Starbucks Union

Today is the 11th anniversary of the grand opening of the first Starbucks (SBUX) store in Korea.  To commemorate the occasion, Starbucks has staged events at stores around the world throughout the month to keep Starbucks in the news, and in the minds of Starbucks customers around the world. A fake robbery attempt was staged to draw attention to a British Columbia Starbucks store.  It had to be fake because how else can you explain why a would-be criminal would cut in line in front of two police officers in order to make money demands of a barista armed only with a menacing beverage? Starbucks restrooms were quite newsworthy in July due to a live birth that happened in a Colorado Starbucks restroom, a Britney Spears hair extension that was left behind in a Calabasas Starbucks restroom, and a hidden camera that was set up in a San Diego Starbucks restroom (purportedly to record live births and superstar hairdressing mishaps). Staged celebrity sightings created a bigger buzz than caffeine intake at Starbucks stores around the world in July when Zac Effrom and his papps grabbed a snack at a New York Starbucks, Nick Jonas cooled down with a frozen Bucks-a-ccino in London, and Kristin Chenoweth got hot under the collar and pitched a Twitter fit after a bad encounter of the barista kind. Setting up an employee credit card scam to draw attention to a Jakarta Starbucks was a little bit extreme.  The suicide jumper who plunged onto a busy Starbucks patio was definitely over the top. Of course, Starbucks staged none of these events (that we know of), but certainly this eclectic mix of coffeehouse entertainment sounds like it could have been concocted by a creative and slightly demented press-mongering PR firm.  To realize that these very odd events all occurred organically, and all in one month, makes you want to hang out more at Starbucks just to see what will happen next. Outside of the coffeehouse setting, other newsworthy events were happening for Starbucks as well.  At an Oppenheimer conference, Starbucks offered these business changes as the reasons why it the company has returned to profitability despite the lingering effects of economic recession:

• 1/3 of Starbucks stores are global stores, located outside of the U.S.
• 25% of Starbucks operating profit is now coming from Starbucks branded consumer products
• GAAP margins are higher than they've been in five years
• The percentage of licensed stores vs. company-owned and operated stores has increased by 6% since 2005
• Starbucks is now doing business in 50 markets, compared to 37 markets in 2005

And during an investor teleconference, CEO Howard Schultz talked optimistically about Starbucks' stores in China, where specialized product offerings like black sesame green tea frappuccino and black bean kiwi tarts are generating success. Starbucks also generated Internet superstardom for itself when it gained its 10 millionth fan on Facebook, and officially became the largest corporate brand on that social media platform.  It's impressive what a few well-executed pastry giveaways can buy a company in cyberspace these days. The undisputed best thing that landed Starbucks in the headlines in July, however, was its decision to offer free WiFi to its customers.  Not paid WiFi, not WiFi with a Starbucks card and a time limit, not spotty WiFi service from AT&T for existing ISP customers, Starbucks now has honest-to-goodness free WiFi for anyone who can beat off other laptop users for a table or an electrical outlet.  It took Starbucks a while to concede that its customers deserve WiFi privileges for free, but the company did the right thing for its "guests" eventually. Speaking of doing the right thing, there was an extremely eloquent editorial this month in the Huffington Post about how Starbucks has abandoned its own mission statement, and how the global chain has lost its essence in the pursuit of product prominence.  I don't agree with the premise of the article - that Starbucks has forgotten the "why" of its business - but I do think the article makes a great case for why a "why" is important and what the consequences are when you lose it. Its obvious from Starbucks' most recent financials that the company has turned the corner on its own turnaround, well ahead of the overarching retail industry recovery curve.  People are still casting their votes for the Starbucks brand around the world every day, five dollars at a time.  And it ain't just because the premium-priced coffee and black bean kiwi tarts are so worth it. So, Happy Birthday, Starbucks Korea!  Check out this video to see how the South Korean Starbucks stores compares to the U.S.  Make sure to watch the video all the way through to the last verse of the song, which is in English and somewhat humorous. More About Starbucks:

• The Starbucks Brand of Service
• Starbucks Named a "Best Retail Employer"
• Global Store Openings Planned for Starbucks in 2010

Most Popular Articles | Trending Retail Topics | Follow on Twitter | "Like" on FacebookStrange Starbucks Events Kept the Coffee Company In the News, Customers Around the World Kept Starbucks in the Black (SBUX) originally appeared on About.com Retail Industry on Tuesday, July 27th, 2010 at 04:59:08.Permalink | Comment | Email this

The International Council of Shopping Centers (ICSC) said last week that American consumers will spend $38.4 billion on back-to-school merchandise in 2010, which would be a record high.  But never to be outdone in consuming optimism, the National Retail Federation (NRF) called that prediction, and raised it to $55.12 billion.  The NRF's annual Back-to-School Consumer Intentions Survey predicted that the average American family will spend $606.40 to prepare their children for a return to the classroom this year, which would be a generous budget allowance for a consuming population that has needed multiple government rebate bribes to motivate them to open their wallets this year. From these disparate predictions we can probably safely conclude two things.  One, retail trade associations have about as much objectivity as helicopter parents at a dance recital.  Two, consumers do intend to spend money in the next two months, and retailers better be ready with the right products at the right price at the right time in order to best capitalize on the temporary spending mood. The back-to-school shopping season officially started on July 14th.  How do we know that?  Because Staples (SPLS) said so, of course.  Somewhere along the way we gave the Staples corporation the power to designate a back-to-school consuming start date, which they make official when their company representatives ring the bell to start NASDAQ trading on that day.  Without a "real" event like Black Friday as a cue, how else will consumers know that they're supposed to start spending money for the second busiest shopping season of the year? The U.S. retail industry is still under the mistaken notion that it is in the drivers' seat of consumer spending cycles.  The ups and downs of the monthly same store sales figures are telling a different story, however.  Marketing-led shopping habits have been significantly replaced by conscious consuming, which is not so easily manipulated.  As I strolled through the sea of 75% OFF signs at Macy's (M) this weekend, I couldn't help but think of the many U.S. retail industry leaders who boldly declared at the beginning of 2010 that they would no longer need deep discounts to drive sales since they had mastered their inventory levels and overhauled their supply chain processes. Consumers, however, have a different opinion about discounts.  They still want them, and they still want them to be significant.  And they're willing to hold onto their money until they get what they want.  Likely this will be the case in the back-to-school season as well. Consumers made it clear in the NRF survey that they will be doing more comparison shopping online during the 2010 back-to-school season. Because of that, they're not going to be easily fooled by hi-lo pricing smoke-and-mirrors. But winning the back-to-school retailing game is going to take more than discounts this year.  Retailers are also going to need to be good retailers in order to capture the back-to-school dollar. When I was browsing through the Macy's sales racks this weekend, a peppy, perky Macy's associate walked up to me and asked me if I was finding everything alright, a question which made me laugh out loud.  The women's clothing racks were a jumbled mess of sizes and styles, worse than any off-price overstock store I had visited recently.  I politely suggested to Macy's Girl that if she wanted me to find what I was looking for, then somebody needed to spend some time putting the right sizes back in the right places.  She replied by chuckling and walking away.  The net result of my Macy's shopping visit that day was the return of a full-priced item and cash in my pocket.  It just wasn't worth the effort. It's not going to be enough to lure back-to-school shoppers through the front door with discounts.  It's the shopping experience once they're inside that will make - or break - the sale.  Even though employees and companies may have forgotten this retailing 101 principle, shoppers haven't.    The loss of a back-to-school purchase due to poorly executed retailing fundamentals this year will be a big loss because spending sprees are finite in the post-recession consuming paradigm. Retail industry experts and analysts keep wanting to use increased event spending as evidence of economic recovery, but that extrapolation hasn't proved to be valid in 2010.  After each holiday spending uptick this year, there has been a decline, which seems to take everyone by surprise.  It's really not that difficult to figure out.  If consumers are spending more on back-to-school items, they're likely going to be spending less on other things in the months before and after school starts to make up for it.  That's the new normal in a consuming world which is still lacking in jobs and devoid of cheap credit. If back-to-school spending predictions actually turn into spending reality, the retailers that aren't able to secure a respectable share of back-to-school spending won't be able to blame it on the economy. Some will probably still try to blame it on the economy, but that excuse is wearing thin. It's sell now or hold your retail peace until Black Friday because once the kids are safely tucked into their desks and dorm rooms, wallets are likely going to be shut tight until obligatory Christmas gift-giving pries them open again. Most Popular Articles | Trending Retail Topics | Follow on Twitter | "Like" on FacebookU.S. Retail Industry Back-to-School Sales May Rise, But Consumers Won’t Be Spending as Freely as Retail Associations Predict (M, SPLS) originally appeared on About.com Retail Industry on Tuesday, July 20th, 2010 at 04:43:56.Permalink | Comment | Email this

Two Abercrombie & Fitch (ANF) store closings happened this month, not because of failed expectations, but because of pest infestation. An Abercrombie store in Manhattan and an Epic Hollister in SoHo were invaded by bedbugs and were closed for business while they got rid of the pesky little bloodsuckers.  Reportedly, CEO Mike Jeffries wrote a letter to Mayor Michael Bloomberg blaming the city of New York for their pest problem.  Although bedbugs in commercial spaces are not unheard of in New York City, it's questionable whether these particular bugs had a 212 area code before they wandered past the scantily clad greeter guys into the Abercrombie and Hollister stores. Isn't it more than a little bit curious that both the infected stores belonged to the same company?  In the 324 news reports that I scanned about the Abercrombie bedbugs, isn't it also curious that there are no reports of bug problems at neighboring businesses - not even the ones that share walls and roofs with the Abercrombie stores?  Doesn't it stretch the imagination a little bit to believe that a city bug problem was discovered in two locations 1.6 miles apart, but at no points in between? In this case, logic points to the conclusion that the bugs hitched a ride with Abercrombie onto Manhattan island rather than the other way around. While Jeffries was quite public about his letter to the mayor, there were no public reports of any proactive measures taken by the infected stores to use their carefully captured customer data to contact customers about the possibility of critter-carrying clothing they may have toted home in their shopping bags.  If I had made a pricey purchase at one of those flashy NYC flagship stores, I would want to know that my latest fashion acquisitions might come back to bite me - literally. Exceptional customer service recovery is always the "cool" thing to do, right Mike?

• Latest Store Closing Numbers for the U.S. Retail Industry
• All About Abercrombie
• Service Recovery 101

Most Popular Articles | Trending Retail Topics | Follow on Twitter | "Like" on FacebookCause of Abercrombie & Fitch Store Closings Suspicious - Blaming NYC for Abercrombie's Store Closings Defies Logic (ANF) originally appeared on About.com Retail Industry on Tuesday, July 13th, 2010 at 01:26:37.Permalink | Comment | Email this

Much has been reported about the drugstore wars between Walgreens (WAG) and CVS (CVS).  The clash of the pharmacy titans seemingly ended when both companies realized that their game of prescription chicken was doomed to end in disaster if they both didn't put the brakes on their very public dispute.  The recent cease-fire agreement between the two companies appears to guarantee that the rivals will peacefully co-exist for several years and consumers have come out as the winners in the deal. Things are not always as they appear. This CVS-Walgreens dispute is just one example of how large retail pharmacies chains have the ability to make decisions that can affect consumer's freedom of healthcare choice, and how completely powerless consumers are to stop those decisions.  Another current CVS dispute demonstrates this in a way that is even more disturbing than the recently aborted battle with Walgreens. On July 1, 2010, a law went into effect in Connecticut which would require CVS to offer its lowest drug pricing to Medicaid patients.  Those lowest prices would include 400 generic maintenance medications that CVS makes available to uninsured and underinsured customers for $9.99 with its "Health Savings Pass" program.  CVS says if they are forced to provide those drugs at that price to Medicaid patients, then they're just going to stop offering that price point in the state of Connecticut altogether. CVS is playing another game of chicken and much like the Walgreens war, this Connecticut dispute seems to be all about power and control.  If the Connecticut government backs down, then CVS will have proved its ability to trump the government in making the rules about who will be granted access to the best healthcare, and how that access will be granted, if it is granted at all.  Is that a power that should be in the hands of a corporate entity that is inherently structured to put its own self-interest ahead of the public good? CVS, of course, would argue that it does, in fact, have the consumer's best interest at heart.  The company's published Vision Statement is "We strive to improve the quality of human life."  But if that was true, wouldn't the company be sitting in a meeting room with Connecticut government officials trying to find a way to improve the quality of Medicaid patients' lives instead of making threats and using the Connecticut population as leverage in a power play ultimatum? This is not the first time that CVS has been at odds with the state of Connecticut or the Medicaid system.  In March, 2008, CVS agreed to pay $36.7 million to the U.S. government and 23 states to settle a Medicaid fraud lawsuit after it was accused of substituting generic capsules for prescribed tablets in order to increase profits specifically with Medicaid patients. In November, 2009 the Connecticut Attorney General filed a suit against CVS for selling expired products.  This was less than six months after the company wrote an $875,000 check to the California Attorney General for the same thing.  And that was six months after the New York Attorney General received $975,000 check from CVS for the same thing.  Most recently, CVS was busted in the state of Nevada in June, 2010 for the same thing. This ongoing issue with CVS expired products either proves that the company has some of the most ineffective operations management imaginable, or else it has an unwritten policy to continue to sell all products regardless of expiration dates until state charges and substantial fines make it economically unfeasible to continue. But one company's "substantial," is just another company's cost of doing sloppy business.  You would think that the $2.25 million that CVS paid in 2009 after it disposed of customers' prescription drug records in a dumpster would have been "substantial" enough to influence the company's behavior with private patient information.  But just last month, more patient prescription records were found on the street outside of the back door of a CVS store in New York. Anyone who follows the CVS company or CVS stock is well aware of the company's long history of legal charges and subsequent settlements.  The company is currently under investigation by the FTC and 24 state attorney generals for antitrust violations.  It's fair to say that the CVS legal team has job security and the CVS legal checking account has plenty of debit entries. Consumers and investors really want to like CVS.  The company has raised and donated millions of dollars for charities like the Special Olympics, the Red Cross, and the Boys and Girls Club.  CVS is sponsoring a "To Your Health" tour in 100 inner cities this summer to conduct free screenings and health assessments to residents there.   The company has helped its employees purchase their first homes.   We want to give CVS the benefit of the doubt that its positive aspects outweigh, or at least offset, its negative business practices.   We want to believe the best about CVS, but it's just too much of a stretch. The company's own customer loyalty program captures the essence of the company itself.  The "CVS Extra Care" program rewards customers with a 2% rebate on all purchases and $1 back on every two prescriptions filled.  On the surface, these customer loyalty rewards seem kind and generous, and very much in alignment with the company's vision to "improve the quality of human life." Beyond appearances though, are the operational realities of the customer rewards program.  The rewards are not available immediately, but rather distributed once per quarter, and expire after 60 days.   In order to use your Extra Care Extra Bucks, you must carry and present a printed receipt with you.  A swipe of the barcode on your membership card won't give you access to your "rewards," but that same swipe gives the CVS corporation plenty of valuable marketing information on 64 million of its Extra Care members. Just like its loyalty program, CVS superficially gives the impression that it cares about improving the quality of human life, but beyond the surface, the company's daily operations reveal a reality that seems to prove that it really is only concerned with its own best interest first and always.  After CVS has proven time and time again that it is willing to cheat, poison, disregard, and abandon its customers, it can only be concluded that profit is really the only value the company has, despite what any written mission statement proclaims. So, this is the fundamental philosophical challenge that we are all facing up to with health care reform.  For-profit health care companies are riddled with conflicts of interest.  If sick people contribute to profitability, there is no inherent motivation for a company to create or support wellness.  If the government doesn't have the power to intervene (i.e., if the state of Connecticut doesn't hold its ground with CVS), then eventually all the healthy citizens of Bedford Falls will soon find themselves lining up for hospital beds in Pottersville, If CVS was really interested in improving the quality of human life, wouldn't it be focusing resources on making organic and nutrient-rich foods available to inner city food deserts instead of just diagnosing chronic maladies that will require long-term CVS remedies?   If CVS was truly interested in improving the quality of human life, wouldn't it be expanding its product mix to include pedometers and treadmills instead of adding more private label and prepared foods to compete with Wal-Mart? Ultimately it is the responsibility of every publicly-traded company in the U.S. retail industry to make a profit and increase the value of its stock.  The question is, will attention to the best interest of customers create the best returns for shareholders of a health-related companies in the retail industry? So far this year, CVS's profit-motivated legal tangles and public showdowns have led its stock down 12% from the beginning of 2010, and off 22% from its 2010 high.  Perhaps aligning its daily business dealings with its own stated corporate mission, vision, and values might be worth a try? Most Popular Articles | Trending Retail Topics | Follow on Twitter | "Like" on FacebookU.S. Retail Industry Stock Update - CVS Pursues Profits With Power Plays, But Government Battles and Public Walgreens War Leads to Stock Losses (CVS, WAG) originally appeared on About.com Retail Industry on Tuesday, July 6th, 2010 at 02:16:04.Permalink | Comment | Email this

Not surprisingly, U.S. retail industry stocks have been on a down trend, due more to recovery euphoria fantasy self-correction than any particular government data or industry reports.  The S&P Retail Index has declined more than 7% and the S&P 500 has declined more than 3% in the past ten days.  JC Penney (JCP) has beaten them both with a 15.3% decline, which put the JC Penney stock at the losing end of retail stock declines, and at a 52-week low at the close of Wall Street on Friday.  The JC Penney brand makeover is in mid-transition and Wall Street's game of make-as-much-as-you-can-as-quick-as-you-can generally has no patience for transitions. Earlier this month, JC Penney became a strategic partner by providing financial sponsorship to the FIRST (For Inspiration and Recognition of Science and Technology) Robotics Program.  On Saturday, American Idol heartthrob Constantine Maroulis performed along with the Broadway cast of "Rock of Ages" at the Manhattan JC Penney flagship store to kick off the summertime "Broadway in Bryant Park" performances. While community involvement has always been an important part of the JC Penney mission statement, strategic corporate giving really should be aligned with causes that also appeal to its customer base.  The match between JC Penney, rock 'n roll fans, and robot geeks (and their dads) isn't obvious.  At least it's not obvious to me. While exposure to these different audiences might bring them into the JC Penney stores, will they find anything that they want to buy once they get there?  When I think JC Penney, I think Midwestern soccer mom, not robot building science geeks.  The funny thing is that there are plenty of Midwestern soccer moms in Constantine's fan base, but that's exactly the kind of customer that the New York JC Penney store doesn't cater to, with its proprietary product lines and designer labels. The point is, just as Sears seems to be suffering from an identity crisis, JC Penney is another great American brand that may need a big splashy public image makeover.   JC Penney's brand positioning right now is "Style You Want.  The Quality You Expect. The Price You Love."  However, I'm not sure the average American consumer generally associates the words "style," "quality," or "price" with JC Penney.  They seem to deliver a not-great, not-bad experience on all three points, which is not enough to make any of them a unique selling proposition. Mike Ullman came out of retirement in 2004 to help the JC Penney chain regain its relevance.  The changes are happening inside the stores, but are they happening inside the minds of the customers? The good thing about being around forever is that everybody knows you.  The bad thing about being around forever is that everybody thinks they know you, no matter how hard you work to change yourself. It seems like JC Penney is in the middle of a brand transition period and will probably announce to the world what its new brand positioning is when the timing is better.  Unfortunately Wall Street really isn't oriented towards long-term results and JC Penney isn't a very sexy stock in the short-term.  Even though JC Penney's stock isn't moving in the right direction right now, overall the company probably is. See Also:

• JC Penney Complete Same Store Sales Roundup 2010
• JC Penney's Brand Makeover
• James Cash Penney - Principles in Business

Most Popular Articles | Trending Retail Topics | Follow on Twitter | "Like" on FacebookU.S. Retail Industry Stock Update: JC Penney Stocks Hit A Low As the Brand Transitions, Wall Street Loses Patience, and Recovery Euphoria Self-Corrects (JCP) originally appeared on About.com Retail Industry on Monday, June 28th, 2010 at 05:22:37.Permalink | Comment | Email this

Sixty-two years ago today, the U.S. retail industry lost a leader who we now recognize as a legendary founder of a great American brand. Alvah Roebuck was a watchmaker from Indiana who answered an employment ad, and was hired by Richard Sears to repair the watches that Sears was selling with a then-revolutionary direct marketing system. Somehow the two men went from a watchseller-watchfixer relationship to become business partners, and in 1893, Sears Roebuck and Co. was incorporated in the state of Illinois. Roebuck stayed involved with the company in several different capacities until he died on June 18, 1948 at the age of 84. The relationship between Sears Roebuck and Co. and the American consumer has endured 117 years, and like any relationship, it's had its high points and low points. Currently, that relationship seems to be at a low point, and perhaps on its way to an even lower point. Sears Holdings (SHLD) stock prices have dropped 7% since the beginning of 2010, and are about 37% lower from their 2010 high in April. Sears' stock losses can be compared to the 350% increase of Cost Plus, retail's best performing stock so far in 2010, or to the 5.0% increase of the S&P Retail Index in 2010. Either way Sears doesn't come out looking good in the comparison. It's clear that Sears is bucking the retail trend in 2010, and not in a good way. Sears saw its first quarterly sales comp increase in six years in the first quarter of 2010. A plus sign is always better than a minus sign when it comes to sales comps, but it was only a 0.3% increase in domestic same store sales, and it took a "dollars for dishwashers" government incentive and some deep discounting to eke that out. After a six-year downward trajectory, it's easy to believe that Sears might be feeling a little bit desperate these days, and its recent throw-it-against-the-wall-and-see-if-it-sticks approach to retailing seems to indicate that may very well be true. I wonder what the dearly departed founders of Sears Roebuck Co. would think about the company's recent moves and management philosophy? By all accounts Roebuck and his partner Sears were wildly successful retailers back in the 1800s. Richard Sears started the R.W. Sears Watch Company. in 1886, and sold it in 1889 for $82,000. Adjusted for inflation, that's the equivalent of selling a 3 year-old mail order company for $1.7 million today. It wasn't YouTube, but it was a respectable transaction. The Sears Roebuck Co. sales exceeded $1 billion way back in 1945. Again, adjusted for inflation, that's the equivalent of $12.1 billion today. Compare that to 2010 revenue of $44 billion for Sears Holdings, which included $15.7 billion from Kmart and $4.6 billion from Sears Canada. Effectively, Sears sales have only grown 95% since 1946, an average of 1.46% per year. It seems as if the first 52 years were relatively more successful than the last 65. So, what might Sears and Roebuck, the men and the founders, have to say about the Sears of today? Founded on Innovation The Gofer.com grocery and merchandise delivery concept that Sears piloted last year and is expanding this year is seemingly far beyond Sears' core competencies. But the original Sears and Roebuck leadership duo would probably point out that that this new offering actually harkens back to the company's roots. Grocery delivery was a cornerstone of Sears' business beginnings. Rural families felt like they were being price gouged by locally-owned general stores in the late 1800's. Sears and Roebuck didn't compete with the general stores, they created a retail system that bypassed the general stores instead. Today we may see the Sears brand as steady and stalwart, but its retail legacy is all about innovation. The multi-channel integration of the Gofer.com concept really isn't all that innovative or radical, but the successful execution of it for household consumables in a new century could be. Reportedly Sears executed its fulfillment processes so well back in the 1900's that Henry Ford studied their conveyor system before developing his own. Because of the company's successful beginnings with innovative merchandise delivery, I think the original Sears and Roebuck management duo would wholeheartedly support the Gofer.com concept. They'd probably have a few valuable suggestions about how to make it work better too. Giving Away the Store When SHCRealty.com was launched in May, many were surprised that Sears Holdings was quite publicly advertising its belief that other retailers could make better use of Sears Holdings real estate than Sears and Kmart were making of it. This probably did not boost shareholder confidence much, and might help explain the 37% stock price drop that has occurred since April. There are four ways that Sears Holdings is proposing that other retail companies can capitalize on its retail real estate. One option is a store-in-store concept, which Edwin Watts Golf Shops is trying out in 12 Sears stores this year. Another option is "demised space," which divides a Sears or Kmart space and allows another retailer to operate adjacently, but separately from Sears. Reportedly Forever 21 is planning to do this with 40,000 square feet of a Sears mall store in Orange County, CA. The most logical (and most humorous) option is the "outlot" option which allows another retailer to establish a presence in a Sears or Kmart parking lot. As long as there aren't any shoppers' cars making use of the parking lots, the company might as well let another retailer make productive use of the asphalt. Perhaps the least appealing option presented is the "inline leasing" option which allows retail businesses to operate or build adjacent to an existing Sears or Kmart store and "enjoy all the benefits that proximity to our store has to offer." With all due respect, if there was a substantial amount of Sears or Kmart customer traffic to benefit from, the company probably wouldn't be looking for retail tenants to help pay its property taxes. It would be very easy (and expected) for Sears to be too arrogant about its behemoth status to publicly pursue junior retailing partners in this transparent way. Kudos to the Sears management team for realizing that there's no such thing as a too-big-to-fail retail organization. If this kind of location partnership strategy is the alternative to store closings and selling off real estate in what is still a greatly recessed commercial market, then I think the original Sears and Roebuck leadership team would vote "yes" on these actions too. Sometimes you just do what you need to do in order to set yourself up for success in the next 117 years. Fathers Day Promotion and Hail Mary Marketing To convince consumers that shopping at Sears for Father's Day is "life well spent," the retailer is giving a $50 bonus to shoppers who purchase $50 worth of men's clothing. It's a clever way of offering a 50% discount during a gift-buying occasion. The extra $50 might beef up the perceived value of the Father's Day gift itself, or the shopper may decide to keep the $50 for themselves as compensation for their gift-giving generosity. The only downside to this offer is that fathers and grandfathers somewhere in America are going to have to wear those Sears fashions. There's something about Sears promotions in the past year that has the feel of Hail Mary marketing. For some reason their marketing efforts come off as desperate, but perhaps that's just my perception. The Sears and Roebuck Co. was wildly successful for 39 years before the first physical retail location was even opened. Much of that early success was due to its low-margin, high-volume business model, and its creative marketing. According to Sears history archives, Richard Sears established an ultra low-tech affiliate program way back in 1905 and gave commissions to customers for purchases made by their neighbors, family and friends. So, it seems plausible that the original Sears and Roebuck management duo would support any kind of marketing and sales promotions, as long as those marketing efforts don't confuse activity with the accomplishment of some kind of profit margin, no matter how small. Come See the Techno Side of Sears Sears released its Personal Shopper app in January, which allows shoppers to take a photo of an item, and put the Sears Personal Shopper Crew to work locating the item. In April Sears made an iPhone app available that is integrated with GPS satellite technology. The company opened up its API in April to attract some more developer creativity (free from the hassle of paying developer health insurance benefits). As further proof that Sears Holding is embracing technology, the Sears and Kmart brands each have their own "social" website, Facebook page, Twitter account, and YouTube channel. Mostly these social media outlets are being used as promotional broadcast channels rather than interactive touchpoints, but at least the companies will have the infrastructure in place when they decide to adopt a more engaging social media strategy. Props to them for at least showing up on social media platforms and making the effort. Most recently, Sears signed on as one of the inaugural iAd advertisers. And reportedly a pilot program will start this summer in Sears stores that will give store credit for trade-ins of old electronic devices with the purchase of the latest and greatest gadget. Obviously, SHLD is participating in the quickly-evolving retail technology game, but are consumers viewing the legacy retailers as viable contenders on that playing field? Maybe it's just a generational thing, but I have a hard time getting my head around seeing "the techno side of Sears." But just as the "softer side" campaign of the 1990's successfully brought females through their doors, perhaps a similar "techno side" image campaign could shift perceptions and attract techno savvy shoppers to its portals. The problem is, once they have arrived, what will the techno generation find at Sears that they want to buy? The Great American Retail Opportunity And that's what I think the original Sears and Roebuck leadership team would see as the major challenge for today's Sears and Kmart businesses - identity crisis. The standard 4P's marketing formula doesn't seem to be "right" right now. Sears and Kmart don't seem completely certain about where they fit into the American retail landscape any more. Every major retailer is infringing on its product offerings, and consumers of all generations seem to have the opinion that Sears and Kmart stores are "so yesterday." Theoretically the greatest value of the Sears chain rests in its well-known proprietary brands, and yet it seems like the company is having to pimp out those brands and use a fair amount of promotional bribery to persuade consumers to take those valuable brands home. I suspect Richard Sears and Alvah Roebuck would want to remind the current SHLD management team that their greatest competitive advantage lies in something that very few of their competitors can lay claim to. Sears and Kmart are part of a dwindling group of great American brands. Both companies have roots that stretch back to the 1800's, and for that alone they have a certain amount of well-deserved consumer respect just for surviving. While there is no suggestion that Sears and Kmart are going to become successful in the future by taking a giant step back into the past, it could work to their advantage to own and embrace their great-American status. In order to do that, though, they're going to have to embrace what it means to be an American in a new decade of a new century after the bubble of unconscious consumption has burst. The original Sears and Roebuck team knew the American farmer and aligned the company's Four P's behind that knowledge. Then they knew rural America, and aligned the company's Four P's behind that knowledge. It's not clear that the Sears Holding management team of today knows the 21st century American consumer, and if they don't truly "know" their customer, it's impossible to align the P's of their business effectively. Tonight I took a spin through a Sears mall store to see how the Father's Day weekend was kicking off. Even though the mall's parking lot was Christmas-season busy, the Sears store was mid-recession empty. No one - and I literally mean no one - was even looking at the Father's Day promo men's clothing. No one - and I literally mean no one - was looking at the merchandise with the valuable Craftsman, DieHard, and Kenmore brands. I saw four members of the Sears "blue crew." One of them was pacing around the empty television department talking on his cellphone. Two of them were behind the cash register counter talking to each other. One blue crew member was engaging with a couple that was looking at grills. Actually he seemed to be hovering, but we'll give him the benefit of the doubt and call it "engaging." None of the blue crew members seemed to notice or care that I was wandering around their store in all of the departments where I might be looking for a Father's Day gift. I couldn't tell by looking at the merchandise in the store who Sears thinks the typical American customer is. Where was the merchandise for the quality-minded Americans who are re-evaluating their priorities and rethinking what they really need to own in order to have a happy life? Where was the merchandise for the principle-centered Americans who want to work for and do business with companies with character and integrity? Where was the made-in-America merchandise for those who want to help put their neighbors, friends, and family members back to work? Where was the eco-friendly and socially responsible merchandise for the Americans who want to stop having a negative impact on the planet that their children will occupy? It would be easy for Sears leaders to say, "We're not that kind of store." In response, the lack of bodies in the store tonight seems to be sending the message to Sears that "We are those kind of consumers and you don't have much to interest us." This particular Sears store couldn't even plausibly use the frugality excuse to explain its lack of sales transactions on the Friday before Father's Day. There was a plentiful number of neon yellow "additional 30% off" signs attached to the red 50% clearance signs in just about every department of the store. No one - and I literally mean no one - was looking at any of these uber deals. Few U.S. retail chains are in a better position to align with the newly emerging American identity than Sears and Kmart. But in order to avoid the fate of becoming one of the great American brands of yesteryear, the SHLD management team is going to have to prove that they know what the emerging American identity is, and then realign the 4Ps of their business plan to service those consciously-consuming, environmentally-responsible, politically-active, professionally-ethical American consumers. If every marketing tactic and every retailing solution in the company's playbook is just a permutation of "sell-as-much-as-you-can," perhaps the SHLD leaders should consider closing the boardroom door, ordering a pizza, reading the comments on their Facebook page, and trying again. Perhaps the sterilized version of Sears corporate history makes Sears and Roebuck, the founders, seem more savvy than they actually were. There's no harm, though, in believing that, especially if the philosophies you imagine that Richard Sears and Alvah Roebuck used to launch the business could also be used to launch the company onto an upward trajectory again. "You must first be who you really are, then do what you need to do, in order to have what you want." Neither Richard Sears nor Alvah Roebuck actually said that, but it seems like they might have, if they had thought of it before singer Margaret Young did. In any case, it might be a good motto to hang in the SHLD boardroom for a while. Most Popular Articles | Trending Retail Topics | Follow on Twitter | "Like" on Facebook Death of a Legendary U.S. Retail Industry Founder Reminds Sears to Reclaim Its Identity As One of the Great American Retail Brands (SHLD) originally appeared on About.com Retail Industry on Friday, June 18th, 2010 at 23:54:30.Permalink | Comment | Email this

While basketball fans mourn the loss of a record-setting legend, business and retail industry leaders are encouraged to adopt and adapt Coach John Wooden's leadership strategies, which are much more than just "how to play basketball." When legendary NCAA basketball Coach John Wooden passed away at the age of 99, it had been 35 years since he had retired from the basketball coaching profession.  The effusive outpourings of praise and accolades that followed the announcement of Wooden's death, however, proved that although he was long gone from the sport of basketball, he was anything but forgotten. The avalanche of admiration began on the night of Wooden's death when Los Angeles Dodgers broadcaster Vin Scully was so affected by the event that he was moved to quote Shakespeare to the baseball fans gathered at Dodgers stadium.  "His life was gentle, and the elements so mixed in him that nature might stand up and say to all the world, 'This was a man,'" Scully said of Wooden.  That was quite a tribute. Over the years, people who had known, worked with, and played for Coach Wooden have expressed their admiration for him in equally superlative terms... "I admire Coach Wooden so greatly because of his core of integrity which led to an honest, straightforward life.  - Bill Bradley, basketball Olympian and U.S. Senator "He was a molder of character and basketball was just a means for him to affect us and make us deal with our character issues... I had a lot of great mentors in my life but [John Wooden] looms large." - Kareem Abdul-Jabar "I think if you talk to any of his players, players that played for him, I think the thing that's consistent is that he made them better people..." - Kobe Bryant "John Wooden is a genuine person in an era of self-promotion and hype.  He proves that nice guys can finish first." - Tony Luftman, UCLA student manager 1984-1985 "His life refutes the argument that to be successful in life you have to look the other way and cut corners.  He has achieved the ultimate level of success in his career, and he never compromised his values to get there." - Joe Wootten, basketball coach, son of coach Morgan Wootten "I know of no instance during my time as a college basketball coach that Coach Wooden let anyone down or set a bad example.  He modeled decent, proper behavior 24 hours a day, 365 days a year." - Charlie Moir, Virginia Tech basketball coach "John Wooden is an intergalactic treasure who has selflessly lived his life for the betterment of others." - Bill Walton, UCLA and NBA center "John Wooden is God's closest creation to the perfect man." - Dick Enberg, TV sports announcer There just doesn't seem to be enough superlatives in the English language for people to use when they're describing Coach John Wooden.  Notably, when paying tribute to "coach," very few people mention Wooden's coaching record, his 88 consecutive wins, or his 10 national championships.  Rather, all of the praise for him is focused on how he led his team and who he was as a person.   By all accounts, John Wooden was, above all, a man of great character. In reading about Coach Wooden this weekend, I wondered how many of our contemporary leaders in the business world are held in such high esteem.   Specifically, would any of today's most powerful and influential U.S. retail industry leaders be eulogized as "molders of character," "intergalactic treasures," or "God's closest creation to the perfect man/woman?"  More importantly, do today's business leaders even care about how they influence the people who are following their lead? It's probably safe to say that "character influence" is not in the job description of any business leader at any level today.  And as many of my corporate clients have reminded me repeatedly, "If it isn't in the job description or on the performance review form, it doesn't get done." Character influence is just one of the many intangible leadership soft skills that can't be quantified, and therefore, is not a required leadership proficiency.  But according to a recent study, even though the act of character influence can't be measured, the effects of leadership character on individual employees and their performance can clearly be measured. According to the Towers Watson 2010 Global Workforce Study, 55% of employees want the leaders of their company to demonstrate a sincere interest in their well-being, but only 38% believe that they do.  Nearly two-thirds of employees think trustworthiness is the most important characteristic of a senior leader, but only 47% of employees surveyed think their leaders are trustworthy.  And only 42% of the Global Workforce Study respondents said that they are engaged or inspired by the leaders of their company. These numbers identify an interesting gap in leadership expectations and delivery.  But the even more interesting number identified in this Global Workforce Study has to do with workplace engagement.  In 2008, (at the beginning of the recession), only 29% of employees said that their company's image was important to their engagement level at work.  In 2009, that number more than doubled to 60%.  In a post-recession post-meltdown economy, employees are extremely unhappy about being associated with or supporting organizations which are perceived as being unethical, socially negligent, uncaring, or irresponsible. Translated, what that study finding means is that employees aren't motivated to do their best work for dishonest leaders, selfish leaders, thoughtless leaders, careless leaders, or greedy leaders.    What employees want is to align their entire heart and passionate contributions behind a leader with values that they know, respect, trust, and believe in. In other words, employees want to work for a leader with character.  So, John Wooden had it right all along. There's one story in particular about John Wooden that I got reminded about over the weekend that demonstrates what it means to lead with character as well as any leadership story I've ever known.  In the spirit of full disclosure, I'm recommending the story not because I was paid to write it up (which I was), and not because I get paid extra if a lot of people read it, (which I don't), but because it's a story that deserves to be remembered, whether you're a basketball fan or not.   (Read about one John Wooden phone call that changed the history of basketball.) John Wooden deserves to be remembered.  The highest calling of those in a leadership position deserves to be remembered.  The power of an unwavering commitment to an organization's mission, vision and values deserves to be remembered.  The invaluable contribution to be gained from team members filled with passion, pride and purpose deserves to be remembered. In reading through the effusive tributes that have been written about Wooden since his passing, I had to remind myself that this was not the man who found the cure for cancer, launched the internet, or negotiated peace in the Middle East.  Wooden also didn't invent the game of basketball or even revolutionize it.  What he did was teach a relatively small number of really tall college students how to handle an orange rubber ball better than any of the other really tall ball-handling college students in the U.S.  And in the process, he changed the course of many lives. Like any retail manager at any level, Coach Wooden's job description was to teach, correct, develop, and manage his team to achieve goals and perform competently.  Also like any retail manager in any retail organization, Wooden wasn't contractually obligated to be the role model for high moral standards or make a long-lasting impact on anyone's life. Building character wasn't Coach Wooden's responsibility.  It was his privilege.  And from everything I have read about him, it was also his greatest joy. Nobody says that any leaders in any industry have to influence any of the people they manage in any kind of meaningful way.  The question is, if you are in a position to make a life-changing positive impact on another person  - as all authority leadership figures are - then why wouldn't you want to? Reportedly Coach Wooden started every pre-game speech to his basketball team with the same sentence.  And since his greatest legacy extends far beyond the basketball court, I imagine that Coach Wooden would consider that same sentence to be the most appropriate thing he could say to leaders around the world as he passes his legacy of leadership on to the next generation... "I've done my job, the rest is up to you." Quotable quotes from John Wooden about leadership character >> Most Popular Articles | Trending Retail Topics | Follow on Twitter | "Like" on Facebook NCAA Basketball Strategies in the Retail Industry – Coach John Wooden’s Leadership Legacy Is More Than Just How to Play Basketball originally appeared on About.com Retail Industry on Tuesday, June 8th, 2010 at 03:45:17.Permalink | Comment | Email this

Buried in the latest round of quarterly earnings reports was the latest information about store closing store opening numbers in the U.S. retail industry. From a numbers crunching point of view, there were four times as many additions to the 2010 Store Openings list than there were new entries on the 2010 Store Closings list. But the real story was that there wasn't much to report at all. The low number of changes to both tallies - 137 store closings and 535 store openings - indicate that most major U.S. retail chains are moving on the course that they set for themselves at the beginning of the year without any major detours. A quarter without detours is a good quarter for the U.S. retail industry. Both recovery bears and recovery bulls look to a broader historical perspective for evidence to support their recovery positions, though and June 1st is a good day for recovery perspective. Today is the anniversary of the fourth largest Chapter 11 bankruptcy filing in the history of U.S. business, a memorable, but not auspicious event. One year ago today General Motors, (GM), started a reorganization process, which included an international closing of retail dealerships, and the layoff of thousands of employees connected to those dealerships. One year later, here are some key numbers from the "new" GM, which has been quite generous with its own self-praise, and quite vocal in its claims to be on the mend and on the move in the U.S. auto industry: GM Cost Numbers - According to a report by the Center for Automotive Research, the cost of making new GM cars is now $3,000 less than it was a year ago. GM Debt Repayment Numbers - Despite the widely criticized declaration of CEO Edward Whitacre that GM had "repaid our government loan in full, with interest, five years ahead of the original schedule," $43.3 billion in government bailout money will not be paid back until a new IPO is issued, which the company is optimistic will happen before the end of 2010. GM Additional Government Bailout Numbers - Additionally, taxpayers are footing the $800 million bill to clean up 90 commercial properties that were closed and abandoned by GM as part of its bankruptcy. GM has not indicated that it will reimburse the government for these cleanup costs. Additional GM Additional Government Bailout Numbers - GM is also reportedly in the final stages of approval for a $14.4 billion low-interest loan from the U.S. Energy Department which it will use to retool its factories in order to build more fuel efficient vehicles. GM Sympathy Vote Numbers - A recent poll by the Detroit Free Press showed... read more >> U.S. Retail Industry Numbers: 137 Store Closings, 535 Store Openings, General Motors (GM) Chapter 11 Bankruptcy Anniversary Sales, Jobs, Recall, and Recovery Numbers originally appeared on About.com Retail Industry on Tuesday, June 1st, 2010 at 04:44:05.Permalink | Comment | Email this

It's easy to understand why issues about weight and obesity discrimination are being raised more frequently these days.  According to the American Obesity Association 127 million adults in the U.S. are overweight, 60 million are clinically obese, and 9 million are severely obese.  As with any clearly defined group, it is inevitable that some overweight and obese people will identify themselves as victims of discrimination solely because they are a member the group.  It is also inevitable that others will advocate on behalf of the overweight and obese people to ensure that discrimination against them is officially defined as unacceptable. This weight and obesity discrimination scenario surfaced this week in the U.S. retail industry when a former Hooters Restaurant waitress in Michigan filed a lawsuit alleging that she was the victim of weight discrimination when she told by her boss to get lighter or get lost.  After receiving a free gym membership and a probation form to sign, the employee decided that the only thing she wanted to lose was her job and the only thing she wanted to find was a lawyer. Hiring and employment practices in the Hooters organization are always complicated, but in this case, the questions that are being raised about weight, obesity, diversity, harassment, hiring, and employment laws are not unique to the Hooters chain, which gains much of its unique selling proposition from scantily clad and physically attractive women.  Beyond this Hooters case, weight and obesity are becoming contentious issues in many ways for retail organization. In April, 2010, Lane Bryant... read more >> Most Popular Articles | Trending Retail Topics | Follow on Twitter | "Like" on Facebook Obesity and Weight Discrimination in the Retail Workplace - Hooters Weight Discrimination Lawsuit Raises New Questions About Diversity, Harassment, Hiring, and Employment Laws (CHRS, WFMI, ANF) originally appeared on About.com Retail Industry on Thursday, May 27th, 2010 at 06:35:50.Permalink | Comment | Email this

Despite the recent decision to liquidate the Movie Gallery chain, there were significantly fewer retail industry bankruptcy filings in the first quarter of 2010 than there were in the first quarter of 2009.   Despite the 2,415 Movie Gallery stores that will go dark, there are still more store openings planned in 2010 than store closings (so far).   Despite the shaky economic situation in their homeland, U.S. retail industry companies are propping up their earnings and profitability with global store openings in emerging and thriving economies. By just about every measurement possible, the numbers from the retail industry are better today than they were this time last year. That's the retail numbers good news.  Then there's the not-so-good news hidden behind the numbers. The not-so-good news that Movie Gallery decided to close its entire chain of more than 2,400 stores is old news by now.  What is still interesting about that announcement, though, is that the reaction to the bankruptcy of the second largest movie rental chain has been somewhat indifferent.  The liquidation is hardly a surprise, which may account for some of the ho-humness surrounding the event.  But I also think that because Movie Gallery's failure can't be blamed strictly on economic weakness that the newsworthiness of the chain's demise has been diminished. It's surprising, though, that there also hasn't been a particularly strong reaction to the 19,000 retail employees who will soon join the ranks of the unemployed.  There's never a good time for 19,000 people to lose their source of income.  But there really couldn't be a worse time for an extra 19,000 retail employees to be free floating in the job marketplace than in the month of May, when millions of high school and college students are also hoping beyond hope that they'll be able to land a summer job. Four out of five of my college-age family members are having a difficult time finding one of those elusive summer jobs.  It's a good thing that the straw poll taken within the branches of my family tree aren't statistically valid, otherwise that 80% failure rate would be quite depressing. The "official" unemployment figure for 16 - 24 year olds is... read more >> U.S. Retail Industry Numbers: 2,542 Store Closings, 286 Openings, 19,000 Newly Unemployed, and Marpril Recovery Optimism Fuel Economic Realists originally appeared on About.com Retail Industry on Tuesday, May 18th, 2010 at 02:26:17.Permalink | Comment | Email this

Mattel's (MAT) CEO Robert Eckert and CFO Kevin Farr answered analysts' questions today about the challenges the toy company faces for the rest of the year.  There was no mention during that webcast about the  challenges that the company was facing eleven years ago today. On this day in Mattel Inc. history, the California-based toy company paid $3.5 billion to acquire The Learning co., the makers of educational grade-based software programs.  With the acquisition of The Learning Co. on May 13, 1999, Mattel was no longer just an entertainer of children, it became an educator of children. One year later, it was Mattel that was getting the biggest education, reportedly losing $1.5 million per day because of its Learning Company acquisition.  Mattel "sold" its high-tech acquisition just 16 months after it was purchased, for the price of zero dollars, to Gore Technologies.  In less than two years, Mattel losses were substantial -  $4 billion dollars, one CEO, and a whole lot of share value.  But the company did earn itself a place in U.S. business history, with a solid position on the "worst American business deals of all time" list. Understandably, this is a milestone in Mattel's history that didn't make it onto the Mattel website history time line.  But it's not something that Mattel or any other American business should want to forget.  Eleven years later, The Learning Company acquisition debacle still provides a relevant lesson for businesses large and small...  That which almost kills you can make you stronger if it serves as a catalyst for re-examination and conscious change. Robert Eckert became Mattel's CEO one year and four days after the ill-fated purchase of The Learning Company.  In the midst of the greatest upheaval in the company's history, Eckert told his newly acquired employee team that they were going to turn the company around by "building brands, cutting costs, and developing people."  What Eckert seemed to understand was that Mattel didn't need to get into new businesses, it just needed to do the things it did best even better. In its latest quarterly earnings report, Mattel posted a surprising and solid sales, profit, and earnings increase.  Most of the increases came from Mattel's core brands - Hot Wheels, American Girl, Barbie, and Fisher Price.  Mattel is still finding ways to make its best brands even better. For example, Barbie got her 126th career after a voting campaign from adult consumers went viral on the internet.  Computer Engineer Barbie was born out of that virtual consumer campaign, and probably when she's released in the fourth calendar quarter, she will be carrying her own doll-sized version of the Barbie Special Edition X170 notebook that was released in Korea this month.  The Barbie of today can be beautiful, geeky, and relevant all at the same time. The biggest Barbie buzz of the year so far is centered around the six-story Barbie flagship store that opened in China in conjunction with the Shanghai World Expo.  Following the successful American Girl retail-entertainment-experience model, the Barbie store features a spa, people-sized Barbie fashions, restaurants, a karaoke bar, a makeup department, and enough Barbie branded beauty, baubles and bling to satisfy even the most bubbly Barbie boosters. Most of the reviews of the store have said that the Barbie flagship store is a pink-till-you-puke experience, which is exactly what Barbie fans would want it to be.  And those who have had a first-hand American Girl retail experience wonder why it took Mattel so long to build Barbie her own retail kingdom. Mattel's American Girl and Barbie stores do for its dolls what Apple stores do for its computers.  They provide a level of customer engagement that is visceral and meaningful.  These stores are not just about selling stuff, they are about forging relationships with customers.  Not surprisingly, when those relationships are good, so are the store's sales.  It's the highest level of retailing and undoubtedly we'll be seeing more of these types of stores from Mattel, and other leading-edge retailers around the world. The Eckert-led Mattel is doing well today, but has not been without its challenges.  On July 13, 2007 Eckert became aware that there was a major problem with lead paint and loose magnets that eventually forced the company to issue a worldwide recall of 20 million toys, which cost the company considerable money, reputation, and stock value.  This event is also absent from the company's website history time line, but like the Learning Company acquisition disaster, the massive recall propelled the company forward because the company seemed to use the incident to re-identify with its own core values and mission. In this year's Q1 2010 earnings call, Eckert took the time to articulate just what the values and mission are for Mattel today when he said, "We don't just make toys. We create emotional connections that last a lifetime by encouraging children to stretch their imaginations, creating joy and allowing children to become lost in play. That is the real value of our toys. That is the value of play." And that is the real value of the company.  If Mattel's biggest challenges have helped it gain crystal clear focus about its own mission statement for the future, then eleven years ago today marks the day that Mattel started the acquisition of something extremely valuable. By the way, Eckert and Farr said their biggest challenges for the rest of this year are rising Chinese labor rates, higher packaging costs, and foreign exchange rates.  Considering some of Mattel's challenges in the past, it seems like a pretty easy year. Read More:

• Mission Statements of the Largest Retail Companies
• Retail Industry Flagship Stores
• Global Store Openings in 2010

Mattel Tells Analysts About Today's Challenges, Which Are Small Compared to Devastating Acquisition and Recall Losses of Yesterday (MAT) originally appeared on About.com Retail Industry on Thursday, May 13th, 2010 at 18:22:58.Permalink | Comment | Email this

May is a busy month for the U.S. retail industry, at least in terms of significant events that greatly influenced the course of retail history.  Beyond the short-term micro focus on the amount of consuming that will be done to prove love on Mother's Day, there is a larger view which reveals how milestones of the past are still influencing the way retailing is done in the present, and still creating retail trends for the future. Here are some of the U.S. retail industry's most historically significant events that have occurred in the month of May. May 1, 1975 - Discount Brokers Appear When Fixed Brokerage Commissions Disappear At a time in history when a stock trade costs you less than a Subway footlong sandwich, it's hard to believe that there used to be such a thing as fixed brokerage commissions.  The elimination of set fees in May, 1975, of course, paved the way to making stock trading accessible to the masses, which has been both a blessing and a curse for everyone who plays the Wall St. game. Another milestone in U.S. stock exchange history occurred on May 17, 1792, which was the day that the New York Stock Exchange was established. May 2, 1896 was also an auspicious stock market occasion.  That's when the Dow Jones Industrial Average (DJIA) was first published.  Initially, there were 12 members of the DJIA.  All of them were industrial giants, and none of them were retailers.  That was back in the days when the U.S. actually produced more than it consumed. For publicly traded retail companies these days, it's impossible to extricate the management of the retail business from the management of retail stock prices.  It seems as if retail executives spent as much or more effort trying to please their shareholders as they do trying to please their customers. Looking at the 2010 Retail Fortune 500, the leaders that seemingly worry about stock prices the least did the best in the year of extreme downsizings, discounts, and discharges.  Amazon, Apple, and Google are giving America's largest 100 companies a run for their money, even though their leaders seem to be focused on just about everything other than stock prices and shareholders.  Funny how that works. May 1, 2003 - President George W. Bush Declares "Mission Accomplished" for Iraq War On another May Day seven years ago, President George W. Bush stood on board the USS Abraham Lincoln aircraft carrier in front of a "Mission Accomplished" banner and declared that the "major combat operations in Iraq have ended."  I could probably fabricate some obscure relationship between this event and the retail industry but really I just personally think it's important that we all remember who started all this war mess before we spill our tea all over the wrong people. By the way... what was that "mission" anyway? May 2, 1999 - eToys Plays On Wall Street, Eventually Gets Hit By A Bus The internet company eToys was still a startup when its IPO was issued.  The stock was underwritten for $20 per share, the price quadrupled before its first trading day, and on May 2, 1999, investors made a one-day return of 282% on the stock.  Less than two years later the company filed for bankruptcy.  Who needs bookies, Vegas, and internet gambling when you've got the U.S. stock exchange? May 4, 1626 - Manhattan Real Estate Was Affordable It may be nothing more than a colonial urban myth that on May 4, 1626  Peter Minuit, in the employ of the Dutch West India Company, landed on the island of Manhattan.  Legend has it that 20 days later he purchased the entire island for $24.00.  There are conflicting stories about whether actual money traded hands, or whether it was more of a barter transaction with cloth, buttons, wampum, hoes, and Jew's harps. Either way, the part of the story that's often not remembered is that Minuit was fired by the Dutch West India Company five years later.  Which just goes to show that there's never really been much job security on the island of Manhattan.  The Dutch West India Company's boardroom was even tougher than Donald Trump's. May 10, 1775 - Ethan Allen Captured Fort Ticonderoga and Then Went Furniture Shopping Ethan Allen is best known for his leadership of the Green Mountain Boys, a group of soldiers who fought to free Vermont from both the British and the grabby New Yorkers.  On May 10, 1775 Ethan Allen secured control of Fort Ticonderoga and secured their own place in American history. Ethan Allen Furniture (ETH.F) company was named after Ethan Allen because...  it's not really all that clear what the connection was between a New York furniture company and the man who was fighting with his green boys for Vermont independence 150 years before.  Supposedly the founding partners were inspired by Allen's courage, independence and perseverance, which they needed since they first started making furniture during the Great Depression. Ethan Allen Furniture has also needed some of their namesake's courage and perseverance to survive the declines in the furniture industry during the Great Recession.  Only 16 of the companies on the 2009 "Top 100 U.S. Furniture Stores" list made a positive profit for the year.  Unfortunately Ethan Allen was not one of the profitable furniture retailers.  They closed stores, closed a plant, and suffered a 17.6% drop in sales in 2009. At least the company didn't need its employees to chop wood last winter like they did during the Depression because they couldn't afford to heat their offices.  At least we don't think there was any wood chopping going on.  There was a lot of solid wood furniture in those closed stores, though... May 12, 1918 - Mary Kay Ash Was Born, Cadillac Buys Pink Paint Like millions of US. women today, Mary Kay Ash suddenly found herself out of work after a 25-year career.  But in Mary Kay's case, she was not downsized, she quit. She finally got fed up with watching men that she had trained get promoted past her. During the Great Recession desperate women from all professions have flocked to the direct sales cosmetics company that Mary Kay Ash started at the age of 45 for a source of income.  Rumor has it that 2008 and 2009 have been big recruiting years for the Mary Kay organization (and rival Avon) and their newest Independent Beauty Consultants aren't just desperate laid off middle managers.  Both college graduates who can't find work, and senior citizens whose retirement suddenly became less retiring have also been flocking to Mary Kay, where they don't have to wonder if they'll get the interview and they won't get rejected  (as long as they can pay the start-up fees). For displaced working women, any income is better than no income.  And if the economy picks up before they earn that pink Cadillac, the pink recessionistas can use the nifty Mary Kay inventory repurchase program before they move onto something in their chosen field. Considering the roots of the company, I think the now deceased founder of the Mary Kay organization would be happy to see the role her company is playing in the recession.  At least her company is not laying off people and then reallocating the money for exorbitant CEO pay packages. "Layoff unto others so that others can payoff unto you" is not exactly the version of the Golden Rule that Mary Kay liked to talk about. May 31, 1929 - Ford Contracts to Help Build Cars in the Soviet Union (F) It's hard to believe that there was ever a time when selling stuff on another continent was a big deal, when the USSR was considered to have as much or more power than the U.S. and the soviets actually had a union.  When Ford made an agreement to help "the enemy" build cars in their own USSR soil, it was a big deal for both capitalism and politics. Ford supplied the Soviet government with parts, trained its auto workers, and provided plans for Soviet factories that were patterned after Ford's.  When McCarthyism took hold in the U.S. ten years later, the Ford union labor officials who had participated in the Soviet exchange were accused of "un-American activities" because of their involvement in the project.  That's an anti-union move that even Wal-Mart leaders can admire. Ford was officially dethroned in Russia in 2009 when Chevrolet beat it as the top-selling brand overall, and for the first time, the Renault Logan beat the Ford Focus as the best-selling model.  Eighty years of brand loyalty was a good payoff to Ford for some parts, a few blueprints, and an on-the-job training program. Power to the Russian people!  Owning cars and having a choice about what to drive are two freedoms that were difficult for Russians to imagine back in 1929 when Joseph Stalin had a lot to say about how they should live their lives. Retail Births and Deaths in the Month of May State sales taxes, the founder of Neiman Marcus, electric cars, tubeless tires, Coca-Cola, , the Olympics, Mother's Day, Apple (AAPL) stores, and the Indianapolis 500 (were all born in the month of May.   Christopher Columbus, White Castle's co-founder, and the Model T Ford died in May. According to the National Retail Federation's 2010 Mother's Day Consumer Intentions and Actions Survey, cash registers may be slightly busier this May as well, as consumers plan to buy a little more mom stuff this year, compared to last year.  To be exact, the average spending increase is predicted to be $3.01 per person, which is about the price of an obligatory greeting card.   And the retail industry marches on. Historically May Is Busy for U.S. Retail Industry Events – Retail Milestones of the Past Influence Retail Sales in the Present and Retail Trends in the Future (ETH.F, F, AAPL) originally appeared on About.com Retail Industry on Tuesday, May 4th, 2010 at 04:45:17.Permalink | Comment | Email this

HOUSTON, TX - Flight 686 from Houston to Orlando on April 26, 2010 was delayed when a maintenance worker spotted what looked like a leak in the left wing of a Continental Airlines (CAL) aircraft.  Because the conscientious maintenance worker chose to report what he had observed, a serious fuel leak was discovered, a plane full of passengers was emptied, and a potential midair disaster was avoided. I am one of the two hundred-something passengers who had the opinion that it was probably better to deal with fuel leaks and bad o-rings on the ground rather than in midair.  The general sentiment as we were scurried off the plane where we had been sitting and waiting for quite some time was not a feeling of annoyance but rather one of gratitude. Continental Airlines didn't kill anybody yesterday.  Any day an airline company can make that claim, whether they turned a profit or not, is a successful day in the airline industry, right? When the 10:30 a.m. flight finally arrived in Orlando at 10:30 p.m., even though we were still grateful that Continental Airlines hadn't killed any of us earlier that morning, we were not at all grateful for the way Continental Airlines had killed the rest of our day. For ten and a half hours we were held hostage... read more >> Continental Airlines Didn't Kill Anybody With Maintenance Service Failure, But Killed Their Day Instead With Failed Customer Service Recovery (CAL) originally appeared on About.com Retail Industry on Tuesday, April 27th, 2010 at 04:55:54.Permalink | Comment | Email this

It's CEO compensation reporting season again, and despite the consumer uproar and government protests over the pay packages of U.S. corporate leaders at this same time last year, the 2009 compensation numbers that are being revealed for U.S. retail industry CEOs seem to be even more unjustifiable than they were in 2008. This time last year, store closings numbers were in the thousands and retail layoffs were in the tens of thousands.  Today those stores remain closed, and a significant number of those retail workers are still unemployed.  And the companies that saved millions of dollars with those drastic store closings and layoffs took a hefty portion of those savings and redirected them into the pockets of a small number of senior executives.  Multi-million dollar compensation packages were awarded to U.S. retail industry CEOs in 2009 despite downsizings, revenue drops and same store sales declines for the year. The question is... read more >> U.S. Retail Industry CEO Compensation Funded by Store Closings and Layoffs – Will Consumer Protests Force Capitalism to Grow a Conscience? (M, HD, SBUX, WMT) originally appeared on About.com Retail Industry on Tuesday, April 20th, 2010 at 04:44:32.Permalink | Comment | Email this

The International Council of Shopping Centers (ICSC) declared that March sales were the "best in 16 years."  The L.A. Times said that "Pent-Up Demand Explodes for Retailers in March." CNNMoney announced that "super shoppers set records."  With all those credible news sources screaming all those exuberant headlines, it's only logical to conclude that the U.S. retail industry must have been recovering, rebounding, rejuvenating, replenishing, and rebuilding the U.S. economy all at the same time in March. All exuberant headlines aside, some clear-headed analysis of March's same store sales figures, in context with store closings and openings, unemployment numbers, and other underreported retail data tells the real story of the U.S. retail industry.  In the real story, the plot is more complicated than the headlines suggest, and in the next chapter, as much as March figures were encouraging, the forecast for April is set up to be an equal disappointment. According to the Thomson Reuters Same Store Sales Index, the 9.1% gain in same store sales in March was the biggest monthly gain since it began keeping records.  Of that 9.1% year-over-year increase, six percentage points are attributed to an early Easter which motivated sales in the month of March, according to the ICSC.  The record-breaking March sales figure is a comparison to the March 2009 index, which was down 5.0%, (excluding Wal-Mart (WMT) sales, which is today's norm).  This is also on top of a March 2008 index decline of 2.1% (also excluding Wal-Mart). Doing the math, 9.1%, take away 6 holiday percentage points, makes a 3.1% gain.  A 3.1% gain on top of a 5.0% loss, on top of another 2.1% loss does not inspire as much euphoria as the headlines indicated we should all be feeling. Basically, March stole sales from April, and April 2009 stole sales from March 2009, which is how the Easter dance goes each year.  There will be no meaningful conclusions that can be made about retail recovery, rebound, rejuvenation, replenishment or economic rebuilding until April sales results come in and the two months are looked at together.  And, so far, nobody is forecasting April sales to break any records, at least not any good records. Even if overall March same store sales figures weren't as impressive as they seem to be on first impression, certainly there were some noteworthy individual chain results to be exuberant about, right? Comparing the March 2009 same store sales with March 2010, it is obvious that a list filled with double-digit gains this year is preferable to a list full of double-digit losses last year.  But once again, reason subdues the euphoria because same store sales is a year-over-year comparison, which means that unless you take both years into consideration, the figures have no meaning. In March, 2009, only nine major retail chains managed to pull out a positive same store sales number.   Besides these nine, every other gain this year is in comparison to a loss, and many of this year's headline writers seem to have forgotten how devastatingly large those March 2009 losses actually were. It wasn't really difficult for Abercrombie & Fitch's (ANF) sales this year to best the 34.0% decline of March 2009.  Nor was it a stretch for Neiman Marcus' sales numbers to look good compared to its 30.0% March, 2009 same store sales plummet.   Saks' (SKS) 12.7% same store sales increase this year, was barely more than half of its 23.6% decline last March. The March same store sale increases at American Eagle (AEO), Costco (COST), Zumiez (ZUMZ), Wet Seal (WTSLA), JC Penney (JCP), Stage Stores (SSI), and Dillard's (DDS) while positive this year, did not cover the losses that they posted in the same month last year.  Their losses weren't recovered this year even with the holiday, warm weather, and pent-up demand that supposedly caused consumers to "come back from the dead," and sales to "surge" in March. A look at a multi-year comparison of March same store sales provides even more perspective about the relativity of March's sales gains across the board for the U.S. retail industry. Thinking logically, if retailers were unable to cover last year's losses in a perfect storm of positive conditions, what do we really expect they are going to be able to produce in a non-holiday April 2010 to compare with the Easter April of 2009?  And when all four of those months are looked at together, do we really think we're going to be describing what we see as "explosive" or the "best in 16 years?" Aren't we ever going to grow weary of the roller coaster ride of economic microanalysis and short-sighted predictions? Certainly there were some same store sales winners in March, but most of them were not at the top of the list.  Cato (CATO) is a chain that isn't generally seen as a U.S. retail industry pacesetter, so to find the conservative fashion retailer at the top of the same store sales figures list in March is definitely notable.  Digging into its March history, though, reveals that Cato's March 2010 sales were just slightly higher than its 2005 sales, which diminishes the significance of the chain's March accomplishment. Of the nine retailers that managed to eke out same store sales gains in 2009, three really stand out as no-excuses, consistent, positive performers this year. Buckle (BKE) was at the top of the same store sales list in March, 2009, with a 14.7% increase.  That March increase was on top of the 20.9% increase in March 2008, and a 10.7% increase in March, 2007.  Buckle had the same holiday calendar, weather conditions, and economic pressures as every other retailer, and yet it still found a way to improve its performance for several challenging March's in a row.  Although its March, 2010 same store sales increase was not a double digit and, therefore, was far from the top of the list this year, Buckle's year-over-year-over-year-over-year increases really are the most impressive of the month. Walgreen (WAG) and Aeropostale (ARO) have a similar story line, with four years of consecutive year-over-year increases in March.  And even though their March 2010 increases were even smaller than Buckle's percentage, both Walgreen and Aeropostale managed to stay in positive growth while also expanding in the midst of recession.  This was no small feat.    Walgreen opened 502 stores in the recessionary year of 2009.  Aeropostale opened 40 stores last year, and also successfully launched the new P.S. from Aeropostale concept. These are nice accomplishments in any year, but were particularly impressive in a year when most U.S. retailers were busy retracting at full speed.  Buckle, Walgreen, and Aeropostale would have made Rudyard Kipling proud.  They kept their heads about them when all other retailers around them were losing theirs and blaming it on the economy, the weather, the calendar, the banks, the government, and the consumers. These three chains consistently had the right products at the right price in the right quantities at the right time.  They practiced good, solid retailing before the recession, and the strength of their retailing practices carried them through an embattled retail environment unscathed. Whatever happened to just plain good no-excuses retailing? No matter what any other retail chain blamed their performance on in the past couple of years, Walgreen, Buckle and Aeropostale proved that a good retailing formula can work in any kind of economic environment.  For all the other chains, anything less than total responsibility for their own retail execution is a somewhat empty "yeah-but." Along those lines, I am compelled to give one response to Pier 1 (PIR) CEO Alex Smith who said, "Some of the parts of the country have come back from the dead, which is terrific."  Reading the transcript from the investor teleconference where that remark was made, it's difficult to tell exactly what resurrection Smith was referring to, but the inference is that consumers had come back from the dead.  This would be ironic since most retail observers have been viewing the Pier 1 concept as being on death's door much more than consumers. It would actually be uncharacteristic of Smith to blame dormant consuming for anything.  He has refreshingly admitted publicly that Pier 1's demise was "self-inflicted" by pricey merchandise that nobody wanted in a niche that became too narrow.  But just in case Smith has gotten lured into the retail blame game that his competitors play quite deftly, here's one quick reminder about what the "cause of death" at Pier 1 really was. The imports to the Pier were poorly crafted, the candles they sold lost their burnability after an hour, and almost every pillow, rug, placemat, sham, and textile good in their stores had to be dry cleaned, which cost more than the purchase price of the item itself.  Wrong products, wrong price, wrong quantities, wrong time. There's really never a good time for bad retailing practices, but it was easy for many retailers to get away with it in the times of free-flowing credit and careless spending.  Most believe that it will be at least a decade before unconscious consuming will return. Some believe it's gone for good, or at least for a generation.  So perhaps what really needs to come back from the dead is good and responsible retailing practices. So, where does the U.S. retail industry stand, really? In general, same store sales are just one of many measurements, and they cannot be relied upon in isolation to measure or predict anything.  This never stops casual observers who draw unreasonable global conclusions based on same store sales figures every month.  Those who are thoughtfully and responsibly looking for signs of recovery, though, take a more holistic view. In the past couple of weeks, 230 more stores were added to the 2010 store closing list, and Blockbuster is still teetering on the brink of Chapter 11 bankruptcy.  There were also 390 additions to the 2010 store openings list in a time period when unemployment remained at a perilously high level and average wages fell. Consider this recent news from the Discover U.S. Spending Monitor, which tracks consumer confidence and spending on a daily basis:

• A growing number of people expected an income shortfall in March
• A majority of couples with children viewed both the economy and their personal finances as getting worse
• 57% of American consumers rate the economy as "poor," a perception that has not been improving in 2010.

The conclusion of the Discover Monitor survey was that "the positive trends we have recently seen in terms of spending may be short-lived." Certainly optimism precedes recovery, and attitudes influence spending.  But when that optimism is based on hasty headlines and premature predictions that don't materialize, not only will consumer confidence take a hit, but consumer trust will suffer too.  Once lost, Consumer trust is much more difficult to turn around than consumer confidence, as the folks at Chrysler could tell you right about now. From a retailing perspective, action that precedes substantive realignment can have disastrous conclusions if misinformed decisions result in poorly-timed moves.  Thousands of retail operations are opening in spaces that were closed not that long ago because of lack of consumer demand.  If the pre-recession economy was dependent on credit that is no longer available, and was funded by jobs that no longer exist, what is the pixie dust that recovery bulls think is going to make this magical spending power suddenly re-emerge? Hopefully retailers that are aggressively expanding now aren't counting on "explosive" short-term ROI.  And hopefully some of the effort that has been frantically focused on reigniting consumer spending in the U.S. will be re-focused soon on creating an economy that is less about consuming, and more about producing, and therefore sustainable in the long-term. No matter how the retail recovery story plays out for the rest of 2010, the retailers that are going to win a respectable share of the consumer dollar this year are going to have to be really good retailers in order to be successful retailers.  This forced improvement period will create a better U.S. retail industry eventually.  Unfortunately, though, we can't skip any chapters to get to the happy ending faster.  That's just not the way happy endings are created in the "real" world. U.S. Retail Industry Figures Analysis: 230 Store Closings, 390 Store Openings, and March Same Store Sales Forecast April Disappointment (CATO, BKE, WAG, ARO, PIR) originally appeared on About.com Retail Industry on Tuesday, April 13th, 2010 at 03:58:00.Permalink | Comment | Email this