Mike Jeffries May Be Replaced With New CEO in 2014 - Abercrombie & Fitch Brand Not So Valuable Under Jeffries’ Leadership (ANF, TGT, SBUX, HD, MCD)
When the ranking and valuation list of the world's most valuable retail brands was released this month, there was one retail brand that was conspicuously absent - Abercrombie & Fitch (ANF). No matter how much CEO Mike Jeffries has exalted the Abercrombie & Fitch brand in his own mind, according to brand consulting firm Millward Brown, the monetary value of the Abercrombie & Fitch brand is not enough to earn it a place on the annual Top 100 list. In fact, the Abercrombie & Fitch brand is less valuable than KFC (YUM), Target (TGT), IKEA, H&M, Starbucks (SBUX), Home Depot (HD), and McDonald's (MCD) - seven companies that I'm pretty sure make Mike Jeffries' spray-tanned skin crawl.
If we look at a comparison of the World's Most Valuable Brands from the past six years, we don't see the presence of the Abercrombie & Fitch anywhere. And yet the mission of Abercrombie & Fitch, the rhetoric about Abercrombie & Fitch, and the leadership decisions of Abercrombie & Fitch are all about the brand. I asked the question in 2009 and I'll ask it again today... Where exactly should we look to find evidence of the enormous value of the Abercrombie & Fitch brand?
Certainly after last year's flip-flop-boys-on-a-plane revelation and this month's global controversy caused by Jeffries' supercilious remarks about non-skinny people, we won't find the value of the Abercrombie brand rooted too deeply in public opinion about its Chief Executive Narcissist.
We may not find the value of the Abercrombie brand inside its organization either, since Jeffries has only a 38% approval rating from former and current employees, according to Glassdoor.com. The Abercrombie & Fitch website has maintained consistently low Internet retail customer satisfaction ratings, so that's not where the value of the brand is hiding either.
We won't find the value of the brand in the size of the chain, since Jeffries has led it to the top of the 2013 U.S. Store Closings list. We're also probably not going to find it on the balance sheet either, after Abercrombie reported a 9% decrease in revenue and a 17% drop in same store sales for the first quarter of this year.
If we look hard we can find some short-term value in ANF stock, which is 6% higher than it was at the beginning of the year. But if we look harder, we won't find it in the long-term value of ANF stock, which is selling today at 2006 prices.
As bad as all of this may look, a recent conversation at a coffee shop caused me to believe that negative publicity, low employee approval, sales, and stock prices are the least of Mike Jeffries' and Abercrombie & Fitch's worries right now.
I was sitting in a coffee shop with a group of millennials from Germany, the Netherlands, Australia, and the U.S. One of the girls from Germany was wearing a Hollister t-shirt... >> continue reading >>
Do you think Mike Jeffries should be replaced when his contract expires in 2014? Cast your vote in the poll above and then click the link beneath it to see the current results.
Where 2013 College Grads Can Look For and Find Jobs - Retail Headquarters in the Best Cities for College Grads and the Best Cities for Employment
Nearly two million college graduates were dumped into the job market in the past four weeks, which is scary news both for the new graduates and also for those already in the U.S. workforce with or without degrees. There are two questions about retail employment that are pertinent to these 2013 college grads. First, do retail employers have suitable employment for newly-degreed job hunters? Second, where are the best places to find the best retail jobs available to new college grads?
In a study released this month by management consultants McKinsey & Co., half of the respondents who had graduated college between 2009 and 2012 didn't think about the jobs they would or wouldn't be able to get when they chose their degree or their college. So, it's not surprising that 53% of those recent college grads also said they would choose a different major or a different college if they had it to do all over again.
These are the kind of thoughts that will be probably be running through nearly two million minds in a U.S. job market that is both tight and skills mismatched. A college degree is not a job guarantee. That fact might still come as a surprise to 2013 Millennial graduates who generally aren't lacking in confidence or feelings of entitlement.
A study released in January by the Center for College Affordability and Productivity (CCAP) estimated that there will be 19 million college graduates between 2010 and 2020, who will be competing for less than 7 million new jobs requiring a college degree. Confident or not, entitled or not, according to the Bureau of Labor Statistics, 7.7% of people with college degrees were completely unemployed in 2012.
Given this somewhat depressing employment data, college grads should be happy to know that the U.S. retail industry, which employs 15 million people and accounts for about two-thirds of the U.S. GDP, has been thriving relatively well in 2013 and has been adding jobs and hiring new employees every month. But this still isn't a booming U.S. economy, so there are still more resumes than positions in every major U.S. retail company. The 2013 college grads are going to have to work to find their retail work.
A college grad seeking a retail job can't walk door-to-door through the mall and expect to find one any more. And frankly, why would they want to? There are professional, managerial jobs requiring college degrees in all of the largest U.S. retail chains too, if you know where to find them. So, where should degreed retail job-seekers start looking?
The best cities for college grads are the ones that have... >> continue reading >>
Surveys on Retail Personalization Technology Can’t Justify Data Collection Invasion of Privacy - Will Shoppers Opt Out as Legal Retail Cyber Spying Grows? (WMT, SHLD, TGT)
Americans and European grocery store shoppers want more personalization and mobile interaction, according to a recent survey by Symphony EYC, an online and in-store data collection company based in California. This is great justification for the 83% of retailers leaders surveyed at the annual RetailNext Executive Forum this month who said they have increased the amount of data that is being collected and analyzed in their retail stores in the past two years. While the number of ways to gather data about consumers grows, the controversy about retail personalization vs. retail invasion of privacy grows as well.
Shoppers want a personalized shopping experience. Retailers are eager to give shoppers anything that will result in more sales. So what could be controversial about that?
"Personalization" requires "tracking," and tracking requires "data collection," and data collection results in data "sharing." And at what point does the "personalization" process cross the line into "intrusion?" Is there such a thing as a right to shopping privacy? And if retailers' ethics allow them to invade someone's personal shopping space, should those retailers be legally required to stop?
As with every advancement in retail technology, the boundaries of the boundless are defined by the collective consciousness of those who speak the loudest about it. Unfortunately people don't usually speak up and boundaries are not usually defined until after some egregious violation has occurred.
The e-commerce technology company RichRelevance recently acquired the Swedish online merchandising platform Avail. What this means is that the company that acquires and tracks data about shoppers on Walmart.com (WMT), Sears.com (SHLD), and Target.com (TGT) is now also acquiring and tracking data from some of the largest European shopping websites like Argos in the UK, Migros in Switzerland, Coop in Denmark, and GAME, the GameStop equivalent in Europe.
Should consumers be concerned that one privately-owned company has access to that much information about that many people around the world? Especially when the people in their data base didn't even know they were under surveillance?
Every technological advancement in data collection comes with an unlimited potential for loss of privacy and personal freedom. Plenty of consumers are concerned now. Plenty more will be concerned the first time that RichRelevance data is leaked, sold, pilfered, hacked, or used for some nefarious purpose.
This month the founders of Euclid Elements told an audience at the PII privacy conference in Seattle that tracking the movements of shoppers via their mobile devices without their knowledge or permission is not an invasion of privacy. This is largely based on a 2012 U.S. Court of Appeals ruling that Americans have no constitutional right to privacy regarding their location if that location is tracked via their mobile device. This lack of privacy ruling is also viewed as the precedent for recognition software currently being used to associate an unlimited amount information about unwitting consumers with their faces.
Both mobile tracking and facial recognition technologies are being used by large U.S. retail chains in the name of "personalization." The leaders of both physical retail stores and Internet shopping websites say the more they know about customers the better they can serve customers. But in practical execution, what that really means is the more they find out about you, the easier it will be for them to get money from you. In my mind, those two things are not the same.
The real world retail equivalent of today's website shopping "personalization" is the annoying used car salesperson who follows you around like a puppy dog and repeatedly wants you to "Look at this!" based on the slightest interest that you show in any feature of any car. You say, "Nice sunroof!" and the salesperson latches onto that positive sales cue like a poodle with abandonment issues, dragging you around to look at 113 other used cars on the lot with sunroofs, whether this is a dealmaker feature for you or not.
But the reason why the "personalization" of websites is less annoying than the average used car salesperson is because most shoppers don't realize that the same tactics are being used by the cybersales bots that are forcing them to "Look at this!" by manipulating what is and isn't seen as cyber shoppers click around a website.
For instance, if you buy a black 100% cotton v-neck t-shirt online or even just click on one to see if it comes in your size on a website with sophisticated "personalization" technology, you will then see a lot of black, 100% cotton, and v-neck apparel on your computer screen the next time you visit that website whether you want to or not. And because the website is programmed to show you "more of the same," you might be missing a bright red printed silk something that you'd really love because it's buried down on page 23 in the search results.
Most of today's retail personalization technology works on the theory that all shoppers are creatures of habit and will always go for "more of the same." Some of the more sophisticated technology is based on the assumption that there are a high percentage of Sheeple Shoppers who are easily swayed by the also-bought-bot... "Shoppers who purchased this book about quadratic equations also bought this garlic press with the purple rubber handle." These website recommendations might see be helpful hints, but if all Internet shoppers realized what was going on behind the scenes to make those "personalized" recommendations possible, they might find them to be manipulative, intrusive, and rather insulting.
But that is a huge "if." If Internet shoppers realized what was going on. If Internet shoppers cared to realized what was going on.
I would like a website pop-up to ask me every time I sign up... "Would you like us to watch your every move so that our algorithms can do your thinking for you whenever you click to our website?" With that kind of forthright question, I might even answer "yes." Retailers would say that they already ask consumers that question every time a consumer is given the opportunity to accept the 10,000-word Terms of Service agreement. Not really.
With Terms of Service agreements, it's all or nothing. If you use our website these are our rules, which include being watched and tracked. And if you don't want to participate in our cyber surveillance, then you can't shop on our website. This is a common stance and as long as this kind of corporate bullying is left unquestioned by Internet shoppers it will continue to exist.
Undoubtedly there is someone who is typing a comment right now that says if I don't like my every click tracked on Internet shopping websites, then I can always just go back into the brick and mortar stores where I'm free to look at whatever I want with anonymity. Agreed.
That is, unless I shop in the brick-and-mortar stores of Nordstrom or 35 of the other largest U.S. retail chains that are now tracking consumers as they move around the mall by tapping into their mobile phone MAC address. These days you don't have to be using a retail mobile app or even connected to a store's WiFi network in order for a store to search, find, and track you via your mobile phone. Just because this is legal, doesn't mean that it's okay.
But is there really all that much be concerned about with being tracked through your mobile device? What kind of data can possibly be tracked from a mobile phone that's shoved in your pocket or purse? Well... By tapping into your mobile device, retailers can not only track how many times you have walked into the store over the past year, they can also find out how many times you have walked past the store without walking inside. Yes, retailers are tracking your movements even if you never set foot in one of their stores. Which would be similar to Walmart.com tracking your every click on the Internet even if you never visit its website.
How long did you spend inside the store each time you visited? Where did you walk inside the store? What merchandise displays did you pause in front of? How long did you spend in the dressing room? Did you walk past our store and walk into a competitor's store? How much time did you spend there? All of this information might have been gathered and shared about you the last time you visited a mall. Did you know? Are you happy about it?
And this is not just information that is being tracked in an anonymous aggregate. This is individual information about individual people gathered from their individual mobile device. And every time an individual consumer walks by or walks in, new data about them is gathered, stored, and amassed. That is, unless the individuals leave their mobile device at home, remember to turn their WiFi off, or get a new mobile phone altogether.
At least on a website the complicated and microscopic Terms of Service do inform users about how they are being tracked and what is being done with the information collected. I don't recall being informed about tracking and data gathering practices when I walked in the entrance of my neighborhood mall. And I don't recall being informed about how I could opt out. If data tracking is being allowed to happen in a mall, then shouldn't a mall be required to disclose that to its shoppers just like a website?
If it creeps you out to know that your every movement is being tracked in malls and retail stores around the world, the good news is that you can click here to opt out directly with Euclid Elements, the company that provides the tracking technology to many of the major retailers. It's not the only techno tracking that's being used, but it's one of the most widespread.
All this technology is being developed and used in the name of "personalization" and what the retail companies are calling an improved in-store experience. But in the case of brick-and-mortar stores, isn't that what living, breathing retail sales employees are for? Aren't retail salespeople the ones who are supposed to be personalizing in-store shopping experiences by building relationships, paying attention to detail, and delivering a personal touch? And isn't that what retailers like Nordstrom are famous for?
By the way, after eight months of tracking their customers through their mobile devices, Nordstrom announced that it has stopped doing it. There's no official word about whether the mobile tracking was stopped out of respect for Nordstrom customers, but we can only hope that the retailer that topped the 2013 Customer Favorite Fashion Store list will continue to put people before profits.
Has it come to the point that retail success these days is dependent on technology-based manipulation?
There are ways to personalize things while allowing the shopper to be in control of the personalization. Instead of showing me black, 100% cotton, and v-neck items based on my last purchase, you could just ask me if I want to see other black things, other 100% cotton things, or other v-neck garments. Asking the question and allowing me to answer is personalization. Not asking me and showing me things whether I want to see them or not is lumping me into a mathematical formula of generalized conclusions based on the behavior of the aggregate. That's the opposite of personalization.
Retailers seem to want to create a consuming Borg with their "personalization" technology, but conscious consumers don't really want to be part of a collective. They want real, genuine, individual personalization. And just because retailers slap a "personalization" label onto the many ways they use their involuntary data collection doesn't make it so.
To me the problem with the increasing amount of data collection and sharing in the retail industry is in the how of it. If all this "personalization" is so good for the customer, then why is the execution of it happening without the customer's knowledge or permission? The reason, of course, is because if consumers were aware of all of this cybersurveillance they might object to it or choose not to participate. Yes. Exactly.
A customer-driven request for personalization based on voluntarily surrendered pieces of information is quite different from cyber spies that surreptitiously gather information to store, use and share at will. The first scenario is a cooperative relationship. The second scenario is a manipulative scheme. And the second scenario, it seems to me, would only be the chosen strategy of retail leaders that are desperate, lazy, controlling, or some combination of all three.
Opt-in programs are used for things that retailers believe that customers will view as obviously beneficial. Opt-out programs are used for things that are mostly for the benefit to the retailers. A majority of consumers still have not have caught onto that yet, and many of the largest U.S. retail chains seem to be betting their reputations on the belief that a critical mass of consumers never will catch onto that.
But in the age of unlimited accessibility, that's a big gamble. It takes very few viral social media minutes for consumer opinion to shift dramatically, as our friend Mike Jeffries can tell you. And by the time consumer opinion opts out of a retail relationship because of policies and behaviors that are judged to be unethical or unacceptable, there is no amount of data that's going to reveal how to win those opted-out customers back.
U.S. Retail Industry Invades Australia and Global Flagship Fleet Sees Store Closings and Protests Amidst Expansion (WSM, TGT, GPS, AAPL, WAG, COH)
In the months of April and May, the fleet of retail flagship stores has been expanding around the globe at an impressive rate. But despite continued global flagship marketing success, not all flagship news has been positive, with store closings and consumer protests also part of the most recent global flagship news.
Similar to the Canadian invasion by American retailers, Australia is becoming a bigger retail target for some of the largest U.S. retail chains. Recently a trio of U.S. based home decor and lifestyle stores opened adjacent to each other in the Bondi Junction area of Sydney Australia. This is the only place in the world where all Williams-Sonoma brands are adjacent to each other, with the Williams-Sonoma flagship store sharing walls, floors, doors and Aussie shoppers with the Pottery Barn/PBKids flagship and the west elm flagship store.
The initial buzz from Sydney shoppers was overwhelmingly positive for all of the stores, which earn their flagship label not only by being the "first," but also by being some of the "best" examples of Williams-Sonoma retailing in the world. Creating a highly engaging retail experience is obviously a high priority for these flagship stores. Sydney shoppers have been already been wowed by the first Williams-Sonoma cooking school, the Pottery Barn dinner planning services, and the west elm stylists that will give free in-home consultations.
What Aussie shoppers have particularly appreciated is the styling and merchandising of the three flagship stores, and it's no wonder why. My personal observation of Australian retail stores caused me to conclude that visual merchandising is not a high priority down under. In general Australian retail stores have low ceilings, bare walls, basic fluorescent lighting, and very little signage. They're just not pretty, nor are they particularly logical or well organized. Don't get me started on the annoying lack of pricing.
Even the American retailers doing business in Australia are lacking in merchandising and visual appeal. The Australian Target (TGT) and Kmart (SHLD) stores that I visited look as if they recycled some of their blueprints from the 1970s for their Australian stores. But their basic utilitarian design isn't all that noticeable because Aussies don't seem to know they could expect more.
This is good news for American retailers who are increasingly invading the Australian retail scene because the visual merchandising level that is the standard in the U.S. is at a "wow" level on the other side of the planet. That's sure to change with the new invasion of international retailers on Australian shores, however.
A recent report by Colliers International predicts that 2.3 million square feet of retail space will be occupied by international retailers in Australia within the next five years. Reportedly the retail brands that will be most aggressively entering the Australian market are Topshop/Topman, The Gap (GPS), Zara, and Uniqlo. Apple (AAPL), and lululemon athletica are both expected to have 30 retail store locations in Australia by 2018. Retailers from at least ten countries plan to invade Australian retail space in the next five years, but 38% of that retail invasion will come from the U.S., Colliers predicts.
Other international flagship stores that have opened recently include the Marshalls flagship store in Toronto, Canada, the Coach (COH) flagship store in Tokyo, Japan, the Marks & Spencer flagship store in Bangalore, India, and the Dior flagship store in Hanoi, Vietnam. This is just a sampling of more than three dozen major flagship locations that have opened around the world in the past couple of months, which proves that the flagship marketing strategy and the global flagship fleet are still sailing strong, despite continued uncertainties in the global economy.
On American shores, the U.S. retail chain that is most aggressively using the flagship marketing strategy is Walgreens (WAG). There are now new Walgreens flagship stores in Boston, San Francisco, and Washington DC that have opened up in the past couple of months. These Walgreens are being dubbed as "flagships" because of their size, but also because of their atypical Walgreens offerings which include a sushi bar, a coffee shop, a frozen yogurt bar, and a manicure salon.
The Walgreens flagships are definitely different than the 8,000 "regular" Walgreens stores on every street corner in America. But since there are so many of these "flagships" being constructed with all of the same "flagship features," collectively they are not so much a flagship fleet as they are just a new store design that's being rolled out in key cities across the U.S. This doesn't detract from the Walgreens intent to improve its retail experience, which is reportedly being well received by customers who are impressed with the improvements.
Not all news from the global flagship retail fleet has been positive recently. The Apple flagship store in Manhattan had a leaky cube which allowed water to pour into the store during a particularly intense New York rainstorm this month. In the case of an electronics store, the Apple team found that water is not the friend of flagships.
There's a rumor that the Time Square Toys 'R Us store may be closing in the next three years. The rumor started at the ICSC conference in Las Vegas when real estate brokers were actively marketing the flagship space where the Toys'R Us lease will expire in 2016. Reportedly the Toys 'R Us flagship rent is now $12 million, and it is estimated that would increase to $50 million with the signing of a new lease. Industry experts are convinced that the future of the Toys Times Square flagship is already sunk.
Recently Nokia closed its largest flagship store in the world which had been opened in 2007 in Shanghai, China. The Nokia Shanghai location was one of 18 global flagship stores that Nokia opened in the Asia Pacific region which featured a multimedia in-store experience staffed by Nokia Academy graduates.
At the time that the flagship stores were opening, Nokia declared that customer feedback and insights from its flagship fleet of stores would drive decisions about Nokia products and services. Apparently the captains of Nokia's flagships stopped listening to their passengers somewhere along the way because Nokia's year-over-year sales in China were down 79% in 2012.
Nike's flagship store in Beijing also appears to be sinking and will be replaced by an H&M store when Nike's lease expires in 2013. Reportedly the Nike (NKE) exit is not due to poor sales, but rather the landlord's preference for "young, fashionable brands" which have a higher profit margin. Nike has more than 100 other retail stores in Beijing and has announced no plans to close any of them any time soon, even though the company has seen sales decreases in China recently.
Randalls is also blaming the landlord for the closure of its flagship store on South Voss in Houston. Supposedly lease renewal negotiations didn't go very well. But Randalls also has another "premium" store just two miles away, which might have caused its real estate team to not be very cooperative in the renegotiation process.
Protests have also been happening recently outside of global flagship stores for various reasons. More than 100 demonstrators outside the Reebok flagship store in Manhattan last month were protesting against the company's association with rapper Rick Ross because of lyrics in one of his songs that seemingly describes a date rape. The flagship protest, along with an aggressive social media campaign succeeded in getting Reebok to sever ties with the rapper as a celebrity spokesperson.
Another demonstration was staged outside of the Primark flagship store in London following the factory collapse in Dhanka, Bangladesh. The Primark flagship protestors were calling for the company to provide compensation to the victims of that factory disaster. As a result of that protest, and other public pressure, Primark has created a long-term compensation plan for victims of the factory collapse, which includes short-term aid, as well as a long-term plan for loss of earnings and food assistance.
These flagship protests are not only significant in their ability to get the attention of retail leaders. They are also a demonstration that the iconic status of flagship stores is recognized by consumers around the world. Flagship stores are more than just retail shopping destinations, they are brand representatives that are considered to be synonymous with the brand itself.
While there's no guarantee that flagship stores will stay afloat forever, for the time that they're sailing they're definitely still successful at attracting attention. In a global retail market that grows more crowded every day, there's great marketing value in that.
Another Day, Another Walmart Class Action Employee Lawsuit - How U.S. Retail Employment Is Defined By Wal-Mart’s Ethics (WMT, RAD, WTSL)
This month Wal-Mart (WMT) found itself on the defending end of another massive employee class action suit in California when a California judge certified a class of 10,000 employees who think Wal-Mart broke the law when it refused to provide suitable seating for its cashiers who requested it. Another day, another Wal-Mart class action employee lawsuit.
Wal-Mart's response to this latest class action certification was not that it provided appropriate seating within parameters of existing laws. Instead the response from Wal-Mart's legal team was that the class shouldn't have been certified at all, and instead, each cashier should have to file and fight an individual lawsuit. Logically it seems that Wal-Mart would prefer to just fight one lawsuit instead of fielding 10,000 individual claims. But probably legal actions work just like coupons for the world's largest retail chain. When you make the "deal" available to the masses, you're gambling that only a small percentage will actually take you up on the offer.
Publicly Wal-Mart is not denying that it has consciously chosen to deny seating to its cashiers. Reportedly Wal-Mart's argument against providing seating is that cashiers need to be able to move around to look inside carts, stock shelves, and greet customers.
So to follow that argument through to the end, Wal-Mart believes that if its cashiers are given an opportunity to sit down at any time during their work shift, that the cashiers will then lose their ability to ever stand up again. As if the cashiers are going to say, "No, I won't go stock those shelves or greet those customers because since I have a stool, my job is to now sit on my stool for my entire shift." Flimsy argument, I would say, Wal-Mart.
The point of contention in this case seems to be a confusion between the Americans With Disabilities Act (ADA) and California state law. ADA legislation mandates that "reasonable accommodation" be made to employees with "disabilities." Of course, with the increase in the number of employee lawsuits filed related to ADA legislation, the definition of a "disability" seems to be getting looser by the day and by the lawsuit.
However, California state law about seating in a retail environment is much broader and not necessarily connected to "disabilities" at all. Very simply and without qualifications, The California Industrial Welfare Commission Wage Order 7 says this...
"1. All working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats.
2. When employees are not engaged in the active duties of their employment and the nature of the work requires standing, an adequate number of suitable seats shall be placed in reasonable proximity to the work area and employees shall be permitted to use such seats when it does not interfere with the performance of their duties."
So, disability or not, California says retail employees should be provided the opportunity to sit down at any time that it doesn't interfere with their work. Why? Because California says so. Wal-Mart is taking the position that it shouldn't have to comply with the California Industrial Welfare Commission's rules. Why? Because Wal-Mart says so.
The appropriate name for the legal battle should be The State With the Biggest Population in the U.S. vs. The Corporation With the Biggest Revenue in the U.S. Speaking of annual revenue, California's annual revenue of $97 billion is less than the $113 billion that Wal-Mart collects at its cash registers every quarter. So the state of California is the legal David to the goliath Wal-Mart.
To avoid this legal battle altogether, Wal-Mart could probably have purchased 10,000 stools from its third world supply chain for about $1 each. But instead Wal-Mart decided that its opinion about suitable seating took precedence over the opinion of California agencies and lawmakers. The threat of a $100 fine per employee per pay period since 2007 didn't scare Wal-Mart. It's just another game of Legal Chicken that Wal-Mart is known for playing around the world.
It will be interesting to see if Wal-Mart is able to once again bully its way around the legal playground in California enough to wear the class action legal team down, avoid substantive penalties, or force the state of California to change its requirements regarding employee seating altogether. It's really a battle of People vs. Money, so it's probably pretty easy to predict the way things will go.
In addition to the suitable seating lawsuit, the perpetually busy Wal-Mart legal team is currently defending itself against an individual employee lawsuit filed recently for malicious prosecution and against a suit filed by a group of warehouse workers claiming poor working conditions and safety violations. A judge ruled last week that even though Wal-Mart does not directly employ the warehouse workers, the company could still be named as part of the lawsuit because it owns and/or leases the warehouse facilities where the bad working conditions allegedly exist.
Wal-Mart is also on the legal offensive with employees, filing lawsuits against groups that are daring to protest against Wal-Mart's working conditions and employment policies. A suit against the United Food and Commercial Workers International Union (UCFW) in March, and a separate suit filed this month against OUR Walmart group organizers both seek injunctions to stop protest activities from happening in and around Wal-Mart stores and at the upcoming Wal-Mart shareholders' meetings. Wal-Mart leaders don't really address the issues fueling the protests are valid. They just want the courts to help them shut the protestors up. That seems right.
And then there's the tragic Bangladesh factories where employees burned to death while creating the garments that would stock Wal-Mart shelves. The Bangladesh tragedy is not a legal battle as much as it is a moral debate. Wal-Mart's stance is that they weren't Wal-Mart's employees, so what happened at the factory is neither Wal-Mart's fault nor responsibility. So... the official ethical position from the world's largest retail chain is... What happens in Bangladesh stays in Bangladesh? It's so curious that Wal-Mart has never earned a spot on the Most Ethical Retail Companies list.
Certainly Wal-Mart is not the only major U.S. retail chain that is being taken to court by its employees. Just this month, the Wet Seal (WTSL) chain agreed to pay $5.5 million to settle a racial discrimination lawsuit that had been filed by three of its former black managers. A wage-and-hour lawsuit against Russell Stover was also filed this month by current and former Russell Stover employees who claim they have been misclassified as "exempt" employees and should be paid overtime. Rite Aid (RAD) already settled an employee lawsuit earlier this year similar to the Russell Stover suit after assistant store managers claimed they were misclassified as "exempt" and were due overtime pay.
Retailers large and small must pay attention to employee legal actions large and small because each legal battle sets a precedent for every retail company in the world doing business in the U.S. But because Wal-Mart is the defendant more often than any other retail company, the Wal-Mart legal team has the most influence in defining labor laws for the entire U.S. retail industry. In essence, with every lawsuit that Wal-Mart defends, the entire U.S. retail industry is being aligned behind the ethics, human resources philosophy, and employment practices that Wal-Mart is willing to fight for.
Depending on what you believe to be true about how Wal-Mart regards its employees (and the factory workers employed by its suppliers) this could be a terrifying thought for the future of retail employment in the U.S.
There are two sides to every court case and certainly not every employee lawsuit filed against Wal-Mart has merit. But the sheer number of employee lawsuits filed against Wal-Mart makes you wonder if it wouldn't be more productive for the retailer to reallocate at least a portion of its legal budget to positive employment practices. Isn't it at least a little bit embarrassing to the leaders of Wal-Mart to count the number of people who feel justified in seeking legal revenge because of what what they experienced while working behind a Wal-Mart nametag?
Pinterest’s Nearly Invisible Changes for the Retail Industry - How Pinterest Is Better Than Social Media Giants Facebook, YouTube and Twitter at Monetization
Yesterday I found an e-mail from Pinterest in my inbox with the subject line, "Introducing more useful pins," which was intriguing enough to get me to open it. The first line of the e-mail, "We're excited to introduce pins with more information!" which was intriguing enough to prevent me from immediately deleting it.
The new "pins with more information" were of interest because they were supposed to benefit both retailers and consumers so I read the e-mail, clicked the links and tried to figure out just exactly what was "new." The changes at first were invisible to me, and the vague explanations provided by Pinterest didn't help me find what was so "useful" and "exciting" or even what was different. When I dug a little deeper, though, what I found were changes that were barely perceptible, but not insignificant. The most pinteresting thing about the changes announced is how much better Pinterest is integrating monetization into its platform than the social giants Facebook, YouTube, and Twitter have. That really is something "useful" and "exciting."
So here's the executive summary of what the new Pinterest changes are all about. When you see the icon of a company beneath a pin, it indicates that this is an "info-rich" pin (my terminology, not Pinterest's). When you click on an info-rich pin, you will see information such as pricing and availability for retail items, review scores for movies, and recipe ingredients for food. This information appears beneath the info-rich pin in a much nicer format than just the unformattable paragraph-less comment box that would have previously appeared.
Here's the catch that neither that neither the Pinterest e-mail nor corresponding Pinterest blog post tells you about these new info-rich pins. The icons and the pretty formatted info-rich details will be invisible to you unless you have already switched over to the "new look" version of Pinterest. If you were unaware that there was such a thing as a "new look" for Pinterest and you have no idea how to switch to it, click here for the explanation from the Pinterest team.
No worries, unaware pinners... The "new look" just became available this month, presumably to support and coincide with the introduction of the info-rich pins which just happened yesterday. So even if you've been pinning out of the loop, you aren't that far behind and you haven't really missed much.
Once you've switched to the "new look," and you start to view some of the new info-rich pins, you'll realize that it's much pin-ado about nothing from a consuming pinner perspective, because the changes are almost imperceptible. The info-rich pins don't look that much different, and they don't contain any information that it wasn't possible to attach to a Pinterest pin prior to the "improvement."
Before yesterday's changes, it was already possible for any pin to contain information like pricing and product details, and was already possible to link a Pinterest image directly to a retail website sales page as well. But the imperceptibility of the changes introduced with info-rich pins doesn't make them any less valuable to the retail stores and brands using Pinterest or any less significant for the evolution of Pinterest.
The technology behind info-rich pins is what's significant here because it makes things easier for retailing websites by removing some of the manual work previously required. Now key product information can be disseminated, changed, and updated by retail websites through a feed. Having access to technology that makes it easier for retailers to interface with Pinterest and easier for pinners to purchase is a significant improvement, especially for the for the largest retailers with the largest Pinterest audiences.
The huge significance for Pinterest as a company is found in the strategy that it's using to integrate monetization into its social media platform.
Facebook, YouTube, and Twitter have had huge and sometimes insurmountable challenges with the monetization of their businesses primarily because their social media platforms were built completely divorced from commercialization and their communities grew in a sponsor-free paradigm. Introducing a commercially monetizing aspect to these social media platforms is as simple as introducing banners, sidebars, and links, but it's been sometimes impossible to get those monetizing banners, sidebars and links to pay off for the commercial sponsors. The commercial-free social media communities have simply rejected the social media sponsors by refusing to participate in a commercialized paradigm.
Pinterest, on the other hand, has been unobtrusively integrating retailing into its platform from the beginning. Granted, it seemingly was unintentional integration in the beginning, but as it became clear that Pinterest was going to join the world's largest social media platforms with membership and usage numbers, the moves towards monetization have been made thoughtfully and seamlessly. Each step towards monetization seems to keep both the retailers and the pinners in mind.
The elegance of the commercial integration can probably be credited to the fact that Pinterest is not publicly traded (yet) and has not allowed itself to abandon its original vision and intention. The philosophy of twenty-something founder Ben Silbermann still seems to be the vision that's guiding Pinterest as it evolves.
"It's exciting to see people using the product in ways that we never really expected. It's exciting that people care a lot," Silbermann said in a 2012 Inc. Magazine Interview. "And then you also feel this weight of responsibility, you sort of brought this little thing to the world, this little product, and you want to see it get better."
Seemingly this sense of responsibility to the cyber creation and the simple desire to make it better has allowed Pinterest to slowly introduce commercialization without a widespread community revolt or any dramatic community backlash. Retailers are embracing the visually uplifting intent of Pinterest, and pinners are accepting of retailers who are participating respectfully in the Pinterest space. So far, everyone is playing together in the social sandbox quite well.
As with any participation in social media, the question that's always on the table for the largest U.S. retail chains is whether social media activity is worth the effort. and the only way they really know how to measure that is with good old ROI. While it's getting technically easier to measure the ROI from social media platforms, the value of social media activities will never be completely measurable. Just like a billboard on the side of the highway or a commercial broadcast during the Super Bowl, you'll never really know exactly how your exposure on the Pinterest platform translates indirectly into sales.
There's a degree of blind faith in almost all retail industry marketing efforts which requires you to believe that when you show up in the most positive way possible in front of an appropriate audience, that it will pay off somehow at some time. And no matter how scientific we get with our marketing efforts, sometimes being in the right place at the right time with the right product at the right price is just a matter of dumb luck.
Pinterest, while an amazing success story with astronomical growth and seemingly unlimited potential, is still just three years old. It is still a social media toddler that hasn't been walking among the other social media giants for very long. So the best marketing strategy that retailers probably have at this point in Pinterest's evolution is to just to keep Pinning It against the boards to see what sticks.
Good News for Shopping Center Mall Managers in Surveys, Rising Occupancy, and Increased Traffic Is Not Good News For Mall Retailers With New Mall Marketing Challenges (BBY, BBW, JCP, SHLD)
Surprising shopper surveys, mall repurposing, and global trends are just some of the things that more than 30,000 people have been talking about in Las Vegas this week. Reportedly the mall walking and talking is upbeat at the annual International Council of Shopping Centers (ICSC) RECon convention this year as slowed U.S. mall development and rising demand for U.S. mall space are two important factors in a U.S. mall landlord's formula for happiness.
Malls have been working hard to evolve with a rapidly-changing retail paradigm - not so much to stay on the leading edge as much as just to stay alive. "Dead malls" have moved from metaphor to reality at an alarming rate since the Great Recession, but mall occupancy rates, traffic numbers, and global mall trends have been trending positively lately.
In a recent report, global property firm CBRE estimated that there is 344 million square feet of retail space under development around the world in 2013. Even though the countries and cities with the biggest mall expansion in 2013 does not include any U.S. locations, most existing American malls are finding new footing, getting traction, and moving farther away from claiming their space in the mall graveyard.
An April, 2013 survey by Glimcher Realty Trust has concluded that despite the consensus that brick-and-mortar retailing is a thing of the past, only 20% of Americans shop exclusively online, only 14% of brick-and-mortar shoppers do "showrooming," and shoppers are still willing to travel up to 30 minutes to reach a mall where they will spend at between one to five hours at least once per month. This is good news for malls that have been feeling abandoned, unappreciated, and obsolete.
The Glimcher research is in line with the most recent Piper Jaffray "Taking Stock with Teens" market research study that revealed that 82% of teen spending is still done in brick-and-mortar stores. And a third survey also confirms that malls are not yet "so yesterday" with Gen Yers (age 18-35) either.
The "Generation Y: Shopping and Entertainment in the Digital Age" report says while 91% of Gen Yers have purchased something online in the past 6 months, more than 50% also have visited brick-and-mortar retail stores in the past month. The report also concludes that Gen Yers would spend more time in malls if there were more bargains, sensory experiences, and social interaction. Gen Yers value experiences over stuff, and would visit malls more often if they perceived there would be something new to do or see or talk about when they arrived.
The Gen Y survey seems to be the one that mall owners and managers are paying the most attention to because a big topic of discussion at the ICSC RECon convention is about mall repurposing, and the future vision for malls which is much larger than just retailing.
Increasingly, mall retail space is being repurposed for medical facilities, teaching facilities, fitness facilities, cultural facilities, and even churches. This is good for mall management because it fills space left empty by store closings and store rightsizing by the largest U.S. retail chains. Seemingly, higher mall occupancy would be as good for mall retailers as it is for shopping mall owners because functioning businesses draw more foot traffic than empty store fronts.
But traffic and sales are two very different things. A doctor's visit and a shopping trip aren't the same thing and aren't necessarily compatible. Are you in the mood to spend more money after you've just been handed a prescription to fill that your HMO won't cover? Are you going to grab a bite to eat after a trip to the dentist? Do people who are sick enough to be getting medical care feel like walking around a mall afterwards? Do we really want them to?
Mall repurposing creates a lot of unanswered questions for mall retailers. Do people who use free resources from mall-based libraries then walk into the mall to spend the money they've saved by borrowing books and DVDs? Will the students attending mall-based schools be doing more trying or buying before and after class? Will the fitness crowd be checking out new fashions and filling dressing rooms after their sweaty workouts at mall-based gyms? And again, do we really want them to?
While it would seem that good news for mall managers also means good news for mall retailers, this isn't necessarily the case in malls that are being re-engineered as experience and activity destinations. The gap between mall management and mall retailing is wider than it's ever been since the first fully enclosed, climate-controlled retail shopping space opened in Edina MN in 1958.
When shopping malls were completely retail-centric, it was clear that what helped the mall also helped the retailers in the mall and vice versa. But this correlation is no longer so clear. If good mall management these days is just about filling space and generating traffic using any kind of non-retail proprietor, event or activity as the mall magnet, then mall retailers are really left to fend for themselves inside a whole new mall marketing paradigm.
For one thing, in the reimagined, reengineered multi-purpose-mall-of-many-missions, retailers are pitted as direct competitors with essential life expenditures. Prying discretionary dollars out of the tightly closed wallet of consumers immediately after they paid for an essential service next door is a tough sell in a teetering economy.
It's also a completely different marketing challenge to lure mall shoppers through your front door than it is to capture the attention of people who came to the mall to be students, patients, researchers, and artists in order to first transform them into shoppers before you even have a chance to lure them into your store.
Certainly the percentage of retail tenants in most major malls is still high in comparison to non-retail tenants. So it still makes logical sense to mall managers that in helping their retailers they are helping themselves. But the more malls move away from being retail hubs and towards being experience destinations, the less invested mall managers are going to be in assisting retail success. Retailers probably don't have to worry about being completely neglected, but there will obviously be some split focus and reallocated budgets in future mall promotion efforts.
Reimagining, reengineering, redesigning, and repurposing is not a new concept for American retailing. Retailers like Best Buy (BBY), Build-a-Bear (BBW), and jcpenney (JCP) have been aggressively working to reinvent themselves in the past couple of years, and have experienced both success and failure in doing so.
The most radical retail repurposing plans were recently introduced by Sears (SHLD), which is reportedly planning on converting some of its retail mall spaces into data centers, server warehouses, and mobile phone antenna rental depots. Come See the Software Side of Sears? This seems to be one more example of the desperation of Sears Holdings. It is definitely a good example of a mall repurposing move that will benefit the bottom line of the mall, but will probably do nothing for the bottom line of the malls' retail tenants.
In general, we may slowly discover that non-retail visitors are to mall retailers as vegetarians are to steakhouses. Just because you parade them by, doesn't mean they'll ever want to consume. This is not to say that mall reinvention and repurposing is a bad thing because certainly empty, abandoned, and bankrupt malls are of no value to either retailers or shoppers. But it is to say that mall retailers need to add "new mall marketing strategies" to their long list of 21st century retail challenges.
It's not completely certain exactly how malls will be repurposing and reinventing themselves and if they will be able to do it quickly enough to stay relevant in the future, but one thing is for sure. As is the case with every part of today's retail equation, successful mall retailing is more complex than ever before.Share This Story | Trending Retail Topics | Newest Articles & Updates | Free Retail Newsletter | E-mail Quote of the Day | Pinteresting Retail Pins | Follow on Twitter | "Like" on Facebook |
Retailers and Bloggers Work Together to Create Social Media Bias At the Risk of Losing Consumer Trust and Long-Term Customer Relationships (SHLD)
This coming weekend more than 200 bloggers and retail representatives will be meeting face to face in Bentonville, Arkansas with the purpose of collaborating and creating "collective bias" for certain retail brands on the Internet. Collective Bias is actually the name of the organizers of the event. "Effective leveraging of the social space" is actually the term being used to describe the collusion between bloggers and brands that is expected to be the result.
At face value this seems to be a conference built on an ethical tightrope for both the bloggers and the retailers who will participate. While there are separate designated tracks and presentations for company representatives and bloggers, it is unlikely that the formal sessions are the attraction of the event. I doubt that retail marketing employees and bloggers who have the ability to influence consumer opinions are making the effort to visit the exciting metropolis of Bentonville for three days just because of the workshops. When these two contingencies share meals, hallways, hotels, bowling lanes and Happy Hour events for three days, there are sure to be some "relationships" (wink) forged.
The description of the Collective Bias "SoFabCon" doesn't list the relationships (wink) that will be created as one of the benefits of the event, but undoubtedly everybody knows why they're there. Making the connection between retailers who need some positive social press and bloggers who have the ability to generate it is what the Collective Bias business is all about.
The stated purpose of Collective Bias on its website is to "drive retail sales through the coordinated creation of social media stories." It's a worthy mission and there's nothing wrong with it. That is, unless the readers of these "coordinated social media stories" don't know that the blogger who wrote them was "influenced" to cover the topic and that they have a relationship (wink) with the companies that will profit from the positive press about the stuff they're writing about.
Kmart is one of the companies that has used the "coordinated social media stories" strategy, according to the Collective Bias website. Reportedly Kmart sponsored a blogging campaign for their Outdoor Living department products with 40 bloggers. In looking at the sample posts, it is clear that the bloggers were given clear instructions about what links to include in their articles and even some of the verbiage to use in their because several things are repeated by different bloggers in different posts.
Now, I'm sure that Kmart and Collective Bias will be quick to jump in and say that all of their bloggers are required to post the standard disclaimer... "I am a member of the Collective Bias™ Social Fabric® Community. This shop has been compensated as part of a social shopper insights study for Collective Bias™. #CBias #SocialFabric. All opinions are my own! " Legally, this seems to meet the minimum requirement for declaring a sponsorship relationship (wink). But the fact that this disclaimer is posted at the end of a long article, after several large photos, at least one video, and numerous links to the sponsors' website pretty much guarantees that it won't get read. Especially since it's often in 6 point type and barely understandable.
Really, does the average reader know that "compensated as part of a social shopper insights study" means the same thing as "one of 40 bloggers who received compensation from Kmart to write about their outdoor furniture and link back to their websites and social media accounts?" This is risky ethical business not because it's illegal, but because consumers often have a different opinion about right and wrong than courts and lawmakers do. Consumers don't like to be duped and they're not inclined to be forgiving after they find out they have been.
It's unfortunately not surprising that Kmart would engage in anything that could be considered risky social media business (and allow the Collective Bias website to proudly display it as a case study) given the desperate hail-mary marketing from Sears Holdings (SHLD) that has been using just to try and keep its business alive. Seemingly, though, this "leveraging of the social space" seems to be a great example of going after short-term gains at the expense of long-term relationships. This is probably the kind of managerial thinking that got the Sears and Kmart chains off track in the first place.
If long-term success is dependent on customer engagement and loyalty (and it is) and if customer engagement and loyalty are built on a foundation of trust (and it is), then the potential for collateral damage from these collusive blogging campaigns is huge. Not because anything is illegal, but because it's not as forthright as it could be.
Why isn't the legal sponsorship disclaimer posted at the beginning of the article so that the reader knows what's happening before they read the article? I can only imagine it's because consumers don't respond the same way to advertisements as they do to unbiased content. But the fact of the matter is that few if any of the 40 bloggers on the Kmart campaign had ever blogged about Kmart outdoor furniture before they were compensated to. So even the consideration of the topic was purchased, which makes the content biased. Consumers deserve to be informed about the bias up front, in my opinion.
Sears and Kmart are unlikely to win themselves a spot on the "Most Ethical Retail Companies" list with these kind of marketing smokescreens. And they're unlikely to rebuild their base of genuine loyal brand advocates with semi-deceptive strategies and purchased mouthpieces. You might be able to mislead people through your doors, but in the age of transparency, you can't believe you won't ever be called out for it.
This is not to imply that anybody is doing anything "wrong" or that Collective Bias is the only company that is in the business of connecting bloggers with sponsors. Blissdom is another company based in Canada that will be sponsoring a similar conference in October. Along with workshops, the Blissdom conference will include at least one Sponsor "Meet and Treat" event and classic trade show booth exhibits presumably manned by company representatives who want bloggers to talk positively about them.
It sounds like a walking talking full weekend swag bag. Not that there's anything wrong with that either for the participating bloggers or the sponsors like Chevrolet (GM), Microsoft (MSFT), Starbucks (SBUX), Indigo, and Sleep Country who will be courting their affections. They're just "taking a meeting."
I'm not sure what the laws in Canada are regarding sponsorship transparency, but if readers are unaware that their favorite blogger's affections are for sale, it's less an issue of legalities as it is an issue of trust. It seems like both bloggers and retailers would want to factor in the value of customer trust before doing anything that jeopardizes it because genuine trust is one thing that will never have a price tag.
More About Business Blogging and Social Media:
- Most Popular Retail Blog Posts and Topics
- Understanding Business Blogging Jargon and Terminology
- Business Blogging Is More Than Babble - Building Social Media Equity With Customers
Disappointing April Retail Sales Blamed on Boston Bombing, Payroll Taxes and Spending Sequester May Be the Result of Bad Retail Management
March retail sales in the U.S. retail industry were disappointing, and that disappointment is likely to extend to April when same store sales are reported next week. The New York Times attributes the recent retail sales slowdown to increased payroll taxes. The U.S. Bureau of Census points a fiscal finger at the government's spending sequester. Redbook Research blames it on the Boston Bombings.
No doubt the U.S. retail chains that report disappointing same store sales next week will cite one or all three of these external forces that were beyond their control to explain their performance.
It's convenient to report and even more convenient to believe that any or all retail sales disappointments can be blamed on external forces. But what if the truth of the matter is that retail sales are down because in-store retail employees and managers just didn't do a good enough job in April?
It is inevitable that when... read more >>
2013 Employee Satisfaction Studies Say Managing Retail Happiness Is A Big Challenge - Sears, Radio Shack, GameStop and Rite Aid Need More Happiness? (AAPL, F, RSH, SHLD)
More than 900 senior executives attended the 10th annual Great Place to Work Conference that was staged in Los Angeles last week to focus on the art and science of creating workplace engagement, job satisfaction, and happy employees. Just reading that sentence causes involuntary eye-rolling from plenty of leaders in the U.S. retail industry who either don't think it's necessary or don't think it's possible for a retail environment to be a "great" place to work.
There's plenty of evidence to support the eye-rolling leaders in their belief that happiness, engagement, and satisfaction may not be possible to attain in a retail workplace these days. Not only are retail employees participating in walkouts and mini-strikes in major cities, but also a 2013 survey conducted by Manpower Group revealed that 74% of the survey participants were occasionally or often using their computer to look for a new job while on the clock at their current job. That's not exactly a marker for job satisfaction.
Another survey from CareerBliss.com produced a "50 Happiest Companies in America for 2013" ranking list, based on more than 100,000 employee-written reviews. Of the 50 companies on that "Happy" list, the only companies that have even a remote connection to the retail industry are companies that have retailing as a significant, but not primary, part of their business like Apple (AAPL), Dell (DELL), Ford (F), and Google (GOOG).
Where are all the companies whose primary business is just retailing? You can find those retail companies filling up the Worst Retail Companies to Work For list instead. And not surprisingly, the retail companies that employees rate as being the "worst" places to work are also some of the retail companies that are floundering in 2013 - Radio Shack (RSH), Sears/Kmart (SHLD), Rite Aid (RAD), and GameStop (GME). Could it be that there is a correlation between happy employees and retail sales performance? That's a cutting edge managerial hypothesis, eh?
Retail experts often get lost in a chicken-egg debate about whether unhappy employees are at the root cause of their struggles, or whether, after the company started struggling and started demanding more and caring less that its employees became unhappy. "Both" is almost always the answer to that discussion. But even if it's one or the other, the important point is that there IS a connection between happy employees and company performance.
An awareness that happy employees produce happy results is not helpful to the retail leaders who have the chronic conditions of low pay and limited advancement working against them. Additionally, the retail industry is often viewed as having the "jobs of last resort" for those who can't find work in their own field. There are plenty of those wrongly-employed people working in the U.S. retail industry right now.
Is it possible for employees who are... read more >>