Industry News - February 12, 2008
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HOTLINE
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Macy’s Restructures after Steep Drop in Sales Macy’s
creation of a national department store banner is faltering and forcing
the $26-billion retailer to cut costs and restructure. After announcing
a 7.1 percent drop in January same-store sales, the retailer says it
will combine three regional divisions and put more managers in local
markets. About
2,300 management jobs will be cut. Locations will be grouped into 20
new districts of about 10 stores. Currently, districts contain 16 to 18
stores. The announcement also included guidance that Macy’s expects
that its earnings in 2008 would not meet Wall Street’s estimates.
Sharp
regionalization of assortments by price, demographics and local taste
would mean Macy’s would have to operate a less centralized organization
than it envisioned when it purchased the May Companies in 2005.
“Now,
the pendulum is swinging back,” says Stevan Buxbaum executive vice
president of Buxbaum Group, a Minneapolis-based investment company.
“Technology is available that is capable of doing what Macy’s wants to
do, but is Macy’s current system capable of doing it? They would have
to get the regional buyers to figure out exactly what percentage of
their businesses they need to regionalize.”
Cincinnati-based
Macy’s became a national corporate brand in 2006 after officially
changing its name from Federated Department Stores. About 10 regional
department store brands were put under the Macy’s umbrella, including
the venerated Marshall Field’s chain.
National
branding was intended to leverage the Macy’s name across all 850 stores
and the company’s Web site. Macy’s also wanted to create economies of
scale for its promotions and media buys. The latter represent somewhere
between 2 and 3 percent of Macy’s annual sales.
Some
former regional chains benefited from the brand change. But former
Marshall Field’s customers in Chicago, Minneapolis and other Midwestern
markets were outraged. Macy’s is regarded as an upper moderate
department store; Marshall Field’s was regarded as much higher end,
especially its historic State Street flagship location in Chicago. “In
other markets where Macy’s converted stores, people seem to accept the
name,” says Buxbaum. “In the Philadelphia area where Strawbridge had
operated, for example, Macy’s was a step up. But in Chicago and
Minneapolis, it’s really been a struggle. Consumers have resisted and
feel they’ve been demoted.” Experts estimate that the former Marshall
Field’s stores represent 10 to 15 percent of Macy’s sales.
If
Macy’s is successful in reintroducing higher end brands to its
Midwestern markets, Buxbaum believes the former Marshall Field’s
shoppers will return—even if their store is wearing another name.
“Consumers have a fairly short memory,” he adds. “The question is
whether or not Macy’s will be able to deliver a shopping experience
that will bring them in.”
-Debby Garbato
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RETAIL
AND TECHNOLOGY NEWS |
Best Buy Adds Markdown Software Best
Buy selects DemandTec Markdown to help effectively manage price, profit
and inventory levels. Best Buy uses the system specifically on items
such as seasonal merchandise and discontinued product lines. The
electronics retail giant also uses the technology to optimize both the
timing depth of markdown pricing in order to meet its merchandising
objectives. The system helps Best Buy provide improved shopping
experiences to its customers. Levi Strauss & Co. Optimizes Global Sourcing Operations Levi
Strauss & Co. chooses TradeCard to automate processes and
streamline customs compliance to help it gain speed and agility in
global supply chain. The jeans and apparel retailer uses the platform
to help eliminate manual processes that require physical handling and
viewing of paper documents received from suppliers for purchase orders,
invoices and compliance checking. The apparel retailer integrates the
TradeCard system with its existing ERP system to consolidate payments
and streamline customs compliance by sending data electronically to
customs brokers. Levi’s unveils plans to bring 255 vendors from Europe,
Asia and the Americas onto the TradeCard platform. Lillian Vernon Deploys Web 2.0 Platform Lillian
Vernon implements Certona’s Resonance Web 2.0 platform to optimize
revenues and conversions from product recommendations. The retailer
uses the self-optimizing, real-time behavioral targeting platform to
gain relevant, material content that drives Web visitors. Lillian
Vernon also uses Resonance to personalize web content, better pinpoint
online ads to reach specifically targeted visitors as well as increase
the ability to perform cross-sell, up-sell recommendations and enhance
transactional e-mails with personalized merchandising. The Catolog
merchant and online retailer leverages the traffic patterns of visitors
to help optimize their Web experience without the need of their
personal information, third-part cookies or special individual
interaction. Citi Trends Fashion for Less Chooses Buyer’s Toolbox Citi
Trends Fashion for Less deploys ANT USA’s Buyers Toolbox. The “everyday
low prices” retailer uses the toolbox for company-wide merchandise
planning and open to buy. Citi Trends uses the system to help plan for
various markets across the nation and quickly adjust to changing
fashion trends. The value priced family apparel retailer has more than
300 stores in the southeast, mid-Atlantic region and Texas.
More Technology
News
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EXECUTIVE
INTELLIGENCE |
Optimizing Video Across the Board By Joe Davis, Director of Retail and Security Strategy, Wren Veteran
users of video, retailers are pioneering new uses for network video for
more than just loss prevention and security. The savviest retailers
rely on IP video across the board to support operations and to help
improve the overall customer experience in their stores. The following
examples demonstrate how retailers can broaden the use of video to
maintain a brand, improve employee performance and maximize customer
service.
Maintaining the Brand Retailers
spend countless time, money and energy building their brands. They
promise customers a certain experience – whether it be impeccable,
personal service each and every visit or consistently low prices and
wide product availability. To maintain their investment in the brand,
happy customers, and long-term viability, retailers should support
their brand with every available resource – including video.
Most
retailers put policies in place to fulfill their brand promise at every
customer touchpoint, but it can be difficult to ensure that policies
are followed consistently, particularly across hundreds of stores. By
providing the power to see events at each store, video lets managers
verify that procedures are being consistently followed at every
location. Whether it’s safety compliance, in-store displays,
merchandising, employee training or customer service, video gives
managers a powerful tool for evaluating what is actually happening on
the floor. While traditional data from POS and other systems are
available, that data is often delivered without context and is
therefore harder to analyze and make improvements after evaluation.
For
example, the POS system may show the number of registers being used at
a given time within a store. However it will not be able to clearly
show the customer wait times or other vital information that would help
improve customer service. The combination of video and data gives
managers the ability to understand the situation, and ultimately gain a
deeper knowledge of how stores are operating, leading to better
management and a more consistent experience across multiple locations.
Video goes a long way toward ensuring fundamental expectations that
represent the brand name are met for every customer – every time.
Improving Performance Video
is an excellent tool for improving training and associate performance
and satisfaction, yielding a better-operating, more pleasant retail
environment for employees and customers. Video gives managers the
ability to identify problems and issues that occur with employees in
stores by capturing examples of actual incidences. They can then use
specific video to train other employees. This is much more effective
than merely painting a picture for other associates of a scenario.
Video examples can augment other training processes to visually
demonstrate real-world examples of how to handle or how not to handle
particular situations.
Employees
may also perform to maximum potential if they are aware of being
monitored. Loss prevention studies show that monitored employees are
less likely to steal or conduct personal business during work hours.
Some retailers are also using video as a way to provide incentives and
reward employees that are performing well and going the extra mile.
Evaluated across multiple stores, video can capture outstanding
performance, allowing managers to reward those individuals. For
example, a business may have a focus on certain types of transactions
within its stores. By using video, retailers can effectively evaluate
cashier activities during these targeted transactions and reward or
train the operator accordingly.
Maximizing Customer Service Both
of the previous applications for video contribute to ensuring a
positive customer experience. However, video can be used in other ways
to improve customer service.
For
example, demographics can be captured with video, giving retailers a
better understanding of their customers. This is valuable information
for implementing the most effective marketing programs and also for
procuring and stocking products that are of interest to that market. A
review of video over time reveals who is shopping at the store, the
effectiveness of end caps and other in-store promotions, and the peak
shopping times.
Video
can also be used to ensure readiness during peak store hours. Managers
can view video of any store to verify shelves are stocked, floors are
covered with retail associates, aisles are clear and accessible,
shopping carts are stacked and available, cash registers are fully
staffed, and that each store is ready for the rush of customers. Video
can be reviewed remotely by the corporate office to ensure that
customers are being well-served. The power of network video to provide
easy remote access to a wealth of information is unmatched by any other
source of data.
Retailers
who apply some creativity to their investment in video can use it as a
tool to differentiate themselves and to maximize their efficiency and
revenues across the board.
Joe
Davis serves as Director of Retail and Security Strategy at Wren, a
video surveillance solutions provider for more than 20 years. Mr.
Davis directs the product management efforts of the company and serves
as subject matter expert in retail and loss prevention. Davis also
provides consulting services to customers looking to develop successful
loss prevention programs. Mr. Davis began his retail career in 1987 in
an entry-level operations position at Wal-Mart. From there, he was
promoted nine times during his 12-year career with the retail giant. He
can be reached at joe.davis@wrensolutions.com.
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