While the 2013 Store Closing Roundup list for the U.S. retail industry is much smaller than it has been in previous years, it's still not insignificant. Despite what the leaders of the retail and restaurant chains that are closing physical locations in the 2013 calendar year may say, the downsizing that will be occurring so far in 2013 is not so much about the encroachment of Internet and mobile shopping, the aftermath of the presidential election, the fiscal cliff-turned-dead-end-plateau or the ongoing consumer concerns about the U.S. economy. Rather the biggest issue for the U.S. retail industry continues to be relevance.
The recent closing announcement that caught my eye as an illustration of the issue of relevance was the announcement of restaurant closings by the Ruby Tuesday (RT) restaurant chain. The restaurant chain has one of its brands up on the sales block and is closing 24 restaurant locations even before it finds a buyer. This is on top of the 29 locations that it closed in 2012. In total this is less than a 7% reduction for the chain over two years, but the desire to sell the Lime Fresh chain seems to indicate that the leaders are having a challenge with figuring out out how to keep restaurant concepts relevant and alive.
I've watched Ruby Tuesday with interest not because I own their stock (which I don't) but because Ruby Tuesday was the post-college job that I worked while I looked for my first "real job." At that time it was one of the hottest of the "fern bars," and it was particularly known for its salad bar, Two-for Tuesday drink specials, its marinated chicken and steak dishes, and the cast iron skillets that it used to serve all of its entrees. (Two-pound cast iron skillets were not fun to carry, but they kept me in great shape!)
Thirty years later (dating myself with that reference), the question is, what is Ruby Tuesday known for?
The Ruby Tuesday chain still has its salad bar, which it now calls the "Create Your Own Garden Bar." This may be an attempt to disassociate the offering with the preservative-laden, sneezefest, germalicious image that salad bars have acquired over the past three decades, but I'm not sure that a name change can accomplish that.
Back in the day, the Ruby Tuesday menu was small and revolved around burgers, a few marinated chicken and steak entrees, and a couple of huge and decadent desserts. Today the menu is huge and includes lots and lots of pasta, seafood, ribs, and even vegetarian dishes. So now there's more to choose from at Ruby Tuesday's but less to be known for.
There are 11 menu items that Ruby Tuesday has designated as being "signature" on its current menu. But just because Ruby Tuesday claims those dishes as their "signature" doesn't mean it's true. In looking at those "signature" dishes, it seems that Ruby Tuesday has been trying to forge the signature of its competitors.
When I think Spinach Artichoke Dip, I think TGIFridays. When I think Fresh Guacamole Dip, I think Chili's. When I think Baja Chicken Quesadillas and Baja Chicken Tacos I think Chevy's. When I think Coconut Shrimp, I think Bahama Breeze. When I think anything seafood I think Red Lobster or Bonefish Grill. When I think anything pasta, I think of Olive Garden.
So that leaves Avocado Turkey Burger and Salad Bar as the two signatures that really belong to Ruby Tuesday. And apparently those are not big enough or unique enough signatures to give Ruby Tuesday high restaurant relevancy ratings. Otherwise it would be on the 2013 Store Openings list, not putting its assets on the auction block.
When Zagat's asks diners about the best full service restaurants, Ruby Tuesday generally makes it into the top five for burgers and salads, but not in the top spot for either. Ruby Tuesday is apparently not known by a critical mass of diners as having the best steak, appetizers, seafood, desserts, or pasta, according to Zagats.
Perhaps Ruby Tuesday wants to be known for variety rather than specialties. If so, it has some stiff competition from Cheesecake Factory and TGI Fridays, which somehow manage to be good at both.
Ruby Tuesday did not make it into the Entrepreneur 2013 Top Franchise Rankings. even though competitors like Denny's made it into the top ten. Ruby Tuesday isn't recognized as one of the best retail companies to work for, even though the Darden Restaurant chain is. CEO Sandy Beall only has a 45% approval rating, which puts him in the bottom middle of the Retail CEO Approval Ratings list. The Ruby Tuesday mission statement is not that much different from any of the other major U.S. restaurant chain mission statements.
This is not intended to be Ruby Tuesday bashing, particularly because it was a fun job and I have fond memories of my time there. This is not really about about Ruby Tuesday in particular, or the U.S. restaurant industry in general. This is about every restaurant and retail chain in the U.S. and the big question that lies before them in 2013 and beyond.
Can you be average in the U.S. retail industry and still survive?
Fashion Bug, Ritz Camera, and Blockbuster said "no." Sears (SHLD), Kmart, jcpenney (JCP), Best Buy, Pacific Sunwear (PSUN), American Apparel (APP), Suzuki, Talbots, Blimpie's, Ponderosa, Tony Roma's, and TCBY say probably not.
Just as the numbers of middle class "average consumers" are shrinking in the U.S., so is the desire for consuming the "average" shrinking as well. Consumers are demonstrating with their consuming trends that they can still be easily persuaded to purchase the cheapest or the best, but beyond that, the sale of the average, the mundane, the indistinct, and the forgettable is becoming too difficult to be profitable.
So my personal prediction for 2013 is that the largest U.S. retail and restaurant chains that aren't known as the cheapest or best for something will continue to be less relevant to the retail consumer and start contributing more entries to the 2013 Store Closings list.
You can't just show up without an A-game and expect to be successful any more. In 2013 that A-game for the retail industry is really an R-game, and that "R" stands for relevance. For those retail chains without an R-game, the 2013 retail game clock will be ticking very loudly.