Category: Retail News

 

Coming soon: Share your fitting-room experience with friends, family, or anyone with Internet access. 

If you’re thinking like we are, you might recall watching episodes of The Jetsons and other futuristic science fiction programs and balking at the almost surreal-like experiences related through them.  Well, possibly in the not-so-distant future, new technology will enable shoppers to send images from their fitting rooms anywhere in the world via the Web through a site called Shoptogether.com, which is not yet functional.  This new technology was announced at the National Retail Federation’s 2007 Convention & Expo in New York.

Here’s how it works.  Shoppers will try on clothing in their fitting rooms, then walk into a common area with an interactive three-way mirror located nearby.  This mirror, called the Magic Mirror will communicate with the shopper’s cell phone using infrared technology, and the shopper would then be able to establish a Shoptogether session and show off his or her potential new wares to anyone in the world. 

People on the other end of the connection would, in turn, be able to offer comments such as “I love that outfit!”, “It’s not your color,” or others, which would be displayed directly on the interactive mirror for shoppers to see.  Here are some of my own personal suggestions.

“The limitation of vertical stripes has been reached.”

“You look like Rainbow Brite.”

“This is neither Paris nor New York, so that will only garner odd looks here in [insert city here].”

The collaborators would then be able to peruse other items available for trying on via the store’s web site and offer further help. 

Humor aside, the generation gap between those who grew up with the Internet and those who did not seems to dictate whether people will embrace this technology or not.  Mothers have expressed concern that people will have unauthorized access to the Magic Mirror, and perhaps perverts will be able to see their underage daughters changing.  This concern is less so for young people, who think the technology is cool and convenient.  Because many youths are insecure about their shopping choices, having collective input from their peers would help them in making the ‘right’ fashion decision.

Personally I feel the technology is neat, but I’m pretty much the typical guy when it comes to clothes shopping and rarely feel the need to share my decisions with anyone.  I imagine, though, this is niche-oriented toward women, especially young women and perhaps the fancier men out there, and I predict it will become very popular.  Look for the website shoptogether.com to launch later this year (2007) at a Nanette Lepore boutique in the United States.

How do you feel about this technology? Will people embrace it or shun it?  Leave your comments here.   

Yes, you read correctly. Some offbeat retail news caught my eye today…

A Wal-Mart Supercenter in Black River Falls, Wisconsin is installing hitching posts for the Amish so they can hitch their buggies to something other than the store’s signposts, trees, or whatever else is available. The store wants to make it easier for both the Amish to park there without asking the important question of “Where am I going to hitch up this buggy?” and also for the rest of the store’s patrons and employees who desire a bit of order in the world.

This isn’t a new idea, either. Wal-Mart and other stores have been doing this for years in Pennsylvania, Ohio, and Indiana, all states which contain a sizeable Amish population. However, it is new to Wisconsin, which contains about 10,000 Amish residents. However, a professor at UW-Eau Claire stated there are only about 150 Amish around Black River Falls. More Amish live in Tomah and Sparta, which are near to Black River Falls and also have Wal-Marts, but without the coveted buggy hitching posts. Guess we know where they’ll be going from now on.

Has anyone else seen anything like this before? I know I’ve seen Amish buggies pulling in to a Walgreens in Indiana and also shopping at the Cross County Mall in Mattoon, Ill., but do they regularly shop at the same stores the rest of the population frequents? I’m admittedly pretty ignorant about their culture, and also curious. At any rate, it’s considerate that the stores are accomodating to such a small fraction of the population. Anything for a buck, I guess.

Long-struggling California-based Tower Records announced yesterday they will officially begin liquidation proceedings and wind down their business, closing all 89 remaining stores in 20 states.

According to the Associated Press, the company was sold at auction to Great American Group for $134.3 million. Great American feels the physical assets of the company, including its remaining product and real estate, out-value the brand’s future potential in the marketplace, and will shut the chain. Sadly, Great American’s bid bested the auction’s second-highest bidder, Albany-based record store conglomerate TransWorld Entertainment (owner of FYE, Strawberries, Coconuts, Sam Goody, and other banners) by a mere $500,000. Unlike Great American Group, TransWorld planned to close only some Tower stores, keeping the remainder open and hoping to resuscitate the brand.

Now the storied 46-year-old retailer with stores spread across 20 states will be yet another dinosaur littering the landscape of departed media retailers, following many before them. Tower is a sadder loss than most, because they pioneered the record superstore format in the United States, even if in recent years their stores have declined in popularity, failing to remain competitive with their strongest competition on price or selection. Unlike most electronics superstores or the TransWorld chains that now dominate this market, Tower Records cared about its product and employed staff who knew about music (check out the detailed staff listing of some stores on their website, which includes employees’ names and product specialties). This is the kind of touch necessary to be a good music retailer–selling music isn’t like selling shoes–so it’s a sad loss for the industry.
Strangely, the record superstore format has done quite poorly across the board in the United States even as it is the norm in some foreign countries, such as the United Kingdom and Canada. In the U.K., large-format HMV or Virgin stores are common, and Canada’s largest music retailer is HMV, who often operates stores in similar formats as Tower in the United States. HMV pulled out of the United States in 2003 and Virgin still has a relatively limited presence restricted to large cities.

I was a manager at a record store for three years, so I saw the challenges facing this industry first-hand. Increasingly, media products are more easily (or cheaply) found online, via outlets such as Amazon or by downloading through iTunes. This is weeding out all but a) the most loyal of customers, who are collectors attached to the “product” and b) the least sophisticated customers, who may not have the technical know-how or the means to download music or movies. The latter audience has little loyalty, and will often turn to stores such as Target or Best Buy that also sell music and movies, as opposed to specifically seeking out media marts with a larger selection of titles they’ve never even heard of.

That leaves the die-hards–people who buy dozens to hundreds of CDs or DVDs a year–as the remaining audience for these stores. These customers are very sophisticated and expect a wide selection at fair prices, and they only shop in a record store because they choose to, because they have an emotional attachment to the experience itself. Many of these customers religiously buy new releases the day they come out. This audience may not continue to last forever, but it explains why many of the very best stores–such as Newbury Comics in New England, or Amoeba in California–are surviving, even if they are feeling the same pinch as their competitors. These customers do not shop at FYE. There was a time they shopped at Tower Records, but due to the chain’s cost-cutting and inventory-slashing, Tower became less fun to shop than their competitors. The die-hards left, and now another yet one bites the dust.

         

On October 5, 2006, Kohl’s Department Stores embarked on the largest grand opening in its history, opening 65 stores in 30 states. 

At an analysts’ convention in Tampa, they also revealed future plans for expansion.  Currently, Kohls has about 820 stores in 45 states; however, they plan to open 115 stores next year, and about 270 more between 2007 and 2010.  Their same-store sales were up 16.3 percent from the same time in 2005, and September 2006 total sales rose 26.1 percent. 

The linear growth model of Kohl’s reads more like a log function than anything else.  Coming from suburban Milwaukee, Wisconsin, Kohl’s has grown by leaps and bounds to be as successful as it is today.  But why?  I offer up a few suggestions.  The first is that Kohl’s was opportunistic and came up at the right place in the right time.  Kohl’s Department Stores began in 1962 under the helm of Max Kohl, a grocer in the Milwaukee area since 1946 who operated Kohl’s food stores.  In 1972, the British-American Tobacco Company (BATUS) purchased both Kohl’s grocery and department stores, yet the Kohl family stayed on to administrate the stores until 1979 when they left altogether.  Interestingly, Max Kohl’s son Herb is now the senior United States Senator from Wisconsin. 

Through the 1970s and early 1980s, Kohl’s grocery and food stores operated in tandem and were often physically adjacent in shopping centers throughout southeastern Wisconsin.  At many locations, the stores also shared an entrance and customers could choose whether they wanted groceries or a department store by turning left or right once inside.  The stores were, however, physically separated by a barrier and only the front entrance atrium was common to both.   

In 1983, the grocery store division of Kohl’s was sold to A&P, who continued to operate and even open new locations until they all closed in 2003.  BATUS continued to operate Kohl’s department stores until 1986, when they were sold to a group of independent investors who continues to operate the stores today. 

Expansion came slow for Kohl’s at first, but once it began it rose exponentially.  Until the mid 1980s there were less than 40 stores in Wisconsin, Illinois, and Indiana.  Also in the mid-1980s, Kohl’s took over a struggling similar chain called Main Street Stores in the Chicagoland area, and they opened their store in my hometown of Janesville, Wisconsin in 1986, in a former Montgomery Ward location in the Janesville Mall. 

Since the 80s, Kohl’s has expanded where other chains have failed, pairing its excellent customer service reputation with high quality, often name brand merchandise at discounted prices.  Kohl’s made a niche market for itself in between discounters such as Target, Wal-Mart, and K-Mart, and full-line department stores like Macy’s, Dillard’s, and JCPenney.  As Kohl’s focuses heavily on softline merchandise and very little on electronics (aside from small appliances and gadgets, Kohl’s abandoned its full electronics department in 1994) it is very popular with women.  They’ve used other chain failures such as Clover, Ames, Caldor, and Bradlees in the northeast to swoop in and open stores there to expand their concept over the past 9 years.  If Kohl’s continues on their track to 1,200 stores by 2010 they will be one of the most successful chains in history.

  

 

Goodbye, Marshall Field’s.  Goodbye, Famous-Barr.  Goodbye, The Jones Store.  Goodbye, Robinsons-May.  Goodbye, Meier & Frank.  Goodbye, Foley’s.  Goodbye, Strawbridges.  Goodbye, Kaufmann’s.  Goodbye, L.S. Ayres.  Goodbye, Filene’s.  Last but certainly not least, goodbye, Hecht’s.  You all no longer exist and are all now Macy’s. 

On Saturday of this past weekend, September 9, 2006, all of those brands officially became Macy’s, along with countless others which have been swallowed up and converted to the Macy’s nameplate over the years in order to form this national brand.

While many are in uproar and upset about *their* local store disappearing and while no single store to my knowledge has ever converted this many brands at once, this is not a new phenomenon.  

I just read the story of Macy’s and, like the history of many chains, it’s an interesting read full of ups and downs, brutal takeover attempts, a devastating shipwreck in icy waters on the high seas of the North Atlantic, and many different department store chains along the way.  Since Macy’s currently operates in 45 states (you in Alaska, Arkansas, Iowa, Mississippi, and Nebraska are going to start feeling left out), odds are you have a Macy’s near you.  And, since Macy’s just added 330 stores this last weekend to make 850 stores in total, chances are that although you might have heard of Macy’s, you may have never actually been to one.  (Who am I kidding, the people who read this are probably well aware…) anyway, here we go.

Macy’s was founded by Rowland Hussey Macy in Haverhill, Massachusetts.  Quickly, Macy moved his company to various locations in New York, lasting almost 40 years on the corner of 18th and Broadway. 

In 1896, Macy’s was acquired by Isidor Straus (who later died aboard the RMS Titanic) and his brother Nathan.  They moved Macy’s into its current digs on the corner of 34th and Broadway.  The store got bigger and bigger and eventually enveloped nearly the entire block.  However, one Brownstone house right on the corner of 34th and Broadway held out and reportedly charges Macy’s exorbitant rent to this day.  You’re all familiar with the house, you just don’t know it.  It’s covered by a giant red bag which reads “The world’s largest store” – and it is the world’s largest store at over 2 million square feet of selling space.  That’s larger than over 90% of the shopping centers in the country.

Throughout the next few decades, Macy’s was in the business of expansion.  They opened satellite locations in Kansas City, San Francisco, Toledo, Atlanta, and other cities.  They acquired many smaller chains such as New Jersey based Bamberger’s in 1929.  But, in the 1980s, Macy’s bit off more than it could chew and was in dire financial straits.  In 1985, it divested itself of its midwest locations in Kansas City and Toledo, exiting the region for nearly 2 decades save for a lone store at the Mall of America in Minnesota which opened in 1992.  In 1986, Macy’s ended the long-term operation of a name it owned in New Jersey and the mid-Atlantic states by flipping the Bamberger’s nameplate to Macy’s.

Also in 1986, a takeover battle of epic proportions ensued, as Macy’s CEO Edward Finkelstein became engaged in a vicious takeover battle with a Canadian company over the much coveted Federated Department Store chain.  This is where the story gets interesting again (and maybe a little confusing) but we’ll iron out all the details.  Finkelstein lost the hostile takeover bid in 1986; however, as a result, he got some of Federated’s booty, California’s Bullocks and I. Magnin chains. 

In the early 1990s, there was trouble in paradise as the Canadian company which acquired Federated declared bankruptcy.  1992 also saw trouble for Macy’s which declared bankruptcy of its own right.  In 1994, it seems as though these two bankrupt entities would be a match made in heaven and Federated acquired Macy’s.  Finally Macy’s and Federated were one.   Immediately following the merger, Federated chose to shutter the entire upscale I. Magnin chain in California, converting many to the Macy’s or Bullock’s nameplate.  Federated also chose to fold the Abraham and Straus nameplate in the New York area and the Jordan Marsh nameplate in the Boston area into Macy’s in 1995 and 1996, respectively.  Feeling hungry, Federated marched on, attempting and eventually failing an acquisition of the bankrupt Wanamaker/Woodward & Lothrop chains in the mid-Atlantic region.  Instead, it acquired the Broadway/Emporium/Weinstock chain of California and folded those chains as well as the Bullock’s locations they already had into the Macy’s nameplate.

Fast forward to 2001.  Federated dissolved its Stern’s nameplate and many of the stores became Macy’s.  Also in 2001 the Liberty House chain of Hawaii and Guam were acquired by Federated and flipped to the Macy’s nameplate.

2003 saw one of the biggest leaps forward for Federated-Macy’s, as they chose to rebrand its stores in the Pacific Northwest (Bon-Marche), Memphis area (Goldsmith’s), Florida (Burdines), and the Ohio Valley region of IN/OH/PA/KY/WV (Lazarus) to Macy’s.  The branding was gradual, with each store given a hyphenated “-Macy’s” suffix for 2 years from 2003, culminating with just Macy’s in March of 2005, effectively eliminating those brands forever.

Now we’re almost up to date to the biggest merger in Federated-Macy’s history, with May Company in 2005.  This merger happened in February 2005, effectively creating the second largest department store chain behind Sears with over $30 billion in annual sales.  (For those still paying attention, May Company was the parent at the time of all the stores which just converted to Macy’s last weekend.)  In July 2005 the death knell was raised against the stores of the May Company chain as Federated announced that based on the previous successes they had converting regional nameplates to the Macy’s name (see previous paragraph), all May chains would be converted to Macy’s or Bloomingdale’s.  Federated announced they wanted to create a national department store brand in Macy’s and they finally had the stores to do so, so they began store conversions on the 10 May brands during the Summer of 2006.  First, Macy’s gift cards started appearing, then some of their banners and advertisements and finally, the signs came down and big red stars went up everywhere.  Last Saturday, September 9, was to be the official full conversion.

As I alluded to earlier in the post, many are upset at this drastic change in retailing.  In fact, over 50,000 people have signed a petition to keep Marshall Field’s, and there are also T-Shirts for the cause.  But as you can see, department stores are a changing animal, getting swallowed up or vice versa and it’s really all in flux.  My two cents?  I feel that Macy’s has its work cut out for it.  A tough road ahead, but majorly unprecedented successes if they can pull it off properly.  I personally value variety in the marketplace and feel that it’s not only cool to go to a distant city and see different stores, but it probably bears upon the quality of service, variety, and prices.  On one hand, people are loyal to stores which have heritage in their area.  It’s purely topophilic, but what better marketing campaign does a store need to have than being tied to a particular place?  On the other hand, the logistics of having a unified national brand is certainly more cost-effective and easier to manage.  

There have already been problems with the merger.  In Chicago’s flagship Macy’s on State Street, a group of backlit signs improperly labelled the streets and avenues which bound the block where the store sits.  Locals, who are still reeling from the loss of their Marshall Fields, were quick to point out the snafu and how they feel Macy’s is spread too thin to care about them as customers.  I went to Woodfield Mall in Chicago and saw several people wearing T-shirts they purchased on ebay which indignantly stated “Chicago shops at Marshall Fields NOT Macy’s” – What’s in the future for these stores?  Time will tell, I suppose.