REAL ESTATE

Avenue shuttering up to 120 stores

BY Katherine Boccaccio

New York — As plus-size apparel retailer Avenue Stores emerges from bankruptcy under new ownership, it will do so with a much streamlined store presence.

Paul Halpern, chief investment officer of Versa Capital Management, which bought the chain out of Chapter 11 bankruptcy in February for $32 million, said the current store count of 415 to 420 will be reduced to about 300 to assure profitability.

According to a Tuesday report in the Wall Street Journal, Halpern said that a portion of the store closings were completed at the deal’s close, and the balance of the closings are underway.

Under prior ownership by United Retail Group, Avenue put itself up for sale in February. New owner Versa is working to right the ship; in addition to cutting stores it is completing a management transition led by CEO Elizabeth Williams – former president of Fashion Bug — and a retooling of information and cash management systems. Jim Smith has been named the retailer’s new CFO.

Halpern is one of several panelists speaking at the ACG Lessons from Successful Revitalizations panel Tuesday at the Harvard Club in New York.

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OPERATIONS

Survey: Wealthy shoppers rank Nordstrom as top luxury retailer

BY Katherine Boccaccio

New York — Shoppers in the United States earning at least $150,000 annually rank Nordstrom highest among luxury retailers, according to a survey by the Luxury Institute.

According to the 2012 Luxury Consumer Experience Index, which ranks retailers based on customers’ evaluations of a brand’s store personnel, shopping environment and degree of satisfaction with the total experience, Nordstrom earns the top overall score of 8.41 out of 10.

Bergdorf Goodman ranked second (8.37), and Barneys New York third (8.23).

Nordstrom was also found to be the most widely visited luxury retailer, with 36% of wealthy consumers reporting shopping at Nordstrom in the past 12 months.

Only 7% of shoppers have visited Barneys, and 6% have shopped at Bergdorf Goodman, but exclusivity helps with pricing: 76% of Bergdorf’s shoppers and 74% of Barneys’ say that goods in those stores are worth a significant price premium; 65% say the same about Nordstrom’s merchandise.

"Retailers, especially in luxury, are selling experiences to customers more than they are selling any particular good," said Luxury Institute CEO Milton Pedraza. "In the case of a retailer like Nordstrom, we see that a program of continuous improvement in the customer experience can lead to higher degrees of loyalty and improved financial performance."

In addition to its top overall LCEI score, Nordstrom ranks first on two critical measures of customer loyalty: 96% of high-income shoppers plan to shop at Nordstrom again, and 94% recommend Nordstrom to family and close friends.

Survey participants reported average income of $292,000 and average net worth of $3 million.

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OPERATIONS

Study: Retail employee turnover increasing

BY Katherine Boccaccio

Philadelphia — Management consulting firm Hay Group reported Tuesday that employee turnover levels in the retail industry are on the rise.

According to a new survey from Hay Group, an improving job market and solid first quarter sales are impacting turnover. Retailers report a median turnover rate of 67% for part-time store workers, a 33% increase over 2011. One in five retailers report that they have experienced more turnover in the first part of 2012.

“Higher employee turnover is a double-edged sword,” said Maryam Morse, national reward practice leader of Hay Group’s Retail practice. “On one hand, it’s a harbinger of an improving economy, but on the other it’s a significant challenge for retailers who will need to devote more time and resources to retention and recruiting. Retailers are very focused on profitability right now, which is likely leading to an increased demand for part-time workers, who can be scheduled to work at only the highest traffic times.”


For the remainder of 2012, 82% of retailers surveyed expect to see the most turnover among their store hourly workers. Nearly one-third of respondents say they expect to see high levels of turnover among hourly workers at distribution centers.


Hay Group’s survey analyzed responses from 54 major U.S. retailers including Ascena Retail, Carter’s, Meijer, OfficeMax, Petco, PetSmart, Ross Stores, The Limited and Zale Corp. to determine the rate of turnover for key positions within retail organizations, and related retention strategies.


The survey also found that growth in e-commerce and mobile channels is escalating a talent challenge at both corporate offices and distribution centers. With more retail and technology companies competing for the same talent, turnover rates in corporate e-commerce positions are nearly double 2011 levels. E-commerce growth has led to the development of more online fulfillment centers, creating greater opportunities and turnover among both hourly workers and management positions at distribution centers.

Over the past year, the turnover rate for hourly workers at distribution centers increased by 29%.

When asked about key tactics for reducing turnover, 61% of retailers cite career pathing and 54% point to training. Only 30% cite changes to compensation plans.

Although compensation is not the top strategy for retaining employees overall, Hay Group’s March 2012 survey of retailers’ salary budgets found that it is one of the tools used to hold on to high performers. Retailers have budgeted an average of 3.6% in merit increases for top performers this year, up from 3.2% in 2011 and notably more than the 2.8% planned for employees overall this year.

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