No Turn On Red

In January, Office Max announced plans to close 110 of their underperforming stores. This is spurred because for the fiscal year 2005, they ended with a net loss of over $73 million. It appears that in certain markets (the Northeast being one), they have just been getting slaughtered. This is interesting, because as far as I can remember, Office Max moved into my immediate area before Staples or Officedepot. Even now, Officedepot doesn’t have much of a foothold in Monmouth County, but Officemax is getting killed head to head by Staples.

I didn’t realize how bad this was until last week when I found out that the local Holmdel store is closing. Everything is 10-30% off and the place is already eerily sterile. All the markings of Office Max are gone and replaced with large “Store Closing” banners everywhere you look. I remember when that particular store opened, it must have bene over 10 years ago, and to see it in such disarray is saddening, although not particullarly suprising. I know that over the past few years, I have become a loyal Staples shopper. Their prices always seem more competitive, their stores are easier to shop, and the print/copy center is located right when you walk in the store (and not buried in the back like the local Office Max).

There is an interesting website launched by Office Max in order to sell or sublet their excess property. In this day and age, there is a lot of money to be made by dead/dying retail franchises through real estate (Sears is going to make a bundle of money when they decide to start closing underperforming Sears/K-Marts and sell the property that they own). This website shows a map of the area, map of the store, demographic information, and a map of the shopping center that it is located in.

What is most interesting about the Holmdel location map is that they show some of the stores that are about to move into the center. This includes an LA Fitness location, which I had read about, moving into the location vacated by the old pharmacy and party stores. But more interesting, for locals, is that the old Wiz location is being divided up into smaller stores and that this is being anchored by a new Cold Stone Creamery. You know how excited this makes me? My excitement is only enhanced by the fact that there is another place opening up called a Fatburger. As you can tell, I am a fat bastard and excited easily.
I am very suprised that with this round of closings, Office Max has killed almost all of it’s retail presence in New Jersey. However, I think that there will be some suprising developments as they still plan to open 70 new stores this year under their award winning “Advantage” prototype. I think that they will reevaluate what they did wrong, geographically, in New Jersey and reapproach this market with a better format and better locations.

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I went to the nearby Sears the other day - I know, don’t tell my bosses - and they were just putting the finishing touches on the new Lands’ End concept shop. They pulled together all of th Lands’ End apparrel in the Mens and Misses Departments with new fixtures, graphics, visual elements, and updated merchandising. Beautiful graphics anchored by light wood trimed fixtures with deep blue walls made this area really stand out. The two apparel areas are seperated by the new style of self-service (”open sell”) shoe bunkers that Sears has recently put in (following the lead of Kohls and Target, among others). As a visual merchandiser, I was really impressed - as a consumer, I was really drawn to the area and wanted to shop.

But, looking at Sears from an industry standpoint, I don’t know how well this concept is going to work for them. The downfall is this launch lies within the brand, on two different levels. One, how strong is the Lands’ End brand with consumers today? And two, how does Sears look to brand itself to consumers across the board? There seems to be some disarray within how Sears is being marketed (no clearer sign of this than the recent decision to drop the ‘Essentials’ line of stores and convert them all to ‘Sears Grand’) and what their leverage is with consumers.

When I walked into the area, I felt as if I was in J.Crew. Sleek tables with beautiful presentations of pants and shirts, all wonderfully brought together with accessories and shoes. They are really pushing the entire collection and it looks great. However, walk outside of that area and you are reminded of exactly what Sears has become - a dumping ground for a mish mosh of unattractive clothing and horrible merchandising. Walking away from the Lands’ End shop and there are six-ways of clearance merchandise dragged out to the middle of the aisle. Tables look horrible, racks are all over the place, and the merchandise is just not presented well.

Which is why the true test of this Lands’ End rollout will be in how well the stores are able to keep this up. I was in the store the day that the Corporate team was there, setting this up fresh for the first time. Of course it is going to look great - but will it still look great in two weeks, two months, or two seasons from now? The new visual elements look great but Sears is not a visual company - last I knew, they had no ‘visual merchandiser’ positions in their stores anymore. To my knowledge, it is all up to the departments to do their own. Will they be able to keep up with this? Judging by the way the rest of their stores look, I’m not sure.

At the end of the day, I just don’t think Lands’ End is as strong as it once was and that they are sacraficing floor space from other brands and merchandise assortment that they could be offering. There are a lot of eggs in this basket and for Sears shareholders, I hope it is a gamble that pays off.

I guess there is another note to make with this entry, and that is that I approached this whole entry strictly talking about the apparel end of Sears. I know Sears is not an apparrel retailer - their big money is made in hardware and hardlines. So, with that said, this entry is strictly referencing the apparrel side of Sears.

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