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


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.