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June 2008

Innovative Retailing!

Retailing, in so many ways, is the business community's most cautious and conservative segment. Although it's a common practice for one retailer to copy an idea or improve on a strategy already proven sound by another retailer, rarely do we see real innovation. When someone actually does comes up with a new concept, writers like myself jump on it. Using the innovator as an example, we show how successful a retailer can be if they take bold steps to stand out from all the rest.

In the past I've touted Sharper Image for its successful combination of catalog and stores to sell its unique merchandise. I've praised Apple's retail model built on incomparable merchandise, totally unique operating concept, and a shopping experience like no other. And I've written about Home Depot's initial growth greatly attributable to the craftspeople it employed to provide expert advice on customers' various home repair and remodeling projects.

Sharper Image now suffers the process of liquidation after letting its concept and merchandise go stale. Apple updates and improves its products and operating procedures better than anyone, and I've yet to see an Apple store that wasn't jammed with customers. And Home Depot, although trying to get its customer service back on track, still is the nation's second largest retailer.

Fresh, New Concepts!

Among the most innovative retailers in America is Abercrombie & Fitch. The Abercrombie & Fitch and abercrombie stores have long rivaled other chains serving younger apparel consumers. And the company continues to create fresh, new concepts. Hollister Co., A&F's first new venture, provides pre-teens and teens with surf-oriented apparel at moderate prices. The first Hollister store opened in 2000 and now 450 of them can be found in malls around the country. The merchandise may not be particularly innovative but the store design breaks the mold in a mall environment where boring is more the norm. Built to resemble a California beach house, Hollister stores draw customers in.

RUEHL, A&F's next new concept, opened in 2004. The merchandise focuses on post college age apparel buyers. RUEHL stores look like Greenwich Village brownstones with subdued lighting, great background music, and beautifully displayed merchandise. Its brick facades and lack of traditional large windows stand out in the sea of mall sameness.

In January of this year A&F introduced another new concept called Gilly Hicks which features intimate apparel and loungewear for young women in their teens and twenties.

The Gilly Hicks concept first launched online showing a sexy video featuring young consumers but not showing the store's merchandise. This was done well before its first store opened in Natick, Massachusetts. The Internet video and lots of online buzz resulted in long lines of people eager to get into the store when it opened. A&F created the Gilly Hicks character and made up her life history as background for the stores. According to the story, Gilly Hicks was a liberated Englishwoman who moved to Australia in the 1930s. Now, her granddaughter has returned to Gilly's historic manor house in Sydney to open a hip lingerie store for today's young women.

The 10,000-square-foot store looks like that old manor house with Gilly's portrait hanging in the living room. Antique-style fixtures and mannequins add to the decidedly 1930s look and feel with an ambiance that is quite conducive to selling lots of merchandise. Bras hang on pegs rather than hangers, which apparently is done because hanging them on hooks is more irreverent. Clothing tags read "Gilly Hicks/Sydney" even though it's all part of A&F, which is based in New Albany, Ohio.

The Gilly Hicks concept was well planned, and development took two-and-an-half years to complete. A&F expects to open as many as 40 Gilly Hicks stores in the next two years. I have no doubt this concept will be a hit.

Even during challenging times opportunities exist for retailers to innovate and break the rules. Take steps now to ensure your concept, stores, merchandise, and service compel customers to do business with you. Make sure it's fresh and interesting. If you do everything the same as everyone else, customers won't notice you. And if customers have less money to spend, you want them to spend what they've got on your merchandise. Where are the opportunities for innovation in your business?

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The Steve & Barry's Story!

It seems there's always some hot apparel retailer opening stores as fast as possible and getting lots of media attention. One such retail chain is Steve & Barry's, which sells very inexpensive apparel--much of it under $10--with fashions from celebrities like Sarah Jessica Parker and athletes like Stephon Marbury and Venus Williams.

Founded in Philadelphia in 1985, the company now has more than 270 stores with reported revenues of $1 billion. Most of that growth has occurred in the last three years. Unfortunately, like many retail businesses that grow too fast, everything isn't wonderful. Steve & Barry's currently is in default on its recently acquired credit facility with General Electric and is in arrears with many of its creditors.

The original concept was to locate stores near college campuses and sell college-related casual clothing at greatly discounted prices. Until last year the name of the company was Steve & Barry's University Sportswear. But lately it's been taking over anchor space vacated when Macy's began consolidating and closing stores. With this strategic change, Steve & Barry's has become the darling of mall management companies.

According to a recent Wall Street Journal article, "Steve & Barry's is just the latest retail player hurt by the economic downturn." Steve & Barry's problems more likely result from two major management miscues. The first is its almost obsessive desire to grow quickly opening up new stores as fast as possible. In each of the last three years, 60 or more stores opened, most of which took over all or a portion of the space vacated by major department store anchors in malls.

The second and maybe most damaging problem is that most of Steve & Barry's revenues come from upfront payments or signing bonuses from mall owners eager to fill the large empty anchor spaces. The Wall Street Journal and other media sources report that without these payments, the stores themselves are barely profitable. Barely profitable stores and too fast growth are far more likely to put a retailer out of business than an economic downturn. This is particularly true of a retailer selling value-priced merchandise at a time when consumers are more price-conscious than ever.

Steve & Barry's may get media attention but they could very well be facing Chapter 11 if they don't find a way to make their stores profitable and come up with a solution to their financial woes.

RECESSION-PROOF SHOPPERS!

According to a study conducted last fall by Elle magazine, some 8 percent of all women shoppers are essentially recession proof. The study says this customer's average age is 29 with a median household income of $62,000. Sixty-five percent work, but only 52 percent work full time. And they love to shop with 57 percent spending $2,000 or more on clothes yearly. Eighty percent of these shoppers are willing to pay more for the latest fashions while 81 percent agree that "price is not the most important factor." Seventy-five percent admit, "There are times that I buy clothes without even looking at the price."

On a recent trip to Minneapolis I had the opportunity to spend some time strolling around the Mall of America. There appeared to be several customers that fit the above profile shopping in the mall's new Bloomingdale's store. Each carried multiple bags from upscale stores and appeared to be thoroughly enjoying the experience.

THE MAGIC OF THE INTERNET!

If someone had come to you with an opportunity to invest in a store that sells jewelry given to women by their ex-boyfriends, you'd probably pass. www.exboyfriendjewelry.com, launched in February, is just that, an online place to buy, sell, trade, or even give away jewelry from ex-boyfriends, girlfriends, or spouses. It also appears to be a good place to vent. When I last checked the site, there were 1,173 rings, 323 necklaces, 171 bracelets, 159 sets of earrings, and 268 items classified as "Gifts that should have been jewelry." This concept most likely wouldn't make it as a store, but it's perfect for the web. Even with eBay and other auction sights selling some of the same merchandise, this site comes at it from a totally different angle and its entertaining to read the stories behind the jewelry.

DOWN TO THE WIRE...

• Congratulations to Mattress Firm on the opening of its 500th store. The new store in San Antonio, Texas, joins the Houston-based company's growing chain of stores in 21 states.
• Wal-Mart is getting ready to open Marketside stores, a new small format food store that appears to be a direct copy of Tesco's Fresh & Easy Stores. The first Marketside stores will open in four communities in Arizona, which is where Fresh & Easy stores first opened. If you can't out-innovate the competition, you may just as well copy what they are doing.
• Struggling Pier 1 has withdrawn its offer to buy struggling Cost Plus Stores.

Until next month...

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A TIMELY NEW KEYNOTE FROM RETAIL EXPERT GEORGE WHALIN

Over the last year we've seen dramatic changes in consumer sentiment, shopping habits, and overall economic confidence. In its latest survey, the Conference Board reports that consumer confidence in June is at its lowest level since 1992. Retailers must adapt and shift their thinking in order to deal with this new reality.

This timely new keynote will help retailers better position their stores, fine-tune their operations, and respond to a changing retail world. The ideas, insights, strategies, and tips George shares in this valuable presentation provide real-world solutions to the challenges retailers face every day!

This is an opportunity for retail associations, trade shows, franchise companies, manufacturers, and industry suppliers to help retailers survive and thrive in this challenging economy. Call 800-766-1908 today to check date availability.

Seminars and Training Programs for Managers and Associates

Delivering performance-enhancing speeches and seminars for retailers since 1987, George jam-packs his presentations with practical, real-world information. His seminars for managers and associates teach store management skills, customer service improvement, and sales techniques. If you want to improve store productivity and profitability, we encourage you to call George Whalin. Don't wait, his calendar fills up quickly.

Topics for managers' meetings and corporate conferences:
(Click on a topic for details)

Great Store Managers Make Great Stores!

How to Find an Eagle in a Flock of Turkeys! Finding, Hiring, and Keeping the BEST Retail Employees

Customer Focused Selling

Every Customer Every Day!

For more information go to our web site or call 800-766-1908.

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Speeches and Seminars for Retailers

As one of the nation's best-known and most popular retail speakers, George's speaking schedule includes events for retailers and consumer products manufacturers all across the country. He's added some exciting new convention and trade show topics. If you are a meeting planner or are involved with speaker selection and would like to book George for your next convention, we encourage you to call as early as possible. George's calendar fills up quickly.

Topics for conventions and trade shows:
(Click on a topic for details)

NEW! Strategies for a Changing Retail World

Into the Future! Powerful Trends Shaping the Future of Retailing

Retail Success! Increase Sales, Maximize Profits, and Wow Your Customers in the Most Competitive Marketplace in History

Stop, Look, Touch, and Buy: The Dynamics of Merchandising

12 Powerful Advertising Secrets Every Retailer Should Know

Power, Punch & Pizzazz! Create Advertising that Grabs Customer Attention and Sells More Merchandise

Customer-Direct Marketing: Increase Retail Sales with High-Impact Direct Mail & E-Mail

Double Your Sales and Triple Your Profits with High-Impact Marketing and Promotions!

Competition? What Competition! Standing Out in Today's Competitive Retail Marketplace

How to Find an Eagle in a Flock of Turkeys! Finding, Hiring, and Keeping the BEST Retail Employees

Every Customer Every Day!

For more information go to our web site or call 800-766-1908.

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Resources for Retailers

George Whalin's book RETAIL SUCCESS! is now in its ninth printing. A number of consumer products manufacturers have purchased the book for their retailer customers. Retailers have provided copies for their managers who regularly refer to portions of the book in their managers' meetings. And managers are referring to the book in their daily store meetings. If you haven't purchased a copy yet, what are you waiting for? For multiple copies, call us for volume pricing. For individual copies, there are also some very good deals to be had at amazon.

Go to our web site today where you'll find several other books in addition to RETAIL SUCCESS that George recommends. Check it out often, he keeps adding to the list.

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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.

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In addition to speeches and seminars, George also consults with retailers helping them improve the operation of their businesses. His consulting services include helping retailers with strategic planning issues, marketplace positioning, merchandising and store layouts, developing results-driven marketing and advertising programs, personnel management, and improving store performance. If you need solid, practical, proven insights and ideas to grow and improve your business, call us toll-free at (800) 766-1908.

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 2008. 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.

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