Harry Gordon Selfridge and Ron Johnson: Retail Icons Met with Doubt

Jeremy Piven plays Harry G. Selfridge in the PBS drama “Mr. Selfridge.”

Harry Gordon Selfridge, an icon of the retail industry who founded the world-famous department store Selfridges, will soon come to life on television. “Mr. Selfridge” premieres at the end of this month on PBS and Entourage’s very-own Jeremy Piven will play the American-born retailer. JCPenney’s embattled CEO Ron Johnson will probably watch the show with intrigue and wonder if will he get his own show in a hundred years. Johnson takes inspiration from Selfridges for his JCP vision and while these two men may be separated by history, they have a lot in common.

Both are considered titans of the retail industry and have gone to great lengths to make shopping a pleasure instead of a dreaded chore. Like Selfridge – but for different reasons,  Johnson is facing intense scrutiny as sales at JCP have plunged; coupon-addicted customers bailed after he moved to an everyday pricing scheme. Consequently, loyal and elderly skewing consumers had no incentive to check out the uninspiring merchandise in the dated and deplorable stores which had not been updated since the opening days at Woodstock.

While radical plans to turn JCP into a consortium of branded “shops-within-a-shop” are moving along, sales continue to slide. There was no way Johnson could have manufactured a turnaround in four business quarters. JCP had excessive inventory that needed clearing. Ancient systems were being employed to manage the IT infrastructure. Excessive funds were being spent on promotions. And the company had a bloated workforce. Sounds like the Titanic was ready to sink. Unfortunately, Johnson jumped on when they were ready to hit the iceberg.

As a pioneer of the retail industry with his legendary stints at Target and Apple, Johnson can make JCP work despite his early mistakes. The current “shops” are already performing 20 percent above the rest of the old JCPenney store.  But the board must take the company private in order to give Johnson the time and breathing space needed to execute his vision. Investors are already calling for Johnson’s ouster. But what they fail to understand is that all the talent drawn to JCP because of Johnson and his initiatives will bail.

selfridge

Harry Gordon Selfridge

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Is American Retail on the Decline?

There are some bright spots in the American retailing industry. Target. Apple. Nordstrom. Urban Outfitters. But by-and-large, the industry is on the decline for a number of reasons. Foreign competition, lack of innovation, and consumer dissatisfaction. Just over 25 percent of consumers are unhappy with store choices today, according to ARG.

This week, Japan’s Uniqlo opened a mega store in the heart of Manhattan’s Fifth Avenue corridor and promised to open an additional 200 stores in the U.S. market; a direct challenge to Gap, Inc. American retailers are playing defense, while their overseas arms are going on the offense – opening in new markets such as the Middle East, South America, and China where their properties look appealing and are in much better condition than their U.S. counterparts. This does not bode well for us Yanks. JC Penney, an iconic retailer during its heyday, is trying to revive sales by assembling a powerful team of retail experts. But it remains to be seen what magic these magicians can conjure up. Daily Finance asked “Will JC Penney Be the Next Target.” We doubt it. This is one herculean task that may be impossible to achieve. Target built its brand from the ground up just like Apple. JC Penney already has an image and recalibrating could be disastrous. It is best they focus on the department stores’ strengths and work on areas that are essential to remain competitive; pricing, customer service, and providing a decent store experience.

Craig Johnson, president of retail consultancy Customer Growth Partners, suggests JC Penney could add groceries. This would be a game-changer move. No department store in the United States offers this service. And consumers will always be in need of food. In the U.K, John Lewis and Marks & Spencers offer “food halls” where store branded food & drink products are paired with national brands. Ironically, Marks & Spencers suffered from declining sales and a staid image amongst the British public. But new management turned that around despite a sizable offer from TopShop’s Phillip Green. A new look by Urban Salon Architects also changed the way the Brits thought about their beloved “M&S.” Game-changing moves are essential for JC Penney and all American retailers to remain competitive. The question is – do they have the guts to execute?

Photos: Courtesy of M&S Media

Pret + Target = Success?

Pret A Manger continues its expansion in Chicago and not D.C. It was recently announced that the British sandwich maker will open a location within Target’s new urban concept named “CityTarget.” Typically, Target locations feature a Starbucks or Pizza Hut. But featuring a Pret within a Target store meets objectives for both companies. Pret continues its drive for more visibility in the U.S. while Target is able to jump on the health-concious bandwagon and attract premium clientele among the city’s office crowd. According to the Chicago Tribune, the companies declined to describe the arrangement as a test. But it’s clear that both parties will be watching the outcome very closely.

Pret has been keen on an American expansion ever since it’s debut in Manhattan, NY. But after conducting a lack of research and over-expanding, the company quickly shuttered stores and began to tailor it’s offerings to suit the American palette. For the Minneapolis-based Target, it is the beginning of a new chapter in the company’s history by moving into urban sites. CityTarget is aiming for real estate in Los-Angeles, Seattle, and San-Francisco. “We have no other plans in place today for (adding Pret A Manger to) other CityTarget stores, but we’re excited for the potential for that over time,” said Annette Miller, senior vice president of merchandising for Target’s grocery business. ” I am inclined to believe that if Pret drives traffic and rings in high sales within the Chicago loop location, you may see additional Pret sites follow.

 CityTarget Chicago will open in July, 2012.

Grocery Stores: Good, could be Greater

What a difference a decade makes for our grocery stores. I was reminded of the transformational change as I walked into a Target store. The company is aggressively remodeling urban locations to include the new P-Fresh format. The concept involves remodeling 1500 square feet of an existing store to make room for frozen foods, fruits, vegetables and some baked goods.

Over the last decade, our area has been a battle ground for supermarkets. We had the upscale stores such as Wegmans, Whole Foods, and Balducci’s at one end of the spectrum. Trader Joe’s, Wal-Mart and Target played on the opposite end of the field to those who valued price. With market share being stolen from both ends, what were the middle guys supposed to do?

Safeway engaged in a complete lifestyle change. Literally. After unveiling a $100 million campaign, the company began to remodel it’s stores nationwide with muted lighting, wooden floors and expanded it’s offerings with nut bars, prepared meals, and private label goods. Safeway tapped into the consumer motto of being “cash rich, but time poor.”

Shoppers Food and eventually Giant jumped on the bandwagon to reinvent themselves. While their attempts have been succesful, grocers will need to invest more in private label goods and better prepared meals.

European grocers such as Waitrose and Carrefour have excelled in creating powerful brands that put the national players to shame with attractive packaging and tastier food.

The recession has forced consumers to give private label goods a try. And they like what they gotten in return. But to sustain that momentum, grocers in our area will have to innovate. Their position will need to change from “sellers” to “creators” for them to be not only good, but great.

Update: Waitrose is a high-end supermarket in the U.K. Realizing consumers were trading down in price during the recession, the company introduced a discount private brand dubbed “Waitrose Essentials.” Three months within launch It nearly achieved it’s sales mark three months early.

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