The Broken Department Store Model

Four of the five worst-per­form­ing S&P 500 stocks in the first half of the year were department stores. A few days into the sec­ond half of 2019, there is no in­di­ca­tion that trend is changing.

Nordstrom, which fin­ished June with the du­bi­ous dis­tinc­tion of the S&P 500’s worst per­former, lost 2.3% Tues­day af­ter UBS be­came the lat­est in a string of firms to lower its rat­ing for the stock.

The sell­ing pres­sure spilled over more broadly in the re­tail sec­tor: Macy’s and Kohl’s were also among the five big­gest S&P 500 de­clin­ers in the first half of the year, fell 1.3% and 1.1% respec­tively. Gap Inc.. fills out the roster. And, JCPenney is down 55% for the 12 month period.

The disruption is not about retail in general: Walmart, Target, Costco, Marshall’s, Ross Stores, Home Depot, Lowes and others are showing growth in sales and earnings.

And then there is Amazon

The business model for department stores has been disrupted. And, disruption is the mother of invention. Stay tuned…

From Akane Otani for the Wall Street Journal

The Emperor Has No Clothes

“Inside Walmart, tensions are rising. The company is projecting losses of more than $1 billion for its US e-commerce business this year, on revenue of $22 billion. Walmart does not disclose these figures publicly and declines to comment.”

“That size loss is an eye-popping figure for a company that is used to printing cash and which prides itself on its profitable operations.”

If a newsstand and a vending machine had a baby…

If a newsstand and a vending machine had a baby… It might be the “NanoStore,” created by store automation vendor, AiFi Inc.

Essentially an automated self-service convenience store in a small footprint, NanoStore can be dropped into an indoor or outdoor space. Swipe a credit card to enter, and once inside it is “grab and go” cashier-less tech observed by sensors, cameras, and other tech.

Amazon Go in a box? A reduction in consumer friction? A good example of retail evolution popping up everywhere? Or, another “S.O.S,” victim of Shiny Object Syndrome? Just because we can build something doesn’t mean we should build it.

Your thoughts are welcome, as always.

Bankrupt Once More

Payless ShoeSource is closing its 2,100 U.S. stores in what will be the largest-ever retailer liquidation when measured by the number of stores closing.

Payless was founded in 1956. In the 1990s the company sold 250 million pairs of shoes a year, in 2018 that number was estimated to be closer to 75 million pair.

Payless went through Chapter 11 bankruptcy restructuring less than two years ago and closed 500 stores. Creditors at the time became shareholders in the restructured company.

The company will begin liquidation sales at its U.S. and Puerto Rico stores this weekend. “We expect all stores to remain open until the end of March, and the majority will remain open until May,” a spokesman said.

The closings will increase pressure on already challenged U.S. retail malls, where Toys R Us, Sears, BonTon, and JCPenney have shut down stores. Payless said its international business, including Canada and Latin America will not be affected..

Z

Amazon HQ USA

SEATTLE — After a search for a new location lasting more than a year, a massive dome was seen descending from the sky and enclosing the whole nation as Amazon CEO Jeff Bezos announced to a horrified American populace that it was now living inside his company’s second headquarters.

The impenetrable steel dome, which reportedly stretches from coast to coast and from the Mexican to the Canadian border, will house a state-of-the-art campus that serves as the online retailer’s long-awaited new base of operations.

Amazon executives said that while they were impressed with the many proposals they received from cities across the country, they ultimately decided the location best suited to their ever-growing needs was the entirety of the continental United States.

“For the sake of convenience, your Prime membership fees will be automatically deducted each pay period, and all wages will be paid in the form of Amazon gift cards. What’s more, every employee in good standing will receive one free Audible download per month!”

– The Onion

In reality… sort of: After conducting a yearlong search for a second home, Amazon has switched gears and is now finalizing plans to have a total of 50,000 employees in two locations.

The company is nearing a deal to move to the Long Island City neighborhood of Queens, AND the Crystal City area of Arlington, Va., a Washington suburb.

Amazon already has more employees in those two areas than anywhere else outside of Seattle, its home base, and the Bay Area.

Where Will Tomorrow’s Retail Leaders Come From?

Look at Kohl’s.

  • Prior to joining Kohl’s, new CEO Michelle Gass, spent 17 years at Starbucks and began her career with Proctor & Gamble.

  • Kohl’s recently appointed president, Sona Chawla, spent 7 years at Walgreens as president of ecommerce.

  • Chief Merchanding Officer, Doug Howe joined the company from QVC.

  • And Chief Marketing Officer, Gregg Revelle, served at Best Buy, AutoNation & Expedia prior to joining Kohl’s. 

Really? What do they know about general merchandising?

A lot. Kohl’s shares are up an impressive 30% in 2018 – during a “retail apocalypse.”
Kohl’s has shops where customers can return their Amazon purchases, and buy Amazon Echo, Fire & Kindle devices. Crazy? Like a fox. It’s doubtful that Kohl’s is creating new Amazon customers, and the store is generating increased traffic & loyalty.
Want groceries with your comforter set? Aldi will open supermarkets inside Kohl’s doors as part of a new partnership. Strange bedfellows or clever collaboration? Credit Kohl’s with innovation and a focus on fundamental retail metrics – driving increased sales with less inventory – better turn, less dilution.
Well done.
And, the company is well positioned to gain market share from recently departed retailers Bon-Ton, Toys R Us and Babies R Us.

(c) David J. Katz, 2018

Where are Brands Headed in the Amazon Era?

David J. Katz Podcast

An Interview with David J. Katz – eCommerce Braintrust

Today we have a really fascinating and informative interview with David Katz, of Randa Accessories. He shares with us a lot of his knowledge about brands, where they come from and where they are in the Amazon era. As a result of David’s abundant history in direct marketing, he has a really unique perspective on this topic. On the show today he talks about how his direct marketing has evolved and why he believes that brands are becoming more important, even with the seeming migration of consumers away from brands and towards private labels.

David is the alchemist and Chief Marketing Officer at Randa Accessories, a leading multinational consumer products company and also the largest men’s accessories business worldwide. He is also the co-author of the bestselling book Design for Response- Creative Direct Marketing That Works a frequent public speaker referred to by the press as a retail industry expert.

As a company, Randa is still very involved with the Amazon ecosystem. As  both a seller and a vendor on Amazon, the company continues to have a robust partnership with Amazon, despite the fact that Amazon is moving powerfully forward into private label brands in the accessory space. Tune in to find out what David has to share about brands and where they fit in today’s consumer ecosystem.

  • Kiri Masters

Continue reading “Where are Brands Headed in the Amazon Era?”

Amazon & Private Label. It started with a simple battery.

On the surface Amazon‘s move into private label appears to be a deft move.

Analysts predict that nearly half of all online shopping in the United States will be conducted on Amazon’s platform in the next couple of years. That creates a massive opportunity for Amazon to more than double revenue from its in-house brands to $25 billion in the next four years. That’s the equivalent of all of Macy’s revenue last year.

It started with a simple battery.

Continue reading “Amazon & Private Label. It started with a simple battery.”