The summer is usually not a time for great reflection: more often most of us spend as much time as possible getting away from the real world, via vacations, trashy novels and the latest super-duper hero movie sequel. But for some reason, it seemed like the right moment to revisit some of the many retailers of home furnishings that have been injected, inspected, detected, infected, neglected and selected in this space over the past few years. Many of the stores have experienced some pretty important developments since last encountered, some for the better, many for the worse. So, in no particular order – OK, maybe in some order – lets see what these guys have been up to.
What a mess they’ve made in Minneapolis recently. A big-time security breach of Snowdean proportions; a Canadian launch best described as the Great White North – Not; bad comps; and a CEO forced out of his corner office via the self-checkout line, Target is in free fall right now.
Last year we talked about its huge Threshold private label home program roll-out and while the brand is still the cornerstone of that side of the store, the rest of the home planogram is open for suggestions. The store’s TSS (Target Store Services) sourcing operation and its philosophy that if it wasn’t invented here it can’t be any good has created an insular environment where the wagons remain circled.
Will management open up the process? The telltale sign will be who is picked to be the next president of the company. If they promote from within, it will be more of the same. If they go outside, it may indicate a willingness to change. Unfortunately, my money is on the former.
New president Doug McMillan just led his first annual meeting this past June, only a few weeks after our “Dear Doug” letter urging him to focus on the store’s broken merchandising process rather than just logistics and operations. I guess he didn’t read my letter. “We’ll be at the forefront of innovation and technology,” he said at the meeting. I did see one quote mentioning “products,” but it was squeezed in between “formats” and “technology.”
Walmart is an amazing company but it is not going to get better until its gets better at merchandising. It can have all the new technology, formats and software in the world but if it doesn’t have products people want to buy it won’t matter.
Doug, I can email you my letter again in case you didn’t get it the first time.
Bed Bath & Beyond
A year ago, Wall Street couldn’t get enough of Bed Bath, a store I once postured might be the best retailer in America. Its stock was riding high and it had plenty of running room with its Cost Plus and Christmas Tree divisions. It was even set to relaunch its website, which would solve one of its few blemishes, an underdeveloped online business.
Well, the new website went up last fall, but business didn’t. Bed Bath does less than 2% of its business online, a glaring red flag compared to other retailers and it doesn’t seem to have a Plan B on how to fix it.
Christmas Tree is being expanded under the “And That” nameplate, which doesn’t exactly roll off the tongue and my last visit to a Cost Plus store showed little if any change from its pre-acquisition days.
Bed Bath is infamous for its conservative, risk-adverse expansion strategy as well as for its tendency to play everything extremely close to the vest. And that’s worked remarkably well for them. But if in the past I gave them a BBB-plus, right now I’d have to give them a BBB-minus.
When the most creative thing a company does is run an ad, you have to wonder how long it can survive. Radio Shack’s hilarious Super Bowl TV ad mocking its overly dated stores and employees had to hit way too close to the home bone for comfort. It would be different if the company was in the process of remodeling thousands or even hundreds of its stores, but the count remains in the low to mid-double digits at best. In the meantime, management attempts to pare down the total store count have been met with huge resistance by creditors who have decided they are more interested in getting a few bucks out of this thing now rather than wait it out in the hope they can fix this sucker.
The truth is that no one can. Even a recent foray into tech repairs – something the store tried previously as well as something suggested here in a piece last year – will prove to be way too little way, way too late. The only question left is if Radio Shack goes away, will anyone notice?
When you base your retail strategy on offering everything to everybody, the minute you screw around with that you are asking for trouble. Earlier this year I wrote about the tremendous advantage the company had with its supplier base versus other online players — and that remains. But Amazon’s ongoing online power play with publishers who won’t abide by its terms is a dangerous game of chicken. And if Amazon continues to put its needs ahead of its customers, it’s likely to get fried. Deep.
The longest going-out-of-business sale in American retailing history continues. No change.