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Greatest Hits: Retailing
Retail Electronics Has Been A Crapshoot Since 1947 Or So: Best Buy Co. plans to close 50 big box stores and open 100 small mobile locations in the U.S. in fiscal 2013 and cut $800 million in costs by fiscal 2015. The biggest U.S. specialty electronics retailer posted a fourth-quarter loss of $1.7 billion.
No surprise here - the retail electronics industry is constantly shifting because it is built on sand rather than a foundation. In the very early days of the business, electronics manufacturers decided that they would sell to anyone rather than setting up a focused retail distribution network.
You could buy radios at drug stores and newly-formed small electronics repair shops. Record players could be found in record shops and furniture stores. Televisions were sold not just by TV retailers, but department stores too. Then discount stores came along and the electronics manufacturers reps lined up outside the discounters' purchasing departments, fidgeting anxiously while holding new 'hot' price sheets.
It's a basic rule of business: When everybody becomes a distributor, no one is a distributor. Consumers price-shopped brands like crazy, ruining retailers' margins. Chaos reigned. There wasn't enough business to support all the outlets. Price wars left the bodies of dead stores littering the retail landscape. More died as the Big Box Era saw Costco and Sam's peddling flat screen televisions and other high end electronic trinkets.
Electronics retailing: it's an ugly business - and always has been - thanks to short-sighted marketing strategies by manufacturers. (posted 3-30-12, permalink)
The Ghosts Of Department Stores Past: Recently, I was re-reading 'Willow Grove Park', a book about the famous Philadelphia-area amusement park.
One of the photo captions noted that ... (more >>>)
 The Sharper Stone: Among the many catalogs appearing in the mail this holiday season was one from Brookstone.
I haven't paid much attention to the firm lately and was surprised to see that its focus has changed from clever little tools and mechanical gadgets to flashy and mostly-useless electronic gizmos, like The Sharper Image used to peddle. Channeling the ghost of TSI, Brookstone now offers a $3,500 vibrating recliner as well as an ionic air cleaner. And various - ahem - 'personal massagers'.
Selling overpriced glitzy crap put The Sharper Image into bankruptcy. Now, Brookstone is facing financial difficulties, losing $13.8 million in the most recent quarter - on sales of $78 million. That's a loss of about 18¢ on every dollar rung up at the register. Ouch.
Brookstone got its start in 1965 by offering hard-to-find tools via classified ads in Popular Mechanics magazine.
Fear not, though. You can still find those no-nonsense hard-to-find tools at Micro-Mark. They have a nice print catalog as well as an online store. (posted 12-22-11, permalink)
False Advertising: Investigators from Portland television station KATU visited a Made in Oregon store and "found some items in the stores are indeed made in Oregon but a good number have tags saying they are made in faraway places like China, Vietnam, El Salvador, Indonesia, Korea and Mexico."
This is both a reflection on the basic dishonesty of this particular retail chain as well as an acknowledgement of the paucity of saleable retail products actually produced in the state of Oregon. (posted 12-20-11, permalink)
 Malls Are Dead ... and office buildings aren't feeling so good either. Once upon a time, Mall Walking was a leisure activity, especially in the rainy Pacific Northwest.
People strolled inside cavernous indoor shopping meccas to be dazzled and see what was new and trendy. And make impulse purchases. And buy a Cinnabon or two for "carbo-loading purposes."
You may want to cue up some mid-1980s music, because that's when mall retailing peaked. I would suggest The Bangles' 'Walk like an Egyptian' or 'These Dreams' by Heart.
We rarely go to malls anymore, even when we travel. The few times we do so, they look deserted - a shadow of the shopping meccas of their glory days.
Last week, we strolled the Vancouver Mall and its many boarded-up spaces. Most of the people we saw were either store employees or geezer mall walkers getting their daily exercise.
Over the years, the U.S. retail market has grown fairly steadily. But when big-boxers Costco and Wal-Mart and online retailers such as Amazon.com achieve double-digit sales gains, something has to give. And most of the 'give' is coming from the traditional bricks-n-mortar retail establishments.
Bill McBride of Calculated Risk has produced a graph showing investment in offices, malls and lodging as a percent of GDP.
Aside from a bubble during the real estate boom of half a decade ago, shopping-oriented real estate has been in a decline since the mid-1980s. The enclosed shopping mall is on track to join old-time, trolley-filled downtown Main Street in the musty annals of retailing history.
 Office construction had a big, bubble-like run-up beginning in the late 1970s and - like retail real estate - peaked in the mid-'80s but the decline has been even more dramatic, falling by more than 85%.
Guess what? When technology reduces staff needs, when businesses create job-sharing, flex-time and work-from-home programs, when tasks are outsourced to free lancers - including former employees who are now 'contingent workers', when administrative duties are sent to other countries and when paperless strategies reduce storage requirements, the need for office space is vastly reduced.
Someday, mid-town office towers will seem as quaint as soda fountain emporiums, trolley barns, skee-ball-only arcades, sundries stores, vegetable hucksters, public steam baths and hat-blocking establishments. The mirrored skyscraper has outlived its usefulness.
Over the last 50-plus years, lodging investment - hotels, motels, etc. - typically runs between 0.5-2.2% of U.S. Gross Domestic Product, depending on the business cycle. Right now, we're just experiencing a major bust cycle in that segment.
In summation, it's not a good time to be in the commercial construction business. Cue up Peter Gabriel's 'Sledgehammer'. (posted 5-23-11, permalink)
"From Atlantic To Pacific ..." Troubled retail grocer A&P filed for Chapter 11 bankruptcy protection over the weekend, weighed down by a crushing debt load and competition from low-price rivals.
 The Great Atlantic & Pacific Tea Company's history goes back to 1859; a century ago it was to America what Wal-Mart Stores is today. Its first store was in New York City where A&P began selling tea, coffee and spices at value prices. Soon stores sprung up all around the metropolitan area and salesmen took their wares to the road in horse-drawn carriages bound for New England, the mid-west and the south.
A&P eventually extended its operations to the West Coast and became the first national supermarket chain in the United States. Over the years, the company pioneered many innovative, trend-setting concepts. The dark green A&P sign and striped awnings soon became a familiar sight.
By the 1920s, A&P had more than 15,000 stores across the country. As supermarkets took over in the postwar era, these smaller stores disappeared.
The business has now shrunk to less than 400 retail stores in eight eastern states trading as A&P Supermarkets, Waldbaum's, Pathmark, Best Cellars, The Food Emporium, Super Foodmart, SuperFresh and Food Basics. In recent years, sales have continued to drop and losses continued to swell.
I'm old enough to remember the pre-supermarket era when A&P, American stores and others operated corner groceries with limited selections due to the compact size of the premises. There were no line-extended offerings. The idea of five flavors of Cheerios, hundreds of cereal offerings, dozens of specialty coffees or twenty kinds of bread was unheard-of in those days.
One version of each cereal was offered and in one size box. In those small stores, cereal choices were limited to Toasted Corn Flakes, Grape Nuts, Cheerios, Shredded Wheat, Puffed Rice, Puffed Wheat and, if you were lucky, Kix, Quaker Oats and Rice Krispies.
The retail grocery business is a lot different now. Times have changed. Apparently, A&P didn't change enough with them. (posted 12-14-10, permalink)
Good News But It's Two Years Away: Sporting goods retailer Cabela's has signed a letter of intent to anchor a 125,000 square-foot mall in Oregon City.
Cabela's would be one of two anchor tenants in The Rivers development being built on 66 acres near I-205 and Oregon 213. Construction will begin next summer and the new mall will open in 2013, when a major realignment of Highway 213 is completed.
At last - I can Eat Like A Hunter.
At Cabela's in Post Falls, Idaho: The sign at right welcomes patrons to the cafeteria.
During our visit to the Idaho store in Post Falls, we did - consuming half-pound Bison cheeseburgers. They were awesome and juicy - best burgers of the entire 2,300 mile trip.
We passed on the ostrich, wild boar and elk sandwiches, the safari salad and the venison bratwurst. (posted 12-3-10, permalink)
Diehard Retailer: Sears Holdings Corporation's third-quarter loss nearly doubled versus the same period in 2009, dragged down by weak revenue at its long-suffering Sears chain.
I had forgotten that Sears was still in business.
 Once upon a time, Sears & Roebuck was a powerhouse in the retail trade.
From its start in the mail order business in the twilight of the 19th Century, Sears developed a reputation for both quality products and customer satisfaction.
The company grew to become the largest retailer in the United States by the 1950s. And remained so until the 1980s.
In my opinion, Sears troubles began in the 1980s, when the Allstate Division became active in visual merchandising at Sears. In a quest for more-limited liability and exposure, Allstate took an aggressive role in store design and fixturing which dumbed down the already-stolid appearance of the retail store interiors.
In its quest for anal-retentive efficiency and control, Sears executives became navel-gazers and the firm lost its customer-centric focus.
In the 1980s, when we lived in the small Oregon town of Corvallis, we were a major Sears customers. We did a lot of mail-order shopping, because the local merchants were so bad/sparse in that small burg and major shopping centers were 40 miles away.
Sears was one of our major suppliers of clothing, tools and household goods. Between our personal purchases and business purchases (my company used mostly Craftsman for small tools), we probably dropped $15,000 per year at Sears. Since they had essentially zero retail presence in town - except for a merchandise pick-up station with a couple of lonely Kenmore appliances displayed in a dusty corner, we ordered everything from the Big Book.
Shortly after we moved to Washington state in late 1989, Sears changed their policies and began charging money for catalogs. That was the end of our relationship with Sears.
The new policy offended me - when you spend large amounts of money with a firm and have been a good customer for 20-plus years, you shouldn't have to make an upfront payment just to get their offering document. Do you think that Sotheby's good customers really pay for auction catalogs?
Once we had settled near a metropolitan area with Costco and other good retailers nearby, we never missed Sears. I still have my old Craftsman tools, collected over 40-plus years. And, my needs for hardware and tools are much lower now that I'm older. I don't buy much in the way of clothes from catalogs these days but, when I do, it's usually the J.C. Penny catalog, which ol' J.C. is happy to send me. Free.
The last time I actually stepped inside a Sears store was in 2005. In the fading light of the post-K-Mart merger gloom, it looked especially dumpy. At its inside-the-mall entrance, Sears had placed a tire display in center of the doorway. Guess they had given up on making high fashion statements. Or just wanted to inhibit the flow of shoppers.
It just hasn't been the same since ol' Roebuck died. Or maybe it was Richard Sears, who actually croaked before Roebuck did.
When the last nail is finally pounded in the Sears retailing coffin, someone - in an attempt to say something nice about the deceased - will utter, "Well, they outlasted all those Monkey Ward stores." (posted 12-1-10, permalink)
More Retailing postings can be found here.
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Disclaimer
The facts presented in this blog are based on my best guesses and my substantially faulty geezer memory. The opinions expressed herein are strictly those of the author and are protected by the U.S. Constitution. Probably.
Spelling, punctuation and syntax errors are cheerfully repaired when I find them; grudgingly fixed when you do.
If I have slandered any brands of automobiles, either expressly or inadvertently, they're most likely crap cars and deserve it. Automobile manufacturers should be aware that they always have the option of trying to change my mind by providing me with vehicles to test drive.
If I have slandered any people or corporations in this blog, either expressly or inadvertently, they should buy me strong drinks (and an expensive meal) and try to prove to me that they're not the jerks I've portrayed them to be. If you're buying, I'm willing to listen.
Don't be shy - try a bribe. It might help.
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