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    Published on: February 5, 2020

    Digital strategies aren't just about creating alternatives to the bricks-and-mortar shopping experience.  Done effectively, they can actually bring people back to the store, while also eliminating customer anonymity, creating rich and actionable data, and deepen relationships between the store and consumer in a way that transcends the simple transaction.

    Our newest Retail Tomorrow podcast, which brings together a terrific panel of experts from a wide range of disciplines, was recorded at Google’s New York City offices during the recent National Retail Federation (NRF) Show.  Our guests:

    •  Matt Alexander, co-founder of Neighborhood Goods, an unusual and fascinating take on physical retailing with stores in Dallas and New York.

    •  Patrick Flanagan, senior vice president of digital marketing and strategy for Simon,  which has more than 200 properties in 37 states and Puerto Rico.

    •  Tom Furphy, CEO and Managing Director of Consumer Equity Partners, a member of the Retail Tomorrow podcast family and a regular contributor to "The Innovation Conversation" on MNB.

    •  And Jalna Silverstein, a leader in Ernst & Young’s Transaction Advisory Practice and its Real Estate, Consumer Experience and Retail Strategy.

    You can listen to the podcast here.

    This Retail Tomorrow podcast is sponsored by the Global Market Development Center (GMDC).

    Pictured below are our panel members, from left:  The Content Guy, Matt Alexander, Tom Furphy, Patrick Flanagan, Jalna Silverstein.

    Published on: February 5, 2020

    We had a story yesterday about how Amazon's Echo Show now will be able to scan product bar codes and compile a shopping list, which prompted MNB reader Tom Murphy to write:

    You just blew past an interesting comment without making a point: “Alexa may have some problems recognizing some private label products…”.  Really, in this day and age?

    I am sure Alexa is powered by access to multiple industry databases that manage barcode to product relationships.  Back in the 1990’s, CPG companies were terrible at keeping accurate barcodes on products, especially with all the line-extensions and “new improved” version of stuff they dropped regularly to see what would stick on the consumer.  They tried to “game” the UPC number.

    In order to bypass POS restrictions, their lack of capability or just lack of discipline, for years retailers “gamed” they system on barcodes/UPCs…and accuracy, at best, was deplorable.  Now in the day of digital sales and consumer attitudes, allowing your business teams to game or fail to act quickly to register new private label products…could be part of the “slow death syndrome”!

    Come on retailers...wake up!

    Regarding the problems with skating rinks that use plastic instead of real ice, one MNB reader observed:

    Totally agree with the comment about the fake skating rinks being less than desirable.  On the one we tried, you don't 'slide' as much as you walk around it.  My teenagers mock me still, over a year later, for taking them there!!

    On another subject, from another reader:

    Regarding the MNB Culture Desk article about "Hamilton" coming to the movies … Very exciting news for those of us who need to get our culture at the movies. Broadway should take a page from the Met Opera and broadcast to the movie theaters. Although I love Opera now, I never saw myself as a opera fan or even thought about going to the Opera. But the Met  gave that opportunity to those of us who will never get to New York. Seeing Operas like La Boheme, Tosca, Madame Butterfly, most recently Porgy and Bess and so many more  broadcasts at the movie theaters has been a phenomenal and very affordable ($25.00 !!) experience. Broadway should do the same! I can hardly wait to see "Hamilton"!

    I actually saw the live "Porgy and Bess" broadcast in a movie theater last weekend … and am saving my comments about it for OffBeat on Friday.  But I agree with you about live streaming plays and musicals to movie theaters.

    And finally, yesterday I used a Jeff Goldblum quote from The Big Chill yesterday.  You know, this one:

    "I don't know anyone who could get through the day without two or three juicy rationalizations. They're more important than sex … Ever gone a week without a rationalization?"

    One MNB reader wrote:

    <b>Kevin, I used the Jeff Goldblum quote here in the office last fall, no one in the conversation knew the movie! It was painful.</b>

    It does hurt.

    Published on: February 5, 2020

    •  The New York Times this morning reports that "Walgreens will pay $7.5 million to settle allegations that for more than a decade it let an unlicensed pharmacist handle hundreds of thousands of prescriptions, including some for highly addictive painkillers, the authorities in California said on Monday, another setback for a company already facing broader accusations that it helped feed the opioid epidemic … As part of Monday’s settlement, Walgreens also agreed to institute a license-verification program and conduct annual audits, among other new oversight measures."

    According to the story, "The Santa Clara County District Attorney’s Office, one of two San Francisco Bay Area agencies that sued Walgreens, said that the employee, Kim Thien Le, 44, handled more than 745,000 prescriptions, including thousands for drugs like oxycodone, fentanyl, morphine and codeine, from 2006 to 2017. She was never licensed by the state pharmacy board as required by law, the authorities said."

    Published on: February 5, 2020

    Malls, facing closing stores and retail bankruptcies, are taking all sorts of different approaches to the problem.

    One way is to make the experience more, well, experiential.

    Another was is to find other uses for the real estate.  Like for community colleges, health care facilities, or even restaurant ghost kitchens.

    But now, mall operators Simon Property Group and Brookfield Property Partners,  along with the brand licensing firm Authentic Brands Group, have come up with another way to deal with the bankruptcy of Forever 21, which has operated large, often multi-level stores in almost half the malls they own.

    They're buying the company.

    NPR's Marketplace reports that they "have agreed to purchase the assets of Forever 21, the bankrupt clothing retailer, for $81 million."

    Analysts say that it is unlikely that the mall consortium will be able to return Forever 21 to past glories, but for now, "the lights stay on."  People stay employed.  And their malls look less like ghost towns.

    But … there are always possibilities.  <i>Marketplace</i> notes that "Simon Property Group and Brookfield have done this before. In 2016 they bought the bankrupt clothing chain Aéropostale. Since then, it has reopened more than 500 stores."

    Published on: February 5, 2020

    The Financial Times reports that the Best Buy board of directors has completed its investigation into misconduct allegations against its CEO,  Corie Barry, and said that it "supports the continued leadership of the Company by Ms Barry. To preserve the confidentiality and integrity of the process, the Board will have no further comment."

    Barry became CEO of Best Buy in June 2019, taking control of a company that has had some experience with sexual misconduct in its c-suite.  Last month, Best Buy said that Barry had been accused via anonymous letter of having an inappropriate romantic relationship with a fellow executive who subsequently left the company;  both were senior vice presidents at the time of the alleged relationship, and the other executive became CEO of a non-competitive business.

    KC's View:

    I was considering just slotting this into the "FastNewsBeat" section, but thought that it would be fairer to give the story clearing Barry the same kind of position that I gave the story about the original allegations. 

    That's especially because we got a number of emails that sort of piled on Barry before we knew any details about the charges.  I think sexual harassment in the workplace is a serious issue, and I would never minimize it, but not every relationship is harassment and not every allegation is true.

    I suspect that Best Buy's board took this very seriously because of the company's history, and so if it cleared her, it must be because she was in the clear.

    Published on: February 5, 2020

    There is a great piece in the New York Times about retail's problematic relationship with private equity, suggesting that financiers often have a lot of money but very little experience or common sense about how to be a merchant - though this does not stop them from overruling experts, sometimes in disastrous ways.

    One example:  Payless ShoeSource, which just recently emerged from bankruptcy and has its third ownership group in four years.

    An excerpt…

    "As in any corporate failure, there is no one cause. Over seven years, Payless went through a wringer of private equity and hedge fund stewardship that left it with inadequate technology, run-down stores and no financial cushion to survive an era of upheaval in retail.

    "But the collapse of Payless is more than a story of one discount shoe company that couldn’t hack it in a changing business environment. It provides disquieting clues about one of the great mysteries of the modern economy.

    "Why hasn’t the finance-driven capitalism of the last few decades created faster growth? What if the masters of financial efficiency are making choices that don’t actually create the more dynamic, productive economy they promise?

    "In extreme cases, what if they don’t really know what they’re doing at all?"

    You can read the story here.

    KC's View:

    Let's face it.  Retailers get involved with private equity because they're in trouble.  They need money.  They've been hammered by competition, they've made miscalculations, and maybe have been mismanaged.

    But if the money doesn't get used the right way, or if a brand's equity is squandered because of debt obligations, who exactly is being helped?

    The money people I respect are the ones that are focused on sustainable and workable business plans that keep stores open and people employed, that are mindful of both strategic and tactical imperatives (and know the difference).

    It doesn't help to toss a business a lifeline if it is attached to an anchor.

    Published on: February 5, 2020

    Four New Jersey Foodtown stores that have been operating as Nicholas Markets are being converted to Wakefern's The Fresh Grocer banner this month and next, the companies announced this week.

    The transition is part of a strategic repositioning that started last year when the Maniaci family, which owns Nicholas Markets, joined retailer-owned cooperative Wakefern Food Corp., making it the co-op's 51st member.  The Fresh Grocer banner is a trademark owned by Wakefern.

    “My customers know they get a top-notch, specialty grocery shopping experience at our stores, and we will continue to provide all the things our customers know and love while adding new and exciting features as we rebrand to The Fresh Grocer,” said David Maniaci, president and CEO of Nicholas Markets.  “This is the exciting next chapter in my family’s 77-year history in the grocery business. I want to thank shoppers for their ongoing support as we complete our rebranding efforts and make the change to The Fresh Grocer.”

    KC's View:

    "Fresh" is something that a really good food retailer can and should be able to do better than more conventional competitors, especially of the online variety.  So it is critical to emphasize that everywhere - including on the sign hanging over the front door.

    Published on: February 5, 2020

    Macy's said yesterday that it plans to close 125 stores over the next three years, roughly 20 percent of its fleet.  Macy's also will eliminate some 2,000 corporate jobs, and close a technology office in San Francisco and a headquarters office in Cincinnati - moves that it hopes will generate annual savings in the neighborhood of $1.5 billion, which it wants to plow back into the business.

    The CNBC story says that "the department store chain said it plans to exit weaker shopping malls, and instead will shift its focus toward opening smaller-format stores in strip centers … with a focus on growing its off-price business, known as Backstage, expanding outside of the mall and improving online."

    Macy’s has closed more than 100 stores over the past five years.  Some of the closings announced yesterday already had been made public, such as the downtown Seattle store, which, ironically, is in a building that has been gradually taken over by Amazon.

    KC's View:

    Cutting one's way to prosperity often has been tried, but doesn't usually succeed.  So I'm not persuaded by this announcement.

    In the end, Macy's future will be decided by whether consumers are persuaded.  As a shopper, I'm not wild about its stores … there seems to be a lot of vanilla, and not much in the way of a driving narrative that defines the brand and compels the shopping experience.  Now, it may just be that I'm not Macy's target shopper.  (I'd bet on that, in fact.)  But when I look around a Macy's, I wonder who is.

    Published on: February 5, 2020

    The Jacksonville Business Journal reports that Southeastern Grocers, which owns Winn-Dixie, is acquiring five of the Florida stores being closed by the now-bankrupt Lucky's Market.

    Those stores are in Naples, Fort Meyers, Gainesville, Lake Mary and Melbourne.  Terms of the deal were not disclosed.

    In addition to this acquisition, Lucky's said that its St. Petersburg store will be acquired by 11-store Hitchcock's Markets, and ethnic grocer Seabra Foods - which has stores in New Jersey, Rhode Island and Massachusetts, as well as one in Florida - plans to buy one in Orlando.

    The story notes that "Lucky's has previously announced deals with German discount grocer Aldi and Lakeland-based Publix Super Markets Inc. for 11 of its Florida stores, including the Neptune Beach store going to Publix."

    KC's View:

    One of the interesting things in the story is the note that the Lucky's stores are smaller than the units that Southeastern Grocers operates, which suggests that maybe the latter is thinking about some new sort of format to serve these communities … which could mean that it is looking at this move as not just an acquisition, but an opportunity to do something different, something relevant, something resonant.  As opposed to, say, just trying to squeeze 20 pounds of flour into a 15-pound bag.

    Published on: February 5, 2020

    by Kevin Coupe<

    Is there any business that Amazon doesn't want to get into?

    Reuters reports that Amazon and Goldman Sachs Group are in "advanced talks" to begin offering loans to small- and medium-sized businesses.

    The interesting note from the story is the suggestion is that the loans would be targeted at companies that need resources to invest in things like … wait for it … technology.

    You know.  Like some of the stuff that Amazon offers.  Like Amazon Web Services (AWS).

    I'm not being cynical here.  More like admiring.

    Because when you think about it, if there are big companies that won't want to do business with AWS because they compete with Amazon in other venues, it will make sense for Amazon to develop relationships wherever possible with other businesses that may learn to depend on it.  For better or worse.

    (There's also, of course, the vig, which can be good for a bottom line.)

    The story also notes that this is part of a broader strategy at Goldman Sachs, which, teaming with Apple, "rolled out a virtual credit card to help build out the Wall Street bank's consumer business, which also consists of its online bank Marcus."

    Tentacles for everyone, spreading everywhere.

    It's an Eye-Opener.