Ultimate Electronics - A Phoenix?

"Ultimate Electronics signed a lease on an old Circuit City building and is about to sign another," CoStar.com. 9-30-09.

Ultimate Electronics is on the rise - again. The quote above appeared online at CoStar.com which is the engine for commercial real estate companies across the US. There is talk that Ulimate is out looking for as many as 30 stores in California for next year.

Channel vets will remember the rapid rise and descent of this electronics chain out of Denver. At a time when CompUSA, Circuit City and others were struggling to maintain they tried to explode. And they did - or rather imploded. Can they do it again, but get it right this time?

There certainly is far less competition in retail storefronts. Only Best Buy on a national basis carries depth in the categories. I say they have a good shot.

Who knew we'd miss Circuit City?

What Are Retailers Waiting For?

July retail sales are coming out today and there is very little good news. Target is down more than expected. Macy's off more than 10 points. The GAP is down 9 points. The Back to School time period should be a perfect time to get creative but it doesn't look like anyone is.

What we can't figure out is why retailers are not stepping up? Restaurants sure are.

Let me tell you - this group gets it. This is not the time to do "business as usual" or to "return to basics" or maybe just cut expenses and "ride it out". Restaurants are really adapting and marketing to bring in traffic. They have pulled out all the stops.

Roy's was one of the first to get going with their 3 course prefix meals at great prices. They started a year ago. TGIFridays created all multi course meals, something called "Right Portion-Right Price". Almost every other major restaurant group has come up with some kind of special price or special portion.

Even boutique restaurants are creative with happy hour specials, early bird dinners, late night appetizers, you name it.

How come retailers can't take the hint and get going?

How about special sale hours during the week? Say 4-6? Maybe partner with a restaurant chain and work a deal that pays the customer for shopping and eating at both?

How about a new spin on the old frequent buyers card? Family underwear purchases that result in a reward after so many purchases?

It is Back to School time? So how about a retailer donating to the local school district a portion of the nights sales? 2% to the Buckeyes? 2% to the Cougars? Wouldn't Mom look to make her money work in more ways than one?

Come on Retailers! Get a clue from your brethren in the Restaurant Business! Get Creative and Get More Customers in your doors!

Is There a Tenant Out There?

It's been 10 months now learing about commercial real estate. Here's what I know.

One - there are very few retailers or restaurants who are actively looking to open new stores. Some will tell you they are- and perhaps there is a shred of truth. If they can find landlords that are on their death bed - then maybe. If they can find AAA markets at B market prices - maybe. But otherwise - save your breath.

Two - there are landlords out there who think that their development is immune to the current roll back in lease rates. These landlords seem to think that just because they bought the dirt that makes it still work inflated rates. They take so long to come to reality when presented with an offer that the retailer who made it can find two others to take their place.

Three - banks care little. The financial institutions have some compasion but not much. They drive harder on the front end and they drive harder on the back end of the deal. They make the deal take longer, cost more and mean less by the time it gets done - if it does.

There is nothing much happening but everyone is busy rushing from call to call. Chance to chance. All the while hoping that their deal will work.

Retail Stablility

I just finished reading this weeks blog post of the Brazen Careerist by Penelope Trunk. She writes that the new coin of the realm is stability in our current economy. That you get stability by either creating it - or selling it.

That got me to thinking about retail stability. Is there such a thing and where would you look for it?

Setting aside that we could discuss the stability of say Target vs Eddie Bauer what I'm really thinking about is just what jobs in retail are stable? If I was growing my career what would I be pointed to?

Store management positions are very stable. Not too many companies are going to be able to open the doors, greet the customer and make a sale without it. No one argues that online has eaten into brick & mortar - but it's not going away anytime soon. So these jobs are golden.

Distribution? Yep - you have to move your inventory from point A to point B. So gaining experience and moving up in a distribution pyramid will keep you stable for a long time.

Buying? Yes - but perhaps not as much since systems allow more to be done with less people and the developmental positions or Asst Buyer, Product Mgr, etc will be challenged to be cut back.

So what's not so stable? Marketing, Human Resources, Training, Operational Support, etc. These groups are there to add depth to the company, resources to improve, critical evaluations of process and in short make the most of a good thing. In this economy it's all about holding on till the bottom is felt and the upswing begins. Until then it's best - and most stable to be developing your career in the meat and potatoes of the business.

The premise is that today there are more people unemployed and for the first time in their lives have to look for a job.

If you consider that until this economy most job changers already knew where their next job was going to be when they left their last job then there are generations of people who are struggling with how to go about finding a job. Losing your Job is traumatic. How do you get through it, pick yourself up, organize yourself and get to work finding your next position.

There are generations of people that have never had to look for a job. That's why Kerry Kelly, an industry leading recruiter for over a decade and Dave Uhlman, Co-Founder of CPointe Associates, have created a brand new, interactive and engaging 120-minute WebCast Seminar, “Shape Your Next Career®.

If you are one of the generations out there who has not ever had to look for your next position – then this seminar is a must. Has it been years or several job changes since you didn't know what your next position was going to be? Then you need to invest in yourself! Whether you are 25 or 55 don't assume you know how to mentally, emotionally, physically or organizationally are skilled at SYNCing up your career

SYNC is the real deal and you can find out more by clicking here.

Just a Follow Up

Our last post talked about innovating with Cisco's TelePresence system. Looks like a couple big hotel players - Marriott and Starwood - are already thinking along the same lines. Take a look at the articles.

Marriott: http://tinyurl.com/lyvuz9

Starwood: http://tinyurl.com/nuu9yh

Seems like these two players will have the chance to drive new revenue streams into their hotels for all kinds of things. Stay tuned!

So Where is the Innovation?

Think back over the past years - and maybe decades - about exciting retail concepts and retailers that were setting the pace. And then ask yourself - who is setting the pace now?

In the 70's discount stores Target, Wal-Mart and yes back then even K-Mart were re-imagining how their customers wanted to shop. In the 80's we saw specialty store like GAP and Banana Republic along with some of the first big box stores. In the 90's those big boxes like Home Depot, CompUSA, Staples and Price Club went crazy. The early 2000's have seen the resurgence of specialty store as the economy surged: Urban Outfitters, Juicy Couture, Coach and others.

But - what's happening now? Not much. I know that the economy is bad, banks are not lending but now would be the time for a creative retailer to step forward.

I recently had the chance to listen to some ideas that social websites such as YouTube would open brick & mortar stores where you could watch with others and have a coffee or such. Maybe Twitter will open a place where you can watch posts on a big screen or multiple screens.

How about shopping in a store in Milan using Cisco's TelePresence while standing in Los Angeles? Too far out there you say? Ok - what's your idea?

Eddie Baus Out

They finally did it - filed Chapter 11. It's been out there for a long time so it's not a surprise.

Since Holiday time the stores have felt understocked and not in step. Same colors, fabrics, patterns as all last year. Email blasts looked the same and may even have been the same product for all I know. I've gave up on them as you can tell.

And this is from a loyal customer. I call myself that because between Eddie Bauer and Nautica apparel that's pretty much what I wear. I really like EB's quality and I used to like their looks but for sometime I couldn't find anything I actually wanted to buy. Guess there are lots of others out there who feel the same. That's what pretty much what C11 is about. A lack of interest.

Will they come out of it - probably. But if they don't get a new direction, with a new senior merchant and a group of buyers that understand today's active adults and what they want and want to look like - it won't matter much.

For me - I'll wait and see. After all - I'm a loyal customer.

Sear Outlet Stores Face Conundrum

What comes first - sales of new product or sales for outlet stores? That's really the conundrum facing Sears Holding Company as it grows the Sears Outlet stores across the nation. How do you maintain stock levels in outlet stores if you don't have enough "scratch & dent' to go around?

Prices are great in Sears Outlets where washers, dryers, refrigerators that have gone out to someone's home and come back are being sold. These items have been rigorously tested and then sent to what may be referred to as a "hub" store of the chain in a metro or regional market. Once there the "hub" store sends out excess items to other stores it's responsible for stocking. There's the rub - at least as far as the "spoke" stores are concerned. Inventory is a crap shoot. Oh, you might have enough washers in total - just not the right ones. Too many large capacity in a predominately renter/single neighborhood for example. And do you think the "hub" store cares if the "spoke" stores make their sales? Doubtful.

Now, at the even bigger picture level, what happens when sales at top level Sears stores slow down - say in an economic downturn? Not enough going into the pipe means not enough coming out of the pipe for the outlet stores. Makes you wonder just how many is too many doesn't it?

Retailers Cut Back Where It Hurts Most

Spent some time last night talking with a rep that has custom shower doors in one of the big box home stores. My first comment to him was "business must be awful"! While he agreed that it was not living up to LY he did say his company had made many concessions to help the retailer and themselves drive sales.
He talked about how they lowered cost; visited stores routinely to provide training to new associates; faster turn around time on orders. Everything short of subsidizing payroll in the store.
The good news is he routinely finds customers shopping his shower doors and wanting to spend money. But - today he seldom finds associates available to help them. Custom shower doors don't sell themselves. "We could both be doing better if there was someone to help the customer".
The retailer in this case makes a margin of 35% while, according to the rep, they are left with about 10 points on an average sale. "We just don't have any more money to give them" he said.
Retailers need to keep their end of the bargain and provide the customer - and their vendors - the payroll support necessary to make sales happen. Not every category in a store sells itself. Today's technology should allow for associates to be quickly sent to high customer service areas.
There is a way - if there is a will - to balance both ends.

Today's Retailers and Email Marketing

I had the chance to listen to 8 major retailers present to a large audience in Las Vegas last week at ICSC. ICSC is, of course, the international gathering of commercial real estate groups. This "Retail Runway" presentation was meant to reassure the channel that while the economy is tough - there is still plenty of growth planned.
I'm not sure that message got through - or was believed - but oh well.
As I listened to executives from Pinkberry, Auto Zone, Wal-Mart, Darden Restaurants and the others I tried to listen for opportunities that maybe were being seized on now or maybe ones being missed. I heard both from Collective Brands.
Collective Brands as you know is Payless ShoeSource and Stride Rite. John Smith, Exec VP of Corporate Development from the company reminded us that they sell more shoes than Wal-Mart. What really perked my ears up was when he talked about using text messages to drive visits. If you text a certain number from your cell phone the ccompany will send you back a coupon good for discounts in their stores. Sounds like a very good idea! Since Payless leverages their brand on kids shoe sales - and who texts more than kids - this potentially is big. That said there was nothing on their website about this or how to find out - nothing at all. Maybe it is conceptual.
Now, the thing that made me go "hmmmm" was when John said that over 600,000,000 customers cross their threshold every year! A ton of people right? Then he casually mentioned that they use email marketing to reach their house file of 5,000,000 names. What? They have emails on only 1% of all the people that walk through their doors in just one year? That's criminal!
But - all too common in brick and mortar retail. Missing such a big opportunity is just wrong.

Retail Runway @ ICSC

Retail Runway @ ICSC
Spent an interesting couple of hours today at Retail Runway here at ICSC. Eight retailers (Auto Zone, Pinkberry, Dollar General, Dunkin Brands, Wal-Mart, Collective Brands, Panera, Darden Group) presented their "for consumption" strategies and plans to grow their store counts and businesses. For the most part - this was not what was interesting.
What was interesting was listening to what they - in general - didn't say. They didn't say they were concentrating on growth outside the US because they are overstored here. They didn't say that they were growing stores and cutting staff to reduce costs and improve margin.
Another very interesting dynamic was how Dana Telsey, retail analyst, was much more impressive than her co-host Jeff Newman(Esq). Especially in the last 5 minutes when Dana showed an impressive command of data points off the top of her head when Jeff freelanced questions.
Kate Anketill, GDR Creative Intelligence Ltd, presented a number of cutting edge retail concepts that included social websites such as YouTube and MySpace whom she suggested were seriously considering what she termed 3D stores to monitize their concepts. Free sites have a revenue problem it seems.
All things considered, you'd be smart to pay attention to Dana and Kate.

If It's ICSC Next Week - Will Anyone Hear?

If It's ICSC Next Week - Will Anyone Hear?
Yeah - it's a play off the tired old axiom but it's still appropriate. Next week is the big shopping center and commercial real estate conference in Las Vegas. Normally a huge deal for the developers who reel in national and regional retailers for new centers, new space, new stores. This year it's likely to be WAY down in attendance and even farther behind in deals. We've spent some time recently working with brokers and developers trying to find retailers for new projects, existing space, you name it. There is little happening.
Today's LA Times.com has a storyabout banks teetering on the edge due to commercial loans. The numbers are staggering. If we really are hitting bottom and starting back up this part of the business climate has to gain strength. If developers and by default banks start to fail because of commercial loans then we have hit only a plateau - and the bottom is still somewhere lower.
There are retailers out there expanding and several are looking to buy their dirt rather than lease it. Companies like In-N-Out have cash and strong sales and are now looking at markets that previously there were no vacancies. There are plenty now.

So - Who's Doing Well?

So - Who's Doing Well?
Retailers that sell stuff to repair, replace and rebuild are seeing strong business in this new economy. Take a look inside the numbers even at Home Depot and you'd see these categories doing well. How about repair services? Yep - they are blowing LY numbers out. I think you will see companies like Sears, Best Buy and others step up their marketing and sales efforts in these areas. Look for how and who they partner with to have big returns. And let's not forget - these are service categories with high margins in many cases.