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Men’s Wearhouse, Jos. A. Bank talking; sign non-disclosure agreement

BY Dan Berthiaume

Fremont, Calif. — Men’s Wearhouse Inc. and Jos. A. Bank Clothiers Inc. may be inching closer to a deal. Men’s Wearhouse announced that it had reached a nondisclosure agreement with its rival, setting up talks that could lead to a merger of the two retailers. The two firms announced they are exchanging certain confidential information with each other and working in good faith to evaluate a potential combination.

As part of the agreement, Jos. A. Bank submitted a draft of a merger agreement to Men’s Wearhouse.

As previously reported, Men’s Wearhouse is prepared to increase its offer price from $63.50 per share, or $1.6 billion, to $65 per share, or $1.78 billion, if Jos. A. Bank can demonstrate or Men’s Wearhouse can discover additional value through discussions or limited due diligence. Men’s Wearhouse’s cash tender offer to acquire all outstanding shares of Jos. A. Bank Clothiers Inc. for $63.50 per share is scheduled to expire at on Wednesday, March 12, 2014, unless the offer is extended. Consummation of the offer is not conditioned upon any financing arrangements or subject to a financing condition.

Men’s Wearhouse noted that there can be no assurance that a transaction will result from the discussions with Jos. A. Bank. BofA Merrill Lynch and J.P. Morgan Securities LLC are serving as financial advisors to Men’s Wearhouse, and Willkie Farr & Gallagher LLP is serving as legal advisor.

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Two Retail Technologies to Keep an Eye on in 2014

BY CSA STAFF

By Jeff Weidauer, VP of Marketing and Strategy, Vestcom International

Webster defines technology as “the application of scientific knowledge for practical purposes, especially in industry.” Put another way, technology is the use of knowledge that solves problems in a practical manner. It’s important to understand that, because when it comes to the concept of retail technology, history shows that too often the solution becomes a hammer looking for a nail.

Technology is certain to play a major role in retail this year, but the success of any given technology will depend more on whether we start with a problem, rather than start with a solution. It’s not as if there are not plenty of challenges to solve. Solutions for the most critical and obvious challenges are well within reach of current technology. Let’s look at a couple of examples.

The single largest complaint shoppers have with retail stores is the wait to checkout. Online shopping, along with its many other advantages, comes without any concept of lines or waiting. If stores could figure this one out — and at least one or two have — then the overall brick and mortar experience would improve. With the low cost of sensors, e.g. infrared to sense heat, or photocells that can sense movement, in-store traffic can now be monitored in ways that were unthinkable even a decade ago.

Anyone who has worked in a store knows that there is never a steady flow of shoppers through the store. That would be too easy. It sometimes seems like shoppers gather in the back and rush the checkout on purpose; the ebb and flow of traffic at the front can be that extreme. The net result is that the checkout goes from lull periods to times where all available checkstands are needed, and the process can be repeated two or three times in an hour.

Leaving checkstands open in between the rush periods isn’t cost-effective. The standard practice is to close down all but a couple so other tasks can be accomplished, and when the next rush hits, the troops are brought back up front. But by this time the lines have formed, and that 30 seconds of waiting feels like five minutes to the shopper.

The answer is to monitor the flow of shoppers through the store and bring the troops up before they descend on the front end. The tracking devices previously mentioned, combined with some software, can make short work of this problem. This is a perfect example of how technology can solve a real problem and increase shopper satisfaction. The only question is why this isn’t the standard now.

The next challenge has been around for just about as long as lines: out-of-stocks. Out-of-stock levels in U.S. supermarkets have held consistently at about 8 percent for as long as anyone has been tracking them. Many approaches have been tried to reduce out-of-stocks—often using technology — but with no real success in reducing the 8 percent rate. Part of the challenge has been in defining the root cause of the problem. Out-of-stocks have historically been blamed on either a broken store product pipeline or on poor ordering, so technology solutions focused on solving these two problems.

Logistics have gotten very precise in the past 20 years, and major pipeline supply issues are rare with auto-replenishment, item movement tracking and perpetual inventory systems that take out the guesswork at both the warehouse and store level. So why is there still an out-of-stock problem? Recent studies have shown that up to 75% of out-of-stocks are actually caused in the store itself, i.e. the product is in the building but not on the shelf.

Oftentimes this problem is exacerbated by store policies. It’s been a longtime practice to “face over” holes where products were missing, but more often than anyone wants to admit, that has the effect of making a temporary stock-out a permanent one. A classic example of this is when a product is out, it’s faced over with something else, and the shelf tag is covered or even removed (often being stuck under the shelf). Voilà! An instant out-of-stock.

The dirty little secret about that 8% out-of-stock rate, by the way, is that shopper perception of the problem is much higher. Shoppers perceive the out-of-stock problem to be closer to 25%. Higher velocity items are out more often and have a greater impact on shopper perception. No one cares that the pickled okra is out, but if the Honey-Nut Cheerios are gone, that’s a problem.

Item-tracking software tends to be focused on movement, i.e., when shoppers purchase a case of a certain product, it’s reordered automatically. But what happens when that case never makes it to the shelf and the movement stops? Few systems track that, or if they do, it’s to reorder yet another case. Suddenly there are three cases in the backroom, but still none on the shelf because the tag is missing.

Out-of stocks present one of the greatest challenges retailers face today. Rather than looking outside the store, the solution lies in the store itself, at the shelf.

Retail technology is a tool, and properly used, it can be a very effective one. Laser scanners and barcodes, perpetual inventory systems, even automatic misters in produce — these are all examples of effective use of technology. But for every practical use, there is an example of a solution in search of a problem, to wit: electronic shelf labels, kiosks, and ceiling-mounted video screens.

If we can focus on technology second, and spend more time and resources identifying opportunities and their underlying causes before we worry about solving the problem, the customer benefits and retailer ROI will rise together.

Jeff Weidauer is VP of marketing and strategy for Vestcom International Inc., a Little Rock, Ark.-based provider of integrated shopper marketing solutions. He can be reached at [email protected], or visit Vestcom.com.


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Beat Bitcoin Blues With Your Own Electronic Currency

BY Dan Berthiaume

As I have previously expressed in this column, I am a Bitcoin skeptic. The recent news that major global Bitcoin exchange Mt. Gox suddenly disappeared, possibly due to losing as much as $350 million to fraud allowed by a computer glitch, reinforced my reservations about Bitcoin and similar electronic currencies. In theory, independent electronic currencies are promising, but in practice, relying on third-party payment methods which are not backed by the full faith and credit of a stable government is a risky proposition.

However, retailers who are intrigued by the notion of alternate electronic currency but spooked by the uncertainties of third-party platforms have another option: creating their own electronic currency. Many retailers already have some sort of proprietary electronic currency, such as loyalty points or electronic discounts, but these common digital mechanisms are only the beginning of what is possible. Let’s look at a few other options.

Social Currency
Favorable social media postings from customers can provide tremendous value in terms of branding and consumer awareness. So why not turn those postings into a form of digital cash? During the recent Fashion Week, the fragrance division of Marc Jacobs opened a pop-up in New York City’s SoHo neighborhood that traded in social currency instead of money. The Daisy Marc Jacobs Tweet Shop conducted all transactions based on customers’ use of the hashtag #MJDaisyChain across Twitter and other social media platforms. Shoppers were able to exchange each tweet, Instagram post, or Facebook update for a single item.

While you probably don’t want to make unlimited amounts of your entire inventory available for the price of a tweet, with reasonable limitations social media posts can make a very effective form of electronic currency. Consider the monetary value of the goods you trade for social posts as an investment in marketing.

Playing the Game
Gamification is a hot topic in retail, and an increasing number of retailers are using online games as an inducement for consumers to visit their e-commerce sites. But points and prizes won in games can also be converted into digital currency customers use for tangible products.

To maximize the benefit they receive from what I’ll call “gamified” currency, retailers should tie games closely to actual shopping and marketing activities. For example, customers could earn electronic currency by identifying brands and products the retailer sells, recruiting the most new customers, checking in the most at different stores, etc. Games should be legitimately fun for the consumer, but any currency they generate needs to generate some type of real value for the retailer.

Be Your Own Mint
Another option for retailers to consider is “minting” their own electronic currency and selling it for actual money. Thus retailers can avoid problems such as uncontrolled exchange rates and platforms suddenly closing down. To avoid angering customers, retailers cannot ever set the value of their proprietary electronic currency at anything less than the going value of the dollar. What they can do is offer special discounts and sales for customers who use it.

For instance, a retailer might run an electronic currency special on out-of-season merchandise, or provide customers an electronic currency discount to help push a cross- or upsell. They can bank money ahead of purchase similar to a gift card purchase, and then stretch the value of that advance purchase further by steering it in a favorable direction. The consumer obtains convenience and value. Sounds like a profitable equation.


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