IMRA outlines survival strategy
May 25, 2001,
DALLAS — Finding new ways to grow — or at the least stay afloat — were at the forefront of the International Mass Retailers Association's conference, held here last week, as retailers strive to weather the economic storm.
"The new millennium has not been good to us so far," said Joe Ettore, chairman of Ames, and the retiring president of IMRA. However, he added, "each retail category will do well because customers like choice...The challenge in the long run is to be the retailer of choice."
"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 earns one third of the total company's earnings growth and 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 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 "differenciate itself in the marketplace." In its efforts to offer Martha Stewart and other Kmart 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 has now been voted the number one retailer to work for in Canada.
The internet also held a lion's share 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 has typical Kmart fare, it also offers — and sells — the unexpected for the discounter, including projection screen TVs and Waterford crystal.
While 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 learning 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" and some are adding features one can't get from an e-tailer.
In Neiman Marcus' Los Angeles store, for example, people can saddle up to its elegant martini bar and view nearby moniters 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 such rule re-setter is Home Depot Expo. For example, Expo doesn't "work well with planagrams," said Steven Smith, senior vp, merchandising, and instead lets each store have a certain amount of freedom with how it is laid out. 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.
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