Bad news for retail executives: The life cycle of a retail concept has shrunk dramatically.
In the 1970s, new retailers averaged 16 years before earnings growth began to stagnate, according to a study by consultants McKinsey & Co.
But beginning in the mid-1980s, that lifespan shrank to four or five years.
Some reasons are intuitive. For example, consumers have become more sophisticated and are willing to shop around for value, and competition has increased as more players have entered the game.
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So a retailer’s failure to rejuvenate every few years has serious consequences, McKinsey warns. Of retailers with three consecutive years of declining earnings, almost half went bankrupt and most of the others took at least four years to recover, the study found.
Who is doing a good job of reinventing itself? The study’s authors cite Kohl’s, the Menomonee Falls, Wis.-based retailer.
In the 1980s, Kohl’s, a regional discounter, responded to Wal-Mart’s threat by upgrading its stores with parquet floors and specializing in apparel, something that the Arkansas giant didn’t do well. But Kohl’s lean operations helped it keep prices low, while many of its competitors responded to Wal-Mart by moving up-market, putting them in competition with department stores.
Hail to technology: The award for the best-performing catalog during the United Parcel Service strike goes to Lands’ End.
Workers at its state-of-the-art catalog facility in Dodgeville, Wis., started shipping packages via the U.S. Postal Service on Aug. 4, Day 1 of the strike by the Teamsters Union.
The transition was relatively smooth despite Lands’ End’s previous dependence on UPS to ship more than 90 percent of its packages. The secret: Lands’ End began sorting its packages by ZIP codes, making the post office’s job much easier.
By the fourth day of the strike, Lands’ End was sorting by 120 ZIP codes and trucking its packages to various postal facilities to get them closer to customers. Many packages arrived within two or three days, said spokeswoman Anna Schryver.
Meanwhile, other catalogers weren’t doing any ZIP code sorting, and the Postal Service was rejecting many of their packages.
Lands’ End also addressed customers’ fears about the post office. On Friday, the company announced it would guarantee delivery within a week. Beginning Monday, if a package doesn’t arrive on time, Lands’ End will send a second package.
A new lingo: Fashion connoisseurs, pay attention. Here are some words that Marshall Field’s says you should know before attempting an intelligent conversation about fall fashion.
– Toggle closures: Remember those plastic clasps that hung from the draw strings of our raincoats? Field’s says they’ll be everywhere this year, even on unlikely items such as sweaters and pants.
– Johnny collars: Those comfy collars on your polo shirt are appearing in a new way, sewn onto V-neck shirts or sweaters.
– Kilties: These funny-looking golf shoes with their tassel-like flaps have broken the bounds of the clubhouse and now “are a great new look for the new season,” Field’s promises. Without the spikes, of course.
Back to school redux: When retailers turn in their grades for the back-to-school season, most will receive a “C,” predicts University of Georgia economist Jeffrey M. Humphreys.
U.S. retail sales during August and September will climb to $429 billion, exceeding last year’s total by 5.2 percent.
That would top last year’s lackluster gain of 3.6 percent. But after adjusting for inflation, seasonal retail sales will be up only 2.7 percent this year.