Bloomingdale’s Next Chapter

Tony_SpringAn Interview With Tony Spring, CEO, Bloomingdale’s

Robin Lewis: Tony, tell our readers a little bit about yourself. Where are you from? What got you interested in the retail business, and how did your career path lead you to your current role as CEO of Bloomingdale’s?

Tony Spring: I grew up in the New York area. My father was a lawyer and my mother worked at CBS as a secretary. There was a mix of passions in our family. The message in the house was always: find something that you love to do and do it well. I was always doing something, some kind of job, whether working in my father’s law office, delivering papers, or working in a fast food restaurant. I went to the Cornell School of Hotel and Restaurant Management. I had a passion for the customer, and what hospitality meant, and how to take care of the customer. I graduated from college in 1987 and had opportunities to work for a couple of hotel chains, including Marriott, but then Bloomingdale’s came to campus to recruit. One thing that really made me want to work at Bloomingdale’s was the people, and to this day they are a key part of my love of the business. They were very competitive, but cared about you as a person. In my belly I felt “wow,” these people want to do something very special.” Campeau bought Federated one year after I joined, then there was an LBO, then cost cutting. A year and a half later I came into Central in the home goods area as a buyer of cookware and cutlery. [Read more…]

What Can Luxury Brands like Louis Vuitton Learn from Lego?

legoImportant Lessons, It Turns Out

Fast Company just published an interesting story about Lego and its Future Lab, titled “How Lego Became the Apple of Toys.” Before the recession, Lego was in serious trouble. Fast Company sets the stage:

“About a decade ago, it looked like Lego might not have much of a future at all. In 2003, the company — based in a tiny Danish village called Billund and owned by the same family that founded it before World War II — was on the verge of bankruptcy, with problems lurking within like tree rot. Faced with growing competition from video games and the Internet, and plagued by an internal fear that Lego was perceived as old-fashioned, the company had been making a series of errors.”

What Lego Did Wrong & How Lego Made It Right

[Read more…]

Fast Retailing Redux

Forget Weed, Maybe It’s Ecstasy

uniqlo_newA week ago, I suggested that Tadashi Yanai, President and CEO of Fast Retailing (parent of Uniqlo), must be smoking something, as he declared he would have 1000 stores opened in the U.S. by 2020. Now I read in WWD.com, which covered the company’s annual media event last week, that his aim is to reach $253 billion (yes, USD), in global sales by 2030, up from their August current year-end revenue projection of about $13 billion. His new projection for 2020 was $42 billion,which by the way, is way lower than $61 billion target I had reported that Mr. Tadashi had projected in last week’s article. So, which numbers are we to believe?

And, even with the lowered projection for 2020,does the $250 billion goal for 2030 sound like something a person with all of their marbles would throw out at such a meeting? Mr. Tadashi said, “So we are within sight of 5 trillion yen, ($42 billion) and that’s not just big talk. I think soon we have to start making big ambitions for the year 2030 as well, and if it’s the year 2030, why not 30 trillion yen ($253 billion)?” The audience laughed thinking that this must be Yanai’s type of a Japanese joke. He responded, “It’s not a joke. I believe it’s possible that we can realize this dream.” [Read more…]

When Activists Attack, Preempt!

activistsIt can happen fast, and without much provocation. It’s happened to companies from eBay to Family Dollar, Ann Taylor to Neiman Marcus, Safeway to PepsiCo. Even Apple.

Activist investors are making waves throughout the retail industry and beyond – and they will only continue to play a bigger role going forward. Understanding your company’s vulnerability to an activist and how to respond accordingly is a key ingredient to success in today’s retail environment.

Activist investors are nothing new, but they have recently broadened their scope from just trying to sell off a target company to influencing the company’s future performance through board representation, reorganization, returning capital to shareholders, changes in strategic direction, capital allocation plans and corporate governance reforms. [Read more…]

Millennials: Retail Experiences Around the World

zaraBy Victoria Kulesza, Tiffany Lung, Kei Sato and Daniel Swanepoel

At the World Retail Congress in October 2014, a panel of Millennials presented their takes on the Future of Retail. Here is an excerpt of their comments, providing a provocative playbook for retailers to retool the customer experience.

What’s the best in-store experience?

DAN / London: Product design is such an important part to the store. Take the newly popular HAY, a homewares design store on the London retail scene. It has products that are not really essential to have, but they are so cleverly/uniquely individual in design, it transforms any retail space. The thing that makes me return to a store is the turnout of new products/merchandise. Every time I visit a certain store, I should be on an adventure of new discovery. New fashion trends, new designers/fashion houses showcasing their moments of creativity. I want to be inspired by a store. Live for the brand. I want to walk out of that store with a shopping bag. I want to walk all around the city, showing off that I have just been shopping in that retail space.

KEI / Tokyo: I would like my in-store experience to be enjoyable and inspiring. It would be fun shopping if the store can communicate effectively how the products will affect the purchasers’ lives. I want a store that is very personalized. The store would make personal profiles of their customers, including purchase history, taste, cultural background, etc. The store can then give effective advice on what to buy and customers will be able to trust the store since they know who they are and what they like. [Read more…]

Radio Sacked

radioshackWhen Woolworth went out of business and bought its one-way ticket to the great strip mall in the sky, I remember the great outcry from people who reminisced about the good old days of grilled cheese sandwiches and nickel Cherry Cokes at the lunch counter and shopping for notions.

Except when you asked these same people when was the last time they had eaten a grilled cheese sandwich or shopped for notions at Woolworths, they stared blankly and searched their memories to no avail.

We are now in the same mourning period for Radio Shack following its bankruptcy filing last Thursday. Certainly it was the retail demise with the longest build-up and least amount of surprise since the General Store closed in Dodge City.

Equal parts sad, appropriate, unforgiveable and tragic, Radio Shack’s bankruptcy has been forecast for years, despite new management, a handful of new concept stores and a Super Bowl ad that was every bit as dumb and ill-advised as Pete Carroll’s play calling. [Read more…]

Wallet Wars

iStock_000000409904Consumer behaviorists are mulling a new question: Will they swipe, tap, Tweet or text?

Whichever they choose, consumers, particularly the much sought after Millennials, are looking for new ways to pay. We’re approaching a tipping point where mobile payment systems, or mobile wallets, will move into the mainstream with cash, credit and debit cards becoming as archaic as stone tools.

An article in a recent issue of BCG Perspectives by The Boston Consulting Group put it this way: “Never in the history of the payments industry has there been a time of such disruption and opportunity across regions. Digital technologies will upset the competitive order and the role that payments play both in the operations of businesses and in the daily lives of consumers.” [Read more…]

Uniqlo and Forever 21: What Are They Smoking?

UniqloForever2I don’t know if “weed” is legal yet where CEO Tadashi Yanai, (Tokyo-based Fast Retailing Company, including the Uniqlo brand), or CEO Don Chang, (Los Angeles-based Forever 21) run their companies, but maybe they’re getting delusional on some other substance.

One thing their delusions have in common is Larry Meyer. He was CFO at Forever 21 from 2001 to 2012, and then left to become CEO of Uniqlo USA. Both of his bosses gave him his marching orders to “get big fast” (to steal the Jeff Bezos line), and focus mainly on the American market. Doesn’t everybody? And getting big fast apparently means bigger stores and lots more of them. I guess in their minds, this growth logic is supposed to result in bigger revenues as well.

Furthermore, and this is pure speculation on my part, perhaps Uniqlo observed Mr. Meyer’s performance at Forever 21, aggressively pushing for more and bigger stores, and believed they could use his real estate acumen to implement Mr. Tadashi’s mind-numbing growth objectives. However, Mr. Tadashi’s mind must have been a bit addled, not foreseeing that, in my opinion, Forever 21’s get big faster strategy would end up with being stuck with a ubiquitous number of stores that are bigger and less productive, resulting in a cool brand turned cold. Bye, bye young customers. Unfortunately, Mr. Tadashi and Mr. Meyer are now both racing down that same delusional growth-to-death path. [Read more…]

Did Tesco Get Hooked on Drugs?

Under-the-table transactions...That’s a strange question, and the answer is even stranger: “yes,” at least figuratively speaking.

It all has to do with vendor allowances and the revenue bump they give retailers. These allowances are intended to incentivize retailers to better promote or better display a manufacturer’s product, and there’s generally a lot of money left over for retailers after that’s done.

For a long time, supermarket insiders have cloaked vendor allowances in secrecy, privately referring to them as the “drug” supermarkets just can’t kick. The metaphorical drugs caused supermarkets to become almost entirely dependent on them for profitability, despite the fact that they fostered grotesque retailer inefficiencies in the long run.

Now a day of reckoning may be at hand, because Tesco has blurted out the dark truth. Tesco, a huge UK supermarket chain, is being battered by newly disclosed accounting irregularities that were used to puff up financial reports by hundreds of millions of dollars.

Tesco stated: “[Irregularities] are principally due to the accelerated recognition of commercial income and delayed accrual of costs. Work is ongoing to establish whether this was due to error or an aggressive accounting policy.” Commercial income, by another name, means vendor allowances. [Read more…]

Not Your Grandmother’s Neiman’s

RL_Blog_NeimansNeiman Marcus is not wasting any time as it marches into the new frontier, or the “wild west,” as many are calling it. And it’s headed right towards the intersection where technology and the Millennials connect. Neiman’s is recognizing the tsunami of new technologies being introduced on almost a daily basis, as well as the fact that Millennials will soon replace Boomers as the largest consumer segment. This next-gen cohort has not only embedded technology into every moment and movement in their lives, they also bring huge shifts to the marketplace in how they want to engage or be engaged by retailers.

First and foremost, understood by all retailers (except for the few with their heads still in the sand), they must promise a compelling experience to attract consumers to the store. This is especially true for the Millennials, who are more interested in pursuing style of life over the stuff of life. They desire many types of experiences over shopping and hanging out in malls. And since technology is their life, the Neiman’s that attracted their grandmothers will die with their grandmothers, if they don’t integrate technology into every aspect of their business, including an engaging experience in the store. [Read more…]

Suit Supply to the Rescue!

suit_supplyI hate clothes shopping. In eighth grade my father wanted to buy me a suit. We went to a men’s shop on University Place in Greenwich Village.  We picked out a wool three-piece herringbone that was a dark ochre with traces of so many embedded colors. I liked it. The salesman handed me off to Mr. Miller, a short, bald and pudgy man with a heavy Eastern European accent and a yellow tape measure dangling around his neck.  Stepping up onto the platform surrounded by three mirrors, Mr. Miller gathered the cuff material around my ankles and put in his pins. Couple of weeks later we were back. I put the suit on in the changing room, stepped up onto the platform and from three angles I saw how the baggy-fitting pants were overflowing onto my shoe tops like the Ganges in monsoon season; the huge water-catching cuffs deep enough to have guppies swimming in there.  I was a deer in the headlights about this pant/shoe debacle. But I didn’t know what to say, being only 14, getting fitted for a suit for the first time.  I looked at my father for some help; none was forthcoming.  Then I looked at Mr. Miller in the mirrors — all three Mr. Millers — and noticed that Mr. Miller’s pants were exactly like mine; baggy, billowing, ridiculous.  Mr. Miller and I both looked like circus immigrants getting off the train on a dank night in Prague. My introduction to suits, fittings, and this “a man’s world” club was less than stellar. [Read more…]

Is IKEA the Most Influential Retailer of the Past 25 Years?

shutterstock_202577677Let me cut to the chase. Yes.

Because say what you want about Walmart SuperCenters, H&M, Uniqlo, Restoration Hardware or even Amazon, none of them— not one—would exist in their present form if Ikea hadn’t come along to totally change the rules of retailing.

Ok, you’re saying, Shoulberg, you’ve been downing too many of those Swedish meatballs and have clearly lost your retail smarts. That may be true, but I stand by my Ikea statement.

And I’ve got the proof to back it up. But first, a quick refresher course on this Nordic retail operation that doesn’t easily fall into conventional models. Started in Sweden in 1943 by a 17-year-old named Ingvar Kamprad, named after a typical Scandinavian mash-up of his name and the farm and town where he grew up (take that, Macy’s and Walmart), the company opened its first American store in 1985 in the King of Prussia, Pennsylvania, area. [Read more…]