News

Growing Out of Business

BY CSA STAFF

By Kevin Kulinowski, Robert Grosskopf and Rick Edwards, Gordon Brothers Group

The defining paradox of our industry is that closing stores has become a trademark of successful retail companies. Certainly healthy retailers are opening new stores; but shuttering locations has become the norm as well and, in most instances, is equally indicative of positive growth.

There are numerous reasons why retailers close stores, from simply relocating to a better position in the same market to closing a lower-performing store. Regardless of the reason for winding down a location, a retailer faces complex challenges when a store closes.

However, retailers that approach store closings as viable opportunities to grow the business, rather than just go out of business, can capitalize on store-closing events. Retailers have perfected store openings and store operations, but store closings require very different tactics to be successful. When the decision is made to close a store, the ideal scenario is to approach each closing as a unique opportunity to monetize inventory and assets, fortify the retail brand, and promote future sales. Through many years of experience, we have developed the following guidelines to maximize these opportunities for healthy companies when they arise:

Rule No. 1: Go out with a bang, not a whimper
As an event merchant working on behalf of retailers to close thousands of stores, we have found it is most efficient and cost effective to conduct a managed store-closing event that leverages promotional campaigns to maximize recovery.

By turning the store closing into an exciting event, retailers and event merchants are more likely to maximize value and monetize all the assets at the store location, from inventory to furniture, fixtures and equipment.

Although the process of hosting a store-closing event may seem fairly straightforward, each retailer is unique and each event should be customized to meet their specific needs. For instance, the retailer’s brand and culture must remain intact throughout the event, and the company must uphold consistent store operations and housekeeping standards to maintain a consistent customer experience

While store-level managers and associates are focused on day-to-day necessities during the closing, an event merchant or the retailer’s corporate management should initiate advertising campaigns and special promotions that pull traffic to the store-closing Event while simultaneously building excitement for new locations and the retailer’s brand.

Rule No. 2: Sell to the bare walls
A store-closing event should encompass 100 percent of the inventory, ideally selling merchandise above cost, liquidating the inventory in place to avoid the expense of moving and storing goods, and selling everything in the store down to the bare walls.

A retailer’s total return comes not only from hosting a productive sales event, but doing so with cost-effective efficiencies that eliminate the need for the logistics and manpower associated with packing and transporting unsold merchandise. In total, the wind-down process can be completed in a timely fashion, typically just four to eight weeks.

In some cases, the retailer’s vendor agreements prohibit discounting select merchandise. This occurs most often with low-margin, high-demand products such as cosmetics or luxury brands. In those instances, the merchandise that cannot be discounted is either price-protected or moved to other stores before the closing event begins to prevent any confusion. However, inventory that falls into a vendor-restricted category is the exception, not the rule, and a store-closing Event will usually drive the expedient sale of all other merchandise.

Rule No. 3: Transition existing customers and acquire new customers
In addition to clearing out inventory and monetizing assets, the store-closing Event is a pivotal opportunity to build awareness and excitement of new stores in the market as well as spotlight the brand’s direct channels such as e-commerce or catalog sales.

The should proactively market other locations in the area and weekly promotions should be used to help transition customers to the retailer’s on-going stores and retain the brand loyalty of existing customers. If the retailer is exiting the market, promotional offers might push customers to the retailer’s website.”

We deploy a full spectrum of promotional tactics during these events, from traditional bag-stuffers and handouts to mobile coupons, social media outreach via Facebook and Twitter, and messages conveyed through blogs pertinent to the store’s local market.

During a closing event, retailers often attract value-motivated shoppers who may be visiting the store for the first time. In-store signage and special offers can be used to encourage newcomers to develop an affinity for the brand and shop at the retailer’s other stores or through direct channels.

Rule No. 4: Cover all the bases
Success hinges on the retailer’s ability to effectively merchandise and discount the inventory so the event continues to attract shoppers even as the selection of merchandise dwindles. Seasonal, clearance or slow-moving product is often consolidated from nearby stores enabling the retailer to effectively leverage the store-closing event to liquidate excess inventories from across its portfolio. This helps position new and on-going stores with an optimum selection of merchandise. Additionally, the event might be used to sell assets beyond store inventories, including furniture, fixtures and equipment (FF&E) in the store as well as merchandise and FF&E in warehouses, call centers and corporate offices.

In such store closing scenarios, we sometimes transfer FF&E from the closing locations to be used in other on-going locations. There may also be proprietary fixtures that are no longer needed and if these could be identifiable to the retail brand then we handle the disposition so they do not resurface in other formats.

Retailers can measure the success of a store-closing event by the results of the liquidation, as well as by the redemption rate of promotional offers that were presented during the event and subsequently redeemed at neighboring stores or online. Ultimately, the retailer has to meet financial goals while maintaining brand integrity; and if the retailer partners with an event merchant, the results achieved must exceed what they could have done on their own.

Kevin Kulinowski is president of the retail division of Gordon Brothers Group, where he oversees operations and lends specific merchandising expertise, strategic planning and leadership to asset disposition deals.

Robert Grosskopf is principal & managing director of the retail division of Gordon Brothers Group, and responsible for managing all the complex issues surrounding inventory dispositions and maximizing the recovery values for retailers’ underperforming assets.

Rick Edwards is principal & managing director of the retail division of Gordon Brothers Group, and is responsible for the development of evaluation techniques and inventory assessment measurements, which have become industry standards.

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A.Habas says:
Oct-11-2012 07:15 am

I believe retail is going
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A.Habas says:
Oct-11-2012 07:15 am

I believe retail is going through a tough change, where only the retail stores will survive who adopt to new technology. The ones who try to stay as they are today will be gone within the next 5-10 years. A new type of IT adopting retail stores will emerge and replace what's missing in malls or shopping streets. used auction cars

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News

Fresh & Easy sweetens up baked goods offering

BY CSA STAFF

EL SEGUNDO, Calif. — Fresh & Easy Neighborhood Market has expanded its offering of baked goods and desserts. The retailer has introduced more than 60 new products including new varieties of bagels, scones, cookies, breads, pies, cupcakes, and pastries. The new products include several seasonal flavored, gluten free and organic options and like all fresh&easy brand products, contain no artificial colors or flavors, high-fructose corn syrup, or added trans fats, according to the company.

Josiah Huelle, Fresh & Easy’s dessert development chef, created the new dessert items. Chef Josiah joined the Fresh & Easy team in January, bringing years of experience as a pastry chef for a variety of resorts including St. Regis Monarch Beach and St. Regis Princeville.

“My baking philosophy has always been to keep things simple and let the ingredients speak for themselves. And that’s what we did with these new desserts,” said Chef Josiah. “I’m excited that our customers can now enjoy these naturally flavorful, high-quality and affordable treats. We worked hard to create delicious and innovative products that our customers will love.”

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OPERATIONS

Booze & Co.: Shopping trends for 2012 holiday season

BY Allison Cerra

New York – Emerging consumer buying trends will have significant implications for retailers this holiday season, according to a new survey from Booz & Co.

In its 1,600-person survey — which polled consumers, retail store staff and retail executives to determine buying habits and potential trends for this holiday season — Booz & Co. found that in-store competitive browsing, heavy online shopping and downloaded gifts top the new shopper behaviors expected this holiday season. The company specifically called attention to multichannel shopping, which it said will be a core part of how consumers shop: 40% of surveyed consumers describe "showcasing" as their new shopping strategy: browsing in-store before buying online, which creates a major challenge for brick-and-mortar retailers.

Additional key findings include:

  • 52% of consumers will closely consider affordability in their shopping decisions;
  • 73% of consumers said they expect to find great deals this season, compared with 62% last year;
  • 51% of consumers reported that economic survival is a great reason for celebrating this year;
  • More than 80 million shoppers plan to purchase gift cards this season, about 4% more than last year;
  • Downloadable gifts will become a distinct and rapidly growing category this year, as 45% of consumers expect to give at least one downloadable gift (i.e., an e-book, a music download or a movie);
  • 53% of consumers intend to buy at least one luxury item (up from 41% last year), and the item is likely to be one the whole family can enjoy; and
  • Consumers are looking forward to the holiday more than last year; 53% expect to host multiple gatherings, compared with 45% last year.

"The biggest challenge this season for brick-and-mortar retailers is determining how to drive more than their fair share of ‘showcasing volume’ to their websites rather than Amazon.com or another competitor," said Thom Blischok, chief retail strategist for Booz & Co. "While technology enhancements and economic uncertainty will both impact this holiday season, there is a dose of optimism compared to 2011, as people shop with a value-seeking mindset."

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P.Lopez says:
Apr-02-2013 08:52 pm

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The company specifically called attention to multichannel shopping, which it said will be a core part of how consumers shop: 40% of surveyed consumers describe. chatrandom

P.Lopez says:
Apr-02-2013 08:52 pm

The company specifically called attention to multichannel shopping, which it said will be a core part of how consumers shop: 40% of surveyed consumers describe. chatrandom

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