Retailer Blog

Taking Control of the Holidays

As we entered November, the economists and other experts all weighed in with opinions on how consumers will spend their money this holiday season. The latest numbers have retail sales either down for the season from as much as 7% to up as much as 1% from last year’s dismal holiday sales.

I don’t know which of these forecasters will be right or which will be wrong. I do know that some retailers will win big this year and others will struggle. The question is which retailers will be the winners and which will be the strugglers.

The winners will be retailers who take a positive approach to their business and serving their customers. They will do this by focusing everything they do on the goal of exceeding the wants, needs, and expectations of their customers. Yes, I know, this may sound like a broken record, but with fewer customers coming into stores and many of those customer cautious in their spending, customer focus is more important than ever before.

1. Keep the Store Fresh and Exciting

When did you last buy new holiday decorations for your store? Have you been using the same old decorations hoping you can get another year or two out of them before they have to be replaced. If there has ever been a time to refresh your holiday decorations, this is the year!

2. Make Every Day of the Season Special

I am a long-time advocate of holding short meetings at the beginning of every day. During the holidays this is particularly important as it helps get everyone in the store focused on the customer and making their holiday shopping experience fun and exciting.

I am also a long-time advocate of having lots of one-day specials during the holidays. If customers know they have just the one day to take advantage of the special they are more likely to buy that day. This simple concept has worked for thousands of retailers and will continue to do so this year with so many bargain-hunting shoppers.

3. Take advantage of Every Opportunity

Customers will be in your store today. Smart retailers will give every customer every opportunity to buy whether those opportunities are in the way of daily specials, in-store signs highlighting certain merchandise, mailed coupons, or sales associates directing customers to the best values in the store. Everything in your store should be looked at as an opportunity to sell more every day.

Don’t let those opportunities pass you by.

A Personal Note

You may have noticed there has been a gap in my blog postings of several weeks. I had surgery on my neck in early September and have not been able to do any writing.  But I am on the mend and writing once again. Thank you for your patience and the nice notes from those of you who missed my comments.

How do you define value? Part Two

As consumers become more and more cautious with their purchases, retailers must look for ways to influence those purchases. One of the factors that has long been part of the value building process is the customer’s in-store experience. In tough economic times the absolute importance of the in-store experience can be overlooked.

The concept of providing a more memorable customer experience began to take hold back in the 1980s with the growth of stores built around entertainment themes. These included such retailers as The Disney Stores, Bass Pro Shops Outdoor World, and American Girl Stores. While many of these stores did very well and continue to do well, we learned that customers will also respond favorably to other forms of pleasantly memorable in-store experiences.

More recently we’ve learned that improving the in-store experience in more basic ways can pay off as well. For example: Ongoing training of associates so they are well versed in the store’s brands, merchandise, warranty information, and anything else that adds value to the customer interaction. As we have seen retailers that invest in this kind or employee development see measurable returns with increased sales and loyalty.

Another improvement that can pay off in real sales increases is store design, layout, signage, and décor. A great example of this took place in the automobile business some years ago when Saturn and Lexus opened their first dealerships. Management at both automobile companies knew they needed to reinvent the customer experience if they were going to stand out in a marketplace where the customer’s shopping experience had long been so poor.

Saturn designed its dealerships to make the sale a no-pressure event unlike the usual car buying experience. The design was specifically created to make customer interaction less confrontational and pressured. Showroom signage provided information and guidance.

The dealership design at Lexus was elegant with softer colors and comfortable seating. Salespeople no longer were housed in cubicles or small offices with customers sitting across a desk. In both the case of Saturn and Lexus the idea was to transform the process from a “selling” experience to a pleasant “buying” experience.

One of the store’s profiled in my book Retail Superstars: Inside The 25 Best Independent Stores In America is Abt Electronics in the Chicago suburb of Glenview, Illinois. This amazing store does both employee training and store design very well. They consistently teach their associates how to serve their customers. Associates at Abt Electronics rank among the most knowledgeable anywhere when it comes to the vast array of products sold in that store.

Abt Electronics is also one of the best designed, laid out, and merchandised stores in the country. All of this adds up to an exceptional experience for every single customer. The end result is the most successful independent electronics and appliance store in America.

What are you doing to increase the value of your customers’ in-store experiences?

Somebody forgot to tell the consumer!

Over the last couple of weeks a number of economists and government officials have said they believe the recession ended in either late July or early August. But apparently the consumer didn’t get the message because spending decreased again in August at the largest retailers.

Here are the same-store sales numbers from a sampling of publicly held chains. With just a few rare exceptions apparel retailers continue the downward spiral that started in September of last year.

Abercrombie & Fitch: down 29%
Aeropostale: up 9%
American Eagle Outfitter: down 7%
Gap: down 3%
Stage Stores: down 9.5%

Dillard’s: down 12%
Kohl’s: up 0.2%
Macy’s: down 8.1%
Neiman Marcus: down 19.6%
Nordstrom: down 7.6%

Target: down 2.9%

Rite Aid: down 1.9%
Walgreen: up 1.9%

There may have been something of an official end to the recession, yet we are a long way from seeing real signs of a turnaround in consumer spending or desire to go shopping. All of this means retailers will continue to be diligent in their inventory management, cost controls, and goal of providing real value for every customer.

How do you define value? Part One

2009: Everyone is in the value business. Makers of consumer goods and retailers attempt to define value, but ultimately it rests with consumers and what they perceive the value of a product to be.

One way makers of consumer goods have chosen to define value recently has been to play around with the size and amount of product in a package along with the pricing of the package. I suppose this works on consumers who have not previously purchased the product. But is likely to alienate customers who are regular buyers of that product.

Another method some manufacturers use to increase the value of their products is to introduce lower-priced merchandise to stores.  The danger here is that often these products are of inferior quality. The customers buying the lower-priced, lower-quality products think they are getting a well-known brand at a really good price, but what happens when the product doesn’t perform as expected? Both the brand and the store suffers the consequences.

Defining value for retailers is an ongoing process that shifts and changes as consumers become cautious in their spending. While the value proposition for such retailers as dollar stores and warehouse clubs hasn’t changed, virtually every other type of retailer has had to revisit their value proposition and find ways to define how they want consumers to judge their businesses with respect to value.

At the very core of any retailer’s value position is pricing. We’ve seen a whole range of upscale retailers from Neiman Marcus to Saks grapple with this issue as their same-store sales fall month after month. Even Abercrombie & Fitch, one of the most heralded retailers of the last ten years, struggles with its value proposition as customers avoid its stores this year.

We’ve also seen retailers stocking lower-priced merchandise that upholds the quality their customers expect. One such company is Whole Foods. Over the years Whole Foods had the reputation of selling high-priced, high quality foods. In recent months its buyers have aggressively pursued new products that reflect their quality standards at lower price points. This has been a win-win for the company and its customers.

In this current climate, smart retailers leverage everything that can be thought of as “valuable” to their customers. This might include such things as educating customers about the merchandise and the store by conducting seminars, providing more product information on in-store signage, a more comprehensive web site making in-depth product information available, additional store hours, in-store special events, home delivery, new product categories, and recycling information.

Leveraging a retailer’s value proposition at this time is a good way to build for when the economy does turn around. What are you doing to define value that attracts more customers and helps build your business in this economy?

Yes, garden centers sell far more than plants!

Over the last several weeks I’ve been visiting garden centers both here in the U.S. and in Canada to prepare for a speech I gave recently to The Garden Center Group. This group represents a wide range of garden centers from all across  North America.

  Yes, garden centers do sell plants and garden supplies of all kinds. And they often sell landscape services to help home owners grow productive  and beautiful flower, herb, and vegetable gardens. What may be more surprising if you aren’t a regular garden center shopper is the diversity of other merchandise sold by many of these merchants such as outdoor furnishings, indoor home furnishings, and decorating products.

Garden centers in cold climates often take a real turn during the winter months and transform into a Christmas store selling home decorating and gift products for customers with whom they already have a strong relationship. This has proven to be very popular with customers. 

The biggest and best garden center I visited was the amazing Roger’s Gardens situated on seven acres of prime real estate in the upscale community of Newport Beach, California. The garden displays create a dynamic shopping environment with plants of every variety including exotic plants, colorful shrubs, and, of course, flowers.

Among the many things savvy garden center owners do to draw customers to their locations is hold educational seminars and special events. Roger’s Gardens’ attractive outside classroom sits right in the center of the gardens and features sufficient seating without being too large for everyone to see and hear the instructor.

At Roger’s Gardens, frequent special events focus on a variety of subjects. For example this fall there will be seminars on Growing Plumeria, Gardening Naturally, Basic Garden Design, and Celebrate Herbs as well as several events around Halloween and Christmas.

In addition to the garden center portion of the property, Roger’s has a wonderful series of rooms that include a diverse offering of decorating items and gifts along with an impressive selection of Christmas ornaments. This is a first-class operation with a loyal Southern California following. Roger’s Gardens certainly qualifies as a Retail Superstar.

Visit the Roger's Gardens web site to see more photos: rogersgardens.com.

A Message for Independent Retailers

Here's a clip from a seminar I did for independent retailers.

Learning Lessons from Great Merchants!

Even in this challenging economy there are lessons to be learned from some of the world’s best retailers. I have long admired Starbucks, its CEO, Howard Schultz, and the company’s commitment not just to sell coffee and other products but to create a true destination for people spend time and enjoy themselves.

Like many other retailers Starbucks’ business has been hammered by the recession and the desire of consumers to spend less on everything they buy. With McDonald’s, Dunkin Donuts, and others putting a full-court press on Starbucks with lower coffee drink prices and aggressive advertising, Starbucks is fighting back by testing a new concept store in Seattle [see July 24 posting], fine-tuning the operations inside their stores, adjusting prices, cutting costs, closing under-performing stores, and exploring new ways to better serve its customers. And for the first time, Starbucks has been running a series of newspaper ads that clearly communicate what makes Starbucks different and better than the competition.

One of the steps Schultz and Starbucks have made is to do more research into buying patterns during the day. As a result, a new initiative allows any customer who made a purchase earlier in the day to buy any grande cold drink for just $2 after 2 pm. They call this the “treat receipt.” I wonder how many other retailers could adapt this idea to reward customers for their purchases and bring them back into their store that day, the next, or even within just a few days?

One of the things Howard Schultz has always done is to spend a lot of time in the company’s stores. He visits 25 or more stores a week consistently. I know some senior retail executives who rarely visit 25 stores in a year. If they did maybe things would be done differently in their stores.

Who are you learning from?

When will we see a turnaround for retailers?

Nearly every day newspaper headline or radio or TV broadcast reports  we’ve finally reached the bottom of the downturn and that the recession will be over soon. I don’t know if the economy has reached bottom yet, but it doesn’t appear to have happened for consumer spending. All one has to do is look at July same-store sales results for publicly held retailers.

As has been the situation since the downturn began last year, the department store sector continued with declining numbers last month. Macy’s same-store sales number was down 10.7 percent, Dillard’s was down 12 percent, and JC Penney was down 12.3 percent. Luxury retailers are also seeing anemic numbers with Saks, down 16.3 percent and Neiman Marcus down a startling 27.3 percent.

While warehouse club Costco was down 2 percent, BJ’s was up 1.8 percent. The real bright spots in July were in the deep discount sector. Both TJX and Ross stores were up 4 percent.

The apparel category for young consumers got hammered again in July with significant declines in same-store sales nearly across the board. Abercrombie & Fitch was down 28 percent and American Eagle was down 11 percent. The bright spots were once again Buckle with an increase of 2.8 percent and Aeropostale with an increase of 6 percent. A robust back-to-school shopping season seems unlikely.

While it’s often hard to find a silver lining in the retail numbers for 2009, the good news is savvy retailers have continued to cut costs and more effectively manage their inventories. While profitability is under siege, a growing number of retailers are able to generate a profit even with fewer shoppers coming through their doors and lower sales.

Health Care Reform

If you regularly read my newsletter or this blog you know I usually write about something I find interesting like a new retail concept, how retailers deal with certain challenges and issues, and how to grow any retail business large or small. But I believe the current health care debate in Washington is so important to retailers, I have decided to post today’s entire media release from the National Retail Federation for everyone to read. If you think the U.S. Congress is on the wrong track with health care reform, I urge you to contact your congressmen and let them know how you feel.

_____________

NRF CALLS HOUSE HEALTH CARE BILL 'SURE RECIPE'

FOR JOB LOSSES, ASKS LAWMAKERS TO

SCRAP BILL AND START OVER

WASHINGTON, July 31, 2009 – The National Retail Federation today asked the House to scrap its controversial $1 trillion health care reform bill and start over, calling the measure “the biggest anti-stimulus legislation imaginable” and saying it would be a “sure recipe” for further job losses during the current national recession.

“The key to reform is reducing both short and long-term health care and coverage costs without disrupting existing health care. The House bill fails to meet this objective,” NRF Senior Vice President for Government Relations Steve Pfister said. “We urge Congress to abandon H.R. 3200 and make a fresh start on a better-calibrated and more-affordable bill.”

“Above all else, we believe that health care reform should avoid driving up labor costs, a sure recipe for much higher unemployment in the midst of a recessionary economy,” Pfister said. “Done wrong, health care reform could well become the biggest anti-stimulus legislation imaginable. We cannot afford bad health care reform.”

Pfister’s comments came in a letter sent to House Speaker Nancy Pelosi, D-Calif., and Minority Leader John Boehner, R-Ohio, and copied to all members of the House.

“NRF strongly favors comprehensive health care reform and universal health coverage, if done correctly,” Pfister said, noting that NRF has pushed for dozens of measures to encourage health care providers to compete on cost and quality as outlined in the NRF Vision for Health Care Reform issued last year. “We have worked hard with lawmakers and stakeholders of every political persuasion to try to help develop comprehensive health care reform we could support.”

Pfister said NRF strongly supports the actions of the Blue Dog Coalition of conservative Democrats and their allies in seeking both short and long-term cost savings, but that more work is needed to secure and expand beyond the agreement reached between Blue Dogs and House leaders.

“Retailers necessarily operate on a short horizon, needing to meet both present payroll obligations and also build and maintain inventory,” Pfister said. “We agree that long-term cost savings are vitally important to our financial future but these are not sufficient to meet retailers’ present day needs.”

Pfister said NRF appreciates a tentative agreement with Blue Dogs to limit the House bill’s employer mandate to companies with annual payrolls of $500,000 and larger rather than $250,000, but that NRF still cannot support an employer mandate in any form because the increased labor costs could lead to layoffs. While the Blue Dog plan is intended to shield small businesses, Pfister said it could have the unintended consequence of discouraging businesses from increasing the size of their payrolls beyond the threshold.

Pfister said NRF continues to oppose a publicly sponsored insurance plan, particularly in a form that would reimburse health care providers at Medicare rates for the first three years as provided in the version of the House bill approved by the Education and Labor Committee and the Ways and Means Committee. While the Blue Dog agreement in the Energy and Commerce Committee version would provide for negotiated rates, NRF believes an open market negotiation without the involvement of the Secretary of Health and Human Services would be a better approach. NRF supports market reform for individual and small-group plans, and believes insurance reform and new national or state-based exchanges should be given an opportunity to succeed without the addition of a public plan.

NRF opposes the legislation’s proposal to limit grandfathering of existing group health plans under the Employee Retirement Income Security Act to five years because of its potential to greatly increase employer coverage costs at the end of the period. NRF also strongly opposes a $540 billion tax surcharge on wealthy individuals approved by the Ways and Means Committee. Pfister said the surtax would hamper small retailers whose business income is taxed as personal income.

The NRF Vision for Health Care Reform position paper proposes a variety of initiatives that would make health care more accessible by making it more affordable, including an individual mandate that would help even out costs between the healthy and sick by requiring workers to accept coverage offered by their employers, malpractice reform, subsidies and tax credits for individuals and businesses, group purchasing arrangements, broader use of computerized medical records and other proposals.

The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.6 million U.S. retail establishments, more than 24 million employees - about one in five American workers - and 2008 sales of $4.6 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. http://www.nrf.com