Restoration’s Restoration?

I remember walking into a Restoration Hardware three or four years ago late in December as the holiday crunch was on. The rumours had swirled forever that they were never very productive retailers and they were struggling. Quite frankly I never understood it. The stores were well merchandised, well branded and well kept. The colour stories were always appealing and I always felt like walking in and browsing. But did I ever buy anything? Ahhh, there’s the rub.

Although, that one December evening, the place was packed and they surprised me with a terrific assortment of classic games in beautiful wooden boxes. They were already pre-wrapped and I couldn’t resist. What’s more, they were being promoted. The place was a madhouse and people were lined up buying multiple units of those games such as Clue, Scrabble, Battleship and the like. I bought a Monopoly game that the family still plays to this day (even today as a matter of fact). I often thought that it was a very good business for them to be in when it is gift season, those well made, higher end versions of classic games.

So, what has been the problem? Yes, their particular space is crowded with Pottery Barn, Crate and Barrel and everyone and their brother opening a furniture offshoot of their concept (think Eddie Bauer). But it goes beyond that. The merchandise mix when they first opened was highly eclectic; assortments of accessories, doorknobs, nostalgic radios, some furniture, lamps etc. I was never really sure what they were selling or what they stood for. Lately, they started to really merchandise with colour stories, more furniture and a snazzy website. But I still wonder, what is their bread and butter category? What do they pay the rent with day in and day out? What is the denim or yoga pant of their business with which they can build a steady, repeatable clientele? I don’t see it as yet.

Under new private equity ownership, partnering with the current CEO, maybe they will start to head down the path of basic commodities that will sell each and every day, in every market. Their real estate is of high calibre and their brand name has been built over years of being in the game. However, if they don’t find additional products that resonate on a daily basis, like those games do at certain times of the year, then I fear for this Restoration Period.

TheRetailTherapist

Retail Life is Like a Box of Chocolates (or Gummy Worms)

I was struck by the energy, colour and panache of Dylan’s Candy Bar when I first visited them on 3rd Avenue in Manhattan. I believe it is the way candy should be merchandised and sold – in a vibrant, colourful, fun atmosphere that doesn’t take anything very seriously. Chocolate and candy are part of life’s delights (especially for children, although even I am a self-confessed “Chocoholic”) and they are also part of life’s sweet little sins. How many times have children or adults tried to sneak in an extra treat without their parents or spouses knowing?

This should have been the evolution of “sweets” retailing, but alas, I am afraid it is not.

The sweets retailer I am most disappointed in from this perspective is Laura Secord. This almost century old retailer has not yet entered this century, even though they have new ownership and lots of money to do so. It is disappointing to walk by some of the very best real estate in Canada and be uninspired by their merchandising, their assortment and their presentation. They have it all – an exceptional brand name and virtually 100% brand recognition in Canada; a rich, authentic history; the very best real estate; and a quality product. So, why, I ask, does it have to be so boring? Why can’t we be treated to some buzz, some flare, some panache? Can anyone tell me?

Although Rocky Mountain Chocolate Factory has tried to energize their stores, and they have to a certain extent, it still feels a little dark and serious for me. They rate a mention because they do a better job than Laura Secord, but still have a ways to go in the whimsy department.

Dylan’s Candy Bar is only 6 years old, and granted, it only has 6 stores (not sure why) and it is the brainchild of Ralph and Ricki Lauren’s daughter Dylan. Public relations is not an issue here. But she has the right idea. She has made this concept a destination. Everyone who walks by is compelled to walk in. Isn’t that the essence of merchandising? Isn’t that the goal specialty retail?

I say it isn’t good enough just to have a quality product or a great location. In order to maximize one’s specialty retail business, one has to have a compelling proposition visually and atmospherically. It has to exude energy and vitality. It has to constantly refresh itself (hence the expansion and makeover of the Third Street store recently).

I think Dylan has it right. Where is Laura really going?

TheRetailTherapist

Three Cheers for Dick’s

I have always loved browsing and shopping in sporting goods stores. As a, well, former “jock” (at least in my own mind), I would meander the aisles looking at the latest equipment and marvelling at the choices. The Mom and Pop shops were the foundation of the industry until the “Category Killers” came onto the scene. At that time, I thought The Sports Authority (TSA) was paradise. Sure, there were the locals like Oshman’s in the Midwest and Paragon in Manhattan, but TSA had them all beat as far as I was concerned because of their sheer size and the breadth of assortment they would carry. It was Disneyland for us athletic types.

But along the way, TSA had their problems (that’s for another entry, but it became too big, too fast and too boring) and in Canada, they were even pushed out of town by the monopoly that is now Sportchek (owned by the Forzani Group). I am not crazy for the store design or the breadth of selection at Sportchek, but, then again, Canada is not the United States and the needs and selection are different (just walk down a supermarket aisle and count the number of different breakfast cereals that are available in a U.S. supermarket compared to what is carried in a Canadian one and you will understand what I am talking about).

But I have definitely found the next generation of sporting goods nirvana: Dick’s Sporting Goods from outside of Pittsburgh, Pennsylvania. I always have to walk around the store anytime I see one. With 350 stores across 38 states, they have started to blanket the country in major markets. With over 50,000 square feet on average on two floors, almost guarantees a breadth of selection. But it is in the store design and the visual merchandising that makes this concept different from traditional sporting goods retailers. In the past, you either felt like you were in a warehouse or something from the 1960’s, with bad lighting, worn out carpeting and old style shelving and racking.

Dick’s is a different story. The store design is meant to ensure as much natural lighting as possible comes through, making it a very different feeling in the store. The second floors are generally mezzanine-like in that they do not cover the entire first floor, thereby retaining that airy feeling. Their assortment is second to none. They have the best brands but within those brands, they tend to choose the freshest merchandise. The buyers have very keen eyes for what will sell and what will appeal to their target markets.

Their sight lines are also well managed so that you are able to see exactly what you are looking for and where you are going (not to mention the creative visuals in each section). The store is split into “worlds” which are very well signed (a pet peeve of mine, and very rare) and easy to navigate. Their wall visuals are very attractive and their floor is also easy to navigate and understand.

All in all it is very easy to see why they have become the number one large format retailer in sporting goods in the United States. I continue to be impressed with their stores, their selection and, on most occasions, their service…Which garners them the “Three Cheers”…

The RetailTherapist

Buckle Up

When I first came upon Buckle (based out of Kearney, Nebraska, of all the unlikely places), it was riding high and I needed to see what they were doing. This was almost 1 year ago and they are still blowing away the competition. Furthermore, since we are supposed to be in highly uncertain economic times, they are no doubt stealing market share from many competitors.

Last month, they ran almost a 35 comp. And almost 28 comp YTD…Compare that to Gap Inc. at -12 comp YTD, American Eagle at -6 comp, Abercrombie and Fitch flat, Lucky Brand at negative single digits. Only Aerpostale, through some very heavy promotions, remains above water on the year in single digits.

So what is their secret? I really have no idea, but I can tell you what I like. Feel free to comment on what you like or don’t like…

They have broken through with some great private label jeans at middle price points and taken some of the pressure off their branded merchandise. They still have a very well assorted selection of brands with good stock levels, but their private label “BKE” is now given more dominance and prime positioning throughout the store and it looks very strong.

Their merchandising is all about denim and what to wear with denim. That is their sole, unwavering focus. It doesn’t have the styling or edge that a Lucky Brand has (which I happen to like very much) but it caters to a more basic oriented customer that wants a bit of fashion but doesn’t want to make a statement with it. Their visuals are very practical in that they instantly inform the customer about what top to wear with a particular denim style or denim brand by showing a number of different options faced out above a selection of denim. It is simple but very effective.

Their real estate strategy seems to be aimed just “off centre”, to coin a phrase. Meaning, while they have stores in Mall of America and Woodfield, the AAA malls are not their core business. They are situated in smaller cities and towns where they become the most important denim resource for that mall customer.

Ok, so some of the stores could use the updated, slicker new look. Their staff and in-store service are only average (no worse nor better than any other mall based retailer in this space). But maybe some of that is part of their charm. Maybe they are supposed to be a little rough around the edges and not too slick as that is the customer who is drawn to them.

From what I can tell, there are more and more of those customers coming through the doors over the past year and being converted into Buckle shoppers.

TheRetailTherapist

Kudos to Costco

I am fairly confident that the founder of “Warehouse Style Shopping” never envisaged cool ipods or flat screen LCD TV’s or even 1 carat diamonds being sold as you walk in the front door of a vast warehouse store. It is an interesting experience to be handed a coupon booklet for diapers and Tylenol Cold Tablets as you walk in the door, walk by a few of the week’s specials piled up to 10 feet on your left and on your right see and hear the sounds of the latest, hippest electronics – not to mention being blinded by the” bling bling” also on display at the front. Oh, and you need a membership through a corporation to join and it costs $40-50 to join every year!

But it is Costco that has perfected the art and science of warehouse madness. The old style merchants would marvel at how the old traditional strategy of “pile it high and watch it fly” with large price point signs on each rack really does work in these environments. Did we mention the average household income as being around twice the national average? This, for sure, the founders never dreamed of or originally targeted: A very affluent core demographic.

I know there are large families out there who need three tons of dishwasher detergent at a time. I know in our household we go through 3-4 cases of the flavoured water in barely a month. I also know that to feed a family of five, the portions at Costco allow everyone to feel satisfied without breaking the bank or offending anyone’s taste buds.

So, when we mentioned that the Apple store was the “Perfect Retail Concept”, maybe we should think of Costco in the same breath. There is no floor service – it is fully self serve. There are no shopping bags or boxes – one gets to re-use the strangely shaped boxes in which the merchandise was delivered to Costco. The checkout is easy, quick and very efficient. There is no home delivery or help to load and unload the car (hence my back spasms on two occasions, two days after a Costco run). The stock is replenished and shipped overnight. There is no visual merchandising expense per se as the manufacturers’ own packaging and boxes are used to place on the floor always palletized. There are tastings set up around the store to help satisfy the munchies (which surely entices shoppers to purchase) especially after wandering around 100,000 square feet of concrete flooring. The cost and complexity to build are both extremely low and all the layouts are pretty standard and consistent. There is a built-in loyalty program and mailing list to which to advertise and promote and a built-in cash flow from the annual dues each member pays.

There is no internet expense or national advertising campaign. The employees are very well paid and committed. There seems to be less of a loss prevention issue as items are larger than average and hard to conceal and everything is checked as one walks out the door, by hand and in person. And they only take American Express. Imagine that.

I guess what I am saying is that I like Costco. I admire what they have done and the culture they have created. They do everything well at minimum cost so that they can pass along the best pricing possible to their “members” – that would be you and I. I have found golf bags, life jackets, hockey sticks, Sea Doo tubes to pull behind boats, athletic socks, children’s cotton pajamas, bestsellers in books and audio, patio and dock furniture not to mention the every day staples of bottled water, garbage bags, batteries, pine nuts and Chipits. Now, apparel is taking a larger and larger percent of their floor space and has succeeded based on price and need.

It is a one of kind treasure hunt experience that even guys like to visit. Oh, and they are needed because it usually takes more than one person to lift everything onto the cart and then into the car!

TheRetailTherapist