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Friday, March 24, 2017
by Kevin Coupe
An MNB reader alerted me to an article in Women's Wear Daily about South Coast Plaza, an Orange County, California, mall that is celebrating a half-century in business.
At a time when many malls around the country are in trouble, hurt by heightened competition from both other bricks-and-mortar stores and online retailers, family-owned South Coast Plaza is having "its best year to date in terms of sales — with a vacancy level hovering close to zero and sales for this year projected to be close to $2 billion."
It is, the story suggests, "a testament to what has been a consistent approach managing a retail property: Stock it with the upper echelon of brands, keep it well maintained and the shoppers will come."
To be clear, South Coast is an upscale mall, and while the basic tenets may be simple, putting them into practice is anything but. The story notes that rather than wait for retailers to come to them, management actually goes out and looks for new boutiques and brands that it can bring in, often on an exclusive basis. And they try not to think of themselves as a mall (which, management says, implies sameness), but rather as Orange County's downtown, which changes the mindset; the goal is not just to fill square footage, but to create a welcoming community of retailers with a differential and differentiating advantage.
And while South Coast's ability to be distinctive may be easier because of where it is positioned demographically, the lesson, I think, is a good one for every retailer.
It is critical to find places to be unique and, when possible, exclusive, in the products and services offered to consumers. It is critical to go out and actively seek these opportunities, and not just wait for ideas to come to you. And I love the idea that a mall should be more than just a collection of stores, but rather a welcoming community of retailers; that's not just a semantic difference. And I think supermarkets, for example, might be well-served if they viewed their spaces not as just a collection of other companies' brands, but rather as a holistic experience built around a community of food ... providing not just a source of products, but a resource for information.
It won't be for everyone. But it could be an Eye-Opener.
The Wall Street Journal has a story about Walmart's recent acquisitions of small, online niche brands such as ModCloth, Moosejaw and ShoeBuy, and its intention "to let the retailers run as separate entities, the first time it has attempted to build new e-commerce brands in the US."
It may not be quite that simple.
There are advantages for both sides. Walmart, for example, gets access to both entrepreneurial intelligence from these small companies, as well as to brands that might not ordinarily want to sell their products on a Walmart site. On the other side of the ledger, ModCloth, Moosejaw and ShoeBuy, as "part of a growing group of online retailers confronting the challenge of competing with the fast shipping and large assortment of Amazon or increasingly savvy suppliers selling directly to shoppers," get economies of scale and financial resources that can help them grow.
However, there are cultural issues that come into play. For example, "after news of the ModCloth deal surfaced last week, shoppers took to Facebook and Twitter to critique Wal-Mart’s image as out of line with ModCloth’s feminist, socially liberal and plus-size inclusive branding." And while "Moosejaw shoppers’ reaction has been more muted," the Journal reports that there has been some resistance from shoppers who like buying their "gear at local shops that support outdoor enthusiasts," and are resistant to the notion of shopping at Walmart.
Mark Lore, CEO of Walmart's online operations - who came to the company when Walmart bought Jet, the online company he founded, for $3.3 billion - says that much of the bad press about Walmart's corporate values are "unwarranted," and that people "turn the corner" once they've had greater exposure to the company.
The business case for why these acquisitions make sense for Walmart is clear; if offering differentiated product lines makes sense for smaller retailers, it certainly makes sense for Walmart ... though it remains to be seen if some of these companies will align easily with the price-and-margin driven approach that Walmart typically takes.
The biggest challenge, I think, will be resisting the urge to drag these unique retail brands into the Walmart mindset, and just replace the people who resist the diminution of their cultural values. Companies as big as Walmart don't get that way by tolerating resistance, but in the new world order, I think they have to find ways to do just that. I tend to think of Unilever's acquisition of Ben & Jerry's as a good model ... I'm not sure how they've done it, but so far they seem to have done a really good job of nurturing Ben & Jerry's non-conformity and allowing the company to take positions that may make the mother company uncomfortable.
But a little discomfort is good for the soul ... and a little discomfort may actually make Walmart a more palatable retail source for some consumers, and a more palatable retail partner for some brands.
Videogame retailer GameStop said yesterday that it plans to close at least 150 of its eponymous stores after, as the Wall Street Journal reports, "sales and earnings fell by double digits in the latest period," a reality that seems to have been created by a consumer "shift to digital downloads."
It isn't a big percentage of the company's fleet; GameStop's website says that it has 6,614 stores, two-thirds of them in the US, all of them corporately owned-and-operated. But there seems to be a recognition that a sea-change in how people game - and acquire games - is taking place.
The Journal says that GameStop is counting on a new gaming console - Nintendo's Switch - "to generate the kind of sales that Nintendo’s popular Wii system did," and help generate new growth.
But perhaps more importantly, GameStop is expanding in the non-gaming arena, looking for opportunities that may be less vulnerable to online competition and discounters.
While gaming sales have been it hard, "collectibles - one of GameStop’s success stories that is expected to become a $1 billion annual business by the end of 2019 - saw sales surge 59.5% in the year that just ended and are projected to increase another 30% to 40% this year, company officials said. GameStop had 86 collectible stores as of Jan. 28 and plans to open an additional 35 such stores this year."
For a lot of retailers, getting up and going to work each day must be like playing Global Thermonuclear War, and believing that there is such a thing as acceptable losses.
To be honest, I'm not a gamer. The only video or computer games I've ever bought in my life were gifts for other people, and even my kids have had only a marginal interesting in gaming. (I did have a few months a couple of decades ago when I got addicted to an early version of Wolfenstein, but I weaned myself off it when I decided that there were healthier ways to spend my time.)
But in reading this story, I thought back to War Games, the 1983 John Badham movie about how a computer brings the world to the brink of nuclear destruction and how a high school student, played by Matthew Broderick, unwittingly sets the events in motion. There is a moment when Falken, the man who created the computer, says to a general trying to stop the crisis, "General, you are listening to a machine. Do the world a favor and don't act like one."
That's good advice for any retailer fighting for survival, especially against entities depending on computer algorithms for differentiated advantages. You have to know what the computer can do, but you fight back by playing cards that the computer can't possibly have.
Advertising Age has a story close to my heart, writing about the importance of "content marketing."
"Rather than feed your bottom line with a few entertaining pieces of content, or even a short-term campaign, content marketing can indeed be an ongoing source of sustenance for a business," the story says.
Marriott is the example cited in the piece, as the company looked to establish "its brands as preeminent travel lifestyle authorities through a never-ending storytelling program that focuses first on their audience."
Stories, the company believes, resonate with consumers ... and create enduring connections to its various brands that can build long-term sales.
Good piece, and you can read it here.
USA Today has a story saying that if Sears Holdings indeed goes belly-up - as is being largely predicted these days, as even the company itself concedes that its future is in "substantial doubt" - it is possible that its $900 million sale of its Craftsman brand to Stanley Black & Decker could be voided.
The reason? It is possible, the story says, that a court could determine "that Sears was insolvent at the time of the deal close or became insolvent because of it, among other conditions." In addition, "Other recent transactions, including Sears' 2014 spin-off of retail chain Lands' End, could also be unraveled if the company is deemed to have been insolvent at the time, Sears warned."
Sounds like it is all going to depend on how the courts define "insolvent." Sears has been creatively insolvent for a long time, and as far as I'm concerned, its path to irrelevance and obsolescence has been clear for years.
• The National Retail Federation (NRF) is out with a projection saying that "Americans will spend more than ever as they celebrate Easter nearly three weeks later this year than last ... According to NRF’s annual survey conducted by Prosper Insights & Analytics, spending for Easter is expected to reach $18.4 billion, up 6 percent over last year’s record $17.3 billion and a new all-time high in the survey’s 14-year history. Those celebrating plan to spend an average of $152 per person, up 4 percent from last year’s previous record of $146."
• The Food Marketing Institute (FMI) and National Retail Federation (NRF) announced that they will partner on PROTECT in 2018, combining their existing risk and safety signature events - focusing on loss prevention, risk and safety, organized retail crime investigators, and risk management - into what is described as "one cross-industry gathering starting in 2018."
FMI President and CEO Leslie G. Sarasin said, “Respecting the changing grocery landscape and the intense consolidation our industry has witnessed over the last several years, our trade groups are making similar strategic decisions to maximize efficiencies and deliver greater value to the audiences we serve. Our partnership with NRF on PROTECT 2018 will afford our food retail members the opportunity to expand their horizons, network in a larger sphere and get at the root of what they seek to do best – mitigate risk.”
• Marketing Week reports that "Coca-Cola is getting rid of its global chief marketing officer function by merging it with ‘customer and commercial leadership as well as strategy’ to create a new ‘chief growth officer’ role. As a result, current chief marketing officer Marcos de Quinto is set to retire after a near 35-year career at the company."
The strategic shift comes as COO James Quincey moves into the CEO office on May 1.
Francisco Crespo, currently president of the Mexico business unit, will fill the newly created role of chief growth officer.
In addition, Robert Long, currently vice president of research and development, has been named chief innovation officer.
Jennifer Mann, currently chief of staff to Quincey, will become Coke's chief people officer.
Bea Perez, vice president and chief sustainability officer, will become chief public affairs, communications and sustainability officer.
This week's Innovation Conversation in part talked about how traditional broadcast networks fully expect that streaming services eventually will get the rights to major sports events, though they still believe that mainstream networks have the advantage in reaching a mass audience.
Two days later, Re/code reports that "Facebook, Amazon, Twitter and Google’s YouTube have all submitted proposals to the NFL" in hope of landing a streaming contract for four Thursday Night Football games.
According to the story, "Just like TV networks, tech companies are interested in live sports right now. Facebook and Twitter are cutting deals for virtually any live sports they can get their hands on, and Amazon is also interested in live sports deals and has been buying movie rights, too.
"Live sports rights are expensive and tough to come by, though; traditional TV rights for major sports leagues like the NFL, NBA and MLB are already locked up for years. That makes these Thursday night streams the highest-profile package on the market right now."
Twitter actually carried games last year that also could be watched "on NBC or CBS, NFL Network and Verizon, which has mobile distribution rights."
I think where this will get interesting is when companies like Facebook or Amazon decide to throw major marketing dollars at the NFL games they stream, seeing broader opportunity than just the attraction of eyeballs. I wonder if Amazon, for example, could use the games to sell NFL merchandise, sports equipment, sports-related books and videos ... and maybe sell them in such volume that it will make it worthwhile to spend big bucks for the package. And then maybe produce its own pre-game and post-game shows, using experts not seen on broadcast TV. And then ... well, who knows?
From MorningNewsBeat, September 15, 2016:
A US Department of Labor report recently revealed that there were 5.2 million jobs available in the United States ... which was said to be the highest level of job availability since these specific numbers started being tracked back in 2000. This despite the fact that there remains considerable debate, much of it cacophonous, about national unemployment and under-employment.. The problem, one expert said, is that what we have in this country is "one of the biggest mismatches between skills and lack of qualified help available in the nation's history."
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Got the following email from MNB reader Philip Herr, responding to our story about how Sears CEO Edward Lampert will emerge from a possible shutdown of the company:
I am reminded of an episode from the Sopranos when a gambler, in debt to Tony, signs over his sporting goods store to him. Tony’s crew then proceed to use the store’s line of credit to order miscellaneous goods to resell to generate “earnings”. The owner was devastated.
Why do I see Eddie Lampert in this?
I wrote yesterday:
I cannot help but wonder, though, how protected all the employees working at Sears are.
Which prompted one MNB reader to write:
I think it's fair to note that Lampert kept these people employed for years longer than people like you thought he should.
It is inaccurate and unfair to suggest that "people like me" wanted Sears employees to lose their jobs. "People like me" actually rooted for Sears to develop a competitive and relevant business strategy that would sustain the company - and its employees - for decades to come. They didn't.
Suggesting that I wanted these folks to lose their jobs years ago is akin to suggesting that Amazon is responsible for Sears' demise. It denies reality, and blames the wrong people.
On another subject, from an MNB reader:
I wanted to comment on the controversy about Starbucks hiring refugees.
One point that seems to be lost in this debate is that a company the size of Starbucks cannot hire any person that doesn’t produce documentations showing that they are legally allowed to work whether in the US or any other country Starbucks operates. When these refugees/ immigrants go through the process of obtaining legal work authorization, would it not make sense to give them the opportunity to apply for any job they are qualified for?
Those opposed to this should probably redirect their frustration toward the broader immigration discussion which seems to be the cause of the unease. Besides, in addition to being legally authorized to work, being a Barista requires at Starbucks a good deal of understanding English to keep up with all the variations the menu offers, this job is probably not given to any immigrant/ refugee who simply walks in….
Or understanding whatever the language is that is spoken in the 75 countries where Starbucks plans to hire refugees.
Keep in mind that by offering refugees jobs, Starbucks also helps keep these folks off the public dole, allowing them to become active and contributing members of society.
And finally, from another reader:
I am getting caught up after spending two weeks in Florida watching spring training games, relaxing on the beach, visiting some craft breweries, boating and having seafood every chance I could.
I saw your FaceTime donating blood and wanted to thank you for reminding people to try it if at all possible as it really is a good thing to do. I also started in college and have tried to keep doing so especially after my first daughter was born with two holes in her heart and had open heart surgery at five months old. She is now 29 and doing fine.
I have donated 192 pints or 24 gallons and will continue as long as possible. I just wanted to say thank you for making people aware of the good it does to donate blood. We were lucky to have people donate for our daughter's operation, there are many emergency surgeries that require blood when you do not have time to ask people to donate for a specific time frame.
I'm glad you liked the piece, and I am happy for your daughter. I cannot even imagine how stressful a time that must have been.
I also need to once again thank Karen Caplan of Frieda's, who did a blog posting herself about giving blood and inspired me to do the same.
The Sense of an Ending is a fascinating little British film that unfolds on a number of levels, all of them intriguing and made compelling by layered performances by a number of outstanding English actors.
The movie is based on a highly regarded novel of the same name by Julian Barnes; to be honest, I haven't read the book, though the movie makes me want to, since I get the impression that it takes a somewhat more sober-minded approach to the same material.
But I thought the movie version certainly stood on its own. The Sense of an Ending has at its core a man named Tony Webster, retired and in his late sixties, running a small used camera shop in London. One day he gets a letter, written to him by the mother of a woman with whom he had a relationship while in college.
That letter opens up all sorts of memories, which are seen in flashbacks, of Tony's various relationships ... but the fascinating thing about it is the degree to which Tony has closed himself off from those memories, remembering only what he wanted to. He hasn't even shared what he does remember with his ex-wife and daughter, the only people with whom he seems to have anything close to a personal relationship. Tony is the very definition of isolation, but slowly, like an onion, the layers get peeled away, and he has to face the memory of and repercussions from his actions. There is a humanism in the approach taken by director Ritesh Batra that I found to be intriguing, as he tries to get at the core of why people make decisions.
Jim Broadbent is extraordinary as Webster; the character could've been creepy, but instead he becomes an almost Scrooge-like figure, facing ghosts of his past. In supporting roles - some of them extremely brief - are actors who include Charlotte Rampling, Harriet Walter, Michelle Dockery, Emily Mortimer, and Matthew Goode.
One of the nice things about The Sense of an Ending is that Mrs. Content Guy and I found ourselves discussing it long after we left the theater. If you see it, I suspect you may have the same experience. Like me, you may even want to read the book.
If you are not a fan of "Billions," on Showtime, I highly recommend you catch up with it ASAP. The second season is well underway, portraying the death match taking place between Chuck Rhoades, the US Attorney for the Southern District of New York, and Bobby Axelrod, who runs a hedge fund that has been successful through questionable means.
Think Preet Bharara vs. Steven A Cohen, with tons of drama, dark comedy and testosterone to spare.
Paul Giamatti and Damian Lewis are outstanding as Rhoades and Axelrod, supported wonderfully by Maggie Siff and Malin Ackerman as their ambitious wives.
Written by people with experience in business journalism, "Billions" is a hoot - often improbable, but probably more real than we want to know.
That's it for this week.
Have a great weekend, and I'll see you Monday.
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