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Brian Kelly

  • Posted on: 09/20/2017

    Kohl’s to accept product returns for Amazon

    Traffic. Prime members who typically do not shop at Kohl's. It is customer acquisition to build Kohl's base. I suspect that Kohl's recent customer loyalty program has provided insights that it now is attempting to capitalize upon. My sense is that Prime members (higher HHIs) are under-represented among Kohl's shoppers. If this is the case, and IF Kohl's can flawlessly execute the strategy without any negative impact upon its selling model/store experience (people plus place), then Kohl's should be able to build its database. It then will have to convert those consumers into Kohl's shoppers.This is way early days. We really don't know Amazon's apparel play as it seems to be a work in progress. Kohl's shoppers (lower HHIs) are attractive to Amazon for building its database and then altering its selling model. Therein lies the rub."If you can't beat them join them" seems to be catching on. Shrewd retailers need to test their way in with eyes wide open and a firm hand on the KPIs. Too far? Well I guess that would be a "retail eclipse" where Amazon overshadows Kohl's in the mind of the shopper.
  • Posted on: 09/12/2017

    Gap Inc. leans more heavily on Old Navy and Athleta

    Gap is a reflection of the current state of retail. Some malls are closing, but not all. Some Gap and Banana Republic locations under-perform, but not all. In the bubble, folks just don't understand the economic reality away from urban centers where malls, with Gap and Banana Republic continue to operate.Trump or the opiod crisis ought to provide clues to a challenged nation. Rural economies are in the tank. Middle America is struggling. Stores that rely upon those constituencies either change, go out of business or enter the market as a fresh relevant alternative.Old Navy delivers value to these folks. Athleta is a response to the new dress code. Comfort, ease of use, casual first. Gap and Banana Republic will shrink until the portfolio no longer remains a viable business.
  • Posted on: 09/12/2017

    Nordstrom tries a no-merchandise store

    Nordstrom goes Seinfeld. It is a show about nothing.No this isn't a store about nothing; it is a showroom. Some might call it Bonobos. Back in the day it was Service Merchandise. It is a living catalog.When did "retail experience" become reduced to just "place?" Not fulfilling the transaction at the point of sale is fine for some shopping goals, but not all. What shopper goals these stores will fulfill and how to retain or grow share of wallet needs to be sorted out. We are in an amazing place. On one hand there are showrooms and on the other there is same-day delivery. We are plumbing the long tail of shopper expectations.Seems to be more true than ever, "retail ain't for sissies!"
  • Posted on: 09/07/2017

    Is Kohl’s giving away the store to Amazon?

    a 10-store test. What's the downside to Kohl's? Kohl's, a national chain of mid-price fashion with an aggressive high/low pricing strategy, is at risk of extinction. Stores of this ilk, a cousin of department stores, are fading fast. Kohl's was an early "disintermediator" of mall stores. It was mall apparel without the hassle of the mall. It was always about taking the friction out of outfitting a family. Kohl's has to prove relevance to the surge of digital natives entering family/home formation years. This is an extension of its brand legacy.So Amazon, as an ingredient brand, is a test for the host brand Kohl's. What brand is more relevant to these moms than Amazon? Amazon looks at the retail industry as if it's a roulette table. Kohl's is yet another bet. And a smart one. Kohl's has some overlap with Whole Foods, and lots of opportunity.Net-net this is a great decision for Kohl's. Roo bad none of the mall anchors thought of it.
  • Posted on: 08/29/2017

    Is thrifting going mainstream?

    No, large chains should not install a "thrift section." No not even in the basement.Yes, thrift stores will continue to grow as they are relevant to an emerging segment of new family-/new home-formers. It's not a "could," it is happening! Do you see the Salvation Army ads in your market? Any Millennials moving out of your home?Look at thredUP or swap or even eBay if there is any doubt that used items will find a home for those growing up in the "shared economy."
  • Posted on: 08/29/2017

    Are Whole Foods’ price cuts game-changing for food retailing?

    Amazon is an awesome brand manager. "Whole Paycheck" was a BIG problem. Amazon went after it first thing, at least via IR/PR. It seems like high purchase frequency items aka traffic items got the haircut. Bananas for 79 cents was dumb even in Chicago, you are right, Paula.I doubt if Bezos wants to race to the bottom. He certainly isn't doing that on Amazon, so Whole Foods won't either. That's price. For the balance of the selling model, product assortment/distribution and place/space rationalization will probably be run through AWS. That's what newer versions of the bookstores seem to show.This is exciting and we all get to watch when we visit our Whole Foods. Or at least those of us in Seattle or Manhattan.
  • Posted on: 08/28/2017

    Does Best Buy now have its own summer Black Friday?

    Retailers create their own retail holidays all year long. Store-wide, category and item promotions fill the calendar. Promotions are positioned on the calendar to drive traffic at troughs or spikes, it all depends upon how it fits annual and seasonal flow and it started with the first "tent sale."Best Buy choosing mid-August fits into the back-to-school selling season. Best Buy hopes to be the preferred destination when dorms are being outfitted and all sorts of electrical items are needed. It wants to get more than its fair share. Positioning it as an anniversary sale sends the signal there are special reductions to incent shoppers to visit a store.Even newcomers like Alibaba and Amazon saw the value of a "sale" with Singles Day and Prime Day.But these promotions become a curse when the need to "beat last year" is expected by The Street. Markdowns get deeper, another event goes on the calendar and the promo needle goes in deeper. Before the brand knows it; price integrity is eroded.Yes, retail ain't for sissies!
  • Posted on: 08/23/2017

    Do retailers need to buy the loyalty of consumers?

    Value = price + quality. The components of quality are product, place and people. Lots of variability.In a time of austerity, price takes on a higher priority based upon need and category. For a generation entering into the key spending life stages, price is very important. Think of those who came of age during the Great Depression or recent Great Recession. Their "value proposition" varies from Boomers.Retailers need to clearly identify their target audience and understand the role of price in the purchase decision and factor that into how they build that into the brand's value proposition.Retail brand experience is the value proposition is the selling model, which is the "five Ps." Yep it's complicated and many get confused. And it is why we like to say, "retail ain't for sissies."
  • Posted on: 08/22/2017

    Will a former eBay and Home Depot exec help Macy’s get turned around?

    Mr. Lawton was at Home Depot for the successful transition from Nardelli to Blake. So he should be uniquely qualified to participate and lead the Macy's repositioning. All of Macy's is fair game for meaningful change. Macy's has plenty of issues and they all start with a clear understanding of their customer.A national department store chain is a concept never proven and now Millennials moving into the key life stages no longer live a departmentalized life. Macy's credibility in fashion is suspect. And so are Ralph/Tommy/Calvin/et al. There is no more one-brand-fits-all. The rules for mass "lifestyle" branding are no longer relevant in an age of personalization. So 40 percent seems like a stretch.The biggest challenge will be to rationalize the store portfolio and then all that selling space.
  • Posted on: 08/17/2017

    Is Walmart on an unstoppable run?

    "Unstoppable" is not a word used in describing the arc of retail history.Walmart is navigating the channel transition from bricks and adding clicks, similar to Sears evolving from catalog and adding stores (first urban and then suburban). At this time, WMT seems to have an agile organization culture to nimbly move with the consumer. WMT has adopted a consumer centric selling model. The vastly improved store experience added cost that has paid off. And the buying spree of the past 5 years of tech/digital companies have enabled some of the changes.I think McMillon deserves the lion-share of credit. He has acquired competencies as well as personalities and blended them into Sam's model. Bravo!Will it continue? As Sam might say, "retail ain't for sissies!"
  • Posted on: 08/15/2017

    How should vendors respond to Walmart’s reluctance to raise prices?

    In which bubble are you? The prosperous urban one or the struggling rural one? In which area are most Walmart stores? Walmart's original real estate strategy was C and D counties, rural communities. Surely now most revenue comes from the suburban/urban stores, but the number of stores skews rural. If shoppers cannot afford to shop in a store, they will find one they can afford. Ergo, the growth of "Dollar" stores.Walmart wants to protect its base, vendors will need to help if they want to remain on the shelf. Packaging, supply chain, allowances and other cost levers remain to be tweaked.
  • Posted on: 08/08/2017

    Does Dunkin’ need donuts?

    Plenty of remarks, so not much new to add. Eliminating "fried chicken" didn't seem to harm KFC.And then there is this. I see the broad-national take out coffee world as Starbucks v Dunkin' Donuts. And both enjoy entrenched loyalists. They also reflect the macro division currently afflicting the US. Starbucks tends to be urbane while Dunkin' Donuts tends to populist.While I tend to agree with comments that this is much ado about nothing, I am intrigued by the entrenched Dunkin' loyalists. The "blue collar" Dunkin' loyalists. Will they see the brand abandoning them? Will they think the brand is going up market to get a better customer in the store? Does the elimination of "donuts" suggest an irrelevant wellness play, with a "don't tell me what to eat, dammit" reaction? Could be an exercise in over think, but I do wonder in these overly sensitive times in which retail brands have taken a noble stand and it has harmed the top line.Did Dunkin' Donuts speak with its loyalists and receive permission to alter the brand?
  • Posted on: 08/04/2017

    Are the four Ps of marketing irrelevant for retailers?

    CPGs 4 Ps are not complete for retail. There is a fifth P, that is People and it drives meaningful differentiation. Some call it the experience. But in reality all five Ps are the shopping experience. The five Ps aka Selling Model: Product, Price (merchants); Place, People (operators) and Promo (marketing) all need to be in balance and are defined in terms of the target audience. This requires the 3 key shareholders to be in alignment. It also requires the enablers (IT, finance, HR, legal, strategy) to also be in alignment. All of that aligning is the CEO's job.Dysfunctional retail brands are the result of a distorted Selling Model. Distorted selling models fail first.This model works for all channels: bricks, clicks, and calls.
  • Posted on: 08/02/2017

    Are there too many grocery stores?

    Grocery isn't apparel, or beauty, furniture, electronics or whatever. Folks need to eat. Right now, all other categories are superfluous. Don't fall into the trap of applying irrelevant circumstances to different shopping behaviors.That's not to say that grocery retailers with an irrelevant selling model will hang on. Nope, those brands will go away just like the thousands of home fashion or apparel cousins that have shuttered in the past eight years. Recent industry consolidation has claimed plenty of regional chains as brand portfolios got trimmed. Perhaps grocery is further along the curve.The same external and internal forces remain to challenge grocery. Aldi and "dollar" both address those budget-stretching shoppers in both urban and rural food deserts. Convenience stores face an uncertain future as local municipalities rush to enact a "sin tax" on pop. Will Lidl arrive with a uniquely compelling solution? Tesco didn't and it went away. And of course, how Amazon absorbs Whole Foods and responds remains to be seen.Grocery is different. And it's exciting. That's why we say, "retail ain't for sissies!"
  • Posted on: 08/01/2017

    Are private equity firms the true retail chain killers?

    It is a combination of forces. Some external (lower comps from reduced demand) and some internal (debt from refinanced loans or sale to PE). If topline objectives are not met, then bottom line reality is harsh.Overall, US retail is no longer growing as it had since say 1962, when Kmart/Target/Walmart all launched. And that is regardless of channel.On this site, both demand (spend) and competitive (online) forces are well documented. Both conspire to flatten comps. Retailers that recapitalized since 2007/the home mortgage crisis when demand was crushed and then 2009/the Great Recession cratered interest rates now find themselves unable to make good on debt to whomever it is owed.Therefore the amount of debt might be similar, but the demand is below historic levels. And, as we all know, it is not going to return to pre-2007 levels for another 20 years.Since 2007, the US has migrated from owning homes to renting apartments. Economic consolidation has returned city center population levels beyond historic levels leaving rural areas devastated by wage stagnation and job loss. Those now entering the key life stages which drive retail sales are going about it very differently from the recent past.At this time, what we see over and over again is the need for relevant selling models to take and grow share. Regardless of ownership (other than online disruptors), retail brands must possess a natural draw to drive traffic and convert to sales that result in an acceptable EBITDA.Of all the shuttered retailers in past 5 years, what does the ownership look like? Didn't all the public companies that were failing take the businesses private to throw off cash to shareholders? And then they were squeezed one last time, before they were shuttered for good?Yep a tawdry tale and the moral is: retail ain't for sissies!