Barbara's Retail Industry Blog

“Retail Politics” is the term that describes the hand-shaking, baby-kissing strategy that politicians use to make a personal connection with voters and “buy” their loyalty. This political season Wal-Mart put a 20th century spin on the old-fashioned term when it brought politics onto its retail sales floor.

Reportedly, Wal-Mart store managers and department heads were forced to attend mandatory meetings where they were warned that a vote for Obama meant a vote for unionization. A vote for unionization, of course, was a vote for increased labor costs and fewer jobs. Vote for the democrats and risk losing your job? It seems like an unspoken mathematical deduction that Wal-Mart wanted its managers to make.

While Wal-Mart has denied they are attempting to tell their employees how to vote, it’s easy to see how the average Wal-Mart employee who was corralled into the involuntary political rally might have felt a little bit pressured. Certainly any undecided Wal-Mart voter now has a strong compelling reason to land on the Republican side of the fence. With all other things being equal, “because my employer says so” is a pretty strong influence.

The issue at stake is the Employee Free Choice Act, which is being labeled as the root of all retail industry evil by many retailers big and small. Just because you make it easier for employees to unionize, though, doesn’t automatically mean that they will want to. Nowhere in American labor history can I find an example of unions successfully organizing in a retail organization where employee satisfaction and company loyalty were high. Since Wal-Mart currently has more than 75 class action lawsuits in 41 states filed against it relating to wage and employee practice issues, though, it is obvious why giving unions easier access to its employees would be a cause for concern.

Wal-Mart’s senior officers are not the only ones setting up their tents in the Republican camp this election year. Public opinion pollster Zogby International has concluded that Wal-Mart shoppers are also buying what the McCain campaign is selling. By asking people to name both their favorite presidential candidate and their favorite retail store, it was discovered that a majority of loyal Wal-Mart shoppers were also loyal Republican voters.

Political-minded consumers might want to consider as they stroll around Wal-Mart, Sears, and Kohl’s that they are most likely rubbing elbows and bumping carts with shoppers who will be voting Republican this fall. Also according to Zogby, to shop Costco, Macy’s and Target is to shop where the Democrats roam. If the new “retail politics” involves using paycheck pressure to influence votes, then perhaps politically-minded consumers will exert their own political pressure by voting with their spending dollars for the retailers who share their own political opinions.

Along with religion, sports, medicine, science and ethics, perhaps “retailing” should be added to the list of things with which politics just doesn't mix.

The American dream is alive and well at Target. While companies like Coca Cola have spent billions to fabricate an image of Americana for themselves, Target authentically embodies the American dream in its new CEO, Gregg Steinhafel.

Retail employees everywhere can get inspired by the story of a man who graduated from college, got an entry-level merchandising job, worked his way through the ranks, and 29 years later assumed the top position of the company where he’s spent his entire career. It is the classic story of anything’s possible, hard work is rewarded, and persistence pays off. Steinhafel represents the essence of the American opportunity.

In his 29 years at Target, Steinhafel has held just about every position that has ever existed in a retail organization. He spent 15 years in merchandising roles, and it was 20 years before he was named president. Steinhafel’s predecessor, Bob Ulrich, also worked in the company for 20 years before taking the leadership reins. This is a definite demonstration of what Target values in its leadership team-- stability, loyalty, and a depth of understanding that comes only with experience

It seems that their slow and steady executive grooming strategy pays off well for both the corporation and the CEO. Target’s sales and store presence tripled under the Ulrich’s leadership, and its net earnings increased nearly nine-fold. More valuable than monetary earnings, Target was named by Fortune magazine this year as the 11th most admired company in America. That is a reputation that was not bought. It was earned.

Target has what it calls a “Community Responsibility” policy. Many retail organizations claim to have values that they believe will boost their image in the eyes of financial analysts, but Target actually backs up its claims in a tangible and measurable way. Target’s parent company, Dayton Hudson, has contributed 5% of its pretax profits to charitable and community organizations since 1946. Target has participated in this 5% giving practice since it was founded in 1962. Although Dayton Hudson doesn’t advertise the total amount of contributions they’ve made in their 62-year history of giving, since their donations will be about $150 million just this year, it’s safe to say the total calculation is mind-boggling. At a time when the retail industry is struggling, Target has not reallocated its charitable contributions in order to pad its bottom line.

Target, in a word, is grounded. It is rooted in its promise “to provide consistent growth plus a long-term plan to sustain our success.” If there are any short-term quarterly return strategies employed at the expense of the customer, they are imperceptible. Instead of living from quarter to quarter, Target is focusing on building for the future. It’s a shining example of what corporate American can be. Target is, in another word, inspiring.

The need for a quick bite on the road this week led me into a Taco Bell. While I was chewing the first bite of my utilitarian meal, an employee walking by asked me, “How is your food today?” I almost spewed beans out of my nose. This is a question I would expect to hear when partaking of the market price fresh Mediterranean catch of the day, not while ingesting an 89-cent burrito. I must have looked either dumbfounded or stupid as I nodded my head and made a food-obscured “Mmmmm” noise.

When I was ready to leave about 10 minutes later, this same Taco Bellman held the door open for me. What was up with this guy? I gave him an amused “Thank you!” and looked at him quizzically. The age… the starched shirt… the lack of nametag… of course! It was the franchise owner.

Who else would bother to talk to a $2.00 customer? Who else would exhibit genuine courtesy in an environment that doesn’t demand it? Who else would care? Only the actual owner who has a personal stake in the daily cash register receipts would exhibit this type of ownership behavior, right?

Last night as I entered a Ralph’s grocery store, I was almost mowed down by a Ralph’s grocery store employee in a full out sprint to the parking lot. I stopped to avoid the collision, and I turned to see what his big rush was. He yelled, “Ma’am!” to stop a woman so that he could hand her a bag with a dozen eggs inside. He said, “We forgot to give you your eggs!” (He gets extra points from me because he didn’t say, “You left your eggs,” or “They told me to give you your eggs.”) The delighted customer enthusiastically said, “Thank you!” and started fumbling for a tip. The bagger sprinter waved her off, and ran back into the store almost as fast as he had run out.

The Taco Bell owner surprised me, but the Ralph’s bagger stunned me. Honestly, what did it matter to him if he caught the eggless woman or not? Would there be a “little something extra” in his paycheck at the end of the week if he caught her? Would he get yelled at, put on probation, or fired if he didn’t? From my observation the energized bagger boy chose to run instead of walk, and he said “we” instead of “they” because he had that same sense of ownership that I had observed in the Taco Bell proprietor.

Ownership is a rare and elusive quality to find in the average employee because it can’t be externally motivated. A sense of ownership is internally born and personally bred. To those with a sense of ownership, demonstrating it is its own reward. Managers really can’t create ownership in people who don’t have the natural tendency for it, but they can cultivate ownership that is latent and they can support ownership that has been stifled by a controlling boss or work environment.

I was standing in the hallway of a large corporate office and noticed a jumbo poster on the wall declaring that “ownership” was one of the company’s corporate values. I walked into their customer service department and heard their reps talking on the phones with customers and saying things like, “The system messed up,” “They can’t get it out today,” and “I don’t have any control over it.” Building a team of employees with ownership is not impossible, but it’s going to take more than a poster to pull it off.

Retailers can’t control economic forecasts, but they can control their response to the voices of doom and gloom. While many look at today’s reality and get paralyzed, a few creative retailers are looking beyond today and getting mobilized.

• Food Lion announced this week that it is helping its customers identify IRS-approved health care products that can be purchased from their Health Savings Account or Flexible Spending Accounts. I have one of those health accounts, and I have never yet used those pre-tax dollars on anything because I don’t know what’s “legal.” I just wish I had a Food Lion close to me now. Perhaps they can take over my neighborhood Albertsons that is closing down at the end of August. Perhaps my Albertsons wouldn’t be closing down if they had proactive strategies like Food Lion.

• Macy’s has mini FAO Schwartz’s. Stop & Shop has Starbucks juniors. J.C. Penny has Sephora boutiques. Little stores inside big boxes is a way that retailers are partnering for profits. I’ve always been an advocate of the “don’t compete, create” philosophy and these creative partnerships are great examples of it. How about a washeterita inside an AMC theater? I love escaping to the movies, but I would love it even more if I knew someone was folding my underwear while I was eating my $10 popcorn.

• This month Target started offering next day installation of consumer electronics products like high def TVs purchased from its website. With this quick and easy service, Target hopes to not only boost sales, but also decrease returns. Good idea! I still can’t get TV sound through my entertainment system speakers, and my DVD-R still doesn’t “R.” I have returned more CE products than any other category because I’m always convinced that it’s the machine’s fault, not mine, when I can’t get it to work right. Perhaps it was my return receipts that helped inspire this Target offer.

• Kroger has gone mobile with its coupons in Atlanta. Through a wireless system that I don’t fully comprehend, shoppers can select coupons from their cellphone which will then be loaded to their savings card and automatically applied at checkout. To participate in this, I would need to charge my cellphone and figure out how the picture screen thingy works. Luckily for Kroger I am not in the target age group for this innovation. It does seem like a great way to reel in those youngsters, though, who barely know what a newspaper is and would rather eat dirt than clip coupons.

Fresh strategies can lift the energy of a retail operation and lift the spirits of those shopping there. Today's retail industry is what it is, but tomorrow is what creative retailers will make it to be.

Low-carb equals lower weight, lower weight equals better health, therefore low-carb equals better health. So the logic goes for the fattest country on the planet. My favorite example of low-carb insanity was a bag of pork rinds that had prominent placement on the special “low carb/diet” section of my grocery store. While it is true that the deep-fried skin of a pig has little or no carbohydrate content, I have never seen pork rinds on anybody’s healthy eating food chart. But the low-carb myth was one that food retailers were willing to participate in and perpetuate as long as the low-carb train was headed to Profitville.

“Green” is now the new low-carb. Green is good for the planet, consumers are happy to help the planet, therefore consumers should be happy with anything labeled by a retailer as “green.” And so the exploitation of the newest craze begins. But just because something looks green and sounds green, doesn’t mean that the retailer bragging about it is green-motivated at all.

Plastic bags are a hot green retailing topic. Personally I will be glad when stores – particularly grocery stores - stop using plastic bags. I have always found them to be the most flimsy, inefficient, customer-unfriendly method for toting merchandise – particularly groceries – available to mankind. So, yes, it is good that plastic bags are leaving both the retail scene and the environment.

Here’s my question… Who decided plastic bags were a good idea in the first place? Retailers who were completely unconcerned about the environment made plastic bags the standard because they were much more concerned about their bottom line. So, please excuse me if I hold my applause for the elimination of a retailing practice that was started by ecologically irresponsible retailers in the first place.

Whole Foods set the green standard for bagging long ago. They have encouraged the recycling and reuse of bags for as long as I have been shopping there, and they have been paying back the customers who bring their own bags for years. They didn’t start their reuse-recycle practices because it was the hip green trend of the day, but because one of their core values is to “care about our communities and the environment.”

From a consumer point of view, the Whole Foods standard is much different than the ride-the-green-train retailers who are charging customers for bags – like IKEA and Marks & Spencer – or using the green movement as an excuse to sell expensive logo-plastered tote bags like Macy’s and Bloomingdale’s.

Last week, the city of Los Angeles joined the city of San Francisco by passing a law that will ban the use of plastic bags in retail stores by 2010. It’s interesting that the plastic bag bans are starting to come from the government. The implication is that retailers will not make the change themselves unless forced to. And yet, as they make the government-mandated move away from plastic, it will be interesting to watch retailers proudly declare themselves “green.” Mandated compliance is a celery-tinted move at best, and doesn’t really deserve full-blown green respect.

Green retailing is a positive thing. And if the only way the planet can get green is through government coercion or fad exploitation, then so be it. The retail industry should be concerned, however, with how long the public will be fooled by those retailers who are passing out green-colored glasses with one hand and reaching into shoppers’ wallets with the other hand to finance their own green image. Not long enough, I predict. Because already “retailers who care about something besides money” is starting to be the new “green.”

The latest retail CEO to bail out of the boardroom on a golden parachute is Charming Shoppes’ Dorritt J. Bern. After announcing Charming’s strategy to eliminate 150 corporate and field management positions, cut 200 full-time home operations positions, and close 150 stores earlier this year, Bern just announced her own elimination this week. Shortly afterwards, the media announced the $5-6 million she will be paid to leave. Bern should have used a better contract negotiator. Six million in CEO-dollars is more like a yellowed bed sheet than a golden parachute. I wonder how much the hundreds of other ousted employees got paid to get fired.

One of Charming’s chains is Petite Sophisticate. I used to be a loyal Petite Sophisticate customer until the styles got irrelevant, the fabrics got cheap, and the sales people got pushy. I guess in a way Bern is being held accountable for that and whatever else has caused Charming’s stock to plunge. But her $6 million punishment is kind of like being grounded and confined to your bedroom with nothing but your plasma TV, iPhone, high speed internet, and PS2 to entertain you.

It would have been fun to listen in when the first CEO convinced a board of directors that being at the top of the corporate ladder is akin to the being at the top of the professional sports ranks. That was a masterful sales job. I would be willing to bet it was a sports agent turned corporate contract negotiator who pulled it off the first time. The notion that a company should pay a CEO vast sums for getting fired because the firing might have a detrimental effect on the CEO’s future earnings is quite a notion indeed!

Admittedly, the half life of a retail CEO seems to be getting shorter. Some of this year’s more notable short-timers include these high profile CEO’s:

• Daryl Brewster led Krispy Kreme’s stock price from about $9.00 to around $3.00 in just two years. He received $2.8 million for that 2-year accomplishment when he resigned in January for “personal reasons.” I should hope that a 66% decline would be “personal.”

• Paul Harrington resigned in March, 2008 after just 2 years as the head of slumping sales for Reebok. He took his good-bye bonus to CA to “pursue new career and business opportunities there.”

• Woolworths was much less kind when they booted Trevor Bish Jones out of his corner office. Not only did he get a pitiful one-year salary severance, he didn’t even get to pretend that his departure was in the pursuit of some greater happiness. Woolworths’ press release bluntly announced, “It has been agreed between the Board and Trevor that this is an appropriate time to seek new leadership for the business.” Ouch, Trevor. You might want to think about hopping over the pond where we hold our ousted corporate failures in greater esteem.

• Also this week, John Poon resigned as Esprit Holdings’ deputy chairman and CFO, claiming he had no disagreement with the board. While it’s nice to believe that Poon skipped happily out the doors towards “his intended pursuit of other interests,” I have to believe that the board had at least a little bit of disagreement with the 27% drop in share prices this year.

When I was walking through the mall tonight I wondered which of the part-time retail employees might follow their retail career path all the way to that rock star CEO status or how many of them even wanted to try. It’s all glitter and glamour if you don’t mind the risk of public failure and professional humiliation. A good sports agent is a must.

There is a new shopping center that I pass almost every day, and today I opted to visit it in lieu of wasting my TGIF mood in rush hour traffic. It was a much larger hub of big boxes than I realized. Best Buy, Costco, Whole Foods, Target, Lowe’s, Borders, a 14-screen AMC theater and a 30 lane bowling alley were side by side, with lots of smaller and independent stores in between. Big retailers in a big shopping complex in the middle of a big residential area sounds like the makings of big profits.

To look at the packed-like-Christmas parking lot was to see tangible evidence of its success. To DRIVE the parking lot was to experience the tangible evidence of its failure.

There were obviously not enough spaces built into a parking lot shared by 7 big box stores. The parking lot layout was complicated, with stop signs about every 20 feet, or so it seemed. The multiple lanes of traffic that were converging in many unnecessary places were all trying to figure out the taking-turns system of chaos that was supposed to pass for traffic control. The spaces that were easily accessible to my desired Borders destination were across four lanes of traffic without a pedestrian crosswalk.

While the flow of cars into the complex was substantial, the flow of cars out of the complex was equally substantial. The exiting vehicles might have been filled with satisfied shoppers who had just pumped their Friday paychecks into the retail economy. But since there were two SUV’s that had been doing the parking space dance with me, I concluded that it was more likely that the departing cars were filled with people who, like me, had decided to take their paychecks home because it just wasn’t worth the effort it would take to spend them.

Considering how difficult it is for some people to earn their money, retailers just can’t afford to make it difficult for people to spend their money. While most retailers don’t have control over their parking lot design, they have complete control over the design of their shopping experience.

I was shopping in an Old Navy store this week and there was one particular corner of the store that was a jumbled mess. Upon examination it was easy to determine why. All of the petite sizes were hanging on the top bars, which were way too high for petite-wearing women to reach. So, the small sizes had been yanked off their hangers to be examined, and then draped on top of the lower racks when they were not purchased. Why any retailer would think it is a good idea to put the short-person sizes on the top rack I will never know. But I will tell you from first-hand experience that it is the rule, not the exception.

The good news is that in every jumbled mess, there is the opportunity to recover lost sales. With every hassle, there is the opportunity to prove to the customer that you are willing to make changes on their behalf. With every exodus is the opportunity to find a way to improve the invitation to come back inside.

I like the Corner Bakery. It’s a quick serve sandwich/soup/salad restaurant chain that’s almost as fast as fast food, but with menu choices that are real and fresh. I’ve been to several of their restaurants in more than one state, and it’s the high quality consistency of their food that’s impressed me the most. Until today.

Today I stopped on my way home to grab an early dinner instead of sitting in rush hour traffic. I ordered a scrambled egg sandwich from their breakfast menu and even though they’re not an all-day breakfast kind of place, they didn’t even hesitate to comply with my request. When my order was delivered, though, there were things on my sandwich that I didn’t order. As soon as I walked back up to the counter with my plate in hand, before I said anything, the cashier, Monica, said, “You didn’t want ham!”

Not only did the cooks have to make a breakfast item at the wrong time of day, now they had to make it twice for the same customer. Some very few minutes later Monica walked up to my table with a new steaming hot sandwich in one hand and a big hunk of my favorite chocolate cake in the other hand. (Besides being friendly, apparently the Corner Bakery employees are psychic too!)

What happened next is something I rarely experience as a customer. Monica said, “I’m sorry for the mixup.” No excuses. No justifications. No attempt to make me feel guilty for my unusual order. Monica made a simple, sincere apology, smiled, and walked away. Five minutes later the manager walked up and said, “How is your new sandwich?” With my mouth full, I nodded and smiled while he said, “Sorry about the first one.”

It was Service Recovery 101. They did nothing extraordinary, but it was not an extraordinary situation. Just like with their menu, the Corner Bakery team delivered a service recovery experience with rock solid consistency. They gave me a new reason to be impressed.

What is the measure of success at the end of a typical retail day? Sales? Number of transactions? How about the number of times you give a customer a new reason to be impressed? That’s a goal that any customer can get behind. It’s what motivates me to say things like, “I really like the Corner Bakery!”

Last week Best Buy executive Mike Vitelli told an Oppenheimer Consumer Growth Conference about the chain’s plans to expand growth and increase revenues. One of their more interesting strategies will be to expand their musical instrument category beyond the basic keyboards and guitars that are available in their stores now. After visiting a Best Buy store this weekend, it wasn’t a clarinet or a drum set that I missed or wished for.

I was looking for some kind of liquid solution that would clean CD’s. It seemed to my low-tech logic that this product would be located where the CD bulk media was sold. A logical assumption maybe, but it was not correct. So I walked up to the first blue polo-shirted employee I spotted and asked him where I could find CD cleaner. His response was “I’m sure they probably have it somewhere, but I’m a vendor. You have to find an employee.” He pointed me in a general direction and walked away.

Blue polo shirt #2 directed me to blue polo shirt #3 at the opposite side of the store, who I followed like a puppy dog as he snaked his way up and down the aisles, in the same manner that I had done myself on the opposite site of the store. Blue polo #3 asked blue polo #4, who pointed me to the corner before they both walked away together.

I didn’t find any CD cleaning solution shoved on the shelves in the corner next to the emergency exit door where I had been directed. Unwilling to seek out blue polo shirt #5, I walked out of the store empty-handed.

One of my long held beliefs is that most businesses don’t need to go out and get more customers, they just need to figure out how to keep the customers they already have. If Best Buy in particular, or the retail world in general asked its customers for strategies that would increase sales and drive growth, I wonder if the customers would suggest that they do something more, or just be better at what you do? If Mike Vitelli would have surveyed me while I was purchasing the cleaning solution from Wal-Mart just minutes later, I would have told him that he could have had my money if Best Buy had done better with the merchandise they have right now.

If your current customer service strategies allow the CD cleaner customer to walk out empty-handed, then what’s going to keep the trombone customer from walking out empty-handed too?

Back in February, Starbucks management made a bold move when they closed all of their 7,100 stores for 3 hours so that they could re-train their baristas on creating the best customer experience. With an average of 20 employees per store, that’s a staggering 426,000 man hours, more than $3 million in wages, and 21,300 hours of lost customer revenue. That’s what I call a customer service commitment!

When I read earlier this week that Starbucks was permanently closing 600 of its US stores, I had to wonder how they were feeling about their radical training effort. Today I went to my neighborhood Starbucks. After observing one transaction, I wonder no more.

As the customer ahead of me got to the front of the ordering line, the Starbucks barista immediately said, “Hello there! Long time no see!” Customer lady went into a long explanation about where she’d been. Barista girl smiled, and nodded, and listened politely to a much-too-long explanation of Customer lady’s recent whereabouts. When Customer lady finally took a breath, Barista girl said, “Are you still doing those tall lattes?” Customer lady said, “Yes, exactly!”

Barista girl walked away to make the tall latte, and Customer lady said to her friend, “I can’t believe she remembered that. I haven’t been here in FOREVER!” That was followed by more details about her recent activities, which caused her friend to smile, and nod, and listen politely.

The reason why a customer service moment like this is so important in a retail business is because it makes an impact on every person within observation range. Customer lady was impressed. Customer lady’s friend was impressed. I was impressed. And the 23 people who will undoubtedly hear the story from chatty Customer lady will be impressed too.

Any employee in any retail setting can find a way to put a personal touch into their work and make a positive impact on customers. The question most retail managers ask is “How do I motivate my employees to WANT to make a positive impact?” It took 21,000 hours and several million dollars for Starbucks to prove to its employees that it was serious about the Starbucks-branded customer experience. If the result is what I observed today multiplied by 7,100, then I don’t think they should regret one minute or one penny of their efort.