Thinking Beyond the Box

250px-Incredible_UniverseThe Incredible Universe was…well, pretty incredible. There was no store like it ever before – and there’s not likely to be one like it ever again.

For those of you who have gone through retail remembrance reprogramming, a quick history lesson: During the 1990s, which in hindsight represented the full-tilt zenith of big box retailing, superstore chains were exploding. Be it home improvement, home furnishings, computers or consumer electronics, big boxes were multiplying at geometric proportions.

And the biggest box of them all was Incredible Universe, which was a dramatic new retail platform from the folks who ran some of the smallest boxes out there, Radio Shack. Current management at the time – who can remember back that far – decided to out-box everyone else out there and go for broke. The first Incredible Universe opened just off Old Country Road in Westbury on New York’s Long Island, which with the exception of Paramus, New Jersey and Schaumburg, Illinois, is about the most concentrated retail location in the country.

The store was well over 150,000-square feet, if memory serves me well, and featured just about every conceivable product with a plug that existed at the time. And considering this was well before iWhatevers, that was a whole lot of TVs, stereos and toasters. Every shopper got a personal identity card that promised all sorts of digital delights. There were salespeople in snappy uniforms as far as the eye could see. It truly was incredible.

It was also way, way too much. Shoppers were overwhelmed and they ended up underbuying. The Universe as we knew it soon failed to exist.

Fast forward a couple of retail generations to today’s reigning – by process of elimination, it has to be noted – big box player in consumer electronics retailing: Best Buy. We’re not here to go through all of Best Buy’s problems. Frankly, the Robin Report website doesn’t have that much bandwidth. But among the leading issues the retailer faces is that its physical stores are just too big. Talk to anybody who follows retailing and they’ll tell you that the problems of too many stores in the country is only matched by the problem of too-big stores.

And Best Buy has got it the worst. Unlike a Home Depot or a Lowes, which need those tens of thousands of square feet of space for tools and aluminum siding, Best Buy has more space than it knows what to do with. Let’s face it, nobody has bought a CD or DVD in a store since the Bush administration. So, as Best Buy was on the leading edge of the big box movement it may also be in the forefront of the next trend in superstore retailing: Not-So-Big Boxes.
Yes, the DIY twins need that floor space, but does Bed Bath & Beyond or Staples or Office Max require stores that large? What about giant furniture stores like Rooms To Go or Raymour & Flanigan? And does it end there? What about off-pricers like the MarMaxx group? What about supermarket? And ultimately, what about the biggest big boxes of them all, Walmart and Target?

If, as some people predict, anywhere from 30% to 50% of general merchandise sales will eventually be done online, does that mean we are in the final stages of Big Box retailing? Does it mean that, in the end, the big box will be outdone by the small carton?

Warren Shoulberg is editorial director for several Sandow Media home furnishings business publications and is glad he was there for the big box era.

Private Labels, Public Nuisances, and Captured Moments

rr_3-13_private_labelAll the recent hubbub over a certain Connecticut homemaker’s image and brand is only the tip of a major merchandising movement that is starting to consume the home furnishings field. As national brands continue to recede from the category—they are pretty much null and void in soft home categories, like sheets and towels, and hold a tenuous position at best in some smallappliance and housewares classifications—the ascendency of private and captured brands is nearing unprecedented levels.

The spectrum goes from the extreme of Kohl’s where virtually the entire home department is proprietarily branded, to stores like Target, and now Penney, where soft home is all private and hard home is mostly national brands—to ones like Macy’s and Bed Bath & Beyond where the assortments are still…well, assorted. [Read more...]

The Penney Dividend

jc_penney-01There’s a billion dollars of home business missing; anybody have a clue where it went?

One thing is clear: Over the past 12 months, the new JC Penney/The Penney Co./JCP/Whatever has lost about $1 billion in home furnishings sales as it transforms itself into…well, into what it’s not.

Quantum mathematics was never my specialty, but a rough crunching of the numbers shows JCP overall sales off about 24% for the past four quarters since Ron Johnson came to town, and if you figure about a quarter of the retailer’s business is in home, that works out to a drop of about an even billion. That’s a pretty fair square amount.

So, where did it go? While the tendency might be to round up the usual suspects and dole it out accordingly, the fundamental things don’t seem to apply in this case. Certainly, the big winner has been Macy’s. Often located at the other end of the big bad mall from JCP, it has been the beneficiary of a department store diaspora the likes of which we haven’t seen in quite some time. All of the coupon-clipping, one-day-sale-tripping tired-and-poor are parking their cars near the big red star and buying up a storm. Macy’s is clearly enjoying a big home run. [Read more...]

Innovation in Home Products…It Ain’t Just Fitted Sheets

Drum Roll Please, Ladies and Gentlemen.

Announcing the three greatest moments of innovation in the history of home furnishings products:

3. Furniture manufacturers, trying to reduce their cost of upholstering with expensive craftsmen and detailed stitching and sewing techniques, invent the staple gun as a way to attach fabric to frame.

2. Small appliance makers, seeking to differentiate their blenders and give them the perception of more power, employ a Spinal Tap-esque technique and increase the markings on the speed indicator of their machines from “10” to “11.”

1. Producers of bed sheets, responding to a customer base that wants to cut corners on making hospital corners, run elastic around the edge of their product and create the fitted sheet.

OK, so innovation has not been the strong suit of the home furnishings industry. Outside of the consumer electronics segment of the home business—and let’s face it, the CE guys don’t consider themselves on the same planet, much less the same industry as companies that make furniture and housewares and home textiles—the industry’s track record when it comes to creating innovative products is pretty dismal. [Read more...]

Why Home Furnishings Can Save Sears & Kmart… And Why It Will Never Happen

The Robin Report - KmartDisclaimer: This is not another opinion piece trashing Fast Eddie – aka Eddie Money, Edward Moneyhands, Edward S. Lampert. Unlike a whole lot of other people, I get what he’s doing at Sears Holdings, which is making a lot of money for Fast Eddie – aka Eddie Money, Edward Moneyhands… well, you get the idea.

The plan is not to run a great retail institution, it’s to make a great deal of money. And by that measure, they are perhaps the most successful company in American business today. If someone were able to analyze all of the SEC filings, reports and data coming out of ESL Holdings in Greenwich, Connecticut, it would no doubt show Fast Eddie has done quite well… for Fast Eddie.

No, we’ve come not to trash Fast Eddie, but to present a tale of what-if… what if Sears Holding really wanted to be in the retail business and operate not just one, but two strong, competitive and profitable stores?

Not only is that eminently doable, it’s quite frankly not all that hard and wouldn’t take a whole lot of capital investment. Even more amazing, what it would take are some of the very things Fast Eddie has tried, particularly in the earlier days of his ownership – back when it seemed there might have been even a glimmer of a plan to create successful retailers. [Read more...]

Flash Dance

A funny thing happened to all the flash sales web sites: they became retailers.

Perhaps no emerging retail format since the glory days of the original big boxers has arrived with more hype, more press and more uncontrolled exuberance than flash sale sites. Originally called pop-up sales, these sites bounced around under several generic labels until they gradually settled down under the flash site name.

So, today general merchandise websites like Gilt, Rue La La, Ideeli and HauteLook, as well as home-specific sites like One Kings Lane and The Foundary have become well established members of the community of businesses that sell stuff to people.

But any resemblance between flash sites and regular retailers is no longer coincidental: Whether they will admit it or not, these web sites have become every bit as entrenched in the world of retailing as any other store in the country.

That’s not the way it all started. While some people may claim otherwise, Gilt was really the first flash site to go live when founders Alexis Maybank and Alexandra Wilkis flicked on the switch in November of 2007. The idea was to combine the power of online e-tailng with the insider appeal of a Seventh Avenue sample sale, throw in a dash of Loehmann’s treasure hunt with a touch of Costco membership. and come up with a brand place to shop. [Read more...]

The Battle for the Bottom of Home

The Robin ReportBottom feeders. It’s not a very pretty description for anybody, much less any company. It does not have a particularly admirable image. But let me ask you: Have you ever seen a thin catfish?

Feeding on the bottom of a market segment like home furnishings turns out to be a very  admirable strategy indeed if one considers the retailers who are trolling around on the underside of the business.

We all know about the luxury market and how retailers like Bloomingdales and Neiman’s online are doing quite nicely catering to the well-to-do. We know the guys in the middle who are slugging it out for the sweet spot of the American consumer, stores like Macy’s and Kohl’s and Bed Bath & Beyond. And we’re quite familiar with the discounters who go for the serious volume in the land of Walmart and Target.

But there’s a level several fathoms deeper in the retail biosphere where the lights don’t shine as brightly and the merchandising isn’t quite as slick. [Read more...]

Menomonee Falling?

The Robin Report - Kohl'sWhat the hell is the matter at Kohl’s?

The big mid-market retailer – practically the poster child for successful retailing for at least the past two decades – has very suddenly and just as shockingly hit a major wall, with all the lackluster financial and performance trimmings.

Sales are off, comps are off and, guess what: The bloom is off too.

Kohl’s has done a terrific job over the past 20 years of staking out its place at the heart and soul of the American middle-income shopper.

Sure, some of that success was based on timing. The ongoing death spiral at Sears, uninspired merchandising at Penney, and a Macy’s that has taken forever to find its way after countless rounds of consolidation confusion all contributed to creating the void that Kohl’s very adroitly filled, thank you very much.

But Kohl’s has not just been a lucky recipient of being in the right place at the right time. It has done very many things very right: [Read more...]

Home Away From Home?…Not so Much.

The Robin Report - Warren ShoulbergThey say it’s a global economy, but don’t tell that to the home furnishings industry.

This is a business that never met a border it not only didn’t respect, but wasn’t downright terrified of.

Think about it: Fashion stores like H&M and Zara have invaded the United States with a fervor and enthusiasm that would make George Patton jealous.

Likewise, American apparel stores like Gap, Abercrombie and Anthropology have moved into Europe and elsewhere in ever-increasing numbers.

And the big, high-falutin’ fashion houses like Louis Vuitton, Chanel and Hermes are all over the place, having conquered more countries than Napoleon.

But home stores are an entirely different matter. Sure, the American giant Bed Bath & Beyond has moved offshore, or at least crossed the border: It opened its first stores in Canada a few years ago and has a whopping two units in Mexico. (Even worse, the Mexican operation is a joint venture and hasn’t grown beyond those two stores since it launched last decade.) Europe or Asia? Way Beyond its horizon right now. [Read more...]

It’s a Good Thing: Martha + JCPenney

It’s a good thing for Martha (to use one of her signature phrases). It’s a good thing for JC Penney. And it’s a good thing for Macy’s, which I’ll get to in a minute. I’m writing, of course, about JC Penney’s acquisition of roughly a 16% stake in Martha Stewart Living Omnimedia Inc.,which means the retail giant will be installing Martha Stewart shops inside JCPenney stores beginning in February, 2013, following the expiration of Martha’s contract with Macy’s.

From a financial perspective, though the terms of Martha’s deal with Macy’s are not public, the $38.5 million buy-in from Penney’s was certainly not a bad thing for MSLO. And for JCP to make that kind of investment, they must have an idea that’s it’s a really good strategic move.

First of all, from the few hints and statements that have been put forth by Penney’s new CEO, Ron Johnson, there is no way he plans on implementing a “tired formula,” as some have called it. Nor is Martha Stewart a tired brand, even though it’s bounced around for some time. In fact, according to Robin Report home furnishings columnist Warren Shoulberg, who is also Editor-in-Chief of HFN , Editorial Director of several Sandow Media business publications, and one of the most knowledgeable experts covering the home sector, the MS brand continues to be one of the most underrated in the home business. And, it did find a refreshing, well-positioned home at Macy’s where, according to most sources, it was doing quite well. [Read more...]

Reinvention Hardware

The world of retailing is filled with some astonishing tales of stores being reinvented, transforming themselves into entirely different species.

Banana Republic started life selling safari jackets in funky jungle-like locations with jeeps crashing through the front window until it turned to metrosexual ware. Before Marvin Traub & Co. arrived, Bloomingdale Brothers was a low-end discount department store where the Little Brown Bags were little brown bags.

And Abercrombie & Fitch used to cater to the adventurer crowd who wouldn’t know the difference between a Cosmopolitan and a cosmetologist.

To that list, Gary Friedman is in the process of adding Restoration Hardware. [Read more...]

Bed Bath & Beyond: The Best Retailer in America?

The Robin Report - Bed, Bath and BeyondIs Bed Bath & Beyond the best retailer in America? Well, it depends on who you ask.

Ask a financial analyst and you’re likely to get a pretty positive response. Through the best and worst of retailing cycles, Bed Bath, with total 2010 sales of almost $8.8 billion and earnings of $790 million, has generally outperformed virtually every other retailer in virtually every other merchandise classification.

Other than a dip in the 2007-2008 retailing meltdown, the store has had positive comp numbers since the day it went public in the mid-1990s. It consistently puts up better numbers quarter after quarter than anybody.

But ask that same analyst what he sees going forward and, chances are, he will shake his head in ignorance. Bed Bath is notoriously close-mouthed when it comes to handing out information on its operations. For the past two decades, its annual meetings – held in a suburban New Jersey hotel that is conveniently located inconvenient to Wall Street types – have averaged 14 minutes in length…including coffee. [Read more...]