Retailing's Next Decade
May 9, 2005,
It's been a long time, if ever, that the retail landscape has been in such a state of change.
At the same time, one year's retail star — the company that everyone else used as a benchmark — has the inevitable happen: a dramatic fall from the power position to one that is looking to change to keep up with the rest of the pack that somehow caught up.
It's not just a matter of the mergers and acquisitions as cited almost daily in the Federated/May, Sears/Kmart and now the Belk's pick up of part of Saks Department Stores and earlier the acquisition of Elder-Beerman by The Bon Ton. Then there's also the privatizing of ShopKo as well as Mervyn's.
But it's the change of direction — no matter how subtlety presented — that is as significant as a change of ownership. Witness the Macy's Home Store challenge, as big a changeover for any retailer as seen in many a decade, if ever.
Pier 1, Linens 'n Things and Kohl's come to mind as retailers that have definite plans to change things from the way they have been done in the recent past.
It was with this challenge in mind that a couple hundred analysts gathered last month to listen to Mike Ullman, Penney's new CEO, detail his vision of the company's future. To their relief, the future is an evolution, not a revolution — which could easily have been the case.
For some retailers, it was a case of too much expansion without the structure of by whom and how the new stores were going to be manned and what the logistical needs would be. Think Kmart and all those trucks outside stores loaded with product that sat without being unloaded.
Then there were the nouveau fast growth retailers that relied on heavy promotions. And as the heavy promotions grew heavier and more intense as to pricing, legal issues as well as other challenges cropped up.
What makes this era's dynamics even more intense are changes speeding up the distribution of product from supplier to consumer.
In itself, this could be the critical issue in what retailing will look like in the next decade.