B benefited greatly from the demise of Linens n’ Things but frankly it out-executed LNT to get there. And very few general merchandisers have been able to capitalize on the loss of a key competitor, with the possible exception of Kohl’s…certainly JCPenney did not have the kind of growth in its home store that observers expected last year.
Bed Bath & Beyond has stayed focused, is compellingly priced, and takes a “headquarters” position in key businesses like dorm supplies. A good lesson learned for other specialty retailers aspiring to the same kind of dominance in their market space.

Trading spaces…trading down?

Retail Wire panelists discussed the trend toward vacant retail space moving to more “downscale” tenants in 2009 and going forward into 2010. I don’t quite see it that way…I see a long-term trend toward value-oriented retailers picking up share of market and therefore share of square footage. Here’s my opinion:

Stores like Forever 21, JCPenney and Kohl’s are well-positioned to be aggressive about taking over space from failed retailers like Mervyn’s and Linens n’ Things. As far as “trading down,” however, there is little difference between these stores’ target consumers…it’s really about better execution and better financing. The shift of square footage from upscale retailers (such as traditional department stores) to mass-appeal and big-box stores hardly began with the Great Recession…it’s a long-term market-share shift that began at least 25 years ago.

Linens n’ Things: Showing a pulse in Canada?

I would echo the same comments I made a few months ago, when Brain Trust panelists talked about the web-only “play” being made to keep the Linens n’ Things name alive. By the time somebody attempts to revive the brand in the U.S., the damage has already been done to the brand because of the Chapter 11 filing and the sudden closing of hundreds of stores. Jump-starting the brand in the future assumes that desirable real estate is still available (maybe so). It also assumes that surviving competitors (from Bed Bath & Beyond to Kohl’s) haven’t absorbed all the market share (maybe not). Linens n’ Things may have enough brand equity left to “start over” in Canada but it can expect rougher sledding in the U.S. if it tries to stage a revival.

Reviving a “dead” brand name: A good idea?

Today’s New York Times contains a story about defunct retail companies trying to make comebacks as pure web plays or for their brand equity. Their article focused on Sharper Image, which appears to have a second life as a purveyor of packaged gift and electronic items for stores like Macy’s and JCPenney.

I’ve commented on this blog about Linens n’ Things and also commented yesterday on Retail Wire about attempts to resuscitate the Comp USA electronics brand. In this case, I’m skeptical:

I agree with other panelists…reviving the Comp USA business under the existing name is a mistake. You might as well name it Circuit City 2.0 for all the negative connotations. And making price the key competitive difference is also a questionable decision…there is always somebody (Walmart, anyone?) willing to be the low price leader in every category it competes in, including consumer electronics. Since Walmart already “owns” price and Best Buy “owns” customer service, maybe it’s smarter for Comp USA 2.0 to stake out a different competitive position altogether, such as providing the easiest shopping experience in the segment.


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