- Assorting Posts by Topic in Retail Management 12e
- Part 1: Overview/Planning
- Part 2: Ownership, Strategy Mix, Online, Nontraditional
- Part 3: Targeting Customers and Gathering Information
- Part 4: Store Location Planning
- Part 5: Managing a Retail Business
- Part 6: Merchandise Management and Pricing
- Part 7: Communicating with the Customer
- Part 8: Putting It All Together
- Careers in Retailing
- Global Retailing
- Online Retailing
- Privacy and Identity Theft Issues
- Social Media and Retailing
- Technology in Retailing
- Video Clips (non-career)
- Assorting Posts by Topic in Retail Management 12e
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- Barnes & Noble to Leave the Bronx After 15 Years nyti.ms/1rfK5sn 6 hours ago
- In-Depth Article on the Art of Self Branding by @profevansmarket #article#branding slideshare.net/joelprof/evans… via @SlideShare 10 hours ago
- Primer on Product Positioning by @profevansmarket #competitiveadvantage #image slideshare.net/joelprof/evans… via @SlideShare 10 hours ago
While the national debate about the minimum wage still rages (see 1) — and many retailers oppose any increase, some retail chains have gained a competitive edge through higher wages. They believe that happy employees mean happy customers. Three such retailers are Container Store, Costco, and Whole Foods.
As reported by Jolie Lee for USA Today:
“Container Store employees make on average nearly $50,000 a year, CEO Kip Tindell says. That’s more than double the $23,690 average national salary ($11.39 per hour) of a retail sales worker, according to 2013 data from the Bureau of Labor Statistics. Even by paying employees a higher salary, the Container Store is able to make money,Tindell told Business Insider. He says that he believes a great employee is three times more productive than just a good employee. ‘You can pay them twice as much and still save, since you get three times the productivity at two times the cost,’ Tindell, who is also the incoming chairman of the National Retail Federation, said in the interview.”
“Costco employees start at $11.50 per hour and make $21 per hour on average, well above the national average. In 2013, Whole Foods paid its employees $18.89 per hour or $39,289 a year.”
Click the image to read more.
Photo: Richard Drew, AP
Although the U.S. unemployment rate has come down in the years following the Great Recession, wages have not really bounced back in real terms (taking inflation into account). And, according to the Bureau of Labor Statistics, the gap between the haves and have nots has steadily increased. This is NOT good news for retailers who appeal to middle-income consumers, as well as those selling non-necessities, as they gear up for the peak 2014 holiday shopping season.
“The typical American family makes less than the typical family did 15 years ago, a statement that hadn’t previously been true since the Great Depression. Even as the unemployment rate has fallen in the last few years, wage growth has remained mediocre. Last week’s jobs report offered the latest evidence: The jobless rate fell below 6 percent, yet hourly pay has risen just 2 percent over the last year, not much faster than inflation. The combination has puzzled economists and frustrated workers.”
“The great wage slowdown, or the end of it, will help set the tone for American life in the coming decade. It has already done so in the century’s first 15 years, causing widespread unhappiness with the country’s direction and leading voters to shift partisan directions multiple times. The political turmoil isn’t likely to end until the economic reality changes.”
Outlet stores (and shopping centers) have been around for decades. When they first opened, they sometimes occupied old factory buildings, focused on end-of-season merchandise and irregulars, and located miles away from traditional retailers so as not to hurt their retailers’ business. Most of the outlets featured manufacturers’ merchandise (and some still do now).
Today, outlet stores and shopping centers are more attractive (although clearly plainer than traditional stores), feature newer merchandise — as well as merchandise only carried by the outlets, are more conveniently located, and have many more retailers’ own outlet stores.
So, the question for retailers is this: Are they growing their outlet business at the expense of shopping at their traditional stores and at lower profit margins?
Consider these observations Suzanne Kapner, writing for the Wall Street Journal:
“Retailers long built walls around their outlet businesses to keep the bargain hunters from the gates of their full-price stores. Now, those walls are coming down. Desperate for growth at a time when outlet stores are a rare bright spot for shopper traffic, chains are taking the once unthinkable step of putting outlets near their mainline stores in cities and suburban malls and even putting full-price stores in outlet malls.”
“High-priced, luxury chain Neiman Marcus has been opening its discounted Last Call outlet stores in major markets like Dallas, Houston, and New Orleans. Nordstrom plans to open 27 Rack outlet stores this year, many of them near its full-priced department stores. Meanwhile, Macy’s is anchoring a wing of full-priced stores that opened last summer at an outlet mall in Gurnee, Ill. Macy’s chief financial officer said the company would consider opening more such locations.”
Click the WSJ chart to read more of Kapner’s story.
Amazon — which recently announced that it would open a brick-and-mortar in Manhattan — is only the latest online retailer (but certainly the biggest :-) ) to decide to go multichannel. Other firms that have been making the move include Athleta, Boston Proper, Bonobos, and Warby Parker. In all of those cases, the brick-and-mortar stores supplement the main online business.
Recently, the American Express U.S. Small Merchant Group held a panel discussion about how various retailers were transitioning from clicks-only businesses to a multichannel strategy.
As reported by Jill Krasny for Inc., online retailers said they go offline for a variety of reasons, including these:
They can gain further customer insights — At Rent the Runway, “The opportunity to sync online data with offline experiences was just too good to pass up. It’s rare to [personalize data], but knowing a customers’ size, style, and habits really soups up the in-store experience.”
Customers want it — “For Bonobos’ founder Andy Dunn, opening a store in Manhattan provided an opportunity to help guide his shoppers.”
Opportunities to Educate — “Katia Beauchamp, Birchbox’s founder, was inclined to open a store because it really sucked to purchase beauty products on the Internet. Customers need to touch the products and put it in the context of their lives.”
Here is a short video on the American Express panel discussion.
In January, we wrote a post title “Lessons from the Holiday 2013 Hacking and Shipping Fiasco.” That post dealt with the shipping delays by UPS and FedEx so that some shoppers did not get their presents delivered until after Christmas 2013.
To make sure that this big problem does not occur again for the 2014 holiday shopping season, UPS and FedEx have both undertaken a number of initiatives.
UPS is being particularly active in two ways: (1) asking retailers to move up their last dates for guaranteed deliveries of online orders and (2) beefing up its own infrastructure.
FIRST, as Laura Stevens, Suzanne Kapner, and Shelly Banjo report for the Wall Street Journal:
“UPS is trying to persuade E-commerce companies to hold their big sales in mid-December instead of in the countdown to Dec. 25. It also wants them to stagger special offers geographically — so a GoPro camera might be on sale one day in Texas and a different day in Florida. Perhaps most of all, UPS is lobbying retailers to banish any and all free overnight-shipping offers on Dec. 23, as well as promotional E-mails going out that day.”
“If all else fails, UPS executives say they can’t guarantee they will ship anything that exceeds what retailers projected. UPS CEO David Abney says his company is more focused on providing retailers with options than cutting them off. ‘But,’ he adds, ‘you can’t just encourage everyone to say, ‘Hey, just wait and ship the last day.’”
Click the chart to see a WSJ video.
SECOND, as Mike O’Brien reports for Multichannel Merchant:
“UPS [has] plans for ensuring that delivery issues which plagued the 2013 holiday shopping season aren’t a rerun this year, including a $500 million capital outlay to fund initiatives like a 5% increase in sort capacity and a 10% increase in delivery capacity. Plans also call for use of a mobile distribution center than can be transported across the country by rail, as well as modular additions that can add bays to existing facilities to handle increased demand during peak periods.”
“‘We are ready to deliver, and we’ve been working on it since Dec. 26,” said Mark Wallace, vice-president of engineering for U.S. domestic operations at UPS. ‘We understand what happened so we have plans in place for 2014.’”
Click the image to read more from O’Brien.