The Apple of Everyone’s Eye

Being in the retail business for about 25 years or so, I often dream of what the perfect retail scenario would be like…Money would be no object to spend on the customer experience including unlimited sales/service help on the floor; very high margins with little or no markdowns; very heavy and constant traffic due to high brand recognition and enthusiasm; smart and clean store decor; just in time inventory deliveries; and enough time and capital to train staff and be able to spend hours with any customer that desires it…

Welcome to Apple Retail!

It hardly seems fair but they have been so logical in their execution that it is a lesson in simplicity and common sense. I have long believed that your best vehicle for marketing your product and your concept, especially for a mall based retailer, is by ensuring you have adequate staff “coverage” on the sales floor at all times so that every single customer regardless the time of day, can receive the ultimate experience. This is one’s primary marketing expense. I would actually extract millions of dollars from the marketing budgets in any circumstance to invest on the floor in hours and in training.

The other major issue for retailers today is inventory control on the sales floor from presentation and loss prevention standpoints. Apple has figured this out – no inventory on the floor (with the exception of accessories and some software near the back of the store near the cashwraps), only demonstration models of every single piece of hardware Apple makes. All other merchandise is stored in the back room and deliveries are daily based on what sold the previous day.

Not only is the staff plentiful at any given point during the day, but they are rabid Apple fans. The staff does not need to be “sold” on the company or the product, they are already enthusiastic users and experts. Not only do they demonstrate the product and help guide customers to the right machines, but they sit for hours at the “Genius Bar” where they help you re-configure your Mac computers or ipods or fix any problems you may have – for free!!! That is the ultimate technology customer experience.

By the way, there are no markdowns or sales. There are no promotional signs. There are clever and witty and compelling campaigns that draw customers in the doors. The store design lends itself to easy circulation and navigation of that high traffic and allows customers to see the entire store easily.

The sales volumes are huge due to the high average retail price of the product they carry and the brand name recognition that drives the huge amount of traffic. Therefore, their costs of operating in the malls as a percent of sales will be lower than anyone else due to sheer volume (with the exception or maybe allowing for the wage costs).

There is certainly a buzz to the Apple brand and has been for some time. The stores capture that buzz brilliantly and enhance the experience through staff deployment and minimalist merchandising. Does this store rock your world too as a retailer and/or a customer? I would love to know.

If I had to close my eyes and dream of the perfect retail scenario, Apple is the closest thing to perfection today.

TheRetailTherapist

Oh Canada

It seems for those of us who are serious retailers, the Canadian marketplace sure seems to be getting smaller every day. Not that it was ever large to begin with. In the days of Dylex, Comark, Woolco, Bretton’s, Eaton’s, Cotton Ginny, Beaver Canoe, Coconut Joe, Aikenhead’s, Freedom, Kettle Creek etc., it seemed that there was a diverse, healthy and creative retail industry thriving in “our home and native land”.

Today, all of the abovementioned retailers are gone except for Comark which is now a shadow of its former self. Most retail chains today are either owned and operated by foreigners or of the “cheap and cheerful” variety like Stitches, International Clothiers or Urban Behavior. Roots has lost its iconic status, Hudson’s Bay Company just lost its latest U.S. born owner, Sears is owned by a U.S. Hedge Fund manager, Club Monaco is owned by Ralph Lauren, and Gap, Abercrombie, American Eagle, Zara and H and M now seem to dominate the landscape.

It makes things difficult for those who want a career in retail in this country to find a path. With most home offices south of a border or across an ocean, it doesn’t promote the kind of well rounded development an aspiring retailer should possess in order to create new concepts or drive exisiting ones to new heights. It is one thing to gain operational and “on the floor” experience in the field (which is crucial especially when one is just starting out), but then to be able to be exposed to what happens functionally behind the scenes in merchandising, design, marketing, human resources, visual, distribution, planning and allocation is almost impossible given the state of the industry in Canada and one is forced to re-locate to the U.S. to gain that type of experience, which causes a talent or “brain drain”.

I would love to hear what your thoughts are on this topic as it is critical for Canada’s retail industry and the industry’s creativity as a whole, that we continue to nurture and develop and encourage young people to choose a career in retail as opposed to luck into one, like I did.

What can really be done about the state of the retail industry? For every Lululemon, there are 10 Best Buy/Future Shop, Wal Mart/Woolco, Home Depot/Aikenhead’s or Michael’s stories in Canada. American Apparel, which is opening stores in this country is actually an American company owned and operated by a transplanted Montrealer, out of L.A.

Does that really how it has to evolve in Canada? It needs a concerted effort to nurture and foster creativity and career orientation amongst all Canadian retailers to change this trend. It’s time to wake up and get busy.

TheRetailTherapist

Flattery Will Get You Nowhere

It is with mixed feelings I watch the “Hedge Fund Guru” decide to play retailer. After banking a zillion dollars being a very successful, yet ruthless, hedge fund genius, Ed Lampert decided that retailing seemed like a great way to spend some of that zillion dollars. The fact that the latest Wall Street wizard chose retailing, amongst all other industries, was, I guess, flattering in some ways to our ancient profession. Since most people do not stick up their hands and declare they want to be a retailer when they grow up (or even want to interview out of college), maybe this was a turning point in the industry. Maybe, just maybe, under the white hot lights of one of Wall Street’s most successful people of the 1990’s, retailing as an industry and as a career would finally get its due.

But alas, it has been a bit of a joke, in my opinion. I would welcome yours.

Since purchasing Sears to be integrated with his already purchased Kmart, Mr. Lampert has installed himself as the “chief merchant” which, in my mind, is the ultimate insult to our profession. No disrespect intended to Mr. Lampert who has the knack and the intellect to create and nurture value (as he did in this case at the outset with Kmart specifically). However, he should not be thinking that he can run a retail organization and oversee the merchandising aspects of national retail brands.

Case in point…As I mentioned in an earlier submission, the purchase of the esteemed and established “Land’s End” brand was an interesting one, particularly because at that point, it had no bricks and mortar presence and the trend was (and still is) to ensure a retailer had both online and in-store experiences to maximize share of the customer’s wallet. On the surface, not a bad idea to add the catalogue component either, as Sears knows something about catalogue retailing. But, their execution, to this point, at least at retail, has been abysmal and has severely damaged a very solid and trusted brand. The in-store shops at Sears are poorly merchandised, sloppily maintained and dreadfully insipid. Peter Glen would have had a heart attack walking through these “shop-in-shops”.

Of course at the end of the day, it will be about the returns Mr. Lampert can generate over a set period of time. But I am disillusioned at the approach and the arrogance. It demeans merchants and retailers everywhere, who have grown up on the shop floors, have studied customer trends for decades, have walked hundreds of malls and conducted thousands of store visits at all levels. One doesn’t all of a sudden become a retailer or more specifically, a “chief merchant”.

I guess what I am trying to say is that retailers everywhere deserve more credit than what is evident in the Sears experience. I feel strongly that retailing is not a profession one can just “pick up” along the way. The great ones (even the good ones), have worked most of their professional lives in and around customers, stores and merchandising. They have worked on the floor with the customer. A former partner of mine once described it as “getting in your blood like an addiction”. This seems truer every day, but it takes time. Although there are now schools and courses and classes and degrees in the profession, it takes hands on experience on multiple levels and across multiple functions to truly appreciate it, understand it and most importantly to FEEL it.

Highly successful merchandising, at the end of the day, is about FEEL and instinct. I know that this causes rashes amongst investors, analysts and bankers, but these instincts are developed over time and experience in the business.

Ed Lampert cannot possibly possess the instinct for merchandising like he does for investing and generating above average returns for his partners. The Lampert-Sears-Kmart combination may turn out to be strange bedfellows after all and does not paint a flattering picture for retailers across the industry.

TheRetailTherapist