The slow death of large retailers

I think the larger retailers need to get back to basics, but also have vision for the years ahead.  Here are 5 things I've been thinking about that they can do:

1. Streamlined products - Retailers need to streamline product offerings to new/unique products, high sell through commodity products with features that clearly differentiate them, sell co-branded retailer/vendor exclusive products and sell services that assist consumers with the products they sell. Make people come in for those products unique to their stores.

2. Store within a store/ Smaller footprint -Work together with other large retailers selling to similar demographics, to be a "store within a store" whether online or at a familiar large retailer.  Smaller foot print stores with clear branding, good product mix and a great experience would also be a way to go.  JCP has been trying to get off the ground with a new retail launch a few years back, though it seems the Board of Directors didn't have much patience for any long term strategy.  Though they did manage to put in smaller stores like Sephora within their stores and an update their clothing lines with quality brands at reasonable prices.  That said, a new round of store closings was announced recently, so it may have been too little too late.  I think a Consumer Electronics mini-store within their store, like a mini Best Buy or a national jewelry retailer could also do wonders to up the quality of their very basic jewelry section.  JCP has been struggling for years, but now is the time for innovation or it won't be around much longer.

The "store within a store" idea fills a product gap that an existing retail chain might have, allows each retail chain to either cut expense or get additional money toward rent/online presence.  Apple did well by putting their stores within CompUSA stores in the early 2000's - then Apple decided to break out on their own, with Apple retail stores, which ended up being a very successful move.

3. Training - Apple educated salespeople at CompUSA for their internal Apple stores, and those sections of the stores always had customers. However, CompUSA didn't give that same level of intense training for their other products, because most vendors couldn't afford that level of regular commitment.  Beyond CompUSA, retailers typically charge vendors thousands of dollars to do lunch and learns, product trainings, pre-prints, end caps, etc.  Vendors with limited Marketing Development Funds (MDF) can't afford advertising at Tier 1 stores, or only sporadically, after dropping profit margin to just get on the shelf.  Is it any wonder that so many vendors disappeared in the early 2000's? For that matter, is it any wonder CompUSA, CircuitCity and others went away too?  Ultimately, the consumer has been left with a limited product choice and fewer retailers.

4. Retail Greed - Retailers need to re-evaluate its short term monetary (MDF) focus, for longer term success. They need to see Vendors as true partners - good retail buyers already know this.  Some take vendor MDF money because they can, but not because it creates any long term sell through or is part of a bigger strategy.  Smart retail buyers require vendors to have strategic and tactical promotion plans, and to use creative marketing ideas that gets ROI for both the vendor and the retailer.  In the future, it would benefit retailers to allow their sales floor teams to be educated by vendors at little or no cost to the vendor, so consumers can buy at the store, without having to research online.  Retailers should also showcase new vendor products or in promo emails at a LOW cost and assist vendors in navigating their store's demographics and special needs.

Sure, a buyer can force a vendor to pay $30k for a line or two in a store hard copy catalog that no one will ever use, but that is not going to generate sales for the vendor or the store - it's just about collecting money.  That kind of low-level extortion has been going on for a long time and retailers need to take responsibility for seriously marketing products, not just taking a cut.  Vendors also need to get more creative and come up with promotions beyond instant rebates to get foot traffic to the stores and increase sell through.

5. Low Price Focus - Retailers still have the upper hand when it comes to hammering vendors to reduce cost to buyers and MSRP.  WalMart has a reputation for really getting vendors to cut their prices to the extreme and vendors do it in hopes of selling a huge quantity of product. It's a risk that some vendors lived to regret, because the sell through numbers didn't match expectations.  This kind of agreement has left many smaller vendors taking huge financial hits or out of business.  That said, WalMart has staked it's claim on having the lowest price in town and price cuts are great, BUT, it is only one factor - and it doesn't always create long term sell through.

There will always be people in search of a deal, but a majority of people will be looking for more. They want a good price, but they also want service, product knowledge, a nice store environment, appropriate product selection,  quality, online purchase options, product customization and more. Now that consumers have come out of their economic bunkers after the Great Recession, they are caring more about those other things, not just price alone.

Even in 2017, we're still seeing retailers close or downsize and I expect we haven't seen the end of it.

Showrooming, Amazon & the Next Phase of Retail

To me, retail stores and museums have a lot in common. 

I can spend literally hours in either a fantastic retail store or a great museum.  I take my time and walk the floor slowly, admiring, thinking and assessing all of the interesting things that come into view.  Both places exhibit objects of beauty & necessity either on carefully positioned shelves or in elaborate displays.  Visitors in both places admire and desire what they see.  Even the design of the space and the architecture that holds these treasures, is carefully conceived to show off the best attributes of the collection. 

Anyone that has a similar affinity, feels the same way when they walk into a perfectly appointed, favorite retail store or a great museum for the very first time. It's a little exciting to think about the prospect of what you will find, just beyond the doorway.  

The biggest difference, is that in the case of a retail store, you have the ability to bring those beautiful, useful, wonderful objects home with you. Unfortunately, most museums frown upon this.

BUT, for anyone that wants to have breakfast at Tiffany's or has the urge to test a new 3D television, the latest  iPhone or  a new Tesla, walking into a retail space can feel like a little bit of heaven.  

The downside to providing this kind of glorious atmosphere to consumers, is a little problem called, "Showrooming," one of the latest thorns in the side of retailers.  

For example, you're looking for a TV at Best Buy, you try out everything you see, get a little information from the salesperson, go home, do a search for the best price on the TV you want and then purchase it from an online retailer - not Best Buy.  Imagine thousands of people doing this daily and you can see why retailers are concerned.

In essence, Best Buy is paying to provide you with the information/experience you need to make a buying decision and you are giving the sale to an online retailer with the best price or free shipping.  It is an expensive proposition for retailers to provide a 'Showroom" when they can't guarantee you'll give them the sale.  Many Brick & Mortar retailers are finding their sales numbers impacted because they are now competing with online stores that carry the same items, but have lower overhead, resulting in lower prices/free shipping for consumers. 

Amazon seems to be enemy #1 to many traditional retailers, since they offer thousands of products at a lower cost than traditional retail, have expanded delivery options and have partnerships with many other online retailers. It's safe to say that Amazon has benefited from traditional retailers losing sales.

And they aren't done... 

Amazon is currently testing same day drop shipping that they will potentially provide for traditional retailers in  large cities. This is an interesting and ambitious play that may ultimately make Amazon the godfather of retail - IF they are successful with this massive undertaking.   They have 2 or three brick and mortar retailers on board for the testing and I believe I read that Target is one of them.  

Basically, a customer would have the ability to go into a physical store, order something and have it delivered to their house a few hours later.  This will allow brick and mortar retail shoppers to get a better experience at their local store, getting a shipment faster than they would from an online store.  

For instance; a customer could have a large or heavy object delivered to their home immediately, after picking the item out.  As any good car salesman knows, you don't let a potential customer "walk off the lot."  With a same day shipping model, the store could capture the sale and offer quicker delivery than an online store,  instead of being subject to "showrooming." This also plays to the American consumer's desire to have something they purchased, right away.

The benefits to the brick and mortar retailer could be big, at least in the cities that Amazon would potentially offer this service.  

Besides allowing retailers to compete against online stores (even Amazon) on delivery. Other benefits include;  reducing  store warehousing space, cutting out some business from existing product distributors in select markets and they could differentiate themselves from online & other brick & mortar retail competitors without same day service.  That said, they could potentially reduce costs and level the playing field to some degree.  

Of course, it remains to be seen what they would be paying Amazon for warehousing & shipping product...

If Amazon does offer this service in the future, any Brick & Mortar retailer that doesn't use it, would find themselves at a big disadvantage. Smaller regional retail stores in a city like San Francisco or Los Angeles could only compete by using Amazon's service too, because if larger stores are using it, smaller stores would  also succumb to "showrooming" if they had nothing additional to offer customers. 

In my opinion, smaller stores & regional retailers could use Amazon's potential service to gain a huge advantage against larger retailers.  If smaller stores stepped up their service, product knowledge, store experience &  added unique product offerings, in addition to successful commodity products, AND same day shipping, it could prove to be very successful for them.  Larger retailers will be focusing on trying to stop the bleeding, but smaller, specialty retailers that are more nimble, could focus on building more revenue and foot traffic.

Ultimately, Amazon would be the biggest winner if they can make this work.  Warehousing & shipping in large cities for brick and mortar stores is a NEW revenue stream.  What revenue they don't capture through this area, they will continue to make in online purchases at Amazon.com or the retail sites they are the back end for and they will have a part in traditional retail too.  

As mentioned above, Amazon offers back end web services for online retailers - basically managing  online stores for their partners, while still looking like their partner's website.  It's called Check out by Amazon  Of course, they get significant revenue for running the the back end of popular sites like Target.com and hundreds, maybe thousands of others - big and small.  Which is why Target recently moved away from Amazon's back end services and went on to develop their own Target.com site.  I have no idea how much Target.com was paying to Amazon, but I imagine enough to make creating their own expansive, multi-layered site worth it..  

Interestingly enough,  I believe Target is one of the retailers testing Amazon's new same day shipping service for retail stores, so the brick and mortar side of Target clearly sees an advantage to working with Amazon.  

It's not a mystery that Amazon is an amazing retail innovator, but they also realize people will not exclusively buy products online in the future  There is still a need for physical retails stores, chains and shops.  Amazon is clearly working on ways to get a piece of the pie in the traditional retail arena too and they're smart for doing it.  

"Showrooming" doesn't have to be the death of brick and mortar retail, but it will help bring down retailers that don't evolve or have a true plan for the future.  

Like the music & movie industries, many retailers, especially in the consumer electronics space, chose to rest on their laurels and be tactical & reactive, instead of strategic, expecting consumers to continue coming in droves no matter what.  Many didn't realize or seriously assess the threat that the Internet could could pose to them or for that matter, the benefits it could create for them.  Within a 15 year span, consumer electronics retail companies like Circuit City, CompUSA, Good Guys, Tweeter & others went from raking in huge profits to closing up shop. Granted, the recessions throughout that time period didn't help either, but not thinking strategically didn't help either. 

 Best Buy has hung on, up to this point, but they suffer from ongoing tactical approaches and floundering leadership, which doesn't bode well.  They are going to have to really reinvent themselves to ultimately get out of the ditch they find themselves in.  I hope they can.

That said, this is an opportunity and a wake up call for remaining brick and mortar retailers to think about their long term future - online and off. 

 Let's see if they get the message.

Trader Joes - A slice of Retail heaven

Anyone that has known me for longer than an hour, understands that I'm a Trader Joe's ADDICT.  It is a rare week indeed, that I'm not there at least twice, usually loitering around the free sample bar or rifling through the "New Products" bin, just to make sure I didn't miss anything. Oh yea, I shop too.

Like any good brand - TJ's is a very positive experience. Everyone that works there is super helpful and dresses in Hawaiian shirts, which instantly puts me into good mood.  They always have new items and the cashiers always know how to pack a shopping bag without having it break before you make it home.  I feel about TJs, the same way that Holly Golightly felt about Tiffany, 'It's like nothing could ever go wrong there."

Besides having healthy items, everything tastes good as well and their prices are much more reasonable than Whole Foods.

There are new things and old reliable items that I incorporate into my shopping list, some you will know and others might be new to you, but all are great - period.

I thought I'd just give you my shopping list from yesterday & a few extra things - check these items out yourself:

Frozen Steel Cut Oatmeal - 2 servings (heat & serve) $1.59
Frozen organic blueberries (great to put in your oatmeal) $2.29 
Meyer Lemon Very Thin Cookies (great with tea or ice cream) $3.99
Organic Red Pepper & Tomato Soup (put Gorgonzola crumbles on top) $2.79
TJ's Crumbled Gorgonzola $2.99
Gorgonzola Crackers $1.99 (great with soup or cheeses)
Seasoned Ahi Tuna Steaks (tasty marinade and healthy) $5-7
Seafood Mix with shrimp, scallops & calamari (great sauteed in butter & garlic over rice) $5.29
Sweet Apple Chicken Sausage (yummy for breakfast or on the grill) $3.99
Santa Maria Tri-Tip & Beef Kabool (both flavorful & great on the grill) Price ranges
Broccoli slaw (mix with ranch dressing , cashew pieces & dried cranberries as a side dish) $1.49
Bell pepper Melange a Trois (Frozen multi-color bell pepper strips for stir fry or side dishes) $1.99
Frozen pomegranate seeds (already plucked for you!) $2.99
Chocolate Lava Cakes (just like the restaurant) 2 for $3.99
Mochi Ball ice cream (small scoops of ice cream with a jelly-like shell -yummy!) $2.99
Frozen Chocolate Croissants (store and bake when needed) $3.99
Trader Joe's Baklava cookies (great middle eastern treat) $4.99
Olive tapanade (spread on crackers, bread or put in sauces) $2.99
Fresh whole grain pizza dough (make pizza, bread knots or appetizers) $1.29
Dark Morello Cherries in a jar (great for cherry crumble, pies or on top of ice cream) $ 2.29
Tito's Handmade Vodka (very smoooooth) $17.99
Almond Sparkling Wine (nice for brunch & dessert) $5.99

And finally, if you have a cat or two, the must-have Double Wide Cat Scratcher $6.99

The other nice thing about Trader Joe's is that you can put in requests with the shift Captain for anything that has been discontinued or that is out of stock.  They will hold the item you want when it comes back into stock and will call you  to let you know that you can pick it up.  They really DO call you!

Over the course of about 4 years, I regularly requested the apricot Stilton cheese after it had been discontinued.  I'm tempted to believe, my single-handed campaign to get that cheese back into the store, made some kind of impact.  Not only do they have apricot Stilton cheese again, but I've seen cranberry and other flavors too, around the holidays.  Now if I can just bring back the recently discontinued oatmeal flax cranberry cookies...


If you are as big a fan as I am, you can follow Trader Joe's on Facebook, they have a few different fan groups that offer recipes, new item info and other fun stuff.  The TJ's website at www.traderjoes.com isn't the most dynamic site in the world, but you can find your nearest TJ's and some other info.

By the way, let me know what you've found at TJ's - anything cool or interesting that I should know about?  Leave your comments below for me...

Enjoy the summer and see you at Trader Joe's!

April - Get into the Garden!

Thanks to El Nino and all of the rain this winter, it's not surprising that we're starting to see green hillsides and beautiful flowers popping up in people's gardens.  Because I have a new garden of my own, I thought I'd focus on great things to get for your garden or patio for April.

If you are a new gardener or just want to know when to plant what, I recently bought a great book called, Pat Welsh's Southern California Organic Gardening . The great thing about this book, is that it gives you a month by month list of what to do in your garden and how to do it.  There is a focus on using organic methods of killing bugs and fertilizing plants, which is great if you don't want harmful pesticides around the house or plan to eat the things you grow.  A fantastic book for So Cal gardeners.

Need to snip some stray hedge branches or cut your roses?  I found a great hand-held bypass pruner by Fiskars (the same people that do scissors for scrap booking) for a reasonable $9.99 at Target. They cut really well, are comfortable to grip, have a safety lock and a rose stem stripper built in to make non-thorny-leafy arrangements.  They have a similar pair for $7.99 without the rose stem stripper too.

Good Earth - Miracle grow Moisture Control Potting Mix is the best soil to keep plants alive if you over water or forget to water from time to time. There is also a formula for gardens too.  It's about  $6-7 a bag at  your local garden store, but worth it if you have potted plants that require a lot of watering, but you aren't a regular watering type of person.  I have potted gardenia's and primroses that like moist soil, but if I forget 2 or 3 days of watering  or if we have a heat wave- they stay alive anyway!

If your roses or garden are in need of mulch, the best product I have found is cocoa shell mulch.  Not only is it great for your plants, it won't grow mildew and has the wonderful side effect of smelling like CHOCOLATE after you put it down. You can find it at OSH or any other garden center for around $9 a bag. 

Have you gone to IKEA this month?  If you haven't visited their outdoor gardening tent, you should!  They have new solar powered Chinese Lanterns in white, red or turquoise for $9.99 each - the cool thing about them is that they are made from an outdoor fabric, not paper, so they will hold up to the elements.  They have a variety of solar powered lights such as mini-lanterns strung on a chord and long and tube lanterns that can hang from high tree branches and pergolas - $19.99 each.

I also bought  battery powered, round, blue LED tea lights called, Solig Lights that are sold in a 3 pack for $2.99 - they are great to put in votive holders to add ambiance on windy nights outside.  They are LED, so they last longer than normal lights, but you can purchase extra batteries for them at IKEA. 

If you need  a little garden inspiration, you might want to go on a field trip to The South Coast Botanical Garden in Palos Verdes , The Huntington Gardens in Pasadena or take a stroll through the neighborhoods on Coronado Island in San Diego - Coronado Historic Home Tour

Check out other April field trip links on the side bar.  Enjoy your Spring!