The New Face of Retail

Can you smell it?  Fall is in the air!  It may still be 85 degrees in sunny California, but the kids have returned to school, a crispness is the order of the day, and last weekend, I did my annual fall shopping.  The trip this year was much more measured than other years, as I suppose it is for most in the developed world.  The recession is alive, growth from the last few quarters has slowed, and there is still rampant uncertainty in all of our daily lives.

But that is not what I want to blog about today.  On my trip, I did my usual “people watching”  noting a subtle but noticeable shift in the gestalt of the crowd.  We visited our local mall which is owned by Macerich.  The shopping center was renovated in 2007 and a huge Target took over a vacated Robinson’s-May as one of the anchors.  Still, the mall floundered and felt like an unhappy place to me.  And then voila!  In the midst of the downturn, with unemployment still above 9 percent nationally and American companies holding on to more than $1.8 trillion in cash ( not investing, not hiring), a new sense of hope and purpose is in the air.  Unscientific you say?  Yes, but after so many years in the business I am a reader of attitudes, unspoken  intentions, a focus group unto myself.

What has caused this shift in outlook, turned the gray glasses to rose-colored?  I believe it is the retailers, some of whom are doing an excellent job of reading their markets.  With my husband in tow, we were given free treats at Cinnabun, Wetzels Pretzels, and See’s Candy while waiting in line to buy a low-cal coffee at Coffee Bean and Tea Leaf.  I smelled popcorn and saw several happy families with brightly colored red-and-white boxes.  Where did they get these cheery delicious snacks?  Target!  (Sears, you lose again, even though this was your idea in the first place!) And while waiting in line, I saw the Giant Surprise that H & M, one of my favorites, will be opening in our mall in less than two weeks.  The fast-fashion Swedish retailer made the excellent choice not to locate in a struggling new “upscale” lifestyle center in Oxnard (oxymoron, lifestyle center: Oxnard) which would have been a huge mistake!

As a very wise presidential candidate once said, “it’s the economy stupid!” and retailers that have learned to provide VALUE and fun in the shopping experience and in the goods and services they offer are faring well.  TJX, Ross, Forever 21 and now Bloomingdale’s Outlets are giving consumers what they want and need in today’s difficult world.  Free stuff, fun stuff, inexpensive stuff, value for the money!

So while the economic indicators continue to stump the experts, the American consumer is not giving up!  They will continue to shop (less and cheaper), eat sugar and popcorn, and hope for the much badly needed turnaround.  And this, my friends, is a self-fulfilling prophecy for a better year in 2012!

Shopping, Sears and Me

I love to shop. I’m talking about reason to live, first thing you think about in the morning, when can I go again love! I guess that is why I have been a retail analyst most of my adult life. So I consider shopping, retail, the shopping ambiance, the retail experience, whatever we call it these days since the recession, I consider these my avocation and my vocation. I am an expert!

My mother imparted this love to me, as is the case with most girls. It is imprinted on us like little ducks from an early age, this need to gather, to get the prettiest, most current, loveliest shoes, sweaters, pants, skirts, purses, that we can afford. And as a corollary, there are certain shopping rules, again imparted by our mothers. For example, my childhood in an upper middle class suburb of Chicago, taught me that there were only a few department stores where we were allowed to shop for clothes: Marshall Fields and Carson Pirie Scott. WE WERE NOT ALLOWED TO STEP FOOT INTO SEARS! Now I know this is deathly un-PC and there were not a boatload of clothes to be had at Sears back then, no “softer side of Sears,” still we were not allowed to step foot into the store on a girls shopping trip.

When I became a retail analyst, that had to change, but I still have the “No Sears” song in my head.  As most of us know, Sears has done quite a bit in the last ten years to deserve my scorn. They have made many decisions, none of them based on being a great retailer. Considering the ruthless competitive landscape in retail, it’s a miracle that Kmart (who now owns Sears) has survived. Tough rivals in the discount segment abound, including WalMart Stores, Target, and Costco. All three of these behemoths have much stronger brands and customer loyalty than either Sears or Kmart. And regardless of whether hedge fund manager and Sears chairman Eddie Lampert is involved — his mere presence often seems to make some investors consider Sears’ future as a hedge fund, not a retailer — Sears and Kmart both lost their brand luster many years back.

Why am I blogging about Sears today? One thing Sears had going for it way back when was its great brand of appliances, ease of shopping for them, great repair service and service contracts. They were vertically integrated. So all of our appliances are from Sears and they are for the most part, work horses. But when they break, it has been a tear-your-hair-out nightmare to get an appointment for service. We had a minor part break on our refrigerator this summer and it took six visits to get it fixed because they kept sending the wrong part or the service man didn’t show up at the appointed time or they had to cancel or some other excuse that never made sense. It didn’t bother me too much because the refrigerator still worked, although it was very funny to receive a white door for the unit when the refrigerator is stainless steel! (Doors are very big and bulky to mail!)

The last appliance to break was the clothes dryer. I called to schedule an appointment to get it fixed and knew it was going to be a nightmare, but we bought the service contract so we are on the hook with Sears. The agent at the scheduling center told me I had to wait three weeks. I told him that was unacceptable, at which point he pretty much told me to go “F” myself, that I could take it or leave it, that they had no complaint department, he had no supervisor and if he was in my position he would just leave it alone. So I called a local service to fix the problem and sent Sears the bill with a letter of explanation, a very rational letter, and enclosed the repair bill. I fully expected nothing, but I felt better doing it.

Two months later, my husband got a call (in fact now 4 calls) from Sears. He referred the first caller to me. They told me they were extremely sorry for the way I was treated, but they had no control over their repair servicing arm, which of course, they don’t. He told me he would be sending a check for $18.75 for parts (the bill in fact was $100) and that they would be sending me a $50 Sears gift card for my trouble. Will this make me ever consider Sears again for anything? This is called “customer mop-up.”

So here I was with a $50 gift card for a store that I now had multiple reasons not to shop. I tried to force myself into our local store three times before I finally made it. So what was my experience this time, with the 2010 “softer side of Sears?”

I was sad to see that Sears lived down to my expectations. With so many category killers doing a superb job in their niche, they just didn’t do anything well. They didn’t own the “cheap chic” category, they didn’t own the “cheap/inexpensive” category, and oh my god, the quality of the soft goods was abhorrent!

So they have stuck with the warning from my childhood, “NEVER SHOP AT SEARS!” The store carried cheaply made goods (soft and hard), mostly unattractive, AND FOR A PREMIUM PRICE!!!! .

Why would anyone shop at Sears?

Lessons Learned: The 3 Silliest Assignments I Ever Had

My friends tell me I am one of the funniest people they know.  I can find humor in the most awful or embarrassing circumstances and make people laugh.  Those of you who know me may think this is contrary to my way of thinking, which I would call “the worst case scenario.”  Still, many of my jobs have brought laughter to my family when I tell them what I am working on.  My husband wrote me a case study that I keep in front of me on my desk at all times.  It is called THE BEE MUSEUM, and it is an assignment for a nonprofit client that wants to test the market and financial feasibility for, you guessed it, a BEE MUSEUM.  This nonprofit is in a tiny market, but they project a million visitors per year, each spending a $20 per capita.  This is how many of my jobs go, in a nutshell.

We are hired principally to test new ideas, things that have never been done before.  So there have been some wild-ass ideas in my practice.  But as a very wise man once told me, “you never tell a client what they can’t do; you tell them what they can do.”  So for these very silly assignments, we develop projections based on realistic programs.  They may not be what the client wants (most of the time) and they may generate significantly less attendance and revenue, but they reflect the realities of the market.  So here they are, in no particular order, the three silliest projects I have ever worked on and the lessons learned.

Lesson Number 1:  Test before you build and then trust the results!

Native American casinos often wish to develop a cultural component along with the casino amenities.  Many of these start out as museums detailing the story of the tribe.  In one such instance, we were hired when the huge museum next to the casino was already under construction.  It had occurred to them that it might be good to get a realistic viewpoint on their attendance potential.  Of course, they were projecting one million visitors, who would come on the same trip as the gambling excursion.  This was in a day-market locale.  After studying the market, we told them, no the most you could get is 350,000 annual visitors and this would be from the 50-mile market, not from the casino visitors.  They are there to be BAD and they do not want to be educated or uplifted on the same trip they are losing (or winning, but not as often) their rent money.  Low and behold, they stabilized at about 350,000 before they had budget cuts and attendance lagged.  They were never pleased with us, even though we were correct.

Lesson Number 2:  Arrogance will get you nowhere in the retail and attraction businesses.  Remember the local culture and keep your culture out of it!

A very well-known entertainment company was planning a foreign theme park in a country where wine is consumed with lunch and dinner.  This is not alcoholic behavior; this is the culture and custom of the country.  Focus groups confirmed that it was the custom of potential visitors to have wine with meals.  What did this company do?  They prohibited alcohol from the park because it was against THEIR CULTURE.  Can you see where this is going?  Shouldn’t they have known better?  Wasn’t this obvious without expensive focus groups?  Needless to say, after a few years of low attendance and flagging EBDITA, they reversed their ridiculous stance and allowed alcohol in the park. 

Lesson Number 3:  Get inside your potential customer’s head, and don’t stop at a few interviews.  You could lose hundreds of millions.

This is another strange story about the failure of a whole division of Bullocks, when there was a Bullocks.  These stores are all Macy’s now.  But at this time, Bullocks wanted to expand to Northern California.  In order to do that, they had to open multiple locations, indicating a huge investment at the time.  Federated had the best research department in the business.  So we did all the area research, some consumer research, and several stores called “Bullocks Northern California” opened in the San Francisco Bay Area.  And they all FAILED!  How could this happen?  Are any of you aware of the jaw-tightening dislike that Northern Californians have for Southern Californians?  Well, I knew because I went to Berkeley and heard it every day I was there, being from Beverly Hills, which was a particularly huge transgression.  Anyway, no god-fearing Northern Californian would be caught dead in a Southern Californian retailer, EVEN THOUGH THE MERCHANDISE WAS THE SAME AS MACY’S, the closest competitor at the time.