From the Principal’s Office
Well, our beloved industry has been undergoing a lot churn and turmoil in the three months since the last newsletter. This month we open with a commentary on technology, what’s appropriate, what’s out there pushing the envelope.
And then there is the good, the bad, and the ugly of what is happening in the marketplace with bankruptcies, successes, and acquisitions, new and not-so-new technology, with our personal digs thrown in. Enjoy!
Bob Amster – Principal, RTG
When is technology too much (Domino’s Pizza) or just right (Apple Pay)?’
According to an article recently published in Chain Store Age, “Domino’s Pizza now lets customers sync their smart home devices with the ETA of their pizza deliveries.”
Domino’s is partnering with a free platform that allows users to create connections between digital devices and services. “By integrating its digital Domino’s Tracker, which enables customers to monitor orders from preparation to delivery, into the platform, the company has created Domino’s-branded applets” says the CSA report.
The article goes on to say “For example, one applet lets customers digitally turn on their porch lights as their delivery arrives, while another deactivates lawn sprinklers as the delivery driver makes his way up the walk. Customers can also create their own applets and link their smart devices within any step of Domino’s Tracker.”
Notwithstanding how much Domino’s lovers may agonize over knowing exactly when the pizza is coming, this appears to be more technology than most customers need.
The question then becomes: When is technology ‘too much’ technology? The consumer will will decide by either embracing it or letting languish unused.
Meanwhile, Apple Pay transactions surged only 450% over the past year, according to an article by RetailDive. For those of you who have not had the pleasure, or the phone, or the retail establishment at which to use Apple Pay, this payment method is the fastest and most secure form of payment you can experience today.
Retailers should be chomping at the bit to include Apple Pay as an accepted tender type. I saw it first from a consumer’s perspective at Walgreen’s, then at Trader Joe’s, ACME Supermarkets and at (a disappointingly small number of) other retailers, and afterward, as a retail industry veteran that I am. There is no equal yet. I even get to use it to purchase my commuter railroad tickets electronically using their (Metro North in NY & CT) smartphone app. Fastest, most convenient thing I have seen.
What are we seeing?
Consolidation continues
eBags was acquired by Samsonite in a move that complements skills and expertise.
J.C. Penney will close up to 140 stores. We probably should not be surprised. The evolution to fewer stores and more eCommerce is still ongoing. When we only had stores and slow catalogs, we built too many of the former. Now that we have the Internet, we don’t need the marginally-performing stores.
In early March, BCBG|Max Azria filed for protection under the bankruptcy law. The fashion house has already notified mall owners about its plans to close most of its U.S. stores.”
Radio Shack filed Chapter XI for the second time in 2 years.
Gordman’s filed for bankruptcy and Stage Stores is poised to buy the company and keep many of the stores.
Payless Shoes declared bankruptcy.
Bebe is looking to close all stores and concentrate on eCommerce.
Camping World snatched up bankrupt Gander Mountain and will close at least half the stores.
GameStop to shutter up to 150 stores.
HHGregg filed for bankruptcy and ran liquidation sales.
Mergers & Acquisitions
UK’s Sports Direct is acquiring Eastern Outfitters, the parent of Eastern Mountain Sports and Bob’s Stores. Eastern Outfitters is owned by Vestis Retail, in turn, formed by private-equity firm Versa Capital Management.
Wal-Mart acquired outdoor sports equipment and apparel company Moosejaw in February. Supposedly, Wal-Mart will allow Moosejaw to operate independently. That is a very important factor in the acquisition. Don’t mess with the already established brand…!
PetSmart acquires Chewy.com. A great complementary pairing! Read the analysis by Retail Dive.
Emerging Technology
Amazon completed its first public (outdoors) drone delivery in March.
Target committed to a rollout of RFID technology in many of its merchandise categories. Now that there is an other big company showing momentum in this heretofore underutilized technology, maybe more retailers will take a look.
MasterCard is testing EMV with biometrics technology according to an article in RetailDive. As the article points out, we have made no progress in the US with chip-and-PIN technology and MasterCard is already experimenting with another technology that appears to require a replacement of the existing authorization terminals. I vote for ApplePay.
This is taken from and article on eCommerce and price manipulation (dynamic pricing?) in The Atlantic and I loved this quote by Robert Dolan, a marketing professor at Harvard
“The price of a can of soda in a vending machine can now vary with the temperature outside.” And the fact is that it can. Pardon the pun. We can mount thermometers outside any establishment as an IoT device that can be connected to the vending machine, which is another IoT device, which communicates directly to a corporate pricing algorithm that can change LED price displays on the machine remotely. Presto!
On the bright side
Restoration Hardware stock rose sharply in March, presumably because of the newly-instituted membership fee. This belongs under the Wait and See column, below.
Ulta delivered strong results for 2016. Sales up 24.6%!
According to publication The Weekly Consensus, “Williams-Sonoma Q4 Profit Topped the Street. Williams Sonoma Inc. reported adjusted fourth-quarter earnings above expectations and said its board of directors authorized a dividend increase. In a separate announcement, the company said Sandra Stangl, president of its Pottery Barn brands, will resign from the company March 31.”
Five Below to accelerate store openings. At the same time that some retailers are closing all stores in favor of emphasizing an eCommerce strategy (see above), this company is hot on the store-expansion trail.
Shares of Lowe’s have been rising. More activity in DYI? Yes, due to an improved real estate market!
Zumie’s sales on the rise in March.
Bed Bath & Beyond ended a strong 4th quarter.
Burlington Coat Factory stock went up 295% in three years!
Online beauty start-up Birchbox turned profitable!
“Brick and mortar is alive and well at Ulta”: Chain Store Age.
What’s new with us?
Added Services – We are pleased to be able to announce an expanded services offering.
The spectrum of our services now includes Loyalty Program design, Loyalty software selection, and program implementation. Industry veteran James Ray is working with us to lead that service area.
On a similar note, we are pleased to add a service offering in Distribution & Logistics/Supply Chain, through a strategic alliance with Syed Rizvi an experienced veteran in this area.
Both James’ and Syed’s bios are available on our Web site.
Visual Retailing – We are actively looking for retailers to pilot this visual merchandising software application. This SaaS solution enables retailers to deliver concise and consistent standards to their stores to ensure that the brand image and the nuances of the product offerings are accurately represented in every store. The software can be used as early in the process as design, to planning and buying, through merchandising to operations, to develop these concepts and then to communicate clear visual merchandising directives to every store under the company umbrella. The software has been successfully deployed at mark & Spencer, VF, Preca Brummel, Italy and others. We would be happy to work with you. Contact us regarding your interest.
We are working with Overheer Systems, an ITL company to run item-level RFID proof-of-concept projects. Overheer offers a unique suite of SaaS applications – Reflect RFID – to deploy RFID and reap the benefits of this technology with minimal impact on existing systems and processes. In today’s omni-channel environment, inventory accuracy is paramount in maintaining customer satisfaction and RFID delivers that and more. Through its association with ITL, Overheer Systems is now also able to deliver RFID tags in addition to the software, RFID scanners and RFID printers/encoders. The proof-of-concept can be implemented at a single store with a limited range of garments in order to validate assumptions built into the business-case analysis. We are most excited to have the opportunity to work with retailers wishing to develop and prove the case for RFID.
We continue to be enthusiastic about Theatro. The Theatro Communicator is a wearable, hands-free, voice-activated, Wi-Fi-based devise designed with the hourly retail employee in mind. This smaller-than-a-credit-card device enables store operations personnel to use a voice-controlled interface to call for backup, check inventory, locate a manager, or simply communicate with a team member – enabling them to do more, head-up/hands free. The product is already fully deployed at Cabela’s, and The Container Store, and being piloted at numerous other well-known retailers. As evidenced by Google’s Home, Amazon’s Echo and Alexa, and on-board automobile technology, voice activation is an effective, emerging technology. Call us to discuss how we can help you pilot this unparalleled product.
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Obtain more information about us at www.RetailTechnologyGroup.com.
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