SUPPLY CHAIN

Fitting-Room Blues

BY Marianne Wilson

I keep reading about how retailers are upgrading their fitting rooms, about how they are making the individual stalls larger and adding all sorts of enhancements. But the reality doesn’t live up to the hype, at least not yet. We still have a long way to go before such features are standard.

I say this based on a recent weekend of intense shopping for the item that probably inspires more anxiety among women than any other single article of clothing: a swimsuit. I visited lots of stores (mostly mid-market ones), stood nearly naked in lots of fitting rooms. And here’s what I found:

Too many fitting rooms are cramped, dreary and ill-kept, with piles of discarded garments left over by previous shoppers. And while I’m not choosy about carpet style, standing barefooted on a dirty, stained carpet is another matter entirely. It’s a major turn-off. Customers deserve a clean floor.

Overhead fluorescent lighting, still all too common in fitting rooms, is harsh and unflattering. Adding some lighting directly to the mirror to reduce the shadows cast by overhead lamps can do wonders. Other complaints: single-view mirrors and hooks (or the lack thereof). Too many fitting rooms still have only one hook. (I’m not counting hooks that dangle precariously from the wall.)

In several stores I visited, the dressing rooms were so chilly as to be downright uncomfortable, particularly for trying on swimwear. When I mentioned it to the sales associate in the area, she just shrugged.

Despite my glum assessment, I do think some retailers are waking up to the crucial role fitting rooms play in the shopping experience. Following Macy’s example, J.C. Penney has debuted fitting rooms that are large enough to accommodate strollers or groups of friends and include tastefully appointed lounge areas with flat-screen televisions. The try-on rooms in some of its new lingerie departments are almost sexy: purple from ceiling to carpet with curtains dramatically draped over framed mirrors. Plush stools replace the standard Formica benches.

At Martin + Osa, the new concept from American Eagle Outfitters, the fitting rooms are deep and roomy, with cypress wood walls and flattering light. A nature scene dances on frosted glass behind the floor-to-ceiling mirrors. At Metropark, customers can watch music videos on LCD monitors while they try on clothes.

Such innovations make trying on clothes more fun, and can also give a retailer a competitive edge. But they are still the exception.

The problem with fitting rooms is twofold. One, is that while retailers have shown themselves willing to invest in design upgrades in new prototypes and new concepts, bringing the changes down to a fleet of existing locations often gets left on the back burner (Macy’s is an exception). Two, fitting rooms require dedicated upkeep. Even the most well-appointed spaces will suffer if they are not properly maintained. Target’s fitting rooms may be utilitarian, but they are almost always clean and free of discarded goods.

It’s often said that women make the decision to purchase clothes in the fitting room. The other side of the coin is that women make the decision not to purchase clothes in the fitting room, as well. And that was the case with me on my recent swimsuit expedition. Tired and cranky, I went home empty-handed. It’s almost enough for a Jersey-shore-loving gal to give up the beach. But just almost.

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Weekly Retail Fix

BY CSA STAFF

THE NEWS: SAM’S REALIGNS STORE-LEVEL MANAGEMENT

BENTONVILLE, ARK. Sam’s Club is changing the management structure in its stores. In the realignment, approximately 250 positions will be eliminated, Wal-Mart Stores announced last week. The company said it’s replacing five lower level management positions at each Sam’s Club location with three new higher level and higher paying assistant manager positions.

“This is not a cost cutting effort. We expect a slight increase in payroll upon completion of this change,” said Sharon Orlopp, senior vp of Sam’s people division.

THE FIX: Differentiation would better help Sam’s

Since Sam’s decided that its refocus on the business customer was too narrow, it has sought to find ways to make its clubs more attractive to primary shoppers, i.e., women. And that’s a pretty tough row to hoe, as Costco has done a pretty good job at satisfying the club customer in general and BJ’s has been going after female shoppers for several years now, with some success.

Having fewer managers with more direct responsibility could create a tighter knit club-level management and shorten lines of responsibility and accountability. Yet, without differentiating the offering, execution isn’t going to overcome all of Sam’s challenges.

That being said, a store-level management realignment might be overlooked at other retailers, but, this being Wal-Mart, everyone has to make a big deal about it. But that’s the price you pay as the big guy on the block.

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Weekly Retail Fix

BY CSA STAFF

THE NEWS: TOYS ‘R’ US EARNINGS GAIN 40.1%

WAYNE, N.J. Toys “R” Us today posted net earnings of $199 million for its critical fourth quarter, which meant it turned a profit for the fiscal year ended Feb. 3. But special charges and gains had an impact on its numbers.

Sales for the previous fiscal annum were $142 million, the difference translating into a net earnings increase of 40.1% year over year. For the last fiscal year, Toys “R” Us posted net earnings of $85 million versus a net loss of $384 million for the previous period.

Operating earnings in the fiscal 2006 fourth quarter gained 53.1% to $571 million versus $373 million for the fourth quarter of fiscal 2005. For the last fiscal year, operating earnings were $649 million versus an operating loss of $142 million for the previous period.

THE FIX: Improved shopper experience ups comps

Of course, any observer has to take into consideration special financial circumstances. Fiscal 2006 operating earnings were positively impacted by $96 million from gains on property sales, slightly offset by restructuring and other charges. In fiscal 2005, operating earnings were negatively impacted by $410 million in costs relating to the merger of the company, as well as $58 million of costs and charges relating to contract settlement fees, restructuring and other charges.

Still, sales were trending up at last year’s end. Net sales gained 15.8% to $5.7 billion. In the full fiscal year, net sales advanced to $13 billion, up 15.2%.

Comparable-store sales for the Toys “R” Us’ U.S. division gained 0.6% in fiscal 2006, and that represents the division’s first comps increase in six years. Comps at Babies “R” Us were up 4.8% and those at Toys “R” Us international were up 2.6% for the fiscal year.

Jerry Storch, chairman and ceo of Toys “R” Us, said the company is “pleased with the strides we made in fiscal 2006 to improve at all levels of the organization and reposition the company for profitable growth over the long term.”

He said the company’s new management team has been focusing on executing a strategy that would turn the retailer into a global toy and baby products authority.

“This translated into higher overall sales, positive comparable-store sales, improved gross margins and strong operating earnings growth for the 2006 fiscal year,” Storch asserted. “The key to our strategy has been improving the customer shopping experience in our stores. We are accomplishing this by delivering a more compelling merchandise selection, better service and a cleaner and more comfortable shopping environment.”

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