What Can Today’s Retailers Learn from the Captain of the Titanic? Plenty.

Like the captain of the Titanic, leadership of failed and failing retailers has been publicly, and occasionally brutally, criticized. In some instances, this criticism is clearly deserved, in other cases not.

It may not be as bad as it seems.

Despite the painful passing and decline of retail industry stalwarts including Linens ‘n Things, RadioShack, The Bon-Ton Stores, Toys R Us, Sears and Kmart, retail chains including Macy’s, Kohl’s, Walmart, Target and other major retailers are showing financial improvement. Macy’s stock price is up 40+ percent year-to-date, Kohl’s is up 30+ percent, and Target is up 25+ percent. The rumors of the death of brick-and-mortar retail have been greatly exaggerated. And, Sears, Kmart and JC Penney are still open for business.

Recently, I participated in the Annual Retail Forum at Columbia Business School where a keynote speaker addressed a question from the audience: “

How would the speaker approach the precarious position of a challenged major retailer? What steps would you recommend?”

The response was,

“Shut it down…they don’t deserve to stay in business.”

This, “throw in the towel,” response brings to mind a key question we should ask ourselves. What would we do if we found ourselves as CEO of a retailer at risk of complete cataclysmic failure? One obvious metaphor is that of being captain of the Titanic. You may not remember, but the Titanic had a bonafide captain: his name was Edward John Smith.

Continue reading “What Can Today’s Retailers Learn from the Captain of the Titanic? Plenty.”

Investing in Retail Stores

What apocalypse?

The Tiffany & Co. building on 5th Avenue & 57th Street in New York City may be the most enduring example of what traditional retailing looked like before the Internet arrived. So it’s striking that the Tiffany & Co. of 2018, faced with an onslaught of online ecommerce, is responding by making a big new bet on that big old store. It’s investing $250 million in the 78-year-old flagship.

It turns out that all over the disrupted and evolving retail sector, companies are rethinking the mantra that the future is digital, and are pouring money into actual brick-and-mortar stores. 

Three blocks west of Tiffany’s flagship store is the new 47,000 sq. ft. Nordstrom‘s Men’s Store with a full store opening next door. And, Target has committed $7 billion to upgrade operations, and while the Minneapolis retailer hasn’t disclosed how much of that will go to improving physical locations, a spokeswoman said stores are an “incredibly important linchpin.”

Why? Because the bulk of America’s retail is still done the old-fashioned way, in stores…

{An “Apocalypse” is an event involving destruction on a catastrophic scale. Whereas “evolution” is the development of something, especially from a simple to a more complex form.}

New Brand, Old Brand, Private Brand, National Brand

 

This week Target Department Stores added two private brands, and exited one exclusive national brand.

On August 3rd, 2018, Target launched “Wild Fable” and “Original Use,” while announcing that the company will be ending its fourteen year deal with Hanesbrands, Inc. for Champion “C9” at the end of next year. 

Continue reading “New Brand, Old Brand, Private Brand, National Brand”

Trust, Mistrust & Antitrust. Amazon is Not Broken. Should it be Fixed?

“In Amazon’s early years, a running joke among Wall Street analysts was that CEO Jeff Bezos was building a house of cards. Entering its sixth year in 2000, the company had yet to crack a profit and was mounting millions of dollars in continuous losses, each quarter’s larger than the last. Nevertheless, a segment of shareholders believed that by dumping money into advertising and steep discounts, Amazon was making a sound investment that would yield returns once e-commerce took off. Each quarter the company would report losses, and its stock price would rise. One news site captured the split sentiment by asking, “Amazon: Ponzi Scheme or Wal-Mart of the Web?”” – Lina Kahn, Yale Law Review

Eighteen years later, it’s no longer a joke. No one seriously doubts that Amazon is anything but the titan of twenty-first century commerce.

Success, efficiency and scale are achievements to be admired. Should they be regulated?

Continue reading “Trust, Mistrust & Antitrust. Amazon is Not Broken. Should it be Fixed?”

Department Stores & Apparel: The Future is Blurry

Morgan Stanley predicts that the department store share of the apparel market will drop from 24 percent in 2006 to only 8 percent by 2022.

Many analysts continue to predict that, this year, Amazon will become the largest retailer of apparel in the United States. 

Top apparel retailers are ranked as Walmart, Amazon, Target, Macy’s, Kohl’s, The TJX Companies, Gap, Costco Wholesale, Nordstrom, Ross Stores, and JCPenney.

Continue reading “Department Stores & Apparel: The Future is Blurry”

22 Billion Minutes per Month

Americans spent 22 BILLION minutes on Amazon shopping platforms in December 2017 alone. More than the next nine platforms combined.

Interestingly, there is a large gap between time spent and dollars spent on mobile vs. desktop devices: while Americans spent nearly two thirds of their online shopping time on smartphones or tablets in Q4 2017, more than 75 percent of e-commerce dollars were spent on desktop devices. This indicates that many people browse products on their mobile devices, but prefer the convenience of a larger screen and keyboard to complete the checkout process.

#retail #ecommerce #shopping #smartphones #tablets #checkout #mobiledevices eBay Walmart Kohl’s Target Macy’s

Data and chart from Statista Global comScore, Inc.

Which Type of Innovator Are You?

Choosing the right innovation model for your company is all about context.

This article from Boston Consulting Group well articulates the need to evaluate industry context, your culture and core competencies as they relate to innovation.

Industry context matters because only a subset of models can succeed in most industries. Some models are better suited to—and increase shareholder value in—certain industries and sectors than others. For example, four models drive TSR premiums in consumer retail:

  • Creators take on more risk but can achieve dramatic success. Lululemon Athletica, for example, capitalized on the growing yoga movement by offering a distinctive life style brand that encompasses everything from the actual products to the in-store customer experience to corporate philanthropy.
  • Solution builders create loyalty by understanding specific shopper segments and meeting their needs. For instance, Target delivers a “cheap but chic” set of offerings that meet the needs of its young, often trendy customers.
  • Leveragers create a superior business model and then capitalize on it to sustain a position of industry leadership. Costco, for example, combines everyday low prices, a lean supplier network, and a members-only approach to stand out from the retail pack.
  • Expanders achieve rapid share growth by moving into adjacent markets. For instance, Amazon brings its consumer data analytics, logistics capabilities, and exceptional customer service to an ever-expanding number of retail sectors, including fashion, luxury apparel, and—with the company’s recent purchase of Whole Foods—brick-and-mortar grocery.

Read the BCG article, Which Innovation Model is Right for You?