Fulfilling the Availability Promise

RR_Fulfilling the Availability PromiseEnabling an Omnichannel Inventory Management Strategy

While today’s consumer has dramatically changed, most retailers are still relying on inventory management tactics that are stuck in the past.

Some of the world’s best-known retailers have learned this lesson the hard way and are now leading the way toward truly omnichannel inventory management.

For example, in 2013, Walmart lost $3 billion in sales due to out-of-stock issues, even though its inventory grew faster than its sales. The culprit? Infrequent collaboration with supply chain partners, who were not nimble enough to react to quick changes in demand. To address this problem, Walmart gave key vendors access to its backroom inventory data, leading to significant improvements in replenishment capabilities and on-shelf availability. [Read more…]

Supermarket Disruption and Dissolution

RR_Supermarket Disruption and DissolutionA&P’s Long Goodbye

For the second time in less than five years, A&P has filed for Chapter 11 bankruptcy. Two Chapter 11s in close sequence like that are sometimes cynically called a “Chapter 22.” But this is no joke. By the time it’s all over, a stalwart retailing name that started in 1859 on the site of what is now the One World Trade Center building in lower Manhattan will be gone forever.

A&P — once the nation’s largest retailer, spanning from the Atlantic to the Pacific — already has buyers in place to take over a third of its 300 stores. These buyers include Acme (Albertsons), Ahold and Key Food. Another 25 stores will be closed outright. So roughly half its store fleet, which spreads from Delaware to upstate New York, will be rebranded immediately. A&P operates stores under the A&P, Pathmark, Waldbaums, Food Emporium, Superfresh and Food Basics banners, all of which will be involved in the sale or closure process — and already are. [Read more…]

Disruptors at the Door

blue_apronAnother batch of disrupters is eyeing the retail food industry. And, strange to say, they’re knocking on your door in a cardboard box.

These disrupters are meal kits. The meal-kit business is a fledgling form of retail food distribution that features the direct-to-home delivery of the precise measure of raw ingredients needed to prepare home-cooked meals. Each shipment contains the makings for several meals, generally six or more.

Meal kits are not to be confused with the home delivery of groceries available from providers such as Peapod, Amazon or Fresh Direct. Nor are they deliveries of prepared meals that are ready to heat and eat. Meal kits require that meal components be chopped, mixed, cooked and composed. Each meal kit includes detailed recipes replete with photos of ingredients and step-by-step preparation, making them all but foolproof. [Read more…]

GoEnjoy.com

“Personal Commerce” and Preemptive Distribution

There are two strategic concepts that are imperative for any consumer-facing business to achieve success in the 21st century: personalization and preemptive distribution.

goenjoy

As former Apple executive, Ron Johnson’s Genius Bar creation and Apple’s entire retail model exemplified these strategies early on. Now Johnson is leapfrogging his original creation through the launch of goenjoy.com. Essentially, Enjoy sends an expert to deliver a product purchased on their site to each and every consumer upon demand, and within hours. The expert then advises the customer how to integrate and use the product in ways that best fit into their personal lifestyle. And this hour-long consultation is free. Thus, the personalized Genius Bar experience occurs wherever the customer is. [Read more…]

Target Canada’s Ill-Fated Adventure

target_canadaIn what has to be one of the biggest retailing fiascos of all time, mass merchandiser Target has closed its 133-store Canadian division less than two years after it opened. Billions of dollars were lost.

Target’s misadventure in Canada holds many lessons for all retailers, including the very simple lesson that catastrophe invariably comes close on the heels of a retailer’s failure to offer consumers products they want at the price they’re willing to pay.

How could a retailer as big as Target is in the United States fail to grasp such an obvious concept as it moved across the border to Canada?

The answer is that pressures of competition and real estate forced hasty and ruinous decisions. [Read more…]

Tracking and Winning the Revolution

revolutionHey, are we having fun yet? Let’s think about where we are today. Is it somewhere in the early exciting phase of the retail transformation that we know is possible? Or are we held back by the fear of failing to make this shift and ultimately be snuffed out?

Here is where we really are: At the intersection of the art and science of retailing, converging on technological steroids, serving an omnipotent consumer who expects and demands the satisfaction of their dreams wherever they may be, whenever, how and how often — and instantaneously.

Daunting, complex, disruptive — these are just a few of the ideas describing the awesome challenges facing us in this profoundly transformational era.

Traditional brick-and-mortar retailers across all channels are in the process of seamlessly integrating technology, the Internet and m-commerce into the omnichannel model, while at the same time mining big data, configuring apps, and selecting from the endless stream of experience enhancing gizmos, gadgets and augmented reality for the delight of their shoppers. [Read more…]

Rent the Runway: Fashion Meets the Sharing Economy

rent-the-runway

Over the years, whenever I purchased a “party dress” — meaning an expensive dress for a specific occasion, mostly black tie — I always thought, why can’t I just rent the dress, wear it, and be done with it, instead of spending so much money on something that, while gorgeous, might be out of style or not look so great when the time comes to wear it again? Two Harvard Business School classmates, Jennifer Hyman and Jennifer Fleiss, had the same thought, but went so far as to turn it into an actual business. The first Jennifer, Hymen, was struck with the idea after her younger sister showed off a $1,600 Marchesa dress she couldn’t afford but bought anyway to wear to a wedding. What’s a girl to do when every event is photographed and appears on Facebook? Wear the same outfit twice? Not anymore is the answer the two Jennifers provided when they launched Rent the Runway in 2009 with $1.5 million of venture funding from Bain Capital Ventures. [Read more…]

TJX Companies

Luxury Brands, Fast Fashion, Treasure Hunt, Localization, Super Value

Untouchable

tjx_1The TJX business model is not easily copied. In fact, one could make the case that the specific differentiators and advantages that have been crafted into its DNA cannot be duplicated, period. With the exception of Ross Stores, smaller and not a pure copycat, TJX Companies Inc. (T.J. Maxx, Marmaxx, Marshalls and HomeGoods) all but owns the so-called “off-price” space it dominates.

Hey, you guys in the other sectors, in the middle of the “perfect storm” of an overstored, intensely competitive retail environment, with omnipotent consumers driving you into the insanity of the retail share wars, you can only dream of being in such a position. [Read more…]

Ghost Malls: Creative Destruction

ghostmallsIn the horror story of the declining fortunes of the American shopping center, the central character is the “Ghost Mall” – abandoned, forlorn, and lifeless — but looming, casting a post-apocalyptic pall over the American Dream. The website, DeadMalls.com, provides ample evidence that ghost malls are real and that they appear to be a growing insidious blight across America. The eerie photos show boarded-up entrances, broken glass, empty storefronts and hulking monolithic edifices surrounded by desolate unkempt parking lots. Hollywood even used a ghost mall to symbolize menace and hopelessness in last year’s psychological thriller “Gone Girl.”

Frightened yet? Well don’t be. In a country with an astounding 23 square feet of shopping mall space for every man, woman and child – representing almost 70% of the world’s supply — it should come as no surprise that some obsolescence and creative destruction is inevitable…even desirable. [Read more…]

Soar Wars

Look up in the sky! It’s a bird…it’s a plane. No, it’s those Louboutins you ordered.

That might not be too far from reality given the frenzy over drones and their potential in retail.

We have the fertile mind and tongue-in-cheek attitude of Amazon’s Jeff Bezos to thank for that. Since he unveiled Amazon’s flying fantasies on CBS 60 Minutes last year, there are stories almost daily about their commercial use. Bezos is not alone. DLH is already doing drone deliveries in Germany, and FedEx and Google are working on it here in the U.S.

In Japan, which is always serious about technology, the Yamaha Motor Company is developing drone technology and the government has formed a panel to encourage private companies to come up with ideas on how and where they can be used in “drone zones.” [Read more…]

Beauty’s Buying Blitz: It’s the Early Aughts All Over Again

NYX Cosmetics at Yigal Azrouel Spring 2015 - BackstageIf it weren’t for the massive stack of 2015 promo calendars clogging our mailbox (thank you, Triple-A Termite Control and Super Shiny Carwash!), we’d bet our bottom dollar it was 2000 all over again.

At least this seems to be the case for the beauty business, which is currently on an acquisition spree, the likes of which we’ve not seen since the go-go early Aughts.

But before we dive into any serious tea-leaf reading, let’s recap the M&A landscape of the past year.

Acquisitions on Steroids

In 2014, L’Oréal Group snapped up a whopping six brands: three that are primarily skincare (Magic Holdings International, Decléor, Carita); two in hair (Niely Cosméticos, Carol’s Daughter); and one in makeup (NYX Cosmetics).

The Estée Lauder Companies, while less acquisitive, nonetheless swooped in with three third-quarter purchases, adding two fragrance brands to its portfolio (Le Labo and Editions de Parfums Frédéric Malle) and one in skincare, Rodin Olio Lusso. [Read more…]

Macy’s – The Distribution of Things

macys_distributionAgain, in Front of the Trend

I recently wrote about Macy’s distribution brilliance. And even though the ink is hardly dry, here I am again. Actually, I am not going to focus on lauding what most people might view as a great Macy’s marketing program with Plenti (a cross-brand and industry point-generating redemption deal), which I’ll explain in a minute. This new collaboration is really a tactic, albeit very innovative, to support what I view as Macy’s larger distribution strategy and vision.

My recent article was about Macy’s understanding of the broader and more accurate definition of omnichannel. Too many retailers interpret omnichannel to mean simply two channels: online and brick-and-mortar stores.  So let’s get it straight once and for all.  The old term multi-channel meant more than one channel of distribution.  The new concept omnichannel means “all” distribution channels. Under the multi-channel definition, company strategists would align operations, distribution, marketing and all other functions with the needs of each channel as if they were “silos.” For example, the store, catalogs, marketing strategies, etc., would all be tailored to the needs of the specific channel, assuming different customer behaviors for each.  Omnichannel, as Macy’s and other enlightened retailers are employing the model, is the seamless integration of consumers’ experiences in a matrix of all distribution channels, wherever and whenever the consumer wants it: stores, the Internet and mobile devices, TV, direct mail, catalogs, and now, even operating on other brands’ or retailers’ distribution platforms.

“Plenti” of New Distribution Platforms

Rite Aid, AT&T, ExxonMobil, Nationwide, Hulu, and Direct Energy

So, the Plenti deal basically adds many other distribution platforms to Macy’s omnichannel strategy.
It’s pretty simple.  All the aforementioned companies, including Macy’s, are interconnected with each other through Plenti’s program.  Each time a consumer spends a buck at any one of those companies, they receive a point (equivalent to a penny), which then can be applied to discounts at any one of the companies.

As so aptly described in WWD: “Consider pulling into a gas station, filling up your tank and earning a point per dollar, then applying those points to get discounts on shoes at a department store, or cough drops at a drugstore.  Or imagine getting points for discounts at Macy’s or Exxon just by paying for your auto or homeowner’s insurance.”

And while one could argue that these are not, by definition, used for distributing goods, it is, in fact, an indirect strategy of distributing the brand on non-related, but compatible industry and product categories. It all ultimately leads to expanded distribution, acquiring new customers as well as maintaining current customers who will be delighted to build up a bunch of points for new deals.

In fact, Macy’s strategy might more appropriately be called the “distribution of things.”  Borrowing from the term, the “Internet of things,” which describes the interconnectedness of everything, Macy’s is interconnecting and integrating all possible distribution platforms that engage their consumers wherever they may be.

Think about this, Macy’s.  In the future, when you perfect the use of your “big data” and are able to profile each and every loyal customer and what they personally dream for in their lives, you will be permitted into their homes, to be downloaded into their “global communications center” from which they get important and timely information from you and other permitted brands. You will give them information about new styles that you know, from your database, they will love.  A fashion show invitation or Stella cocktail party can be hyped for their attendance.  And you might even be able to deliver products to them that they can keep or be placed in a Macy’s return box to be  picked up by Instacart or some such service that will inevitably spring up over the next couple of years.

The big shift is that the home will be the final distribution platform. The “distribution of things,” indeed.