Thursday, September 22, 2011 | Edited by Daniel Moores
||Stores Reversing Big-Box Trend
The belief in retail that bigger is better may be fading. National chains known for their huge stores are starting to think smaller.
Big-box retailers are moving away from the one-large-size-fits-all strategy to a philosophy of getting more out of smaller spaces and assessing the needs of each location.
Wal-Mart Stores, whose Supercenters typically encompass over 185,000 square feet, has announced plans to build a number of 30,000- to 60,000-square-foot stores.
Many other big-box retailers -- including Best Buy, Office Depot, Target, Kohl's and J.C. Penney -- are looking to downsize existing stores, said Howard Davidowitz, president of Davidowitz & Associates, a national retail consulting and investment banking firm in New York.
"It's the biggest retail trend in the U.S. -- almost everybody is downsizing," he said.
Some chains are looking to downsize existing stores, while others are planning to make future stores smaller, Davidowitz said.
In Houston, Office Depot, Best Buy, Old Navy and Ashley Furniture HomeStores are among the chains looking to downsize existing stores, said Ed Wulfe, chairman and CEO of Wulfe & Co., a retail development and brokerage firm.
"Almost all big-box retailers are reassessing store size," Wulfe said. "It's different than 10 years ago when bigger was better." They're looking at ways to better utilize their space and get more sales per square foot, he said.
Department stores, including Sears, are seeking opportunities to sublease space in their stores, he noted.
Gary Seals, CEO of Hill Country Holdings, the owners of nine Ashley Furniture HomeStores in Houston as well as Ashley stores in other cities, said his company is considering decreasing the size of its stores by subleasing space to other retailers.
"It would have to be a good fit," Seals said.
Ashley would adapt to a smaller space by taking slower-selling merchandise off the floor, Seals said.
His Houston Ashley stores vary from 30,000 to 45,000 square feet in size, and he's considering downsizing by anywhere from 6,000 to 15,000 square feet, Seals said. He leases the Houston properties.
He said he feels no urgency to downsize.
"We're bullish on Houston," Seals said. "All of our stores in Houston had double-digit increases for Labor Day," compared to the same time last year.
What consumers want
Craig Johnson, president of Customer Growth Partners, a consumer research and consulting firm based in New Canaan, Conn., sees the national downsizing trend being driven partly by consumer demand.
Consumers are looking at quicker, easier shopping experiences, rather than navigating 190,000-square-foot super stores, Johnson said.
"Retailers want smaller stores, but more stores," he said, so that consumers will be more likely to find one no matter where they go.
Best Buy, for example, has been opening kiosks at airports, he noted. There are seven Best Buy kiosks at George Bush Houston Intercontinental Airport, said Chad Stiernagle, the company's director of automated retail. The machines offer iPods, cameras, phone chargers and other items.
In many cases, the wish to downsize stems from pressure to cut costs, said Kenneth Katz, a Houston commercial real estate broker, whether it's due to increasing competition from online retailers or more sluggish consumer demand.
Retailers such as Target are planning smaller future stores because they are going into more urban locations where it's harder and more expensive to buy larger tracts of land, Davidowitz said.
Target is planning smaller-format stores that will be 60,000 to 100,000 square feet, compared with 135,000 in a traditional Target, company spokeswoman Amy Reilly said.
All the smaller-format Targets will be located in urban areas and, unlike more traditional Targets, will feature windows and have multiple floors.
Most suburban Targets are owned by the retailer, whereas urban stores will be leased, Reilly said.
"Many of our customers live in the city and drive to our stores in the suburbs," Reilly said. "We'll be bringing the Target experience to them."
The first four urban format Targets will be in Chicago, Seattle, San Francisco and Los Angeles, and they will open starting in summer of next year. Target is initially focused on 10 markets.
Retail giant Wal-Mart has announced a major downsizing strategy, saying it will build hundreds of smaller stores over the next three years in rural and urban locations.
Inventory in the 30,000- to 60,000-square-foot stores will include groceries, health and beauty items and limited general merchandise, and some will have pharmacies, according to a company statement.
Opening up options
Mindy Kramer, Office Depot's director of public relations, emailed comments from Kevin Peters, the company's president of North American retail, explaining why Office Depot is considering trying new store formats.
"Smart retailers are finding ways to shrink their footprints," Peters wrote, and "the smaller footprint strategy" provides Office Depot with new growth options, including the opportunity to enter new and remote markets.
Office Depot could reduce store size from 24,000 square feet to about 15,000 to 17,000 square feet, Peters wrote.
The preferred downsizing strategy for many retailers is to renegotiate their existing leases, allowing their landlords to get space back, said Lance Gilliam, managing partner of UCR moodyrambin, a retail real estate brokerage firm.
When landlords are unwilling or unable to reclaim space and reduce the size of a tenant's space, retailers will seek subtenants, said Gilliam.
Subleasing can be challenging for a big-box retailer, Katz said.
Retailers typically expect landlords to give them improvement allowances when they move to a space, and they are not used to being in the position of providing improvement allowances for the subleasing retailer, he said.
(Source: Houston Chronicle, 09/19/11)
||Consumers Still Reluctant to Purchase Traditional CE Products Online
Even as the incidence of web-shopping increases, many U.S. consumers remain reluctant to purchase certain consumer electronics products online, according to a new report from The NPD Group.
Even after using the web to find out more about those products NPD's "E-commerce and Consumer Electronics: Online Shopping & Purchasing" report reveals that televisions are the fourth most-likely item that consumers research online prior to purchasing (56 percent). However, it's the least likely electronics product that consumers would actually purchase online (19 percent).
Smartphones also showed a much higher level of research vs. buying online: while 52 percent of consumers would seek out information about smartphones on the web, just 23 percent could imagine themselves going online to purchase one. In contrast more people (66 percent) do both their research (66 percent) and expect to make an actual purchase (34 percent) online for PCs then for any other CE device.
"It's not surprising to see that so many consumers won't buy TVs, smartphones, and other popular CE products online, despite using the Internet to perform basic product research," said Stephen Baker, industry analysis VP for NPD. "Computers and other IT products have a much longer history online with a wider variety of outlets, including direct sales from manufacturers, for consumers to choose from."
Top electronics products consumers were "extremely" or "very likely" to purchase online included the following: computer software, computers, 34 percent; e-readers, 32 percent; digital cameras, computer accessories/peripherals, 30 percent; tablets, 29 percent; printers, 24 percent; Smartphone/mobile phones, 23 percent; camcorders, Blu-ray players, 21 percent; home audio, 20 percent; and TVs, 19 percent.
"Part of consumers' unwillingness to purchase certain electronics online might be due to a lack of awareness, or as a result of the slow pace taken by many traditional CE companies establishing a direct-to-consumer buying presence on the web, or it could be something inherent in the products themselves, such as price or complexity," Baker said.
According to Baker, "retailers continue to have an edge with consumers, when they can leverage their physical storefronts with a strong online presence." In fact, more than three-quarters (76 percent) of all consumers said they have used a retailer's website to research a potential purchase, compared with just 62 percent for manufacturer-direct shoppers and 65 percent for online-only shoppers.
Reinforcing consumers comfort with a multichannel approach to gathering information, NPD's data shows that using retailers' stores and websites are among the top five activities consumers do first, when they begin to consider purchasing consumer electronics.
Information in NPD's "E-commerce and Consumer Electronics: Online Shopping & Purchasing" report is based on online surveys fielded in June 2011 to a representative sample of 1,326 panelists from NPD's online panel. Results were balanced to represent the U.S. adult population.
(Source: TWICE, 09/15/11)
||From Gen Y To Seniors, Luxury Fashion Spend Rises
When it comes to spending on luxury clothing and accessories, new research from American Express Business Insights shows surprising pockets of strength, from Gen Y all the way up to seniors. Interestingly, however, the biggest spenders in each demographic -- which it defines as the fashion enthusiasts in the top 5% of purchases -- cut back in the first six months of the year, spending 5% less than in the same period last year.
But the average luxury shopper, by contrast, spent far more -- with men increasing their spending by 126%, and women, 125%, "revealing a compelling catch-up trend," the report notes.
While that trend held true in purchases made in stores, online, and at online discount and flash-sale sites such as Ideeli and Rue La La, the biggest gains for these average shoppers came in store spending, indicating that they are less motivated to buy online, the report says.
Average female shoppers spent 125% more on fashion purchases made in stores than they did in the prior year, while average men increased their premium fashion purchases by 156%. (By comparison, female enthusiast spending in stores was flat, while male enthusiasts actually reined in spending by 11%.)
And online, typical men spent 41% more, with typical women spending 32% more. The fashionista group spent 21% more on full-price luxury items online.
And while all demographic groups showed gains, the report, which draws on transactions on some 90 million American Express cards in 125 markers, found that:
(Source: Marketing Daily, 09/15/11)
- Older shoppers like bargain hunting online, with seniors (those 66 and older) spending 124% more on discount and flash-sale sites than in the same period of the prior year, and Baby Boomers (between 46 and 66) upping their spending 25%.
- Younger shoppers were keener on premium luxury fashions. While Gen X also grew more enthusiastic about discount fashion, increasing spending in this category by 60% in the first half of 2011, Gen X spending on full-price luxury fashion purchases soared 142%. Among Gen Y, spending on full-price items increased 100%.
Daily Sales Tip: It's How You Say It
Prospects think faster than they speak and faster than they can listen. If salespeople speak too fast, prospects may erect barriers to slow or even derail their sales efforts.
So effective salespeople avoid these voice traits that can kill sales:
-- Mumblers. If prospects often ask you to repeat yourself, you might be a mumbler.
-- Slow talkers. If prospects look bored during your presentation, you may be speaking too slowly.
-- Fast talkers. Speaking too quickly can also be a turnoff, especially if it's caused by the fear that people won't listen if you slow down.
-- Screechers. These are salespeople with loud, piercing voices. Learn to calm down, and take a deep breath before starting your presentation.
-- Weak voices. Salespeople with this problem usually don't breathe deeply enough. They need to speak up and act more confidently.
Source: Sales trainer William J. Quirk