To subscribe, click here. To return to list of past issues, click here.

January 2009

The Advantage of Being Quick and Nimble!

I don't know of anyone who could have anticipated the economic mess we find ourselves in right now. I regularly read comments by a number of retail experts as well as remarks and economic prognostications by several well-respected economists. Not one of them predicted any of this--the housing market meltdown, such a drastic correction in the stock market, that some of the nation's best-known banking institutions would fail or get bought up by larger companies, or our country's exploding unemployment.

Retailers struggle to counter such precipitous declines in consumer spending. The Associated Press published an article this month about retailers cutting inventory to deal with the shift in consumer spending. Yes, many retailers will make changes to increase their odds for survival. Unfortunately for some, the changes won't be significant enough or quick enough.

I have long been a fan of Starbucks and its well-respected leader, Howard Schultz, but Starbucks has been very slow in making the changes needed to get back on track. With thousands of locations, Starbucks resembles a big, slow-moving ship that will take some time to turn around.

Larger retailers must eliminate weak vendors and brands, cut costs, and protect assets. And they need to do it quickly. As the nation fights its way through this recession, it remains to be seen which companies can do it and which can't.

For some smaller retailers, making changes in their businesses to adapt to increased competition or altered consumer behavior is nothing new and often an integral part of their business strategies. I've watched it happen for years. A big box store moves into the community and the little guy must quickly find ways to compete--by revamping advertising, searching out and stocking merchandise that isn't available from the new competitor, and improving service to provide a customer experience that can't be found elsewhere. In other words, these street-wise retailers validate their relevance and give customers compelling reasons to do business with their stores.

In book marketing guru Penny Sansevieri's email newsletter this past week (amarketingexpert.com), she reported how Roberta Dyer, owner of Portland, Oregon's Broadway Books, not only saved her holiday season but did so very creatively. Several snow storms hammered Portland the week before Christmas paralyzing the city and keeping customers away. With few shoppers coming through the door, her son posted an announcement on his blog that they would pay for a burrito from a local restaurant for any customer who bought $50 worth of books. Word soon spread and the store was swamped with hungry book-buying customers. At month's end, Ms. Dyer's sales were up 6.5 percent over the previous year.

I talked with a gift retailer a couple of weeks ago who told me he sent a hand-signed letter to his best customers in early December. He described the newest items he had in the store for Christmas and offered a 15 percent discount to anyone who brought the letter into the store. Beginning the first day of the month, he also called eight to ten different customers every day on the phone. The result was a 9 percent increase in sales for the month.

Not everyone had poor sales in December. Some astute retailers recognized the need to do something special to communicate with customers and promote more sales. There is a cliched old saying, "When someone gives you lemons, make lemonade." Well no doubt the economy has given us lemons, so what are YOU going to do with them?

Consumers + Retailers = Shopping Centers!

Malls and shopping centers aren't immune to this retailing landslide. The demise of such chains as Circuit City, Linens & Things, Against All Odds, and Steve & Barry's leaves shopping centers with empty spaces. And with fewer customers coming through the doors, mall owners and management firms watch in horror as stores go out of business and revenues decrease.

In this challenging environment, it will not be surprising to see some weaker centers declare bankruptcy themselves or get sold to other more financially strong shopping center operators. Although it hasn't declared bankruptcy, General Growth Partners, one of the nation's largest shopping center operators, has struggled mightily to deal with its debt load.

Amidst all this gloom, Caruso Affiliated, the innovative Southern California shopping center developer and operator founded by Rick Caruso, opened another of its ground-breaking shopping destinations this past summer--The Americana at Brand in Glendale, a Los Angeles suburb. Caruso Affiliated now manages nine properties in Southern California. The Americana along with The Grove in Los Angeles break the shopping center mold.

Since opening in 2002, The Grove has become one of the Los Angeles area's most popular attractions for tourists and locals alike. Located next to the city's famous Farmers Market, the compact 575,000-square-foot shopping, dining, and theater destination is often jam-packed with visitors. Shoppers enjoy a unique experience at The Grove with its antique-style trolley that winds around the property, several excellent restaurants, a multiplex theatre, and great shopping that includes a small Nordstrom, American Girl Place, and many other stores.

Reflecting the Southern California lifestyle, all of the company's properties are outdoor shopping centers. But The Americana, which opened in August, is a great deal more than just an outdoor shopping center. While there are some similarities with The Grove, The Americana bears no resemblance to any other shopping center anywhere in the country. Strategically placed in the high-density suburban community of Glendale, The Americana looks and feels like a modern European village.

Winding cobblestone streets, spectacular water fountains, a wonderful mix of 75 street-level stores and restaurants along with multi-level apartment and condo buildings, 18-screen movie theater, and fitness club comprise this complex. The Americana also offers valet parking and a wide range of concierge services.

These photos will give you a better sense of what this unique shopping destination looks and feels like. Click on any of them and you will see a larger view. You can also visit The Americana web site at americanaatbrand.com.

Sign at Entrance	Elevator Tower	Classic Sculpture
Convenient Transportation	Stores and Condos	Water Fountain
3-Story Barnes & Noble	Lululemon Athletica	Santa's Cottage
18-Screen Movie Theatre	Barneys New York Coop	Kitson

As some older shopping centers get plowed under and others rebuilt and updated to make them more attractive to retailers and consumers, innovative developers like Caruso Affiliated are busy creating entirely new shopping destinations to attract consumers. Unlike so many shopping centers with their boring anchor department stores and collection of the same stores found in every other mall, Caruso properties feel like real communities where people go to shop, enjoy live music, and meet friends. Sounds like a winning combination to me.

LARGEST DATA BREACH EVER!

In 2007, TJX, the parent company of a large chain of stores including TJ Maxx, Marshalls, HomeGoods, and A.J. Wright, announced a breach in its computer system by hackers. They had gained access to credit card information on 94 million of the company's customers. This week Heartland Payment Systems, a credit card processing firm, announced that hackers had gotten into their system that processes 100 million credit card transactions a month from 125,000 restaurants and small retailers. The hackers got credit card numbers, expiration dates, and other information. This could be far worse than the TJX mess impacting more consumers lives.

On Thursday, January 22, TJX took steps to put their data breach behind them. They held a one-day "Customer Appreciation" event with 15 percent off the customers' entire purchase that day in all of the company's stores. My only question is why did TJX wait until the day before the event to announce this special customer appreciation day?

100 BEST COMPANIES TO WORK FOR!

Once again Fortune Magazine has recognized the best companies to work for and the list includes some exceptional retail companies. Among the top ten are Wegmens Food Markets at #6 and Nugget Market at #10. Whole Foods Market is #22, Zappos.com is #23, and Starbucks is #24. Container Store is #32, Stew Leonard's is #53, Men's Wearhouse is #71, Nordstrom is #72, Publix Supermarkets is #88, and Build-A-Bear Workshop is #94.

A FINAL THOUGHT!

In the article referenced in the above piece about retailers cutting inventory, the Associated Press writer opened with this statement. "For years retailers could afford to be sloppy about running their businesses because customers kept buying." I couldn't disagree more. In the competitive world of retailing, merchants can't be sloppy about running their businesses because the streets of America and the Internet are among the world's most competitive marketplaces. To survive in today's retail climate requires great attention to every detail, diligence, and a massive amount of hard work. I can only assume the AP writer hasn't learned how tough it is to be a retailer.

Until Next month...

If you have an opinion or thoughts about any of the topics posted, I invite you to comment at retailerblog.com It's easy to do. And if you have a topic you would like to see addressed on the blog, send me an e-mail at george@whalinonretail.com.

An Invaluable Resource in Tough Economic Times!

George Whalin's book RETAIL SUCCESS! provides real-world solutions to the challenges retailers face in these troubling economic times. This book, filled with George Whalin's retail expertise, is written in the same easy-to-grasp style as his monthly newsletters.

Go to our web site today where you'll find several other books in addition to RETAIL SUCCESS that George recommends.

We encourage you to pass this publication along to your associates and colleagues. If all or any portion of this newsletter is reproduced in another publication, attribution should read as follows: Copyright 2009. Reprinted with permission from George Whalin's Retail Management E-Letter. To occasionally reprint portions of this newsletter one time, no express permission is required. To reprint in more than one venue or multiple articles, please contact us at 800-766-1908 or info@whalinonretail.com.

To subscribe, click here. To return to list of past issues, click here.

Retail Management Consultants
2382 Camino Vida Roble, Suite L
Carlsbad, CA 92011
Toll Free: 800-766-1908
Phone: 760-431-2910
e-mail: info@whalinonretail.com

Home Page - Presentation Topics - Testimonials - Client List - For Meeting Planners
Consulting Services - Retailer Blog - In the News - Free Newsletter - Resources for Retailers

© 2009 Pilot Whalin Inc.