Borders changes CEO again

Borders announced this week that its CEO over the past year is leaving the company, to be replaced in the top job by its head merchant. It’s hard after one year to condemn the departing CEO when so many of the company’s challenges have to do with long-term execution and strategic brand management. Here’s my take from Retail Wire:

Here’s an example of the sort of nuts & bolts issue that is holding back Borders: If you try ordering “Game Change,” the best-selling non-fiction book in the country, you’ll find it in stock at Amazon but on two weeks’ back-order at borders.com. And doing a bricks-and-mortar search for the same title shows about half the stores in my trading area to be out of stock.

It’s very hard for the also-ran in the bricks-and-mortar book business to compete at this level of execution. Barnes & Noble is showing sales growth at its website that will start to offset comp sales declines at its physical stores. (And these sales drops are more modest than Borders to begin with.) If B&N capitalizes on the e-book trend with its own device and compatible items like the Apple tablet, it has a credible long-term way to compete against Amazon.

Meantime, Borders has struggled for years with a viable competitive argument to shop its stores. It has withdrawn from a lot of the music and video business that once gave it a brand identity, but it’s left with overspaced stores as a result. But the bottom line: It doesn’t matter whether the new CEO is focused on the balance sheet or on branding initiatives until he or she gets the execution right.

Not easy being “green”

RetailWire panelists had a chance this week to weigh in about “green” apparel and what’s holding it back from mass-market success. I think it’s premature to write off the trend:

Eco-friendly fashions have every chance of being successful sooner rather than later if they focus on style and value (not necessarily opening price) instead of using “green” as the driving force. There is plenty of opportunity for organic cotton and natural fibers like bamboo in the marketplace, but mainstream consumers seem unwilling to pay an excessive premium for them. To tie back to yesterday’s discussion about Macy’s (and its “open call” for new vendors and designers), this would be an ideal opportunity to get a midtier retailer in partnership with a “green” supplier committed to put trend and value first.

“Casting call” at Macy’s

Macy’s has announced a “casting call” for new designers and vendors, and most Retail Wire panelists agree with me that it’s a good idea to refocus on product:

Whether Macy’s uncovers the next Tommy Hilfiger or a viable new vendor through this process, it’s good to see that they are looking outside the box of their existing resource structure and roster of private brands. For all the attention paid to “My Macy’s” over the past year, the best game-changer is great merchandise content. And the PR associated with the “search for the next great designer” won’t hurt, either…reality show, anyone?

Home Depot spends on handheld technology

From a recent Retail Wire comment about Home Depot, which is equipping its sales associates with handheld devices:

Apple stores have been using handheld technology for years, and the surprise is that other retailers (from DIY to discounters) have been so slow to react. This is a great technology for tracking inventory and especially for getting customers out the door more quickly (better than, say, self-checkout). It’s easy to see other, sales-driving uses for handheld technology — such as issuing “instant coupons” to customers using a database that can pull up their purchase preferences from their phone numbers. $60 million seems like a modest investment in this kind of technology.

“Store within the store” idea gains traction…a good thing?

How useful is the “store within a store” idea? Retail Wire panelists recently weighed in:

The answer to the “store within the store” concept is, “It depends!” For example, Sephora has given JCPenney some critical mass and credibility in the cosmetics business that it was unable to achieve on its own, and it continues to surprise me that they have not rolled out this initiative faster. For other areas, such as toys, it makes sense for a retailer who is not a “category killer” to give itself the halo effect of a well-known specialty concept.

On the other hand, the concept can be carried too far. I still believe that traditional department stores have taken the European-style idea of branded “shops within the store” too far in apparel areas, causing a lot of duplication of assortment and navigation issues for consumers.

Are affluent shoppers ready to spend again?

Affluent shoppers who have seen their stock portfolios and bonuses recover somewhat in the past six months seem to be opening their wallets, based on the results of luxury retail during the fourth quarter. (Of course, the comp sales from 2008 were a disaster.) At the same time, those retailers have worked hard to provide some sale incentives to their affluent customers, in the form of enhanced loyalty programs, more value-oriented product development and so on.

Walgreens’ latest brand position, part 2 (Food)

Here’s the other side of the coin for Walgreens, right after discussing “wellness” as a valid brand statement for a pharmacy chain. A few days later, Retail Wire asked panelists to discuss Walgreens’ plans to enter the fresh/convenient food business in a deeper way. I disagree with the strategy:

Everybody wants “in” on the fresh food C-store business, whether it’s Tesco, Walmart or now Walgreens. This strategy doesn’t align with the “wellness” positioning that RetailWire panelists kicked around only last week. If Walgreens is serious about what it wants to stand for, it needs to get moving on its SKU reduction, clean up its in-store navigation and improve its overall customer experience. I’m not convinced that a section devoted to fresh and prepared food is the answer, unless there is a serious effort to eliminate some of the other businesses (e.g. basic fleece separates) that are tangential to Walgreens’ brand position.

Walgreens’ latest brand position, part 1 (Wellness)

Here’s the first of two back-to-back Retail Wire comments about Walgreens’ emerging strategy. In this case, they are talking about their “wellness” brand positioning, which makes sense to me. Here’s why:

The more successfully a store like Walgreens can position itself as “wellness headquarters,” the greater the opportunity to recapture pharmacy market share from discounters. After all, chronic disease management (such as diabetes) allows Walgreens to cultivate customer loyalty in a very lucrative way. There is a lot of money to be spent on diabetes supplies and medications, for the consumer who is also visiting the Take Care Clinic (or wellness center) for advice on diet and exercise and for routine blood screening.

Walgreens has a unique challenge rising to this opportunity: There is too much clutter and overassortment throughout the store, and the front-of-store experience is not exactly consistent with the “wellness” concept unless you like candy and cigarettes! Let’s hope that Walgreens moves forward with its initiative on SKU reduction in order to make “wellness” a credible brand position.

Time to redefine “customer service”

Retail Wire panelists were recently asked to discuss a list of consumers’ top-ten providers of customer service. Most of the list contained web-only retailers along with some mass-market stores. Only Nordstrom would be considered a traditional provider of hands-on customer service. So how do we define “customer service,” anyway? Here goes:

This ties back to the ongoing dialog among Retail Wire panelists about what constitutes “customer service.” This list points out that the old-school definition of service (meaning “sales staff on the selling floor”) simply doesn’t resonate any more, least of all with the consumer. It’s no accident that traditional department stores are missing from this list, because they have stuck to an outmoded model instead of defining “customer service” as good execution, efficiency, in-stock performance, and value-for-dollar.

Target cultivates the Smith & Hawken brand

Recent comments from Retail Wire about Target’s plan to buy the Smith & Hawken garden supply/decor brand and take it “exclusive”…sounds like a smart idea to me:

Smith & Hawken had a very limited bricks & mortar footprint (only 56 stores) so its brand equity is unlikely to be damaged by the store closings. Most consumers familiar with the brand know it from its catalog and online business, even though its web presence is currently “in limbo.” This is far different from the attempt to revive a brand like Linens ‘n Things, with its massive national presence.

In short, this has the potential to become a good marriage between Target and a now-exclusive brand with an upscale image. It’s also encouraging to see Target make a move consistent with its core competency of design-friendly home decor, instead of most of the recent tactical emphasis on low-priced commodities and consumables.