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    Published on: April 29, 2015

    by Kate McMahon

    Shoppers excitedly awaiting Target’s Lilly Pulitzer Collection dreamed of tropical prints in bold pinks, greens and blues, finally available at a moderate price point.

    Instead, they saw red.

    “Epic fail” was the crowd reaction on social media after the much ballyhooed Lilly Pulitzer collection of clothing, accessories, beauty and home goods sold out within hours online and at Target stores last week.

    Fashionistas were fuming. Many stood in line outside their local Target stores before the doors opened only to find racks that had been stripped of merchandise “by 8:03 a.m” or in some cases, no Lilly items at all. The online boutique opened at midnight, was immediately overwhelmed with demand for five hours, and sold out while frustrated shoppers watched Palm Beach-inspired product evaporate on their laptops.

    Fumed one Lilly fan on Facebook: “Empty carts + empty shelves = angry customers who will shop elsewhere. “

    Not exactly what Target wants to read.

    A vexed Twitter user wrote: “Everything gone in three minutes. Women waited in line w/hundreds of dollars, left with nothing. How is this good business?”

    Answer: It isn't.

    Further fueling the consumer’s ire, more than 37,000 Lilly for Target items quickly popped up on eBay and other reseller outlets amid reports of “hoarders” grabbing armloads of items and buying out all sizes online.

    Which begs the question: What was the heck was Target thinking?

    The launch has been hyped for months. The retailer had to know shoppers would snap up Lilly for Target shifts for $38, compared to $300 for a signature Lilly dress. Ditto the bikinis for $48, a steal compared to the $135 real deal.

    And Target certainly should have learned a lesson from its bobbled 2011 collaboration with the chic designer Missoni, which was marred by sellouts and website woes.

    Target marketing execs said they “never expected” the Lilly collection to sell out in a day and anticipated having enough product “for several weeks.”

    Some might say this is a miscalculation. I think it’s inexcusable.

    Meanwhile, the Target social media team was in overdrive trying to cheerfully respond to irate customers, but the perky “thanks for reaching out to us!” lines weren’t well received.

    But particularly damning was the number of items that ended up on resale with jacked-up prices. Target estimated only 1.5% of the collection was on eBay (there were still 25,000-plus items as of yesterday) – to which one customer griped “more like 51.5%.” Even more merchandise could found on sites such as Poshmark and Craigslist.

    Next go-round on a limited collection, I think Target should institute quantity control both online and in stores. A limit per customer is common when grocery items are on special, or concert tickets go on sale, and would make perfect sense in this case to help curtail the mass purchasers rushing to the resale market.

    Interestingly, in social media comments, many Target Red card holders also lobbied for a pre-sale for those who have a Target charge card as a show of customer appreciation. I think this makes sense.

    Target’s new CEO Brian Cornell is known for being hands-on, skilled at analyzing data and plugged into social media. He’s looking to aggressively compete with Amazon and Walmart in e-commerce, create a more distinctive “healthy” food segment, and roll out more small stores.

    As best he can, Cornell wants to present the image of a competitive, vibrant retailer. Ironically, a recent Fortune profile showed him posing with samples from the Lilly Pulitzer collection.

    But I think it is fair to say that in this case, on a number of levels, the CEO had no clothes.

    Comments? As always, send them to me at kate@morningnewsbeat.com .
    KC's View:

    Published on: April 29, 2015

    by Kevin Coupe

    Call it the property line between the past and the future.

    The Wall Street Journal this morning reports that the top four UK food retailers - Tesco, Asda, Sainsbury and William Morrison - all are facing major problems related to how much real estate they own there. It is a major shift from just a few years ago, when there was a kind of "space race" with retailers seeking to grab every space and obtain every possible advantage.

    It was all about location, location, location.

    But now, the story says, "customers increasingly shop online and favor convenience over 'destination' trips to sprawling superstores," and retailers are having to write down the value of stores that no longer seem as relevant as they once did.

    It may be happening in the UK .... but it almost certainly is a scenario that we're likely to see again and again as the market continues to evolve.

    And it poses a question with which all of these retailers will have to grapple. Is the best solution to close stores (especially big stores), or to find a way to make these stores more relevant and compelling to shoppers?

    It is an Eye-Opening question that every retailer needs to ask itself. Now. Because even if they are not facing the problem facing UK retailers today, it won't be long before they do.
    KC's View:

    Published on: April 29, 2015

    The Associated Press reports that in Vermont, U.S. District Court Judge Christina Reiss ruled this week against a food industry request for a preliminary order that would block the state law requiring the labeling of foods containing genetically modified organisms (GMOs).

    The brief had been filed by the Grocery Manufacturers Association (GMA), the Snack Foods Association, the International Dairy Foods Association and the National Association of Manufacturers.

    Denial of the request only means that the suit now is likely to go to trial, but that for the moment, implementation - scheduled for July 1, 2016 - can go forward.

    GMA continues to maintain that "manufacturers are being harmed, and they are being harmed now" by the law. "Act 120 is unconstitutional and imposes burdensome new speech requirements on food manufacturers and retailers."

    However, in her ruling, Reiss wrote that "the safety of food products, the protection of the environment, and the accommodation of religious beliefs and practices are all quintessential governmental interests, as is the State's desire 'to promote informed consumer decision-making,"
    KC's View:
    "Informed consumer decision-making." That's really what this is all about.

    It isn't about being pro-GMO or anti-GMO. It is about believing that the biotech companies are missing an enormous opportunity to educate and enlighten the public by embracing the notion of GMO labeling. They'd rather spend millions to fight it, which sends the wrong message and ends up focusing the conversation on the wrong thing. They're fighting the old war, not the next war.

    Typical mistake. Dumb, but typical.

    Published on: April 29, 2015

    The New York Times reports this morning that Anheuser-Busch InBev is facing a public relations eruption this week over a beer bottle label that some perceive as being pro-rape.

    The label is part of its "Up for Whatever" campaign, and describes Bud Light as being "the perfect beer for removing ‘no’ from your vocabulary for the night.”

    According to the Times, "Protests quickly erupted in social media, criticizing what was perceived as perhaps not the best marketing language in the midst of public outcry over date rape on college campuses." A typical tweet described the company this way: "Budweiser - a proud sponsor of American Rape Culture™"

    While the company said that the bottles with the label could not be recalled, and couldn't even say what percentage of its bottles carried the message, it also said it would issue any more Bud Light bottles with that label. “It’s clear that this message missed the mark, and we regret it,” Alexander Lambrecht, vice president for the Bud Light brand at Anheuser-Busch, said in a prepared statement. “We would never condone disrespectful or irresponsible behavior.”
    KC's View:
    I'm going to go out on a limb here and say that it is a near 100 percent certainty that there were no women in the room when the folks at A-B decided on this particular language. Because this message - especially in the context of a national conversation that has been taking place for months - is at the very least in questionable taste.

    Two lessons here. The obvious one is about being sensitive to issues like rape. (You wouldn't think this would be a tough one.) The equally important one is about having a diverse workforce so you're not just counting on one slice of the population to be paying attention.

    Published on: April 29, 2015

    The Associated Press reports that Jeni's Splendid ice Creams, which last week "recalled all its products from retailers and closed ice cream shops in six states over concerns about possible listeria contamination," now is saying that it will destroy 265 tons of ice cream in a move that will cost the company more than $2.5 million.

    CEO John Lowe says that "a team is working to eradicate the bacteria detected in the production kitchen."
    KC's View:
    Yikes.

    Maybe it's me, but it seems as if the Jeni's folks are moving a lot more quickly and decisively to address their issue than Blue Bell did in much the same circumstances.

    These days, you can;t afford to be slow or circumspect in dealing with such public health issues ... because in the modern technology/communications environment, the key word there is "public." (Sure, "health" is important, too ... but you get my meaning.)

    Published on: April 29, 2015

    Reuters reports that Walmart "plans to expand its footprint in China by nearly a third by opening 115 new stores by 2017, the firm’s chief executive said, in a renewed push to lure China’s grocery shoppers despite slowing growth ... As well as new stores to boost sales, the world’s biggest retailer will close some under-performing stores and seek to tap into the faster-growing online grocery market through its Yihaodian.com service."

    “Our aim is to become an integral part of China’s economy,” CEO Doug McMillon said at a news conference in Beijing earlier today. “China is a top priority.”

    The story goes on to say that "Wal-Mart, France’s Carrefour SA and Britain’s Tesco PLC have all seen sales growth slip over the last five years, losing market share to local rivals, according to a report published on Tuesday from consumer analytics firm Kantar Worldpanel."
    KC's View:

    Published on: April 29, 2015

    Michael Pollan has an interesting piece in the New York Times in which he considers the notion of "natural," finding that "at the margins, it’s impossible to fix a definition of 'natural.' Yet somewhere between those margins there lies a broad expanse of common sense.

    “'Natural' has a fairly sturdy antonym - artificial, or synthetic - and, at least on a scale of relative values, it’s not hard to say which of two things is 'more natural' than the other: cane sugar or high-fructose corn syrup? Chicken or chicken nuggets? G.M.O.s or heirloom seeds? The most natural foods in the supermarket seldom bother with the word; any food product that feels compelled to tell you it’s natural in all likelihood is not."

    And yet, Pollan suggests, it is not always that simple ... and you can read the entire piece here.
    KC's View:

    Published on: April 29, 2015

    • The Richmond Times-Dispatch reports that Walmart is scheduled to open a 4,100 square foot campus store at Virginia Commonwealth University today, offering "a full-service pharmacy and will sell fresh produce, dairy products, meats, health and beauty aids, and merchandise tailored to the campus." It will not, however, sell beer, wine, cigarettes or lottery tickets.
    KC's View:

    Published on: April 29, 2015

    • The National Retail Federation (NRF) is out with a survey saying that "Americans will spend an average of $172.63 on mom this year, up nearly $10 from $162.94 last year and the highest amount in the survey’s 12-year history. Total spending is expected to reach $21.2 billion."
    KC's View:

    Published on: April 29, 2015

    • Price Chopper Supermarkets/Golub Corporation announced that William Hull has been hired for the newly created position of Director of Network Engineering and Operations.

    Hull is described as coming to Price Chopper "from a long career with large multinational to small start up dotcom organizations, holding positions ranging from programming and systems engineering in management and director level positions."
    KC's View:

    Published on: April 29, 2015

    Even before Kate wrote her column this morning about Target's Lilly Pulitzer issues, one MNB user weighed in on the same subject:

    I can’t quite understand Target’s POV during the entire thing. There are some observations I’ve made that just don’t add up in my mind. First off, they created a storm of demand for the products – online, magazine and TV adds. The look books were released weeks ago and I, like many shoppers, had it marked on my calendar. However, when Sunday morning rolled around and I got onto the website at 7am, I realized I couldn’t purchase anything I wanted. The website had already been taken down and everything was sold out. Pictures were flowing on social media of shoppers frowning at empty racks and items were showing up on EBay (don’t get me started on that!). So, you know what I did? Nothing. I didn’t go to Target that day. I knew I couldn’t find what I wanted, so there was no reason. The result is that Target lost some of my wallet that day. Had I gone I would have done a lot of additional shopping, but the fact that it was such a mess eliminated my desire to enter the store. That’s one piece I don’t understand. By not having better control of inventory, they kept shoppers from coming into their stores and spending more money. It just doesn’t make sense to me. If I am Target and have decided to sell 100 dresses at $30 dollars then I know the most I will make from the actual dresses is $3,000. What they are banking on (I am assuming) is that they will get even more money from shoppers once they are in a store. It’s a fair assumption, but it will only occur if shoppers actually come into the store. That motivation was eliminated by their (for lack of a better word) dumb decision to limit inventory (I’ve heard only two of each size was provided to stores). Sure they sold out and will see a bump from that, but that number is predictable based on what they had decided to put on shelf. Does they know how much they missed out on by shoppers avoiding the store all together?

    The second piece I found irritating is the number of people calling into radio stations who talked about website hacks which allowed them to purchase items before they were supposed to be turned on for sale. Now, maybe they weren’t really hacks, who knows, but perception is reality. Target just reached a settlement for the data breach that occurred in 2013, now I am hearing that their site was hacked again, but this time for early shopping access? So….can I really trust them with my personal data again? Not to mention they created the demand, they knew it was going to be crazy – be better prepared with your infrastructure!
     
    The Lilly collaboration was successful because it’s a well-known brand. More so than many of the designer collaborations they release. Not to mention, the styles are mainstream. I think you’d be hard pressed to find a woman who doesn’t appreciate a cute shift dress in the summer! So of course there was mass appeal. Many people were excited to engage with the brand because the price point exceeds their budget for clothing. Many of those who shop Lilly regularly viewed this as an opportunity to stock up on a brand they love and save a bit of money (I can buy 5 dresses for what 1 usually costs in!). The truth is, those people will still shop regular Lilly stores without blinking an eye (myself included). However, I will think twice before going back to Target. They created a frenzy and I don’t really see who benefited from it besides them. Which makes them seem selfish and focused on their interests alone.





    On the subject of GMO labeling, and suggestions that it would be too expensive to put them on US products, MNB user Jessica Duffy wrote:

    You know…..many U.S. manufacturers already label their products for GMOs to export them to other countries that require labeling. It really isn’t a valid argument anymore….

    Also a little company called Whole Foods which shortly will make GMO labeling a requirement ... so if you sell to Whole Foods, you're going to have to make the transition anyway.




    Regarding Chipotle, and a lot of the positive coverage it has received lately, MNB reader Peter Talbott wrote:

    Fascinating to me how we fawn over Chipotle.  If I told you there was a restaurant in your neighborhood that (according to the New York Times this week), had an average order of 1070 calories, 2400 mg of sodium, and 75% of the daily recommended intake of saturated fat, you wouldn’t even ask what it was called….

    Another reader had a similar observation:

    Chipotle’s GMO position presents their products as nutritious and healthy, but in reality, the typical burrito with a protein, rice, beans, and salsa is around 1800 mg in sodium and close to 900 calories.  (I would bet your readership has not reviewed Chipotle’s actual nutrition.)   And as high sodium leads to high blood pressure which leads to all kinds of health problems, Chipotle has an opportunity for a new slogan - “GMO Free Coronary Heart Disease”.

    MNB user Benjamin Loy wrote:

    I agree with Chipotle’s intentions and wish them luck in finding a reliable source of GMO-free corn. With 93% of the US corn crop consisting of GMO product even if they were to find a GMO-free source the odds of this not being mixed with GMO-corn in a silo or fertilized with GMO-free pollen will probably be very slim if any GMO corn exists in the surrounding area.




    On the subject of Walmart's proclaimed new focus on fresh foods, one MNB user wrote:

    Will have to do and prove to me that their produce is fresh and healthy before I will even consider trying it...again.

    Does not save me money to have crappy tasting produce, full of poisons and will rot within days.

    I will pay more in the short run to , be sure that it is healthy, and GOOD tasting. More $$$ up front, but save in the long run, not just in $$$.


    From another:

    Wal-Mart's produce department is the most disappointing of all their departments. Most of their produce does not look fresh in the store. They really need to do a better job in this area. I won’t buy any of their produce as it will more than likely be unfit to eat before I eve get it home, much less than after a day in the refrigerator.




    A few MNB readers had some thoughts about the pilot program that will have Amazon using DHL to deliver packages to the trunks of Audi automobiles. One wrote:

    I’ve been following this since Volvo started testing in Europe. There seem to have been very few problems and good customer acceptance of the technology and service. While the variable routing challenges of finding a car could be daunting, the fact is that most of these deliveries are made to vehicles sitting in their usual daily parking spot from 9-5 M-F. Now if they figure out perishables…

    From another:

    Wouldn’t it be cool if they combined this with the drone program and delivered packages to rolling vehicles on the autobahn?




    Regarding Tesco's decision to significantly trim its grocery selection, MNB user Tom Herman wrote:

    I’ve read the book and seen this movie.  I know exactly how it’s going end.  Name me one retailer that drastically reduced SKU’s and had improved sales and earnings?  Enough said!

    Tesco also had to admit that its Ireland profits were not what it had claimed ... because it had claimed supplier payments as profit, which is not the same thing.

    MNB user Scott Proch wrote:

    Ex-Fleming associate here.  Warning! Warning!!
    MNB user Gregg Raffensperger wrote:

    I guess they learned well from their US brethren....sad.





    We reported yesterday about how Kroger will acquire most of dunnhumbyUSA from the Tesco-owned United Kingdom-based analytics firm, a move that is said to give Kroger greater flexibility and give Tesco the ability to sell off dunnhumby as it looks to reduce costs and raise cash. A new Kroger-owned business called 84.51° will operate with those assets as its foundation, with the name coming from the longitude of the new entity's location.

    One MNB user had another explanation:

    Before I saw your explanation that 84.51 refers to the company’s longitude, I Googled “84.51” and found this synchronistic reference to 24 CFR (Code of Federal Regulations) 84.51 - Monitoring and reporting program performance.

    Whoa.




    And finally, from MNB reader Mary Manning, this reaction to yesterday's posting of the John Oliver / "Last Week Tonight" piece about the high cost of low prices:

    This segment about retailers and their pursuit of lower prices which results in the exploitation of workers overseas was right on target. One part Oliver mentioned is that we as consumers bear a huge part of the responsibility for this exploitation. We all need to think about spending more on products that we know are manufactured in a responsible way, and avoiding buying goods that have prices that are "too good to be true". In my opinion, this point just never gets enough attention in the media. Also, I wish he didn't swear so much, so I could show this to my students.

    I kind of wish he didn't swear so much, too. But I'd still show it to college students ... there are no words with which they are unfamiliar, and I'd just warn them about it at the beginning. If they want to leave, no harm, no foul.
    KC's View: