Former Walmart executive joins Dollar Tree management team
Dollar Tree has appointed Duncan Mac Naughton as president and COO of its Family Dollar subsidiary.
Mac Naughton, 54, most recently served as CEO of Mills Fleet Farm. He has held numerous leadership roles at Wal-Mart Stores, including chief merchandising and marketing officer of Wal-Mart U.S. from 2011 to 2014, executive VP of consumables health and wellness and Walmart.com from 2010 to 2011, and chief merchandising officer of Wal-Mart Canada from 2009 to 2010.
From 2006 to 2009, Mac Naughton served as executive VP, merchandising and marketing for Supervalu.
In other changes, Gary Philbin was promoted to enterprise president of Dollar Tree. In his new role, Philbin will oversee store operations, merchandising, marketing and real estate across all banners including Dollar Tree, Family Dollar and Dollar Tree Canada.
With more than 15 years at Dollar Tree, Philbin was most recently president and COO of Family Dollar, where he oversaw the development of strategic initiatives and the successful achievement of budgetary, synergy and transition goals following Dollar Tree’s acquisition of Family Dollar in July 2015. From 2007 to 2015, prior to the acquisition of Family Dollar, he served as president and COO for the Dollar Tree banner.
Philbin began his career with Dollar Tree in 2001 as senior VP stores.
“I am pleased to have the opportunity to lead the Dollar Tree, Family Dollar and Dollar Tree Canada teams in this new role as Enterprise president,” said Philbin. “Additionally, I would like to welcome Duncan Mac Naughton to the Family Dollar team. Duncan is an accomplished retail leader and will be instrumental in continuing to develop and improve the Family Dollar banner through an intense focus on the customer. I also want to thank the thousands of Family Dollar team members across the country for their dedication and efforts through the past 18 months of integration.”
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2017 Survival Tips
The winds are turbulent in physical retail, and gusting in from several directions. Department store anchors in place for decades are closing shop. The sons and daughters of the suburbs are fleeing to cities or, if not, are demanding more cosmopolitan experiences at traditional malls. Online sellers, though still accounting for less than 10% of total sales, continue to advance and readjust shoppers’ visions of what retail is. What’s a retailer to do? Real estate editor Al Urbanski approached top retail real estate executives and asked, “If you met a retailer at a cocktail party, and he or she asked you to name the single biggest challenge they’d face in brick-and-mortar in 2017, what would you say?” Their replies:
CEO, Trademark Property Company
If I were a retailer, I would be focused on the following: How do we make a subconscious connection with our prospective customers? How do we matter or make their lives better? How do I create an in-store experience and deliver in-store service that is worth the extra effort of going to brick-and-mortar stores?
CEO, Olshan Properties
I would tell a retailer, “I think you’re going to be in centers with tremendous vacancy.” Online has taken away the need for three- and four-store markets. Many of these stores need to close; their four-wall profitability is just so low. Retailers have to do a gut check as to what they’re doing in stores and what they’re doing online, because shopping online is way too easy and opportunity lies in the in-store experience.
President, Irvine Company Retail Properties
The hardest thing for retailers in 2017 and beyond is going to be finding that sweet spot between brick-and-mortar and online. The consumer clearly has a calculation in mind on experience versus convenience, and then you have to weigh that against the backdrop of ever-growing consumer expectations. Forget whether you’re a pet store or a drug store. On a micro-level, what should be your ratio between online and brick-and-mortar? That’s going to be a top priority in the next 12 months.
CEO, VEREIT, Inc.
As department stores like Macy’s and Sears downsize, prime locations in malls are available for retailers that may have not been considered an anchor in the past. Retailers like Dick’s Sporting Goods have already been successfully recycling space as they expand their market presence. We see less of this in the net lease space, but we’ll continue to monitor the market for opportunity.
CEO, CBL & Associates Properties
All those department store closures could turn out to be a positive thing for malls as we convert them to other uses. Most of our malls are 95% leased, and so we’re receptive to having 100,000 sq. ft. of space that could be turned to more advantageous uses like food and entertainment. There’s an opportunity here for retailers to experiment.
CEO, Steiner + Associates
The big concern right now is online sales, but that portion of the business is exaggerated. You have retailers like Saks and Nordstrom spending on inventory control systems like Amazon’s to know where every piece of underwear is. It’s good to have those systems, but retailers have to focus on being sexy and being more exciting. Retailers doing unique things are few and far between. Developers are creating more exciting environments, but the retailer’s not with us.
CEO, Gorjian Acquisitions
I was in a small town in Israel last summer and everyone was talking about this new mall that opened. I went over there and the first thing you see when you walk in is a skating rink in the center of the mall and then all these high-end retailers surrounding it. The mall was very crowded and it was a Wednesday night. Retail in 2017 has to provide an experience you cannot get over the internet.
CEO, Starwood Retail Partners
There’s a huge amount of misinformation in the media about the impact of online retailing. The biggest enemy of brick-and-mortar is brick-and-mortar. We built up a huge supply over the past 20 years and now we’re going through attrition. At Starwood, we actually benefit from distress in the marketplace. In Toledo, we reinvested in our mall and gained market share from the other two malls. Retailers have to do the same — push out your low-performing stores and replace them with performers.
Principal & CEO, Phillips Edison & Co.
We’re on a slippery slope and it’s increasingly important that you engage your customer. Do something more than just move in and hang your goods on the racks. Retailers are currently in three groups as concerns this issue: There are the deniers, there are those that are in transition and there are those who are already there. Kroger is leading the way in grocery, combining an internet strategy with a fast food strategy.
I think 2017 is the year when our industry really addresses the facts of the market we’re in. Fifty percent of our business is dependent upon food and beverage versus only 1% a decade ago. We’re redefining department store boxes. We are moving in a direction where we’re readjusting to customer needs and wants.
CEO, RCS Real Estate Advisors
If retailers thought 2016 was bad, they should be prepared for 2017 being worse. The number of retail bankruptcies will be the same, if not higher, and we’re not predicting an increase in same-store sales. Even healthy retailers are feeling they can do the same business they’re doing in fewer stores.
Vice Chairman, The Inland Real Estate Group of Companies
So many retailers today, big ones like Kohl’s and PetSmart, want to have more coverage, more shoppers, but they can’t find a place at the inn at top centers so they have to turn to a smaller format in order to go into new areas. Go to a smaller format and feature the best-selling products you have. That would be my advice to them. If there’s no room at the inn, you have to use the stable.
Chairman and CEO, Regency Centers
If you have an opportunity to lease good space in a good shopping center, take it. We determine a good center with a combination of trade area demographics, resident and daytime populations, a strong anchor lineup and average sales over $360 per sq. ft.
President, Mid-America Real Estate Group
I think a retailer would be making a mistake if he wasn’t pursuing, at minimum, some pilot opportunities in urban markets. Stores may be more expensive to operate, but the volume and profit levels are high. The chains that we work with, both large and small, their top-performing stores are in urban markets.
President, Butler Enterprises
We’re embracing the reversal of the one-size-fits-all concept that created cookiecutter stores and shopping centers. People want a renaissance of the shopping experience.
Chairman, Equity One
The next component on the horizon is the expansion of experiential retail centers, with more entertainment and dining opportunities. Many Class A centers in the U.S. have already begun to mirror the European model with higher-end amenities, from restaurants to beauty outlets and health spas.
Principal, Avison Young
The one thing that I am telling retailers is that they need to embrace change. They need to position themselves to be able to pivot quickly. They need to have flexibility in their lease, space, merchandise, merchandising, customer experience and marketing.
Be it in stores or on sites, the dollars are in the data
We sat down with chief executives and senior managers from 20 retail real estate companies at the ICSC New York National Deal Making show in December, and each and every one had something to say about e-commerce competition. Something, but not the same thing. They fell into two groups.
There were those who said that online retail’s magnitude was greatly overblown. They held that the media over-covered online sellers and placed them on a lofty perch not backed by the facts. They had a point.
The U.S. Census bureau pegged e-commerce receipts at a mere 7.7% of total retail sales in Q3 2016. Starwood’s Scott Wolstein argued they were even lower, noting that an item bought online registers in the revenue column of a retailer’s website, but is deducted from the sales of a store if it’s returned there.
Then there were those who acknowledged that online’s sales impact is still minimal, but retailers who use that fact to dismiss e-commerce players as serious threats make a grave error. They asserted that pure-play e-commers lapped retailers in social media, purchase behavior and in-market status, a mastery that will shine when they move in next to them at shopping centers.
Trademark’s new director of marketing Jencey Keeton has direct experience in the power of leveraging online data at retail. Formerly Fossil’s digital marketing manager, Keeton clued us in that e-coms were way ahead in cleaning up their CRM systems and building data files filled with customer insights.
I once interviewed an executive of a cloud-based marketing agency who was putting together a second-party data service through which several top 100 retail companies would share customer data on an anonymous basis. When I expressed surprise that secretive retailers would share such resources, even with customer identities hidden, he laughed.
“We work with a top retailer whose online business is one of the largest in the country,” said Jacob Ross, the general manager of the Audience Product Business Unit at Media-Math. “Their online division was more eager to share the data with us than they were with their own brick-and-mortar business.”
It’s a scenario that plays out in the corporate headquarters of many traditional retailers. They may have highly developed and profitable online businesses, but the gold mine of customer data captured there is not shared with or leveraged by the brick-and-mortar business. And retail is hardly the only vertical stymied by the so-called siloing of data.
A new study conducted by the Winterberry Group for the Data & Marketing Association found that fewer than 20% of marketing executives surveyed were confident that their business processes and organizational structures were geared to optimal data usage. Asked what would best fix the problem, 60% said dissolving silos between business units in their companies.
We ran this by Mohannad El-Barachi, CEO of SweetIQ, a data-driven solution expert who works with retailers. He agreed that the melding of data between stores and sites was lacking: “If you look at where the industry is going as far as connecting with individual customers, few are getting any analytics on the in-store impact.”
I once asked a noted computer scientist to explain to me, in basic terms, the value of data to consumer marketers. “Someday soon,” he said, “companies will make more money from the customer data they possess than the products they sell. Data is the new currency.”
The retailers that work to break down the data barriers and harness that currency will be the ones to win the day.
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