No Turn On Red

This weekend, the New York Times ran a pretty interesting piece examining how some supermarkets are changing to a one line for all registers approach, versus the traditional one line for each register. Called A Long Line for a Shorter Wait at the Supermarket, they explain:

By 7 p.m. on a weeknight, the lines at each of the four Whole Foods stores in Manhattan can be 50 deep, but they zip along faster than most lines with 10 shoppers.

Because people stand in the same line, waiting for a register to become available, there are no “slow” lines, delayed by a coupon-counting customer or languid cashier. And since Whole Foods charges premium prices for its organic fare, it can afford to staff dozens of registers, making the line move even faster.

This approach has worked well for banks for years and has been adopted by some retailers and department stores. I believe that it (usually) a great way to expedite the checkout process, as I hate when I get in a line and realize that a person is paying by check and making a dozen exchanges and has questions about all of the merchandise.

My local Old Navy usually maintains a single line for all registers - but I’m not sure if it is by Old Navy’s design or whether the customers who frequent the store have adopted the practice on their own. I’ve yet to see the same thing happen at any other Old Navy.

I know Kohl’s has their stores running a similar program during the holiday season and it works. It not only helps to create a (more) efficient checkout experience, but it also cuts down on the confusion that would be created from long lines for each register. On the busiest of busy days, I know it even cuts down on arguments between customers!

So, I support the single line process but I wonder how well it will translate to supermarkets. I can see some supermarkets adopting this policy, but on a whole, traditional food retailers will shy away from this innovation. Fact is that the majority of supermarkets aren’t designed for a system like this and a single line would eventually force customers down aisles and block merchandise. If a retailer redesigns their supermarket layout, with a single line concept in mind, they can get it to work. But the majority of supermarkets will never see this.

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A search on monster.com for “sephora manager” comes up with four opportunities at JC Penney in San Diego, Pleasanton CA, Northridge CA, and Columbus OH. During JC Penney’s Q3 conference call, they said that they were looking to add Sephora locations to 50 JC Penneys in 2007. Could these four stores be the next four to get this new shop concept?

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The second half of last week was crazy busy for me. Let me catch up on a few of the stories I missed last week:

Fendi sues Wal-Mart over sales of fake handbags:

Italian fashion group Fendi S.R.L. sued Wal-Mart Stores Inc. in U.S. federal court on Friday, accusing the world’s largest retailer of selling counterfeit handbags and passing them off as genuine at its Sam’s Club warehouse stores.

Sam’s Club stores in California, New York, Florida and other states sold knock off handbags, wallets and key chains that were identified as “genuine” Fendi products, according to the lawsuit filed in U.S. District Court in Manhattan.

The suit by Fendi said that Wal-Mart has never purchased its products and never asked Fendi if any of the items bearing its trademark were genuine.

Having never stepped foot into a Sam’s Club, I’m suprised to even imagine that they would carry any Fendi products. This suit will be interesting to watch to see where the blame, if any, lies within Wal-Mart. Is this the case of an over-zealous buyer making sure they’re meeting “always low prices” or is this the case of Fendi not happy that their goods somehow ended up in Sam’s Club?

Good coverage in the comments over at Wake Up Walmart

More about the changes at Federated as the September transition to the Macy’s brand approaches. Here’s the rundown: Macy’s is the brand that people response to the most nationally, even if people in this article are negative about the loss of their regional department stores. Expect less promotions and increased private-label and exclusive offerings, as well as stores tailored to the region that they are in, so that Federated can maintain some of the things that people loved about all of the chains that they’ve swallowed up. Very informative article, though.

And lastly, two food-related quickies about two different chains who are being compared to Starbucks:

First is Dunkin Donuts, who are obviously competiting in the same space as Starbucks (in the sense that they both sell coffee). Boston.com has an article outlining the future growth plans of this chain. The plan calls for 15,000 U.S. locations in 2020, up from 5,000 today, and this will be done through a variety of store layouts and prototype as well as increased product offerings to drive afternoon business.

Is this all being done in an effort to compete with Starbucks? Not so much, it seems. As a loyal dunkin Donuts coffee drinker, I think that as much as these two brands concentrate around the same product (coffee), there is not too much overlap in their philosophy and themes, so I can see both of them co-existing pretty well in the world we live in. Seriously, though, whoever thought that there will be a day that we will live in a world with tens of thousands of locations of the same two stores?

The other eatery being compared to Starbucks doesn’t deal with coffee, but instead deals with ice cream.

USA Today has an article outlining the future growth of Cold Stone Creamery and the ice cream business in general. Two quotes that sum up this article really well are the following:

Cold Stone doesn’t just sell sundaes and sorbet, it sells sizzle. “It’s like Starbucks for kids,” says George Carey, president of Just Kid, a consulting firm.

and

An industry that once sold ice cream now is selling an ice cream experience.

Tonight I went to Friendly’s to get a large Reese’s Peanut Butter Cup sundae. I’m not concerned with the experience, I just want good ice cream. But with that said, it will be very hard for me to resist the new Cold Stone Creamery that they are building three minutes from my house.

That’s all I got tonight.

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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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After fantastic 2005, teen retailer American Eagle is off to a great start to 2006, continuing it’s upward trend, beating Wall Street estimates and putting up some solid numbers for Q1: net sales increase of 14%, comp sales up 9% and net profits up 16%.

CEO Jim O’Donnell attributes the success of the quarter to “successful merchandising and design, as well as the solid execution across our company.” Initiatives undertaken in 2005, such as the AE “All Access Pass” customer loyalty/reward program seem to be paying off in 2006 with AE President Susan McGalla saying that the “new enrollments are exceeding our expectations and the first two redemption periods were encouraging.”

As far as the merchandise itself, McGall goes on to say that for the Women’s end of the spectrum, “comps were best in graphic tees, tanks, shorts, capris, jeans, flip-flops and intimates, while women’s skirts, wovens and accessories were below our expectations.” Adding, “Men’s produced a positive low double digit comp with the strongest results in graphic tees, jeans, shorts, polos, flip-flops and boxers. Within men’s, we continued to see a planned downtrend in woven shirts.”

Accessories will be helped by the future launch of the AE sub-brand, aerie. aerie is the new intimates sub-brand from AE, with all stores having a full aerie store-in-a-store concept, launching in September. Results from the initial “bra test” in 100 stores have been encouraging, with a lot of positive feedback regarding merchandise assortment and trends in this area. McGalla says, “the number one bra that we thought was going to be number one wasn’t number one.”

As a male in his mid-twenties, I do not know much about an intimates department geared towards girls age 15-25. But I do know that AE seems to be swinging for the fences lately and I have no doubt that this launch will prove successful, turning into a gold mine for AE.

More about the aerie brand from this February article in WWD: American Eagle’s Strategy for ‘aerie’ intimates.

The other concept that they are excited about is the Martin + Osa store concept, debuting in four cities this Fall. CEO O’Donell describes it as “a unique, specialty lifestyle brand, targeting 25-40 year olds.” With merchandise that is geared towards an older demographic in style, design and price, I think that this store will wind up doing extremely well for AE. You have an entire generation of shoppers who are growing up and outgrowing AE, now get them to stick with you through the years. At the same time that AE is building/developing a lifestyle brand, they are also branding these customers for life. Smart move and I am excited to see this shop concept.

More information on the Martin + Osa concept from WWD, “Martin + Osa Mall Bound: Signs First Four Leases“.

The last area that AE repeatedly touched on is the improvement in sales in remodel stores. Remodel stores are gaining square footage through re-design and expansion, in some cases they are relocating within the same mall. In this area, AE did this remodel last year and the payoff is huge. The new store layout is larger, spacious, inviting, and fun to shop - it is a complete turnaround from the cramp quarters they once occupied.

To this regard, AE says that the average store profitability jumps 70% in the first year after remodel - 70% ! This is fantastic news for investors, as AE looks to remodel 68 stores this year alone. Retail Design Diva had a fantastic article on this a few months ago: You Know Improved Store Design Helps Increase Sales, But Would You Believe 46%? As the trend over the past few years was to reduce visual merchandising and the importance of store design, it is nice to see a company spend so aggressively in this area and be so vocal about their success. AE has even upped their 2006 capital improvement estimates from $175m to over $215m.

It is a good time to be American Eagle. They are poised for a very good year and will be a mall retailer to look out for going through the rest of 2006. Look for them to lead the way through the mall with their commitments to good design, value and aggressively seeking out opportunities to develop itself as a lifestyle brand.

More information on Q1 results here and here

Full transcript of the conference call here from Seeking Alpha.

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