New High-Tech Retail Gimmicks and Low-Tech Retail Innovations Equally Significant for US, UK, Canada, Germany, and China Flagship Stores
Technology was the common thread that connected the opening of new sporting goods, home interior, and designer fashion flagship stores in the U.S., UK, Germany, Canada, and China in February. Bur surprisingly the low-tech, low-cost innovations of the newest global flagship stores are equally significant to the future of retailing as the high-priced, high-tech gadgets and gimmicks that are considered to be on the cutting edge of retail technology.
If you're not sure which high-priced, high-tech gadgets are considered to be on the cutting edge of retail technology these days, you can step into the new Sport Chek Flagship store in Canada's Edmonton Mall to see just about all of them. In one 77,000 square foot store you will see 800 screens with 200 channels, 250 computers, 80 tablets, 1,200 square feet of digital projection, interactive touch screens, RFID technology, and simulators. And no, this is not a consumer electronics retailer.
The Sport Chek flagship store is where sports and technology were merged in an effort to transform a space that retails the same kind of sports shoes, clothes, and equipment as any sporting goods store in the U.S. The goal was to create a new kind of retail space where consumers can "experience sports," in a way that is exciting and motivational, according to the president of Canadian Tire Corporation, which owns the Sport Check retail brand.
While the screens and projections create the wow, it's the golf simulator, the running gait analyzer, the ski and snowboard-tuning machine, the jersey customizing kiosk, the virtual reality trainer for trying out bikes, and the vertical treadmill for trying out climbing gear that really connects customers with sports in an engaging and meaningful way. The gimmicky gadgets will undoubtedly bring people through the doors. But as with every brick-and-mortar store, there's still some good, solid retailing that's still going to be needed in order to transform interest into sales after that.
The convergence of sports and technology can also be experienced at the Nike Flagship store in Berlin which features the Nike+ econsystem, Nike+ running analysis, and the Nike+ FuelBand SE. Technology is also an important part of the new Karl Lagerfeld flagship store in the UK, which uses iPad minis on the display racks to provide customers with the ability to browse the entire Karl Lagerfeld collection online.
Even 200 year-old UK retailer Debenhams is embracing technology in its Oxford Street flagship store, as evidenced by the $42 million makeover which included lots of high-tech enhancements there. Does it take video walls, 65" displays, and ever-changing digital content to sell clothes, kitchenware, and perfume at the world's largest department stores these days?
With the predictions about the "death of the department store" buzzing around the retail industry, it might not take high-tech gimmicks to keep department stores relevant, but it probably doesn't hurt either. Kudos to Debenhams for its willingness to transcend its history and move into 21st century of retailing. The wow factor of its flagship techno displays may not be unique enough for long enough, but it's the willingness to keep trying that is likely to give Debenhems another century or two of retailing.
There's no denying that technological flash has captured attention and headlines with the new flagship store openings around the world in February. But it's not just the big chains with the big flash and the big technology that are positioned to create the big flagship store results.
The Charles Phillip shoe boutique chose to showcase the opposite of high-tech flash in its new flagship store that opened in Shanghai, China this month. Instead of being assaulted by larger-than-life digital images of high fashion footwear in famous runway shows, shoppers at the Charles Phillip Shanghai flagship will be able to watch their customized shoes being handcrafted by cobblers inside the glass walls of their fully functional workshop. It's not just bespoke products, it's also a bespoke experience that Charles Phillip is working to create for its upscale Shanghai customers.
The global retail industry will have another example of a simple, low-tech experiential strategy when the fifth Pirch retail showroom opens as an Oakbrook, Illinois flagship store early next month. Shoppers who are looking at Pirch cooktops will be able to actually cook on them. Shoppers looking at Pirch ovens will actually be able to bake in them. Refrigerators will be refrigerating, grills will be grilling.
Even the showers, sinks, and bathtubs at the new Pirch flagship will be fully functional and demo-ready for shoppers who think it only makes good sense to try before you buy the appliances and fixtures for the most expensive rooms in youe home. There's no amount of video or techno flash that could take the place of fully functional appliances and fixtures. It's such an obviously logical experiential retail offering, it makes you wonder how any brick-and-mortar home store anywhere dares to try to sell its major kitchen or bathroom wares in any other way.
The 3D Virtual Reality Cat Walk Show at the Topshop flagship in the UK definitely created a memorable retail experience for its shoppers. But the styling experts at the Warehouse flagship not too far away will be working to do the same. The important thing for the flagships of the future will be to not just choose the strategies that are the most entertaining to shoppers, and to not overlook the strategies that will actually engage shoppers in the buying process. That buying part is, after all, kind of the point.
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Despite the World's Highest Retail Rents, Hong Kong and New York Are Still Desirable Locations for Non-Luxury Global Retailers
Since it focuses only on prime retail space, it would seem that the quarterly CBRE report on the Cities With the Highest Retail Rents in the World is of interest only to luxury retailers and the most valuable retail brands. But Hong Kong and New York are the cities with the highest retail rents in the world, and Hong Kong and the U.S. are also the two countries that Bloomberg judges to be the best countries for business overall. So no matter what the price, Hong Kong and New York are - or should be - on the radar of all retailers with global retailing aspirations.
New York's City's flagship fleet includes retail brands like Walgreens, Lane Bryant, and Victoria's Secret. Topshop, IKEA, and UNIQLO all have flagship stores in Hong Kong. These are hardly luxury retail brands, but they have all chosen to sign leases in the cities with the highest retail rents in the world.
As the U.S. retail chains and restaurants doing business in Hong Kong have found, though, being a non-luxury retailer in a high rent city is not always a profitable venture. Despite that, the largest U.S. retail chains and other retailers around the world are finding value in the brand visibility of their Hong Kong and New York retail locations and view them as entrees to the American and Chinese consuming population.
In the latest CBRE report, the global cities with the highest retail rents for Q4 2013 aren't much different than the cities with the highest rental rates for Q1 2013. Hong Kong remained the most expensive city for retailers wanting to occupy prime global retail real estate by far, even though the average Hong Kong prime retail rental rates have changed very little since the third quarter of 2012.
It is worth noting that the largest Hong Kong based retail chains don't have presence in the prime retail spaces in either their home country or any of the cities with the highest rents in the world. That's because the largest retail chains based in Hong Kong, like the largest retail chains in most countries, aren't high fashion stores filled with the hottest designer brands, but rather the mundane type of retailers like grocery stores, hypermarkets, and pharmacies.
Hong Kong is in no danger of losing its highest-priced status any time soon since its prime retail rents are 24% higher than the next most expensive city. New York is that second place city, and the popularity of New York's prime retail spaces is growing, as evidenced by the 24% increase in the average prime retail rental rates between the first and last quarter of 2013. Despite a shaky U.S. economy, both the largest U.S. retail chains, and the world's biggest and best flagship stores still want to have a presence on New York's most prestigious retailing streets.
Between Q1 and Q4 of 2013, Paris and London switched places in the retail rent rankings. Australia is still the only country with two cities in the retail rent top ten, even though prime rental rates fell in both Sydney and Melbourne between Q1 and Q4 last year. Zurich is the city that rose the most in the rankings after its prime retail rates rose 15% in 2013.
Of course retail rents are all about supply and demand and much of the demand in the highest-priced retail cities is coming from global retailers who think the retail market is greener on the other side of the planet. A 2013 study by Deloitte disputed that theory when it reported that shareholder returns were 20% higher for the U.S. based retailers that weren't focusing on international expansion.
It's unlikely that the Deloitte research is going to detour international retail expansion for most of the world's largest retail chains any time soon. When economic conditions get difficult in your own domestic market, it's easier to find a new audience for what you're offering than to change the offer to be more appealing to the existing audience. As long as retail leaders worldwide are willing to believe this is true, retail rents in the most expensive cities are sure to continue to rise.
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New Kmart Store Closings Deserve Focus on Sears Earnings Report - Retail Downsizing Spirals vs. Multi-Year Retail Expansion Plans (SHLD)
No amount of positive spin will be able to hide the continued downward spiral of the Sears Holdings (SHLD) business results when the company reports its quarterly earnings on Thursday. Sears leaders will likely be hoping that Christmas holiday shopping season sales declines, and full year losses in revenue and shareholder value will be balanced out by PR spin and false hope about the positive impact that curbside delivery, Shop Your Way loyalty activities, the Nicki Minaj Kmart Fashion collection, and the imminent sale of the Lands End business unit will have on Sears and Kmart business results in 2014. They will likely be wrong about both the strategies and about their ability to distract.
What does deserve to get some focus in the 2013 Sears year-end report is the intent behind dozens of Kmart store closings that have been put into process since the beginning of the 2014 calendar year without any proactive public notice from Sears Holding officials. It seems like the Kmart retail chain is slowly going out of business with nothing more than cookie cutter corporate statements about "routine" lease non-renewals.
Do Sears leaders intend to renew any Kmart retail store leases at any brick-and-mortar location at any time in the future or will the entire discount retail chain be downsized and liquidated one commercial lease non-renewal at a time? We don't know because Sears leaders aren't saying much about anything until pressed for a statement from local media outlets after employees spill the beans about their impending Kmart pink slips.
In the absence of any officially announced changes in Kmart retailing strategies, we can only assume that Sears Holdings leaders are planning to do the same things in the same ways in both the short and long term. The substantive strategy change seems to be that instead of expecting different results from the same-ol'-same-ol' strategy, Sears leaders are now realistically expecting continued failures which will then culminate in liquidation sales.
It's hardly the dignified way that you would imagine one of the oldest U.S. retail chains would make its exit from the communities it has served for decades. But you can't have the same old school leaders leading in the same short-sighted way and expect that good long-term business decisions are going to be made all of a sudden. Nobody who's been following Sears is insane enough to believe that's possible.
Besides the 33 Kmart store closings that Sears Holdings leaders hope nobody's counting, the leaders at Radio Shack stores, Brown Shoes/Famous Footwear stores, and Sbarro stores are also hoping that nobody's counting the hundreds of stores they collectively added to the 2014 Store Closings list this month either. It seems these retail chains are struggling with lost brand identity, retail relevance, and customer base much like Sears and Kmart. So it's not surprising that they are sharing a common fate and that their chains are shrinking.
But while the newest store closing announcements have received most of the attention this month, the number of U.S. based retail chains that are expanding in 2014 is definitively larger than the number of chains that are downsizing. McDonald's, Wal-Mart, Nordstrom, Hobby Lobby, and Tim Horton's are just some of the retail chains that added thousands of stores to the 2014 Store Openings List in February.
Not only do the store opening announcements from the largest U.S. retail chains reveal multi-national destinations, they also reveal multi-year intentions. Beyond the numbers themselves, the most encouraging aspect of the 2014 Store Openings list is the fact that retail leaders are making long-term expansion plans and aren't afraid to make those plans publicly known.
Multi-year planning requires a certain level of confidence in the predictability and stability of the economy as a whole. When retailers like Starbucks, YUM Brands, Nordstrom, ALDI, and IKEA look five years ahead and see something positive, then we can all have a reason to feel optimistic about that same time period. Things might not work out exactly as planned, but it's probably safe to bet that the future will still be brighter for the retail chains on the 2014 Store Opening list than it will be for Kmart.
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Retailers Find Social Marketing Sales Success on Instagram and Pinterest That Facebook Never Delivered - The Retail Social Media Shuffle
Facebook is yesterday. Instagram is tomorrow. Pinterest could go either way. That might not be the assessment of social media users who are photographing, posting, updating, pinning or viewing the billions of photos, posts, updates and pins of others. But to the World's Largest Retail chains that are constantly trying to figure out the best way to convert social media activity into measurable social marketing results, this is a valuable perspective based on the research recently released by GlobalWebIndex.
Facebook has the largest number of registered users, but according to the GlobalWebIndex, the attention of Facebook users is waning, and the active use of Facebook is decreasing. A 3% decrease in activity among 1.3 billion Facebook users doesn't seem all that significant, except as an indicator of engagement. Apparently Facebook is becoming a less essential part of daily life, no matter how slowly.
Compare that to Instagram, which has a much small user base at 150 million but both the number of users and the activity level of Instagram users is growing. According to another report from L2 Digital Thinktank, Instagram has 15 times the level of user engagement as Facebook.
According to L2 research, these are the numbers which measure the behavior of the average Instagram user:
- 57% use Instagram daily
- 35% use it more than once a day
- 90% of Instagram users are 35 or younger
- 68% of users are women
- 16% of adults online with income of $75,000+ use Instagram
The potential in these numbers is obviously attractive to social savvy retailers since more than half of the Top 150 Brands on Instagram are retailing businesses and more than 231 luxury brands are actively working to create Instagram visibility. And the time spent establishing a presence and building an audience is likely to be time well spent, based on the success that retailers have seen on the slightly more well-established Pinterest platform.
A recent study published in the Harvard Business Review reported that 21% of Pinterest users actually purchased the products they liked or pinned onto their own boards. And 80% of those Pinterest pinners purchases were made within three weeks. The visual appeal of Pinterest is a showcase for products that leads to the elusive social sales conversion. Instagram has that same visual appeal, so there's no reason to believe it won't (eventually) deliver similarly impressive social marketing results.
Retailers can't afford to not have presence in the social spaces where so much consumer attention is focused every day. But retailers also can't afford to confuse activity with accomplishment on social platforms. That means retailers will need a willingness to adapt to new social platforms as often as consumers adopt them. In a world where infinite cyber possibilities intersect with unprecedented consumer empowerment, the social media shuffle is a dance that retailers are undoubtedly going to learn to perform well.
Taco Bell Breakfast Threat to McDonald's, Subway, and Burger King Can't Compete With a Starbucks Loyal Customer Community Eating Breakfast Together
After Taco Bell (YUM) confirmed today that it will start serving breakfast nationwide at 5,000 or so restaurant locations throughout the U.S. at the end of March, YUM Brands gave the leaders of other breakfast-serving U.S. fast food restaurant chains like McDonald's (MCD), Subway, Dunkin' Donuts, Burger King, Chick-fil-A, and Jack in the Box a reason to lose sleep. The one retail breakfast destination that has leaders who are probably still sleeping soundly because they feel no threat is Starbucks (SBUX).
No matter how many millions of breakfast burritos Taco Bell serves up, it will present no serious threat to Starbucks for the same reason that the McDonald's specialty coffee drink menu, the Dunkin' Donuts loyalty program mobile app, and the Krispy Kreme bottled coffee drinks present no serious threat. No matter how much other restaurant chains copy what Starbucks does, they still can't compete with what Starbucks is.
Just a few days ago, I arrived at a Starbucks on a Saturday a little after 7:00 AM. That seemed quite early to me for a weekend morning, so i was surprised to find a line of customers queued up already. I was even more surprised that the customer lineup looked like the photo above for the entire ninety minutes that I was sitting in the restaurant. And it's not because the service was slow. Even though five Starbucks "partners" were moving like Energizer barista bunnies, the quickly moving customer queue kept replenishing itself.
This particular Starbucks location was within two miles of a McDonald's, Subway, Dunkin' Donuts, Burger King, and Chick-fil-A. Admittedly I didn't drive to each of those restaurants to compare their customer queues on that same Saturday morning. No matter what the competition was doing, though, the Starbucks business volume was impressive considering the number breakfast options that were easily available. Even though I know all the reasons why, I'm still always impressed to see the number of consumers who are willing to pay the price to get their Starbucks fix.
After about an hour I was looking for a lull so I could get a warmup for my beverage, but there was no slowdown in sight. So I decided to see if I could insert myself into the beverage delivery side of the counter instead of the relentlessly busy order-taking end of the line. After one of the five fast-moving baristas delivered a beverage order to "Alicia," I quickly asked if it would be possible to get a top-up of hot water for my tea. Fast-movin' barista girl didn't miss a beat when she smiled and said "Of course!"
Not "Sure." Not "Yep." No obligatory politeness. I've been on the receiving end of scripted customer service responses and this wasn't one of those. What I got first was a sincere and enthusiastic response, and shortly thereafter I got my hot water topoff.
Yes, it's the coffee, the mobile pay app, and the loyalty program that Starbucks customers like and competitors like to copy. But behind and beyond all of that is the "Of course!" attitude that designs and delivers each offering in a uniquely Starbuckian way. That's what the competitors don't get and therefore can't duplicate. And that's why no matter how many restaurant chains create offerings in an effort to steal Starbucks market share, they pose very little threat to the Starbucks business.
The Starbucks Experience is certainly not a new or unfamiliar phenomenon. And this isn't particularly a dramatic example of it. But in that same morning I also got reminded that to its most loyal customers, Starbucks is about even more than the legendary Starbucks Experience.
While working on my laptop and drinking my refreshed and rewarmed green tea, a man walked in the door, walked straight over to me, stood uncomfortably close, leaned over and looked at my computer screen, looked at me quite intently, turned around, and walked back out the door. The two Starbucks customers sitting next to me noticed the shocked look on my face and asked me if I knew that man. When I told them he was a complete stranger, they became very protective.
One of my Starbucks neighbors got up and looked around the store inside and out for Mr. Scary Guy. My other Starbucks neighbor reassured me that they had my back and wouldn't let Mr. Scary Guy bother me again. "We don't let things like that happen in our Starbucks."
I felt like John Quinones was fixin' to walk around the corner and congratulate my Starbucks neighbors for their gallant and conscientious behavior. And as appreciative as I was that they noticed and cared enough to respond, I didn't get the impression that it had anything to do with me. This was about "our Starbucks" and the deep sense of ownership that these two customers felt for it.
Starbucks is not just a breakfast destination. And it's more than a good customer experience. It's a community. There's not a fast food restaurant in America that will beat Starbucks at the breakfast game because that's not the game that Starbucks is playing.
There will be plenty of customers who will eat breakfast at Taco Bell after March 27th who care nothing about whether there is any such thing as a Taco Bell community as they're munching on their syrup soaked Waffle Taco. But those are the same customers who don't care if there is any such thing as a Subway community, a Dunkin' Donuts community, a Jack in the Box community, etc. Those aren't the customers that helped Starbucks grow by 46% last year. They're the customers that left McDonald's USA with a 1.4% same store sales fall in the final quarter of 2013.
So now Taco Bell will provide one more option for a rotating base of fast food breakfast customers. And while all the largest U.S. fast food chains are focused on capturing breakfast business, Starbucks will continue to focus on capturing the hearts of its customers by establishing the relationships that build the loyalty that create the community that happens to eat breakfast together pretty often. Neither approach to breakfast is better or worse. But they do create very different results.
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Do Department Store Declines and Closings Worldwide Signal the Death of Department Store Retailing or the Birth of a New Department Store Era?
Seemingly, the decline is getting steeper for for the world's largest department store chains. The last of the Loehmann's 39 discount department store locations in the U.S. are expected to close their doors for the last time this month. The U.S.-owned Strauss Innovation department stores chain in Germany is scrambling to keep its entire chain of 96 stores from closing after filing for creditor protection last month. With rumors of an imminent merger between Australia's two of Australia's largest retail chains - Myer and David Jones department stores - Australian news headlines are predicting "The Death of the Department Store."
After announcing that it would close one-third of its department store chain in Finland, Kesko CEO Matti Halmesmaki said during a press conference this month, "It is a global phenomenon that centrally-located department stores are struggling." There's plenty of evidence to support the Kesko CEO in his conclusion that department stores worldwide are struggling, and an equal amount of evidence to support that his conclusion is wrong.
Most importantly, though, the most recent data on department stores worldwide shows clearly that the decline of any one department store chain is not a result of a global department store closing phenomenon, nor is the decline of the department store segment of the global retail industry a foregone conclusion. What seems to be the death of traditional department store retailing might really be the birth of a new department store era
Don't tell the Chinese retail industry or Chinese consumers that the days of the department stores are gone. According to the Global Department Store Retailing report from UK research firm Verdict released this month, department stores in China will generate 30% of the total global department revenue by the year 2019. And that global department store revenue is not being predicted to decline any time soon, but rather grow to $100 billion in the next five years, which will be an increase of about 22%.
To be fair, department stores are still a bit of a novelty for a large segment of the Chinese population, and the Verdict study does report that total department store revenue has decreased globally by about 5% since 2009. Those revenue decreases, however, are not necessarily a reflection of the death of the department store, as much as they reflect a loss in the relevance of the tired, old legacy department store offerings and their loss of appeal to today's shoppers.
For instance, a look at the 2014 Store Closings list highlights that JCPenney is closing 33 of its mid-priced department stores this year, Macy's is closing three of its upscale department stores, and Target is closing 8 of its discount department stores. But a look at the 2014 Store Openings list highlights that Nordstrom will be in the midst of a store opening frenzy, after making the promise that would double the size of its current Nordstrom Rack discount department store chain by 2016.
So what's keeping Nordstrom shoppers shopping in those physical stores when other department stores claim that its impossible to compete with Internet shopping competition? Clues can be found in the latest customer Favorite Retail chain for Fashion and Apparel Shopping report. Nordstrom was the #1 favorite department store in that report, beating out department store competitors like Macy's, Dillard's and JCPenney.
According to the 4,000 customer surveyed, Nordstrom is the best department store because of its in-store experience, merchandise value, loyalty program, and customer service. All of the largest retail chains in the U.S. claim to deliver to be the best at these fundamental retailing practices, but apparently department store shoppers find evidence of that claim most often at Nordstrom and Nordstrom Rack department stores.
Nordstrom also has private label brands and cutting edge designers at discount prices. Nordstom's expansion indicates that the sum total of its retail practices is a winning formula for department stores today.
This is not to suggest that department stores, particularly in mature markets like North America, are not having challenges. In Canada, department store industry revenue has decreased an average of 1.5% per year for the past five years, according to an IBISWorld report last month. And in January 2001 department store sales in the U.S. totaled more than $19.9 billion, compared to just $14.21 billion in January 2014.
According to the U.S. Department of Commerce, department store sales in the U.S. have been falling since 2001 and are currently back to 1992 sales levels. But the fallacy of this department store downturn data is that it is evidence that shoppers obviously just don't want to shop at department stores any more. And even less true is the conclusion that if department store shopping is passe' in the U.S., it must be true for the entire global retail industry, or that department stores are obviously in decline everywhere, as the Kesko CEO suggested. Nordstrom's near-term expansion is just one piece of proof that the dire predictions about the "death of department stores" worldwide is unfounded. And there's more.
Year-over-year sales at department stores in South Korea increased more than 7% in South Korea, according to South Korean finance ministry data. The John Lewis department store chain in the UK reported this month that its annual same-store sales increases last year were the highest since the start of the recession.The Thailand-based department store chain Robinsons is planning two store openings in Vietnam this year. The German Breuninger department store chain recently opened a brand new 172,000 square foot five-floor department store in Dusseldorf.
In the U.S., Ralph Lauren's latest quarterly earnings pointed to its 14% increase in sales of its branded products in department stores as the biggest contributor to its estimate-beating earnings. And this department store revenue is not coming from Ralph Lauren's own branded stores. So, obviously U.S. shoppers are still shopping in department stores, and (some) merchandise is still selling from those department store shelves.
It's just that the old major competitive advantage of department stores - a wide range of selection - isn't all that relevant with the whole world of choices at a cyber shoppers' finger tips. So, department stores are going to have to redefine their competitive advantage and re-identify their brands based on that different strategy. What is the motivation for a shopper to physically hunt through a massive store for the right product at the right price in the right size when they could accomplish that same thing faster and easier on their computer or mobile phone?
When the largest department stores in the world have a good answer to that question, then they will have a good reason to continue to exist. But the even bigger question for the department store sector of the global retail industry is probably not one that most department store leadership teams are willing to ask. That is, do department store closings and declines really reflect the effect of online competition and changing consumer buying habits, or do they just reflect the need for a new vision and mission for department store retailers which probably will require a change in department store leadership?
Like it or not, that's a question that will answer itself for all of the largest department store chains in the world eventually.
January U.S. Retail Industry Job Loss Numbers Not That Significant Except to Newly Unemployed - Best Retail Employers for the Retail Job Seekers
A large amount of U.S. jobs and unemployment data has been released this past week for the jobs market in general, and the U.S. retail industry in particular. Since about 25% of the U.S. public sector workforce is employed by the U.S. retail industry, according to the National Retail Federation (NRF), it's understandable that a reported loss of 21,600 retail jobs in January would be viewed as having significance for the U.S. economy overall. But January U.S. retail job loss numbers probably are not really that significant except, of course, to the newly retail unemployed who are involuntarily seeking new retail employers.
Much like same store sales numbers, the monthly micro measurement of retail jobs doesn't have as much meaning and relevance as might seem apparent at first glance. Why don't we measure and report daily job movement and get all riled up when Tuesday's job numbers are lower than Monday's or the Monday week-over-week jobs numbers look grim? It's because daily or weekly job numbers would have little meaning except the meaning we would assign to them. And week-over-week comparisons would have little relevance to total job numbers for the year. Monthly retail jobs numbers are much the same.
January retail job losses don't reflect the release of seasonal workers, as some might assume. But they do reflect planned 2014 store closings, which are routinely announced in January for mundane reasons like the timing of lease terms, and fiscal year reporting calendars. While the hundreds of thousands of retail job cuts announced in January, 2009, for example, were a genuinely big deal, the 21,600 retail job cuts announced in January 2014 are only as big of a deal as we make them out to be.
It's also worth noting that while an aggregate number of announced retail job cuts were reported in January, we don't see a corresponding report of the retail jobs that are planned to be added. Where would that data come from? The 2014 Store Openings roundup would be a good place to start.
Domestically the ever-expanding Big Three in discount dollar retailing are planning to open more than 1,400 new U.S. retail store locations. No, that's not Wal-Mart, Target, and Kmart. We're talking Dollar General, Family Dollar, and Dollar Tree the discount chains which collectively have more than double the number of brick-and-mortar stores than Wal-Mart, Target, and Kmart combined. Approximately 11,000 new retail jobs will be created as The Dollar Three execute their 2014 expansion plans. That's quite a big underreported offset for the retail job cuts that have been spinning through the media in the past week.
Besides the fact that there's a bigger audience for negative news, the reluctance to include store openings and job creations news along with store closing and job cut news is the fact that it's obviously speculative. New jobs aren't real until stores are actually opened, and there are no iron-clad guarantees that the store openings will actually happen, despite any retail chain's best intentions. Store closings, however, are rarely announced unless they are a foregone conclusion.
Store openings will be happening all throughout 2014, though, and they'll be happening without all the sensational headlines about their aggregate effect. The aggregate effect of jobs created by store openings in 2013 contributed to a healthy year-over-year gain of 230,000 retail jobs, according to the NRF.
That's a significant report. The January 2014 jobs loss report, by comparison, tells only one half of the story for 1/12th of the year. That's far less significant, except to the 21,600 people who were directly affected by it.
If you are one of those newly unemployed retail employees, as long as you are looking for a new job, you might as well look for your new job in one of the retail companies that are judged to be the best employers that the retail industry has to offer. Luckily, there is also plenty of data gathered and reported about that, including the recent 2014 Best Retail Companies to Work For annual report from Fortune Magazine, and the 2014 Best Retail Employers for Women from the National Association of Female Executives (NAFE).
The best retail job, of course is the retail job that's best for you and your particular employment needs and desires. There are at least 14 ways to find the best retail employer in 2014. If you're a retail job seeker - whether voluntarily or involuntarily - you might want to make sure that you've checked out all fourteen.
Store Closings of New York, Toronto, and London Retail Flagships Start 2014 - Iconic Flagship Stores Close As Major Retail Chains Change Course
The biggest news about global flagship store openings in the first month of 2014 is actually about flagship store closings. Sears (SHLD), Barnes & Noble (BKS), and Indigo are just some of the retailers that announced and staged big closings of big iconic flagship stores in prime locations of major shopping destination cities like New York, Toronto and London this month. And as the metaphor goes, when the flagship sinks, it is a sure sign that there is going to be a change in course for the entire fleet.
Sears announced that it will no longer be sailing in the sea of shoppers that frequent the popular Loop shopping district in the Chicago CBD when it closes its flagship store located there in April, 2014. A Sears spokesperson is reported as saying that the Sears Chicago flagship store has performed poorly for much of the time since it was opened in 2001.
Reportedly, Sears had hoped that the Chicago Loop location alone would be enough to attract a more trendy, urban shopper to the Sears brand. Mostly, though, the Sears Chicago flagship store succeeded only in proving to itself and all of the oldest U.S. retail chains that the days of if-you-build-it-they-will-come are long over for the U.S. retail industry.
The Barnes & Noble New York flagship store on Fifth Avenue is another big flagship store that is no longer leading its retail fleet after closing its doors for the last time this month. With a shrinking demand for books of all kinds, it's not difficult to understand why Barnes & Noble no longer has need for its 154,250 square foot flagship store with its oversized Big Apple monthly lease.
The now closed Fifth Avenue Barnes & Noble had been listed in the Guiness Book of World Records as the world's largest bookstore in terms of square footage. Before closing, its 12.87 miles of shelving was stocked with academic, medical, and law textbooks, since the Fifth Avenue Barnes & Noble flagship store had been transformed into a college bookstore.
There's no response from the Guiness Book of World Records officials about which bookstore will be able to claim the title of World's Largest bookstore, but it is certain that it it won't be the bookstore located in Toronto store that is actually named "World's Biggest Bookstore." That's because this 64,000 square foot flagship bookstore location owned by the Indigo Books & Music chain is also closing in February. Indigo can't justify the $1.5 million yearly lease to keep running this flagship bookstore, which is more of a tourist attraction than a profitable retail store.
Toronto is also losing another flagship bookstore when the Book City location on Bloor St. concludes its going out of business sale that started this month. The owners of the small Book City bookstore chain point to the changing demographics of the location's neighborhood as the reason for the flagship store closing. They have publicly expressed their commitment to continue in the bookselling business with their three other Book City locations.
The other retail flagship shopping destination city that lost flagship stores this month is London. For many of the same reasons that New York and Toronto lost iconic flagship bookstores, London lost two of its legendary flagship stores when the HMV flagship at 150 Oxford St. and the HMV Technology flagship store both closed this month.
At 60,000 square feet, the Oxford Street flagship HMV was once the world's largest music store. But as a result of consumer demand for music shifting from physical to digital, the one-of-a-kind HMV music store location will soon be a much less iconic one-of-many sporting goods store.
Rumor has it that London will be also losing both of its Juicy Couture flagship stores soon. These flagship store closings are not really about consuming trends, the state of London retailing, or the UK economy as much as they are about the Juicy Couture brand itself.
The New York Juicy Couture flagship store is also rumored to be closing this year, along with some or all of the Juicy Couture standalone stores. Once an aspirational brand sold in stores like Neiman Marcus and Bergdorf Goodman, the Juicy Couture brand, if what we hear is true, will be coming to a Kohl's store near you in the Fall of 2014 instead of being sold in branded Juicy Courture stores.
It's not all that surprising or unusual that so much global flagship news would be focused on flagship store closings. January is always a big month for announcements about global and U.S. retail store closings. But not all flagship news was negative in January and the flagship store marketing strategy is still sailing strong in the global retail industry.
The Hudson's Bay Company (HBC) will be losing some real estate from its portfolio, but gaining a flagship store after the legacy Canadian retailer sells its downtown Toronto complex, leases it back, and adds a multi-level Saks Fifth Avenue flagship store in 2015, which will be adjacent to its iconic Hudson's Bay flagship. Similar to Sears, Hudson's Bay is a legacy retailer with a long history and a huge real estate portfolio.
Reportely, it was not surprising that HBC agreed to sell the piece of prime commercial real estate, and it is expected that HBC may make more moves to better leverage its real estate portfolio in the future. The difference between the real estate strategies of these two legacy retail chains is that HBC is trying to be proactively smart while the dramatic Sears shift from retailing to commercial landlording is much about survival.
Click these links to get more details about the best practices, leading edge technology, and customer engagement strategies of the newest stores to join the global retail flagship fleet in January, 2014:
- Peet's Coffee & Tea San Francisco Flagship with Bowling Alley Tabletops
- Nasty Pig Chelsea Flagship Store with Basement Photography Studio
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Will Menchies Have the Most Retail Chain Potential After Smashburger Loses Its Most Promising Retail Concept Position in 2014?
According to the team at Forbes Magazine, a U.S. retail company has to cross one of two lines in order to move from being a "promising concept" to being a company that's fulfilling its promise. When a retailer either launches an IPO or generates more than $250 million in annual revenue, that's the point when Forbes deems it to have moved beyond its present-day promise into its successful future. As a reward for making that transition, Forbes promptly kicks the successful retail company off the annual "America's Most Promising Companies," which is exactly what's about to happen to the Smashburger restaurant chain.
Smashburger smashed all other privately owned retail chains by topping the 2014 Most Promising Retail Company list. When compared to all other "promising" U.S. companies in all industries, Smashburger received an impressive #6 ranking. Two other retail companies were also ranked in the Top 20 of most promising companies in 2014. Because of their year-over-year growth, Cardcash.com was ranked #14 and Menchie's was ranked as the #16 most promising company in America.
Two days after the 2014 Forbes Most Promising list was published, Smashburger pretty much assured that it will never again qualify for "most promising" status. After adding 70 new locations to the 2014 Store Openings Roundup, Smashburger is projecting its 2014 sales will increase to $350 million. Smashburger CEO Scott Crane also revealed that Smashburger will be exploring the possibility of becoming a publicly traded company in 2014. So if all goes according to plan, Smashburger will smash through both Forbes "most promising" boundaries, disqualify itself as a "promising" company, and have to find its way onto some other Forbes annual ranking list in the future.
Smashburger's exit will leave room for some other retail company to grab the Most Promising spotlight. The question is whether there is another privately-held retail company that is ready to take center stage.
Looking at the other retail chains on the 2014 Most Promising Retail Companies list, it's clear that there is not much in the way of succession planning for retail promise. The 2013 Most Promising Retailers list included 12 retailing companies. One year later, the amount of promise in the U.S. retail industry has apparently decreased by 50%. But quantity is not as important as quality when finding a promising successor to Smashburger. And the retailer that seems to have the most promising qualities for the future is Menchies.
Menchies Frozen Yogurt moved up from the #49 ranking on the 2013 Most Promising Retailers list to the #16 position in 2014. Behind that notable rise, was 748% growth in 2012, 152 store openings in 2013, 100 rotating yogurt flavors, 51 custom proprietary flavors, six special dietary options (including low-carb, no-sugar-added, dairy-free, nonfat, gluten-free, and kosher) one mobile app that was launched in between all of that Menchie's madness.
In 2014 Menchie's will be opening a self-serve frozen yogurt food truck in Houston, a store at Universal Studios CityWalk in Orlando, up to 180 stores in China with a recently acquired master franchisor, and some percentage of 400 stores that were "in development" as the 2014 calendar year began. From stores in 35 states and 11 countries, more than 3,000 Menchie's employees will be helping to sell more than 30 million cups of yogurt, and hopefully creating an equal number of smiles.
And that's not just a line from a press release. Making customers smile is actually a Menchie's core value and a key business strategy that Menchie's leaders credit for its exponential five-year growth. Let the eye-rolling begin!
In order to fulfill its promise, Menchie's leaders vow that they will NOT be focused on the numbers, no matter how good those numbers may be because that's not where the success of a company can be found. According to a recent interview with Franchising.com, CEO and co-founder Amit Kleinberger said, "Anyone can sell a product, but very few places can provide an exceptional experience... we look forward to increasing our footprint in the hopes that we can join more communities and make even more people smile."
And when talking to FastCasual.com, Kleinberger insisted that businesses that have growth as a primary objective will fail. "We don't focus on what we do. We focus on why we do it," he said. "Customers buy why you do it; not what you do. Everything we do is focused on the why," Kleinberger said in that interview.
To many retail industry managers that sounds like touchy-feely soft skills fluff stuff. And perhaps it is. But Kleinberer's commitment to the Menchie's employee culture and customer experience is akin to similar attitudes expressed by Zappos founder Tony Hsieh, Amazon's founder Jeff Bezos, and Starbucks founder Howard Schultz. Fanatic employee culture and customer-centric strategies have worked pretty well for them.
Retail leaders can debate the practicality of the Menchie's mission, vision, and core values all they want, but there's not much that's debatable about Menchie's results. Besides its high-ranking position on the 2014 Most Promising Companies list, Menchie's was ranked #1 on the Restaurant Business magazine's Future 50 list, #17 on the Fastest Growing franchise list, and #127 on the 2013 Entrepreneur Franchise 500 list.
It might not be about the numbers for Menchies, but it's still nice when the numbers consistently point to a promising future.
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Why Amazon Fresh Could Close Down Traditional Supermarket and Grocery Store Retail Chains - 2014 Food Retailing Trends and Predictions
The biggest 2014 trends, and predictions for the largest supermarket and grocery store chains in the world include in-store technology, grocery home delivery, mobile data mining, health trends, and private labels. But one trend that supermarket and grocery store experts and analysts don't seem to want to focus on is the many ways that the supermarket and grocery store segment of the retail industry is no longer a segment. In a fragmented grocery retailing environment, new food retailing efforts like Amazon Fresh (AMZN) have the potential to close down traditional supermarket and grocery store retailing just because they're completely new.
It's not difficult to predict that grocery retailing will become even more fragmented in 2014. Recently, the undeniably significant role that convenience stores are going to be playing in the food retailing segment in 2014 and beyond came into focus when British grocery store chain Sainsbury's announced that the number of convenience stores it operates will exceed the number of grocery stores it operates before the end of 2014. In case the leaders of the largest U.S. retail supermarket and grocery store chains have shrugged this off as being just the one-off business strategy of an atypical grocery chain on foreign soil, perhaps the Sainsbury expansion strategy deserves more attention.
Of the 250 largest retail chains in the world, 63 of them are are classified as supermarket chains, according to the 2014 Global Powers of Retailing report from Deloitte Touche Tohmatsu and STORES Magazine. But even though supermarkets are the single largest segment on the most recent world's largest retailers list, the dominance of supermarket and grocery store chains is not really all that dominant.
Included on the list of world's largest retail chains are also 27 hypermarket chains, 17 convenience store chains, and five warehouse club chains which also have grocery sales as a significant part of their business. In the U.S., discount retail chains like Dollar General, drug stores like Walgreens, and even Internet retailers like Amazon are expanding their food offerings as a main strategy for increasing revenue in 2014.
These days only home improvement stores like Home Depot, electronics stores like Best Buy, and apparel stores like Macy's don't have food or groceries as a significant part of their product mix. Even home interior and furniture store IKEA sells food. In fact, more than two-thirds of the world's largest retail chains are in a category of retailers which sell some sort of food products and fresh groceries.
So not only are the world's largest supermarket and grocery store chains losing food retailing territory to bigger hypermarket, discount, and warehouse competitors, they're now also starting to lose turf to smaller competitors as well. "Smaller" in this case refers to the size of the stores, but not necessarily the size of the companies that are intently working to make grocery store sales a bigger part of their retail business.
The old neighborhood grocer concept is slowly becoming the new black in grocery retailing. "Small formats" and "smaller footprints" are in. And while the leaders of some of the largest grocery store chains in the world are busy figuring out how expansion through downsizing is going to work, the convenience store segment is busy making more footprints, which are already small by definition.
In the U.S., the convenience store industry increased its store count by 1.4% in 2013, which brings the total convenience store count in the U.S. to 151,282, according to a report released this month by the National Association of Convenience Stores. Compare that to just over 37,000 total supermarket and grocery store locations in the U.S., according to the Food Marketing Institute.
A 1.4% increase doesn't seem like too much for the largest U.S. supermarket and grocery store chains to be concerned about until it is noted that 34.3% of all retail store locations in the U.S. are convenience stores (excluding the restaurant segment of the retail industry). While it's a huge capital expenditure for traditional supermarkets to create and move to downsized stores, from their existing smaller formats, convenience stores are well positioned to easily respond to the shifting consumer behaviors of grocery shoppers.
So what? The history of the convenience store segment of the retail industry started with fill-in grocery staples like bread, milk, eggs and butter. If convenience stores could profitably sell more grocery items, wouldn't they be doing it already?
That's not really the point in the age of I-want-what-I-want-when-I-want-it ultimate consumer empowerment. It's not product mix that's redefining grocery retailing. The retailers that capture a bigger share of retail grocery sales won't do it with re-merchandising, they'll do it with re-definition.
With so many options available to shoppers, the lines between the types of retailers that sell groceries are getting more blurred. And that is what traditional supermarket and grocery food retailers need to worry about - the loss of identity and along with it a loss in retail relevance.
Supermarkets are adding gas stations. Gas stations are becoming neighborhood grocery stores. Pharmacies have groceries. Grocery stores have pharmacies. Dollar stores have supermarket castoffs. Supermarket have dollar store tchotchke aisles. Target shoppers can buy their lettuce with their lipstick. Costco shoppers can use their mobile grocery coupons after purchasing their mobile phone two aisles away.
It's all becoming same-as, same-as for American (and global) grocery shoppers. So what's the purpose of that stand alone retail location that's specifically known as a "supermarket" or "grocery store?" What might seem obvious to those leading the largest retail supermarket chains is not so obvious to those who are shopping in them.
If "selection" is the top of mind answer to why supermarkets are still relevant, consider these statistics from Florida digital marketing company Catalina. A research study of 32 million shoppers at 9,968 grocery stores revealed that the average supermarket shopper buys only 260 different products per year, and ignores 99.3% of the options available to them on the supermarket shelves.
Even though they might say they like it, grocery shoppers don't really want "selection." What they really want is their own personal selection of 260 preferred products. And American consumers in particular have demonstrated that they care less and less about where or how they get what they want.
The high-tech, low-loyalty Millennial shoppers will be the primary spending demographic by 2020 and their desire for consuming empowerment and control will drive the redefinition of grocery retailing. It is disloyal demands and multichannel consuming behaviors of the Millinial shoppers that will likely fragment grocery retailing to the point that traditional supermarkets will become largely irrelevant.
The replacement for the traditional grocery retailing concept will likely be a retailing system that is not defined by a category of merchandise, but rather by a style of retailing. And if we give the idea of that serious consideration, then we'll fully grasp that Amazon.com is already operating in a future retailing paradigm. That's why, of all the different type of retailers vying for their share of the grocery consuming dollar, Amazon Fresh should be the one that makes supermarket and grocery retailers around the world very, very nervous.