Macy’s picking the bones of fallen retailers

DISCUSSION TOPIC

Other’s Loss is Macy’s Gain – 5/14/09

TOPIC SUMMARY:

Macy’s has developed a strategy to take advantage of the misfortunes (specifically the move into bankruptcy and liquidation) of competitors such as Fortunoff, Gottschalks and Mervyns so it can pick up their customers.

“Wherever there is a store that has gone out of business, we are honing our sights on that customer,” Terry Lundgren, chairman and chief executive officer of Macy’s, told The Wall Street Journal.

Macy’s strategy, as The Journal article points out, is nothing new in retailing circles. In New Jersey, for example, even though Walgreens purchased prescription files from the failing Drug Fair chain, every pharmacy within miles of the former chain’s stores have signs posted letting consumers know their business is welcome.

Picking up a fallen rival’s customers is more important than ever considering the realities of consumer spending at this time. According to Deutsche Bank, closed chains in the clothing, electronics and home furnishings businesses left behind roughly $21.4 billion in sales this year.

Macy’s, as an example, is considering adding patio furniture to its stores in the New York area following Fortunoff’s collapse. Outdoor furniture, according to The Journal, was the most successful category for Fortunoff. The company has even talked with former execs at the chain about participating in an online launch of patio furniture this year with product to reach stores in 2010.

Discussion questions:  Has market share become more important for a chain or independent’s success in the current market than it has in the past? What are your thoughts about the opportunity for retailers to pick off the bones of fallen competitors in the current market?

My post: 

Macy’s is well positioned to grab market share from the demise of Gottschalks and Mervyns and other retailers selling the core product categories like apparel, home furnishings and cosmetics.  I do question the idea of going after categories that may not be in their stable of core competencies – like outdoor furniture.  This could prove a distraction they don’t need.  History has shown us that retailers who understand their customer and where they shop can devise effective market share strategies.  The key is to understand those customers who are shopping with you and with your competition.  Macy’s has the best chance of grabbing more of the customer’s dollars for categories they already bought at both Macy’s and the failed retailers.

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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Go to the full discussion at RetailWire.com:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13742

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New Target program guarantees unbeatable prices

DISCUSSION TOPIC

Target Revives Dropped Price-Matching Program – 5/12/09

TOPIC SUMMARY:

Target dropped its price-matching program in 2002. That, as they say, was then because now it looks as though the retailer may be on the verge of bringing it back. Target has tested the program in two markets since March 15 and began a third in its own Minneapolis backyard on May 1.

The retailer has been matching lower prices in its competitors’ ads at 22 stores in the Orlando area and 28 others in Denver for the past two months. The chain rolled out its “Unbeatable Prices. Guaranteed.” program in Minneapolis and Medina earlier this month with the expectation that it will result in a national expansion of the price-matching initiative.

Target believes it has figured out a way to get around the problems it found in 2002. Then, competitor prices were verified at the checkout, causing delays at the front-end. Now, all pricing will be verified away from the checkout at the store’s service desk.

Delia McLinden, a spokesperson for Target, told the Minneapolis Star Tribune that the program was being retested because they “want to speak boldly about value and low prices and give customers peace of mind.”

The Minneapolis/St. Paul Business Journal pointed out in an article that “Target has been ratcheting up its emphasis on prices for the past year, as consumers cut back on discretionary purchases during the recession.”

Discussion questions:  How much will Target’s “Unbeatable Prices. Guaranteed.” program help it achieve a stronger price image with consumers? Does a program like this risk diluting the equity Target has built for its brand over the years?

My post: 

I have always been a big fan of Target.  I am “one of those” who avoid Wal-mart if at all possible due to the feel of the place.  Target provides good prices (even if not as low as Wal-mart) with nice ambience and some really cool product via their focus on design.  Unfortunately, they have drifted in the last few years and lost some of their message.  It didn’t change my enjoyment of the shopping experience there but clearly Wal-mart gained share as they stayed true to their low price message and dealt with much of their bad publicity.

I haven’t seen the new price-matching program in action, but I will assume the two test markets have shown strong results or they wouldn’t be expanding the program.  Target is known for execution, so I will assume they have the bugs worked out of dealing with the customer requests.  I think the marketing message is right for the times and as long as they keep to their design ethos, it will prove to be a good move.

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

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Go to the full discussion at RetailWire.com:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13736

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Wal-Mart joins the quarterly results group

DISCUSSION TOPIC

Wal-Mart Ends Monthly Same-Store Sales Report – 5/8/09

TOPIC SUMMARY:

Wal-Mart is not the first retailer to decide against reporting monthly same-store sales numbers but being the biggest means it is going to get a lot of attention for doing so.

Tom Schoewe, executive vice president and chief financial officer for the company, explained the decision in a press release. “At the start of this fiscal year, Wal-Mart revised its approach to providing guidance for sales. We went from providing guidance for monthly sales to forecasting a guidance range for our U.S. businesses for the full 13-week period. Moving forward, we will no longer report monthly sales. We will provide comparable store sales results on a 13-week basis, along with guidance for the upcoming 13-week period. And, we will release this information during our scheduled quarterly earnings calls.”

Discussion questions:  What are the ramifications of Wal-Mart Stores decision to not report same-store sales on a monthly basis? Does reporting monthly adversely affect retailers that do it?

My post: 

I applaud the move.  The addiction to monthly results by both shareholders and Wall Street pundits detracts from any retailer’s focus on the long term viability of the business and on improving the customer experience.  I’ve watched too many retailers make terrible short term financial decisions simply to prop up monthly comps and even quarterly earnings per share results.  While it would be more difficult for the casual investor, I would like to see focus on quarterly comps (which Wal-Mart is doing here) and semi-annual earnings per share in order to allow the retailer to focus on strategic long-term results.

Mike Osorio, your Dare to be Contagious! ™ strategist

www.OsorioGroup.com

What do you think?  Please add your comments and add to the discussion!

————————————————-
Go to the full discussion at RetailWire.com:
http://www.retailwire.com/Discussions/Sngl_Discussion.cfm/13731

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