Can You Name a Retailer Who Has Had A Second Act?
Apparently, the nose dive at Best Buy is accelerating. Watching retail just as a consumer over the last few decades, it seems that whenever a retailer starts going down the drain, they never recover. Calls are made for more visionary management to reposition the company, but I can't remember any such effort ever working. The slide may be fast - Circuit City, CompUSA, Borders - or slow - Sears, A&P - but the nose dive never seems to reverse. The only retailer I can possibly remember really executing a fairly large shift was maybe Gap from just being a Levi's outlet to whatever it is today. And maybe Radio Shack, which is sort of this zombie you think has been outdated for like three decades but keeps hanging on.
TJIC:
> And maybe Radio Shack, which is sort of this zombie you think has been outdated for like three decades but keeps hanging on.
That is the best encapsulation of my WT*? head scratching re Radio Shack I've ever heard.
How do they stay in business?
How do they even cover the rent on their mall space?
April 10, 2012, 3:17 pmXmas:
I have to step up to defend the Shack.
As a former Radio Shack sales associate, I can tell you that the Shack pays everyone working there minimum wage plus a bonus commission when you're sales * commission rate are greater than minimum wage. They push high margin accessories (like computer mice, and power cords) and the gathering of names and phone numbers by offering the sales associates incentives. They've got their own credit department. They centralized their point of sale systems since at least the late 80s. (I was working their in 91 to 93, and the POS system was on version 4 or 5. It used at 2400 baud modem to synch up every night, and it would dial out for certain types of transactions).
I suspect that they've been selling their customer lists for years. They offer ubiquity to anyone buying something from them. Your grandma could buy you a radio-controlled car (that only goes forward or backwards turning to the left) in Indiana and you could exchange it to store in California without any question (as long as you have the receipt). They specialize in being the only electronics store in some pretty remote places (sharing building leases with Tandy Leather shops) and being the last viable tenant in a failing strip mall.
They do a fairly decent job of offering tier 2 things at tier 1.5 prices while watching every single store's bottom line. I don't know how much longer they can hold on for, but I suspect it'll be a little be longer than we expect.
April 10, 2012, 3:27 pmOneeyedman:
Woolworths has a decent second act as footlocker. Abercrombie and Fitch might be a stronger example.
April 10, 2012, 3:44 pmBFD:
Don't know about the rest of them, but for Best Buy's problem competition - Amazon and Wal-Mart are hammering them. You often see folks carrying out 50" and 60" TVs from Wal-Mart.
April 10, 2012, 3:45 pmDon:
XMAS, Radio Shack and Tandy Leather parted company in the late '90s.
I think the idea of the big-box-store-selling-only-consumer-electronics is pretty much done. Either you're selling high-end audiophile stuff (these are usually boutiques) or your selling consumer grade stuff right next to sporting goods and cookware. Hell, even Fries doesn't stick to JUST consumer electronics (although, they do tend to go for the Nerd factor in a lot of their stuff).
Also, I gotta tell you, Best Buy has too many people to compete. I go into that place, I get asked if I need help from 15 year olds who think their geniuses or something and treat me like I'm Uncle Ted the moose hunter who's never seen one of these newfangled laptop thing-a-ma-jigs. There's a dozen of them, hanging around the iPad display talking about they last Justin Beeber concert they went to or something and basically doing nothing useful. If I were CEO, I'd convert them to commission and let the losers starve themselves out of the job.
Either get rid of about half the $9/hr high schoolers and compete with Walmart, or hire some REAL tech guys and be THE electronics store. Right now, they're just kind of... schizophrenic.
And for got sake, GET RID OF GEEK SQUAD!!!! YESTERDAY!
April 10, 2012, 4:25 pmDoctorT:
"That is the best encapsulation of my WT*? head scratching re Radio Shack I’ve ever heard.
How do they stay in business?
How do they even cover the rent on their mall space?"
Radio Shack stays in business by selling a small number of cheaply manufactured products at 500-1000% markups. I forget to pack my $3 cell phone to charger cable. Radio Shack had one priced at $22. The KMart next door was selling a car cell phone charger with a USB cable and multiple adaptors for $10.50.
April 10, 2012, 4:32 pmEscapedWestOfTheBigMuddy:
I occasionally buy actual electronic components from Radio Shack--when you really need a particular common part and it's not in the box you can get one the same day--but the sad thing is how many of the sales folk are surprised at the idea that someone might need a couple of 555s and some UV LEDs.
I swear they're not all aware that they even carry this stuff.
Which is related to that high margin strategy that other have commented on.
April 10, 2012, 4:43 pmKTWO:
They are making major changes.
I bought a refrigerator at BB this morning. The store at 83rd and Bell in Peoria, AZ has been completely transformed and now has a very large and attractive major appliance section. The prices were competitive and the sales people were great. They are going for simplicity with no gimmicks, the price marked covered delivery, installation, and removal of my failed refrigerator.
Elsewhere that huge section of CDs and DVDs was gone. And the computer section was much smaller, I saw mostly top-end ultralights. Both moves make sense.
Smart phones and Ipads and accessories had huge sections. They are what my children and grandchildren are buying.
It wasn't your fathers BB. Even so such chains are in a tight spot. I wish them well.
April 10, 2012, 8:13 pmFloyd McWilliams:
Second Acts: How about Target? The typical Target was a dingy dump, like Kmart, but in the 90s the company remodeled the stores to be brightly lit and colorful. Still the same disposable crap, but at least a pleasant place to buy disposable crap (and to be fair, good prices on groceries, cleaning supplies, drugs, toiletries).
April 10, 2012, 8:50 pmSteve Burrows:
Radio Shack seems to be going through some sort of transformation back to its roots providing kits and components for electronic hobbyists who are now part of the "maker" renaissance. Can't say if it is enough, but I find myself swinging by much more often for some oddball component they usually have, for a price.
April 10, 2012, 8:59 pmColin:
I have to say that with more retailers going under we seem to be in an awkward phase. I wanted to show some friends a specific movie that wasn't on netflix or another online video service the other week. However, with blockbuster, circuit city, media play, and borders all closed I was surprised how long it took to find the thing. So many retailers have gone under that its actually becoming harder to find physical copies of books and movies, but not everything is allowed online yet. If bestbuy goes down as well...
April 10, 2012, 10:35 pmed:
As a stockholder of Supervalu, I hope you're wrong.
April 10, 2012, 10:38 pmIGotBupkis, Legally Defined Cyberbully in All 57 States:
Hell, about 4 years ago, I happened to have a then-relatively new SATA drive with the mini-power plug, and the PS in my computer had only the older standard plugs. I figure -- "Best Buy's got all that space, surely they have a converter...." and you know what, they DID!! Oh, HELL no. Of course they didn't. Half a million square feet or whatever of floor space and they can't be bothered to stock basic, relatively obvious small parts that a user is likely to need.
What's the point of having this giant box with all this floor space if I still have to get everything through the freaking mail?
Why would I want to pay ridiculously inflated prices (not only does Wal-Mart beat them, but a large appliance chain -- H.H. Gregg -- does too) to support a store that can't even bother to stock basic "likely to need" items? It's like walking into a Lowe's or Home Depot and finding out they don't stock 1" #8 bolts.
April 11, 2012, 12:38 amIGotBupkis, Legally Defined Cyberbully in All 57 States:
Oh, and, in case it wasn't obvious, Radio Shack didn't have it, either. Dunno about the ones in your area, but the ones around here are pretty much useless when it comes to the kind of small parts they USED to be the "goto" place for.
Colin, by the way, has it sorta right -- it can be difficult to obtain anything that's not "the latest releases" in videos and movies -- more and more you're having to go to online mail-order type purchases from Amazon.
April 11, 2012, 12:42 amIGotBupkis, Legally Defined Cyberbully in All 57 States:
Floyd, I never go into Target -- they're like a cleaner K-mart. Their stock sucks, and their prices suck compared to Walmart, and, for groceries, the local supermarket chain beats them all to hell and gone. A month or so ago, I had a pair of $5 gift cards and had a hell of a time finding any combination of things there that wasn't a rip-off that was vaguely close to the $10 total.
April 11, 2012, 12:45 amMNHawk:
Target? Here, they're generally a single cent higher on everything, as WalMart "beats" their price. But, use Target's store card and get 5% off. The equates to 5% less than WalMart. To me, Target is the first real threat to WalMart. The only place they come up short is selection on certain items. Plus their store card's ridiculous $300 limit.
As for Best Buy, I think their problem is that there is less and less difference between the junk and the high end then there used to be. Just to back to 1990 or so and compare the TV from WalMart to a Sony XBR. A world of difference. Now, the difference between a WalMart TV and a high end Plasma? Probably not so much. Same with most other components, now.
April 11, 2012, 4:05 amjoshv:
Went in to a Best Buy looking for a Compact Flash card. None in stock, though they would be happy to sell me an undersized, over prices SD. Yeah - I'll stick to newegg and Amazon - they will even ship it to me next day.
April 11, 2012, 4:27 amBarak A. Pearlmutter:
Wasn't KMart on the long slide to oblivion then came back strong on a crest of Martha Stewart Living?
April 11, 2012, 4:55 amSB7:
AFAIK, Gap is back on the skids, so maybe best not to reach for them as a prime example. I think denim is the only thing they've been consistently profitable on in the last several years, but I can't put my fingers on data at the moment.
April 11, 2012, 5:36 ammorganovich:
target had a very successful reinvention by moving to proprietary brands.
that said, bby is dead. they sell crap at high prices, and everyhting they sell is available at amazon for less money (often far less if you are looking at the products, like cables, where they really gouge you).
April 11, 2012, 7:03 amorion:
Management will be sure to blame the author's at Forbes who started the whole bit of negative coverage a month or two ago. Though the articles really did start a whole chain of articles by people essentially complaining about Best Buy. And they really do stink. I hate going there. Electronics stores used to be fun to go to-I don't know how they managed to ruin the experience but they did. Who doesn't like looking at the latest audio, video, and computer stuff?
April 11, 2012, 7:19 amDrTorch:
Yup. Gap did bounce back, not from a Levis distributor, but from a heroin-chic fashion outlet to returning to their roots of denim (and corduroys?).
They are back on the skids, but many retailers are.
Sears has bounced up and down (as has JCP) but the bounce backs never got back to their original status.
One of the things about Best Buy is that their practices were so shady. Not a lot of loyalty there. Plus your original assertion was right, not too many retailers bounce back.
April 11, 2012, 7:43 ammarco73:
I think BBY will go away.
April 11, 2012, 8:34 amSears may survive, if they shrink to an appliance store (Kenmore) with tools (Craftsman) and maybe an auto center. Soft lines (clothes and shoes) should go away.
Tim:
Sears will hang around for a bit. They were bought out of Chapter 11 by KMart after the Kresge corporation spun off their other holdings, including Borders, The Sports Authority, and Office Depot.
Sears/KMart also holds Land's End; which is a fairly profitable soft goods line, and has a reasonable hold on mid-market hand tools and power tools. One of Sears's advantages, they have a defined revenue stream from their service department.
April 11, 2012, 9:38 amme:
Definitely Target - they turned their sinking ship around; they are expanding into grocery; their shops are well-stocked, widely spread and conveniently situated (that's what is killing Walmart where I live) and prices are low enough that even I occasionally buy items there (instead of patiently waiting for UPS to bring home those parcels).
April 11, 2012, 10:33 amJim Collins:
One of the drawbacks to the Sears K-Mart merger was that K-Mart dropped their line of Benchtop tools in favor of Craftsman. I have some of both and I definitely feel that Benchtop was the better of the two. Didn't Nike drop Sears because they didn't want their shoes to be sold in K-Marts?
April 11, 2012, 11:17 amchuck martel:
Best Buy acted as though they were the guys who invented merchandising when in reality all they were doing was ordering stuff and then selling it in locations at a profit. Hardly an earth-shaking innovation.
April 11, 2012, 11:18 amthe other coyote:
One odd thing about the Sears at my local mall - how many shoppers are of Indian descent. And we don't even have a huge Indian population around here. Do different ethnic groups favor different stores?
I was coaxed back into JCP when a former colleague took an in-house lawyer job there. She invited me to a professional women's shopping day. As a long-time "expensive store" shopper I was reluctant to go, but I was shocked at how cute the work clothes were for the price. I ended up buying several pairs of "dress" pants that are machine washable and dryable and a couple of trendy tops. I figured if they lasted the summer, it would be fine, because my employer had just transitioned to business casual for the summer. I think I paid $20 for each pair of pants (they were on sale and they gave us an extra 10% off) and I have machine washed and dried them about once a week for a year. The black ones have faded but the rest look just as good as my $100 pants from Ann Taylor look after a year of drycleaning - plus I haven't paid for them 2x over by drycleaning.
I also discovered that JCP kids jeans fit my slightly plump elementary school aged daughter. The more expensive kids stores jeans are cut for their scrawny child models.
The best thing JCP did was to get out of the old dingy malls and go to new, bright freestanding stores in suburban shopping centers. Their store is convenient to my house and stays open ridiculously late. If they opened as early as Kohl's (which is open 8-10 in my area) I would probably shop there even more.
JCP also put in a big makeup department that women I know who are into makeup seem to like a lot (Sephora). These women go in for the makeup and end up buying a tshirt or something on the way out.
April 11, 2012, 11:34 amPhilip Ngai:
Where do you guys buy your appliances? Home Depot/Lowes?
April 11, 2012, 12:03 pmmmmwright:
I think I read that Lord & Taylor in NY is turning around pretty well.
April 11, 2012, 12:24 pmIGotBupkis, Legally Defined Cyberbully in All 57 States:
>>> Target? Here, they’re generally a single cent higher on everything, as WalMart “beats” their price.
LOL, good for you, if you're correct. My experience around here is that they were 5-10 cents more than the local supermarket, which often has BOGO and 50% sales of stuff to add to the savings "pie".
And I haven't checked but I'm not sure what you mean by "store card"? You talking about a tracking card, or a store-associated visa card? If the latter, I'd bet WM offers the exact same thing, probably with 5% back on ALL purchases (no, not something I've verified), and, if the former, F*** that.
Tracking cards are complete BS, I've never, ever seen any place that runs them that doesn't use the "not tracking" as a means of mere price increase-removal rather than a means of savings, when you compare to a local company that doesn't use them. That is, tracking cards, in my experience, don't save you jack, they only offer you the opportunity to not get charged for not being tracked. WTF is the logic there, other than "most people are too stupid to compare prices and realize it's not a bargain they're getting"...?
April 11, 2012, 2:19 pmDoctorT:
Philip Ngai: "Where do you guys buy your appliances? Home Depot/Lowes?"
I needed to buy a new double oven and did lots of comparison shopping. The best deal on the Maytag oven I selected was from Appliances Connection (www.appliancesconnection.com). Their price (including delivery into my house) was much lower than any of the local brick-and-mortar stores (without delivery). Plus, I paid no sales taxes and saved another 9.25%. (Yes, Tennessee state and local sales taxes are that high.)
April 11, 2012, 3:23 pmsmurfy:
"What’s the point of having this giant box with all this floor space if I still have to get everything through the freaking mail?" -to sell you a new one since you're already there. I bought a new cordless phone because they didn't have the correct battery for the old one. It wouldn't be worth a second stop or a week's wait for the savings.
Re Radio shack: I understand that some of their stores are franchises and some are owned by corporate. A Clerk at one of the corporate stores once told me that was why they had more wire nuts and bolts than the (now closed) store across town. I would be curious to know if the remaining stores tend to be corporate or franchises. I would wager a guess that dumping their franchise arrangements might have part of their leaning.
April 11, 2012, 4:35 pmsmurfy:
My son: "What's a radio?"
April 11, 2012, 4:40 pmsmurfy:
Not specifically a retailer but what about Blockbuster?
April 11, 2012, 4:43 pmadmin:
By the way, not to leave any confusion on it, I love Radio Shack. I build a fair amount of electronics and have piles of Mouser catalogs laying around but some times you just need a few parts and the Shack is great. But I always feel kind of self-conscious pulling open the drawer of transistors -- like I am the creepy geek equivalent of the guy reading Hustler or Swank in the back corner of the 7-11.
April 11, 2012, 8:01 pmadmin:
By the way, I think Target is a good example. They have redefined themselves as a sort of higher class, more attractive Wal-Mart. Like a Wal-Mart run by Virginia Postrel.
April 11, 2012, 8:02 pmMNHawk:
"My experience around here is that they were 5-10 cents more than the local supermarket"
The local supermarket (SuperValue) is 20-30% higher on everything. The card is a Target store card (Red Card), just as many stores have their own charge card. They do it to save fees a third party processor (Visa) will charge.
April 12, 2012, 5:01 amJay:
Someone once told me Radio Shack is sort of a front, like something that exists for tax purposes. No idea if there's anything to it. Anyway, good point. Never thought about the failure of any of them ever to recover. That puts all my old discussions with Rob May of what went wrong with Sears and how they might recover in an entirely new light.
April 12, 2012, 6:45 amelambend:
I work in real estate and retail is getting hammered. I think the examples of Target above are good in terms of a retailer turning around, but even they are getting annoyed with folks coming into fondle the goods and then just ordering on Amazon. The only thing that best buy has on Amazon is financing plans; if amazon captured that market, Bestbuy's demise would go even quicker.
Back to real estate. Besides the simple rampant over-building of retail space in the last decade, I think we're really starting to see internet to have an effect on retail use. I see drugstores remaining strong because of their special use (and the need it now quality of many of their items, even the non-presciption ones). Grocery is strong and every retailer wants to be close to a grocery store. Department stores are done for. I wouldn't be surprised to see some department store attempt to go back to the old catalog room model. Once you know how their cloths fit, you can order whatever online. Same with appliances. All you need to do is see it and then it can be shipped straight from the manufacturer. Actual space needed by those selling things is dropping. Service oriented retail use remains strong, but they never paid that high a rent. We're in a different world. That easy retail job has become much more scarce, too.
April 12, 2012, 1:32 pmSam:
Amazingly to me, Radio Shack sponsored a cycling team last year and are co-sponsors this year (with Nissan). I don't understand how they'd get much marketing value out of it, considering the biggest cycling events are in Europe which were broadcast on 2nd/3rd tier channels in the US (Versus and Universal Sports).
As for retailers coming back: a bunch of (mall) department store chains have been in trouble for awhile; starting in the 1990s, Federated Department Stores acquired a bunch (Macy's among the first), closing a number of individual stores and renaming many of the rest as Macy's. Macy's (Federated renamed itself to Macy's Group in the late 2000s) doesn't appear to be in distress, though I doubt they're comfortable.
April 13, 2012, 4:59 pmAllen:
I wouldn't call the price difference subjective but it's in that ball park for Wal-Mart and Target. It depends on what you buy and how you buy. I expect we'll see retailer more price competitiveness especially on certain items. Kroger a few years ago rolled out new prices on select items that was as good or better than Wal-mart's, too. That's not to say that they're better overall.
http://shopping.yahoo.com/articles/yshoppingarticles/562/low-low-prices-target-beats-wal-mart/
Two recent price comparisons of grocery and household goods revealed that Target's prices are lower than at No. 1 retailer Wal-Mart.
Craig Johnson, president of retail consulting firm Customer Growth Partners, compared 35 brand-name items sold at Wal-Mart and Target stores in New York, Indiana and North Carolina. They consisted of 22 common grocery goods such as milk, cereal and rice; 10 general merchandise products such as clothing and home furnishings; and three health and beauty items.
Target's shopping cart rang in at $269.13 (pre-tax), a hair lower than the $271.07 charged at Wal-Mart.
"For the first time in four years, our price comparisons between the two has shown that Target has a slight edge over Wal-Mart," said Johnson. A smaller study by Kantar Retail found similar results.
Wal-Mart typically maintains a 2% to 4% price advantage over Target. But in January, Johnson noticed that some products were cheaper at Target.
April 14, 2012, 10:58 am