“Right now we do not believe Kmart is our likely partner going forward,” president and ceo Susan Lyne said during the Bank of America 2008 Consumer Conference here. “However, as of January 2010 we can be in any other mass retailer,” and the company is free to pursue new deals now, she added.If that wasn't clear enough, she added this zinger, "What is important for us is to be with someone who is investing in their business.”
Sunday, March 16, 2008
Wednesday, March 12, 2008
The approach is a simple one: Display more books with the cover facing out, rather than in the traditional bookshelf approach of showing only the books' spines. The CEO of Borders says he learned as a young buyer at Dillards that dresses sell better if fully displayed rather than hanging on a rack.
In a radical move aimed at jump-starting sales, the nation's second-largest book retailer is sharply increasing the number of titles it displays on shelves with the covers face-out. Because that takes up more room than the traditional spine-out style, the new approach will require a typical Borders superstore to shrink its number of titles by 5 percent to 10 percent.More titles facing makes sense to me. I often buy books I wasn't planning to simply because they caught my eye (as my overflowing bookshelves at home will attest), and a cover is more likely to catch my eye than a spine with text running sideways. The downside, though, is that the new policy is likely to result in a reduction of five thousand or more titles from the typical Borders inventory of about 93,000 titles. Borders already stocks fewer than Barnes & Noble in most cases.
That makes the strategy a big gamble for Borders. Reducing inventory goes against the grain of booksellers' efforts over the past 25 years or so. Chains like Borders and Barnes & Noble Inc., the nation's largest book retailer, became household names with superstores that stocked as many as 150,000 titles or more. The rise of Amazon.com Inc., which offers a vast selection online, made it even more important for stores to offer deep inventories.
"We always had face-out titles on the shelves and on tables, but they were used as punctuation and tended to focus on popular titles," says Anne Kubek, senior vice president of Borders U.S. stores. "Today we're showing the front of books even when we only have two or three copies."
And the effect on suppliers?:
The Borders push may affect small publishing houses, which can often place a debut novel in Borders because it has such a broad selection. Whether that will be more difficult in the future is unclear, says Alexander Chernev, associate professor of marketing at Northwestern University's Kellogg School of Management in Evanston, Ill. "If Borders carries fewer titles, then they may prefer larger publishers that have more marketing push," he says.
There seems to be a quickening pace of regulation on issues relating to trade promotion, with most (though not all) the activity taking place outside the
I’ve mentioned in the past the international investigations of Intel regarding pricing and rebate (e.g., Intel Inside) issues. Investigations are ongoing in
But that’s (mostly) old stuff. What is new is a government study of retail concentration and excessive retailer power in the grocery industry in the
Suppliers are to get more protection in their dealings with big supermarkets in a bid to ensure fair competition.
An ombudsman will be appointed to resolve disputes between retailers and their food suppliers, the Competition Commission recommends. [ … ]
The commission also said it was concerned about retailers being able to transfer unexpected costs to their suppliers.
Shortly after the report was released, there were calls in Brussels for a similar study on the continent:
In the wake of the Competition Commission's remedies report on the
The declaration calls for the European Commission to look into “the impacts that concentration of the EU supermarket sector is having on small businesses, suppliers, workers and consumers and, in particular, to assess any abuses of buying power which may follow from such concentration”.
So, the question arises: Is there likely to be anything similar happening in the
The reason for the change is only partially the international tide toward greater scrutiny of trade channel practices. There is also a populist tide running in American politics, and Robinson-Patman is nothing if not populist legislation. In addition, local politicians have found that there are points to be scored by bashing the big boxes (especially Wal-Mart).
There was once a belief that R-P was more vigorously enforced in Democratic administrations than by Republicans. Recent decades have offered little support for that idea – the FTC under Carter and Clinton showed only marginally greater enthusiasm for R-P than the Republicans who preceded and followed them – but the way the leading Democrats have talked in debates might lead one to believe that they would favor at least some increase in enforcement activity. Or that could just be campaign talk.
Even if a new president wished to push the FTC toward a more activist role, it would take some time, since only one commissioner can be replaced each year, and a balance must be maintained between the parties in making appointments.
As a related item, the FTC chair has just resigned to take a job as head counsel for Procter & Gamble. Hmmm … maybe P&G is trying to stay prepared.
The next Trade Promotion Management Association conference is coming soon in
Integrating Marketing Mix Modeling and Trade Promotion Management
Learn to model the effects of marketing investment strategies on consumer demand and link them to the tactical trade promotional vehicles that drive shipments and warehouse depletions.
“Each tier requires a certain level of data sharing, a certain amount of collaboration, and a certain amount of resources to understand and share insights with each other,” Food Lion’s chief operating officer, Cathy Green, said .... Describing the effort as a way to help Food Lion become more customer-centric, Green said participating manufacturers will collaborate with the chain on segment-specific marketing and merchandising; store-cluster specific assortments; and banner-specific manufacturer programs.It appears Green is well aware of what most vendors' first reaction is to any new retailer initiative:
She stressed that the effort is not an attempt to build a profit center. “We want to grow sales,” she said. “We believe this model will do exactly that.”
... Wal-Mart president Lee Scott became so dismayed at the failure to crack the UK market and the constraints on future growth that last year he ordered a strategic review that could have seen Wal-Mart float a minority stake in Asda or even pull out of the UK entirely.Wal-Mart has recently posted better-than-expected results, but a year ago things were looking a bit bleaker. That may have some bearing on the question. Still, added to the German and Korean pull-outs, and the continuing poor performance in Japan, it raises questions about Wal-Mart's international strategy.
According to sources the strategic review has - for now - been shelved. Asda refused to comment.
"We cannot afford, literally or figuratively, to begin [the year] . . . more than $1 billion in the red," Postmaster General John E. Potter testified before a Senate subcommittee yesterday. "We would never be able to dig out of that hole."The one area of growth for the USPS is what they call "standard mail" (recipients are more likely to call it "junk mail" or something less printable).
... standard mail -- advertising circulars, catalogues, fundraising appeals -- has grown to 104 billion pieces in 2007 from 101 billion in 2005.I'm surprised it's that little, actually. It only works out to about three pieces of mail per day per household -- not all that much really (I suspect I get more than that, but who has time to count before dumping it in the garbage?)
In any case, this mail is very profitable to deliver. Unfortunately, to add to the postal service's woes, eighteen states are considering "do-not-mail" lists, patterned on the popular "do-not-call".
At yesterday's hearing before the Senate subcommittee, Potter talked about the Postal Service's lobbying efforts against "do not mail."
"We're working very hard to inform people about the role that mail plays in the economy, as an employer of millions of Americans," said Potter, adding that it is unclear whether states have the authority to create laws that affect the Postal Service. "Fortunately, no legislation has passed."
There may be some traction to this. Most consumers hate junk mail (though not, I suspect, anywhere nearly as much as they hate telemarketing calls). Marketers should keep an eye on the issue, since the effects on all of us would be huge.
The major music companies have been resistant to lowering their price on CDs, but now they may be dragged to that point: Wal-Mart, the largest retailer of music with an estimated 22 percent market share, has proposed a five-tiered pricing scheme that would allow the discounter to sell albums at even lower prices and require the labels to bear more of the costs.The tiers would be:
- Top 15-20 titles: $10
- Hits and current titles: $12
- Top catalog: $9
- Midline catalog: $7
- Budget items: $5
"When you look at sales declines with physical product, and you have a category declining like it is, you have to make decisions about what the future looks like," he said. "If you have a business that is declining and you want to turn it around, it really takes looking at it from all angles."The fascinating item is that there is apparently consideration of dropping music altogether, or at least cutting back to a couple racks, if the labels don't come around. This is a great case study of an industry in crisis. I'll bet there will be a bunch of MBA papers written on the music industry in a few years.
Wednesday, March 05, 2008
But I saw this item in the Arizona Republic and read it -- just a short item saying that Tesco is planning to open ten more stores in the Phoenix area than originally planned :
Fresh & Easy Neighborhood Markets is adding 10 stores to the 27 it previously had announced would open in metro Phoenix, the company announced Wednesday.A positive sign, it would seem, but not exactly earth-shattering news. What got me was that I glanced at the comments at the bottom of the article, and then I noticed that there were 13 pages (!) of comments. Over 130 comments in one day -- about a store!
Brendan Wonnecott, spokesman for the grocery chain, said Fresh & Easy always had wanted to open more stores in the Valley, and it recently had been able to firm up the real estate deals.
Something's going on here.
With no sign of a sales pickup in sight, Sears Holdings Corp. Chairman Edward Lampert is making a radical suggestion: Sears should consider selling its proprietary brands such as DieHard, Craftsman and Kenmore through other retail outlets.Of course, most retailers are going the other way -- trying to build up their private label products as a way of distinguishing themselves from competitors. But no one can accuse Lampert of following the crowd.
The notion of expanding Sears brands outside the company has been tossed about the Hoffman Estates-based headquarters for years, long before Lampert arrived. But Sears never followed through for fear that without the exclusive brands, shoppers would have little reason to visit a Sears store.
But it's easier to justify going against conventional thinking when you can point to results. And not to results like this:
January was a particularly bad month for sales and hurt Sears' fiscal year-end cash position. The company had cash and cash equivalents of $1.6 billion, down from $3.8 billion one year ago.