Interesting point. I am familiar with CVS because of its ubiquity in DC proper. It benefits not from being a great retailer, but having stores in great locations. Then again, Walgreens isn't much better, except for their "landmark" stores, which are great, but rare.
WRT this specific initiative, it's smart in terms of keeping current customers. But the advantage that Amazon has is the platform and the platform provides multiple benefits -- online purchasing from the massive Amazon platform, movies/videos streaming, e-books, and now grocery discounts/delivery from Whole Foods. Sure you pay more for your Prime membership, but you get much more too.
FWIW, if you look at the press release, all the stores are in suburban conurbations, "town centers" if you will. They aren't in urban centers. (Another example that "urban" and "suburban" are sometimes terms that aren't truly specific.) The store in Bethesda Maryland is on "Bethesda Row," Federal Realty's first foray into creating urbanized suburban in-city (in this case in-conurbation) lifestyle centers.
The only thing about this discussion is the implication that Sears was not already on a significant downward spiral before it got entangled with/by Lampert. Even if he hadn't got involved with either Sears or Kmart, it's not unlikely they would be at roughly the same point. That being said, there was opportunity within Sears for revival, changing formats, putting stores in different locations in concert with changes in consumer preferences and behaviors, but that was never going to happen with Lampert. Could it have happened with someone else running the show?
With regards to Ron Johnson, I'd say it's not that he had bad ideas, just that they weren't congruent with the business model and structure of J.C. Penney. It's easy to be seen as great when you're selling items that cost between $600 to $4,000 each, which also gives you credit for stratospheric sales/s.f. It might not mean you're a genius though (for what it's worth, on the Market-L e-list in 1994 I suggested that Apple create stores). It's a lot harder to do that selling t-shirts and dresses and underwear.
But even the theatrical department store companies in the U.K. are having a hard time. I'd be interested in seeing a new thread where people offer "counterfactuals" on what should have been done, if only to prick our thinking in terms of retail store and commercial district revitalization opportunities.
E.g. I wrote a piece a couple months ago about how Downtown Silver Spring Maryland has the opportunity to strengthen its outdoor character (non-mall) by adding a department store, even in these times ...
Ouch. cf. the Walgreens flagship stores, at least the one in Washington, has a floor dedicated to beauty. It's a great "store within a store." But I don't know how successful it is in selling cosmetics or in attracting additional customers. It can be done though. cf./2, Shoppers Drug Mart. Or Boots.
Theoretically it could be used to reboot CVS to be less boring, or really, less of an urban convenience store.
This reminds me of a song lyric by Billy Bragg: "a busy girl buys beauty, a pretty girl buys style. But a simple girl, buys what she's told to buy..."
Anyway, CVS will always have a hard time competing with Ulta and Sephora. Isn't about more than having planograms and minimally trained staff? It seems unlikely that they can staff such units with "aestheticians" the way that true beauty stores do (remember the quote from the CEO of Ulta, "we're not selling cosmetics, we're selling beauty").
But they can probably sell more cosmetics to more segments that aren't likely to shop at Ulta and Sephora (and Blue Mercury) but do shop at CVS. The "simple girl" indeed....
This ain't particularly a new thing. These ULI reports go back to the early 2000s:
- Ten Principles for Developing Successful Town Centers
- Ten Principles for Rethinking the Mall
- Ten Principles for Reinventing Suburban Business Districts
- Ten Principles for Reinventing America's Suburban Strips
Commercial district planning, be it malls or traditional commercial districts, need to look at having co-working spaces as part of a daypart focused mix plan for retail, entertainment, food, and other attractions. Some malls have the opportunity, because they have characteristics similar to those of traditional commercial districts. Others don't.
I think it's difficult politically for stores to segment the types of services they provide by income demographic. That being said, I was just at an Aldi in Laguna Hills in Southern California, and that store was "NICE." Much different than the stores catering to low income shoppers in Prince George's County MD and DC where I normally shop, and nicer than the "middle income" Aldi branch in Silver Spring, Maryland in high income Montgomery County.
At the Laguna Hills store and maybe the Silver Spring store, I can see BOPIS as an important add, excepting the points others have made about the loss of impulse buying.
I once met Herbert Haft, one of the leaders of the discount retail revolution, and he said that people with money are much more focused on saving than people without it.
Aldi as shown with the Laguna Hills store, has a lot of opportunity to reach higher income demographics, especially as they improve their own brand specialty products, which are now a lot better than they used to be. (E.g., after buying Aldi tortillas once, I said never again, but their current offering is quite good; tortilla chips comparable to Mission, etc.)
I thought that Lidl might have been the company to do this, that Aldi was painted too much by its hard discount reputation. But most higher income shoppers don't know Aldi's previous reputation, so it doesn't matter. And Lidl hasn't fully figured out its sweet spot in the US, especially in terms of store locations (me, I think the opportunity is in cities and conurbations, not so much traditional suburban locations). Aldi has lots of opportunity.
My first professional job was for a nutrition policy advocacy group. The information-driven are but a small segment of the food and health market. One of my responsibilities was managing a nutrition software analysis program. I had the idea to build it into a platform, but was ahead of my time (things like licensing cookbooks, etc.) and it was the wrong environment to expect my advocate bosses to understand and accept.
That being said, while I think this comment is insightful, like "Amazon Prime," this product could be developed into a broader health/food/nutrition platform as well, with broader connections into nutrition and health, links with RDs (Kroger isn't known for this, unlike Hy-Vee, ShopRite, Martin's, etc.), "nudge" type programs with regard to weight loss, etc.
For example, it could be linked to pharmacy and medication adherence, dealing with food-related chronic conditions like diabetes, etc.
It has the potential to be brilliant were it to move to that kind of environment. That being said, I think Kroger has lots of what I call "stranded best practice" that doesn't seem to be gathered up into structured best practice and incorporated across their banners. (With some exceptions, like the Marketplace format.)
FWIW, recently I tried Turkey Hill vanilla frozen yogurt and it's awesome.
I've only been to a Smith's Marketplace (and Fred Meyer), not any "marketplace" stores for other banners. Does a Ralph's Marketplace even exist? Anyway, a Kroger Marketplace is no different than a Fred Meyer, Meijer, Walmart Supercenter or Target. Since I believe mostly that the marketplace format is a way to discourage Walmart and Target from opening stores nearby, it would make sense that Kroger realizes that in the ever-competitive marketplace, they need to do more to make their marketplace format more distinctive and special and a destination.