The decline of the department store—the format that put the mass in market—seemed to prove that middle-class shoppers had all but disappeared and no amount of innovation could bring them back. Analysts warned that any retail concept targeted to the middle was flirting with disaster. It had become too diverse, with increasingly nuanced preferences, shopping styles and tastes.
But the rumors of death turned out to be highly exaggerated. The American middle class is back, thanks to the exclusivity, experience, value, quality and ego-satisfying brands of a revitalized J.C. Penney, Macy’s and Kohl’s.
J.C. Penney did not supersize or specialize into narrow niches. The hundred-year-old, traditionally mid-priced retailer is the talk of the turnarounds, with double-digit gains. Six years ago, it began the business of transformation. The company went off-mall, where its stores are shopped twice as often. It embraced the Internet, and was one of the first bricks-and-clicks retailers to allow online shoppers to pick up and return at stores. Today jcp.com is one of the top five Web sites in terms of paying customers. The site allows local inventory checks for apparel sizes, and is one of the few accessible at cashwrap.
Penney’s core customer, the middle-class mom, can shop for her family when and how she wants. And now the mix of five private brands (each doing $1 billion a year], exclusive designer brands and high-end non-exclusive brands is all about her. Penney is further enhancing her experience through partnerships with French cosmetic chain Sephora and an upcoming Ralph Lauren brand.
With the acquisition of May Co., Macy’s invented a new business model with the scale, margins and technological efficiencies to support upscale service expectations, ambience and presentation standards for 800 stores. Its very successful private labels, Alfani, INC and Charter Club, will be joined by a collection from Martha Stewart this fall in brighter, open, more welcoming stores. Last September, the entire fleet of stores operated by Federated Department Stores (with the exception of Bloomingdale’s] converted to the Macy’s nameplate. The brand has been relaunched with the largest advertising campaign in the company’s history, promoting it as a national fashion leader that’s locally accessible.
Kohl’s, too, is listening to its customers and responding with differentiated value—a top concern of shoppers today. The retailer opened a New York design office to manage development of its own exclusive brands, including new lines from Vera Wang, home decor from Hispanic celebrity Cristina Saralegui, sports gear from skateboarder Tony Hawk and more styles from Daisy Fuentes. Last fall, Kohl’s began the rollout of a new store prototype, designed to enhance the shopping experience with lounge areas, glass storefronts, higher ceilings and new merchandise displays. It plans to open more than 100 stores this year.
Most notably, these companies have become stronger master brands and have made strides in strategic brand management, building equity for both the master brand and their brand portfolios. Other categories can learn from their example.
Between Penney, Kohl’s and Macy’s, there’s now a battle brewing for the middle. Even Wal-Mart is making awkward attempts to reach it. Meanwhile, middle-class moms are enjoying some really great shopping.
Coca-Cola names chief marketer
ATLANTA The Coca-Cola Company has appointed Joseph Tripodi to the position of chief marketing and commercial officer, reporting to president and coo Muhtar Kent. Most recently, Tripodi was the senior vp and chief marketing officer for Allstate Insurance Co., where he was responsible for the structure, strategy and execution of all of their marketing efforts.
In his role, Tripodi will lead a new function consisting of the combination of the company’s global marketing and commercial organizations. In addition to overseeing all aspects of marketing, he will be responsible for coordinating and leading the company’s strategic direction in commercial leadership.
Prior to joining Allstate in 2003, Tripodi was chief marketing officer for The Bank of New York. He served as chief marketing officer for Seagram Spirits & Wine Group from 1999 to 2002. From 1989 to 1998, he was the evp for global marketing, products and services for MasterCard International, where among other achievements he was a chief architect of the acclaimed “Priceless” campaign. Previously, he spent seven years with the Mobil Oil Corp., where he gained considerable international experience in roles of increasing responsibility in planning, marketing, business development and operations in New York, Paris, Hong Kong and Guam.
Whole Foods takes top spot on EPA list
WASHINGTON Whole Foods Market took the top spot this quarter on the U.S. Environmental Protection Agency’s Top 10 Retail Partners in its Green Power Partnership program. Other major retailers on the list include Kohl’s (2), Staples (4), Lowe’s (6) and Office Depot.
According to its profile on the EPA Web site, currently, Whole Foods Market is purchasing or generating 100% of its total national power load from green power sources.
The Top 10 Retail Partners in the Green Power Partnership is released quarterly and represents the largest completed annual green power purchases of all Retail Partners within the Green Power Partnership. According to the EPA, the combined green power purchases of these organizations amounts to an estimated 1.4 billion kilowatt-hours (kWh) annually, which is the equivalent amount of electricity needed to power more than 140,000 average American homes each year.