August was a big month of big news for the U.S. retail industry. While Apple (AAPL) was claiming its title as the most valuable company in U.S. history, the not-yet-big fastest growing privately-held retail companies were reporting 4-year annual growth rates between 8% and 10,160%. This is not to be confused with the fastest growing large retail chains, which most recently reported year-over-year revenue growth as high as 71.9%.
These big reports about big earnings and big growth in the U.S. retail industry are a big contrast to sales drops reported recently by some of retail's biggest giants like Best Buy (BBY), Lowe's (LOW), Dell (DELL), Guess (GES), and Big Lots (BIG).
It seems pretty obvious that it's not the weak housing market (Lowe's excuse), the weak European market (Guess' excuse), changing shopping habits (Best Buy's excuse), or diminished demand (Dell's excuse) that is the problem. It's the inability of these companies to respond to the changes and challenges in the global and domestic retail environment that is the real problem.
Big Lots CEO Steve Fishman is one retail leader who owned the quarterly losses without trying to make any excuses for them. After reporting a 38% quarterly drop in earnings, Fishman had wise words that really apply to all big retail industry players that are losing big and blaming even bigger.
Fishman told conference call listeners, "When I look more broadly across the spring season and the inconsistencies in our business, the common theme I see is change. Our business needs to be constantly evolving. When we're not changing in merchandise and driving it all the way to the store and ultimately the customer, we fall behind."
Bingo. Give Mr. Fishman the radical responsibility prize.
The reason why not-yet-big fastest growing retail companies are pulling off impressive growth and creating their own economic stability is because they can change their retail business as fast as retail consumers change their moods, their minds, their priorities, and their spending patterns. And if you've been paying attention to the U.S. retail consumers in the past couple of years, you know those changes have been happening at a dizzying pace.
Flash deals, fast fashion, and cutting edge technology - these are the shiny objects that are catching the attention of fast-moving shoppers and winning big for retailers around the world.
It's not that there aren't still some tortoise-type shoppers in the retail race. It's just that if retailers are going to stick with the slow-and-steady processes of the past to serve those shoppers, the yield is also going to be slow-and-steady, and much smaller in the short-term. That might be okay with retail leaders, but retail investors have very little patience for anything less than big instant gratification.
It is unlikely that the largest U.S. retail chains are all going to be adopting and adapting their business model to mimic fast fashion businesses like Forever 21, H&M, rue 21 and Topshop. But it is likely that they will be looking closely at the World's Most Innovative Retail Companies to see what kind of technological, integrative, interactive, and analytical innovations they can steal.
Like Mr. Fishman, we all know that it's not an economic, competitive, or supply chain problem that underperforming retail companies like Best Buy, Sears (SHLD), Blockbuster, and jcpenney (JCP) are having in 2012. It's an idea problem that they're having.
These struggling retailers are either going to have to get some new ideas, or steal some. And once acquired, the new and (hopefully) inspiring ideas will have to be executed quickly because the big retail spenders these days are thriving on constant change and the frequent availability of new products.
Catch them if you can.
Trending Retail Topics | Free Retail Newsletter | E-mail Quote of the Day | Pinteresting Retail Pins | Follow on Twitter | "Like" on Facebook |
Comments