IMRA outlines retail survival strategy
May 28, 2001,
DALLAS, TX — Finding new ways to grow — or at the least stay afloat — were at the forefront of the International Mass Retail Association's conference, held here last week, as retailers strive to weather the economic storm.
Retailers both big and small are experimenting with formulas to become that choice. Meanwhile, throughout the conference differentiation from competitors and reaching new customers, both here and worldwide, were common themes.
"There is great opportunity in retail, not just in stores, but opportunities in growing internationally," said Rich Freeman, director, retail coverage group of corporate finance, Salomon Smith Barney. "The U.S. can grow east, south and west."
Wal-Mart is one of those which has done so, and its international division now accounts for 17% of the company's sales, which hit $191 billion in 2000, said John Menzer, president and ceo of the international division. The company as a whole is the second largest in the world, he said, though "our goal is not to be the biggest but to be the best. Wal-Mart is still very young in international growth." One hundred new stores will open internationally this year, along with 30 to 40 other international store expansions or relocations. "We're quickly becoming a global brand."
The reason the discounter decided to venture overseas was proactive. "If Wal-Mart stayed in the U.S, we would soon be competing with overseas companies," Menzer said.
Hudson's Bay division Zellers purchased Kmart Canada in 1994 to help compete in the "over-retailed" Canadian atmosphere, said Thomas Haig, president and ceo. The acquisition allowed Zellers to "differentiate itself in the marketplace." In its efforts to offer Martha Stewart Everyday and other captive brands to moms, its target customer, Zellers has evolved from "dark, dirty and dangerous" stores to clean, uncluttered ones with a better in-store experience, and was recently voted the top retailer to work for in Canada.
The Internet also was the subject of much of the conference. Last year saw more than 200 web sites sink, said Tom Blischok, chairman and ceo, MindMeld, and more are on the way. Where web sites have succeeded is when they are connected to a bricks and mortar retailer.
"Bricks and clicks are here to stay," Blischok said. "They're driving customers into the stores."
One such success story is Kmart's Bluelight.com, which is both a traditional e-tailer and a marketing vehicle, both driving customers into the stores and allowing them to surf at kiosks in 1,200 Kmarts, said Jim Wanninger, senior director of merchandising. Though the Bluelight site carries typical Kmart fare, it also offers — and sells — the unexpected for the discounter, including projection screen TVs and Waterford crystal.
In the face of the uncertain economy, several distribution channels see growth ahead — supercenters and dollar stores lead the retail segments as the fastest growing, said Daniel Barry, Merrill Lynch, and are projected to hold those spots for the next five years, followed by warehouse clubs. Some of the more traditional retailers are being forced to adapt.
Department stores, a "slowing category," Blischok said, "have to make merchandise relevant...They have to change what's going on in the stores."
He offered as an example Neiman Marcus' Los Angeles store, for example, people can sidle up to its elegant martini bar and view nearby monitors playing fashion shows. Other stores have microclimate rooms which can simulate winter in the summer and vice versa, he said, so the customer can try on seasonal clothes in the appropriate weather conditions. Other stores have telephones in dressing rooms for ordering, and video cameras behind the mirror for a 360-degree view. "They're resetting the rules of the game," Blischok said. "The retailer is starting to experiment and succeed."
Another retailer re-setting the rules is Home Depot Expo. Despite its warehouse roots, Expo doesn't "work well with planograms," said Steven Smith, senior vp, merchandising, and instead lets each store have a certain amount of freedom with the layout. The growth vehicle for Home Depot, Expo will have an 80 percent store base growth this year, with 50 to 60 percent compound growth for four or five years.
Opening its 30th store last week, Expo works to make everyone from the store employees to the merchants involved with the retailer's process, and therefore the success. The store actively solicits employee feedback, for example, and designates Thursdays as "Holy Thursday," when merchants and store managers walk Expo stores as well as its competitors.