No Turn On Red

Intelligent Entreprise has a quick interview with Best Buy’s Senior Director of Customer Insight, Matt Smith. Good look at how retailers look at all of the channels available to them and how they are trying to understand and better target their customers.

While I believe that retailers need to better look at ways to interact with their customers, using emerging social media technologies, I think that Best Buy’s customer analysis is a good building block. Understand your customers, but interact with them and they’ll tell you more about themselves than you could ever harvest.

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Another one of my exciting weekly rundowns of quick things going on around the retail industry:

Maybe I need to put on my tin foil hat, but I’m not a fan of one test currently going on in Florida. Coast to Coast convenience store in Tampa is currently testing in-store payments via biometrics. That’s where you put your finger into a scanner and your fingerprint is connected to your debit account information. Makers of the system, Pay By Touch, say it is a secure alternative to carrying cash or credit cards. Critics of biometrics say that the system can be defeated with gummi bears. Is this the future of retail payments? I hope not! I use my debit card for a majority of my purchases – but as much as I embrace technology, I don’t know if I am ready to link personal information in to my fingerprint. [story via Slashdot]

ManagersRealm writes about the new Home Depot customer service plan that they have launched. I talked about this the other day – they’ve earmarked $30m to give to stores and employees who provide great customer service. Is it going to work? Probably not. It seems that Gary Bourgeault shares this opinion and offers up some ideas on how the company could improve service.

J.Crew prepares for their IPO this week. Looking to raise $280 million through this stock sale, how will Wall Street react? I’m thinking investors will love this stock – a first quarter profit increase of 60%, the launch of the kids’ store, crewcuts, and the development of a new women’s store, Madewell. J.Crew has enjoyed a great turnaround over the past two years and this IPO is just another step forward.

Gap Inc. has announced three more locations for Forth & Towne, all in the Los Angeles area. All three will be opening sometime in the Fall.

Speaking of new stores, looks like Kohl’s has officially put out their list of new stores opening in October.

In somewhat lighter news, I hear a crew over at a local hardware store chain was loading pallets when they knocked into the sprinkler system, causing a minor flood. What better place for there to be a plumbing problem than at a hardware store?

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Gap is relaunching all of their domestic stores on July 20 with a new store setup in an effort to win back customers and gain back some of it’s marketshare. According to CNNmoney, same-store sales have declined in 17 of the past 19 months at Gap, so obviously they are trying to mend that. The new layout will feature four “shops” within the store. CNNmoney describes:

The “denim shop” will sell jeans, denim skirts, trousers, vests and jackets. The “T-shirt” shop will feature all styles in one area of the store. The “clean shop” will feature more sophisticated urban upscale clothing such as cashmere sweaters, jackets, trousers while the “hoodies shop” will showcase a collection of fleece activewear clothing such as sweatshirts and casual cargo pants.

More from CNNmoney here.

The re-launch will also coincide with a new marketing and television campaign.

The Motley Fool also has an article about the recent developments with the Gap: Gap’s New Ideas.

As a visual merchandiser, I am most excited about seeing what Gap does with this new store layout. The current store layout is very neat and clean – wood floors, white walls, bright lights, and open space. This is a layout that allows the merchandise to really stand out, look sharp and almost sell itself.

But the fashion offerings from the Gap in the past few seasons haven’t stood out. The past few seasons have not been really impressed me or made me want to spend money at the Gap (I’m sure this is a common sentiment – judging by their downward trend in sales). The colors are very monotone. When you have a huge white statement surrounded by the wood and white walls, it makes the store look very sterile.

The Gap store in the Freehold Raceway Mall was recently remodeled. Looking back on my last visit there, I realize now that this was probably a test for the new store layout. I remember seeing the distinct shop concepts within the store, reminding me of their sister store, Old Navy, but making things more organized and logical to shop.

But more than anything, I noticed the colors, new fixtures, and exciting graphics. It is an extremely visually stimulating store – a much different feel from the previous layout. If this is in fact the new layout, I am very interested to see how this rolls out across the country.

Combine the new store layout with more timely deliveries of new merchandise (we shoppers are very fickle, aren’t we? We need everything today and new something new tomorrow) and this could be the push in the right direction that Gap needs right now.

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Today’s Miami Herald has an article detailing some of the information that has leaked out about Kohl’s’ expansion into south Florida.

They say:

After years of watching Kohl’s television commercials, South Florida shoppers are getting closer to the day when they can start shopping at the Midwestern department store chain known best for its moderately priced apparel.

Local real estate sources say Kohl’s has been aggressively looking at every viable option for store locations in Miami-Dade and Broward counties. The expectation is that Kohl’s would start opening stores in South Florida by late 2007 or 2008.

Kohl’s expanded into Florida in 2005 with openings in Jacksonville and Orlando. Speculation is that later this year Kohl’s will open at least five locations in Tampa-St. Petersburg.

A few years ago, Kohl’s started airing all of their television commercials nationally. They were airing commercials in markets before they actually had stores there. Sometimes, in case of Florida, commercials started airing years before they hit the market (or like south Florida or Seattle, they still air without a physical location in the market). The upside to this is they are developing the brand. By the time the stores open, customers already know who Kohl’s is and are at least, hopefully, interested in checking out the new store.

The downside is this:

Shawn Rosenthal of Coral Springs, originally from Michigan, is looking forward to Kohl’s arrival. ‘I would definitely shop there for the kids’ stuff,” she said, describing the chain as a cross between Marshalls and Target.

To compare Kohl’s as a cross between Marshalls (”the second largest off-price retailer in the U.S.”) and Target is unfair to Kohl’s. In my opinion, to compare almost anyone to Marshall’s or TJ Maxx is most likely unfair to them. Over the past few years, Kohl’s has made strides in reducing the amount of clearance on the floors and has gotten away from the issue of high clearance levels that plagued the retailer in 2002 and 2003. That is exactly what the comparision to Marshall’s implies. However, maybe this quote speaks volumes about the strides Kohl’s still needs to make in order to make this known to the general public.

Did you find this post helpful? Then, you should also view these posts:

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First in maybe a weekly column? Hopefully.

Some quick retail notes for this lazy Sunday:

I hear that the new Abrecrombie & Fitch Back To School Preview floorset is this week. The seasonal transition at A&F is very impressive and seamless. Sales will be strong but it will be tough for A&F to compete with themselves and the high comps they had with BTS 2005 (June, July & August had comps of 38%, 22% & 24% in 2005). Look for solid increases in the gross margin with decreases in markdowns and sales for this upcoming season. This will be another great season for A&F.

Two quickies from the Loss Prevention blog: Cop kills man in grocery store shoplifting and Kroger manager jumps on hood of shoplifter’s car. I have nothing to say about the unfortunate shooting, but I’m sure Kroger’s corporate management doesn’t look fondly on employees jumping on cars to apprehend shoplifters. There has to be more to the story than that.

Last week, the Chicago Sun-Times ran an article showing where some of the former Sears executives have gone: Life After Sears.

And finally, a story from Starbucks showing how a good idea from worker, combined with the support of co-workers, the corporate office and customers can lead to a very positive outcome: Starbucks worker brews plan to get java to GIs in Afghanistan. A Starbucks employee from Maine organized a campaign where her co-workers donated their weekly bag of coffee they recieve as a benefit and, with corporate approval, solicited donations from customers. The result? 106 pounds of coffee sent to troops in Afghanistan. [via Starbucks Gossip]

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Here is one thing I believe in: customer service is not one way street.

Customers, as well as businesses they deal with, have an obligation to better customer service. Customer service cannot go from bad to good if the company doesn�t know that they are providing bad customer service. On the same hand, customer service cannot continue to be good or great if the company doesn�t know that they are already providing that level of service. It is important for the customer to communicate with whoever they are able to in order to help build good customer service relationships.

I�d like to share with you five ways that you, as a customer, can improve customer service in the places that you shop. Although the scope of this post is geared towards retail, restaurants, and industries where customer interaction is one-on-one, the basic tenets that I will describe can be applied to almost all of our business relationships.

Most of these ways should seem simplistic and obvious, but that’s the point. Talking to friends and family, it doesn’t seem that a lot of people are doing these incredibly simple and easy things that they can be doing to help businesses improve customer service.

For a little back story as to why I wrote this, check out my other post: On poor customer service and me being a poor customer.

Continue reading this entry

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Some time ago, my girlfriend and I ordered take out food from a national, fast-food restaurant. We drove there and picked up the food, but when we got it home we were not pleased with what we had gotten. When we opened the first food item, we noticed what appeared to be hair on it. I opened up the other item and the chicken, which was used in both dishes, just did not taste right. It may seem trivial now, but decided that we weren’t going to eat the meals we just bought.

I called the restaurant to let them know about the problem. I did this for two reasons. First, I felt as if they should know that there may be a potential problem with the chicken that we were served. My other goal was to see what they would offer me as a resolution to this problem. I was looking for an offer of a refund, but I also expected some sort of concern from their employee.

Instead, the girl who answered the phone acted completely disinterested in what I had to say, quickly rushed me off the phone and never offered me any sort of resolution. I expected she would offer me something – at the very least, I expected that she would offer to put me on the phone with the manager. But nothing.

Maybe I was naive to expect something, anything, but this phone called angered me more.

I took the food and went back to the eatery, where I went up to the counter and explained to the girl there (the same girl who answered the phone) that I was the person who called about the hair in the food and politely requested to speak the manager. The manager came over, spoke to me for a brief second, and then offered to make me new dishes (which I didn’t want) or offered to refund the money. She did this professionally, quickly and offered a great resolution to my problem.

I don’t believe I over-reacted at any point in this, nor do I believe I was unreasonable in expecting some sort of resolution. However, there is only one thing I didn’t do that I wish I had. I wish that I had taken five minutes to write to the parent company to explain to them what happened. I wish I had done this because the company should have known not only how I felt slighted by the girl on the phone, but the company also should have known how well I felt the manager handled the situation. It is a case of a negative experience becoming positive. At the end of all of it, I had a problem and it was resolved well – after a bump in the road.

If I had informed the parent company of what happened, maybe, in the future, the whole thing would have been handled better from the initial phone call. Perhaps the next customer that has a negative experience there isn’t as patient as me. They don’t bother to go back to the store and their story ends on a negative note, never going back to the store again after that phone call.

The reason I share this story now, long after the fact, is because I believe it illustrates some of the points that I touch on in my next post: Five ways you, as a customer, can improve customer service.

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The New York Times on the demise of the petite department in some department stores:

[...] the love affair with little women appears to be over. Three of the country’s most influential fashion emporiums — Neiman Marcus, Saks Fifth Avenue and Bloomingdale’s — have quietly eliminated or drastically scaled back their petite departments in the past several months, infuriating many longtime customers.

Given that manufacturers produce clothing in only a handful of standard sizes — among them, juniors, misses and plus size — the abandonment of petite sizes at the highest levels of American retailing represents a sea change in fashion, forcing some designers to either stop making special sizes for smaller women or re-evaluate how much to invest in the business.

More in today’s article, “Where’s the Petite Department? Going the Way of the Petticoat”

Is this a shift in trends or is this just a case of these three department stores missing the mark? As the Times points out, this may be a case of these stores missing the mark:

What did change is that petite departments gained a reputation for traditional — some would say frumpy — career-oriented clothing. Chic looks, clothing executives said, never made the leap from regular sizes to petite. So the very word petite became synonymous with many women who shopped there — working women over the age 50.

Over the past few years, other brands like JC Penney, Kohl’s, and Macy’s have upped the fashion offerings in their speciality size departments and have been met with positive trends. Walk into any of these stores today and you will see the traditional petite department, anchored by career-orientated clothing, alongside the more fashionable petite offerings. More so, these stores are also boosting their bottom line by offering this contemporary assortment under their private labels (see JC Penney’s a.n.a, Kohl’s apt. 9 & Sonoma, and Macy’s INC).

I don’t predict the downsizing of the petite department by Neiman Marcus, Sak’s and Bloomingdales is the beginning of a larger trend. JC Penney, Kohl’s, and Macy’s are still doing it right. Just because you are short, doesn’t mean you are also 50.

Besides, if a shorter woman can’t shop in your store – who’s to say she’s going to stick around to pick out clothes for her husband and her kids?

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Target released their Q1 numbers, showing positive sales trend, positive comp store sales and a rise in net profit, but didn’t hit the marks set for them by Wall Street and their stock took a quick hit in an active day of trading.

The numbers: overall revenue up 12.1%, comp sales up 5.1% (compared to 6.2% Q1 LY), net profit up 12%, but selling, general and administrative expenses were up 15.3%. CFO Doug Scovanner said that the rise in expenses was due to the construction of three distribution centers and the rise in the number of stores they remodeled this quarter. He maintains that the yearly expenses for this capital improvement will be flat from last year, explaining: “As you know, as well, we remodel and expand a very substantial number of stores each year. We don’t even remotely try to time that by quarter for any particular purpose other than doing it when it makes the most sense. That drove a bit more expense in the quarter than we would expect for the balance of the year. That line item, per sae, should end up being flat year-over-year, but ended up putting some pressure on this quarter’s expenses.”

Scovanner talked about the positive response to the new apparel collections, including those by Luella Bartley and Tara Jarmon and growth in areas such as outdoor, electronics, and food. He also cites the growth in the average amount of items per transaction vs. the growth of the price per item.

Food seems to be an area in which they are making a bigger push. They are in the process of bringing all of their stores up to a newer food prototype layout, with about 650 of their 1418 stores having this new layout today, as many as 950 having an expanded food layout by year’s end and between 50 and 75 stores which will have an even larger food offering than the prototype.. Responding to a question, President Glegg Steinhafel said that although they do not have plans to offer fresh food (produce / meats) in the stores with the largest layouts, they will be focusing on offering a larger selection of their current assortment.

Steinhafel also commented on soft sales in home, the Global Bazaar shop concept from this past winter and tweaks that they are planning for the next year. They are looking to cut down the average unit price of the products in this area in order to spur more impulse buys, rather than having the customer wait for the items to go on sale.

To me, this last part actually makes a lot of sense. Target did get a lot of positive press for their global bazaar shop, but better merchandise mix between full scale furniture and smaller decorative/useful items will allow for more impulse buys, as they say. I will be very interested to see what tweaks they implement as the area was very beautiful, well designed, but didn’t seem to hit the pricing mark for a lot of their consumers.

Target posted very good numbers but Wall Street went into a little panic. Things wil llevel out and I think Targets yearly prospects look fantastic, as always.

Stephen Simpson at the Motley Fool feels that soon may a good time to buy TGT:

OK, so I’ve been positive on Big 2 discount retailer Target (NYSE: TGT) for a little while now and it’s gone all of nowhere. But the closer this one gets to its 52-week low, the more interested I get. I don’t often like to buy huge companies in highly competitive businesses, but at the right price I’ll consider just about anything.

…

I can understand the idea of staying away from Target because of overall fears about the health of the U.S. consumer. That’s not to say that I agree, but I at least can see the point there. In any case, these shares are getting more than a little interesting. A few more points on the downside and I just might add these to my own shopping cart.

More coverage from BusinessWeek.

Full transcript of the conference call here.

Full SEC form 8-k filing here, via Yahoo.

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Like Kohl’s, JC Penney also released some very solid numbers for the quarter: overall sales up 2.5%, comp store sales up 1.3% for the 12th consecutive quarter of positive same store sales, and profits up 22.1%. The company cites strong sales in fine jewelry, mens, childrens, and footwear while they say sales were soft in womens apparel, unlike rival Kohl’s.

According to president Ken Hicks on the conference call, “gross margin continues to benefit from the performance of our private brands, as well as continuing improvement in seasonal transition and merchandise flow.” This follows up his earlier remarks on womens apparel, when he said “In our women’s apparel business, we are taking aggressive action with markdowns to keep our inventory fresh, as well as building or key brands and adding new brands such as a.n.a. In addition, we continue to develop brands such as [E. Spiff], which we will introduce this fall in traditional careerwear.”

This call also gave us the first real look at the partnership between JC Penney and Sephora. Outlining the future rollout, Ken Hicks said “Beginning this fall, we will bring Sephora into a handful of JCPenney stores, and next year, our plans are to add Sephora, primarily in new stores, with some additional existing stores also having the concept. A more extensive Sephora rollout is planned for 2008.”

Walking into any JC Penney these days, one can see that there is opportunities to develop their womens apparel business further. Hicks blames this on general negative trends in fashion, (”.. the lack of really exciting things in fashion aren’t helping the business”) which completely suprises me. It’s clear that JC Penney may not be offering really exciting things in fashion, but don’t blame it on fashion in general.

Back to the numbers: direct sales via catalog were up 3.9%, but Internet sales were up over 22%. The modest gains in diret mail, which have been continuing to slip, lead me into the news that they have announced that they are de-emphasizing the catalog (via marketingblurb).

JC Penney is not suspending their print catalog, but at the annual ACCM Catalog Conference, a company official announced that the retail giant would focus on online rather than catalog sales. It seems that their online sales are growing at 23% per year, while print sales are at 10% growth and falling every year.

DMNews has more on the story. In fact, they are critical of the move, saying:

Former Lands’ End president/CEO Mindy Meads at the Philadelphia eTail 2005 conference cited a study claiming that customers who get catalogs generate a 15 percent increase in transactions and a 16 percent jump in overall spend.

Retailers like J.C. Penney don’t want to lose the chance to train the next generation of shoppers — kids watching Mom and Dad open the catalogs, then call in an order or go online. No catalog, no brand recall. Too much reliance on one channel of sales is not good, either. What if there is more stringent regulation down the road for e-mail and e-commerce?

Again, more here via DMNews.com

Like I’ve talked about before, JC Penney is at a stage where they can recapture what they are missing – through initiatives like the Sephora deal, building the private brands and even sponsoring the MTV Video Music Awards. As a consumer, I think their key to winning us back is through developing brands that we want to shop and making their buildings more exciting and fun to shop. I can’t tell you the last time I’ve gone into a JC Penny that hasn’t felt dated and stale.

JC Penney had a good quarter – higher profits on only slightly higher sales – and this could set them up for a very solid year.

More information via marketwatch.com’s coverage of the results. Retailstockblog has a complete transcript of the call, as well.

The full SEC form 8-k is here, via Yahoo.

Full transcript of the conference call from Seeking Alpha.

Did you find this post helpful? Then, you should also view these posts:

• Where’s the Petite Department? (0)
• Retail roundup – Q1 results, Target (0)
• July Retail Sales Disappoint Everyone (0)
• Five ways you, as a customer, can improve customer service (2)
• Express Lane for August 6, 2008 (0)