OPERATIONS

Sears Holdings names senior VP and head of automotive

BY Staff Writer

Hoffman Estates, Ill. — Sears Holdings announced that Norman Miller will join the company as senior VP and president, Automotive. Miller, who most recently served as president and COO of Dollar Financial Corp., will be responsible for the oversight and leadership of the company’s automotive business, including Sears Auto Centers.

"Norman is a proven executive whose operations, management and sales experience make him an ideal fit to lead the transformation of Sears Auto Centers," said Edward S. Lampert, Sears Holdings chairman and CEO. "His deep expertise in driving the development and execution of growth and sales strategy for large, complex organizations makes him a strong addition to our team."

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REAL ESTATE

Report: RadioShack to close about 500 stores

BY Marianne Wilson

New York — RadioShack Corp. will close about 500 stores within months as part of its ongoing restructuring, the Wall Street Journal reported on Tuesday. The retailer, which is due to report results for the fourth quarter later this month, has about 4,500 locations.

The chain has been working to turn itself around since former Walgreens executive Joseph Magnacca became CEO in February 2013. His efforts have included rebuilding the company’s executive team, launching a new store prototype designed to appeal to tech-savvy customers and introducing a new marketing strategy.

RadioShack has been working with bankers from Peter J Solomon Co to boost its liquidity and with AlixPartners on its operational turnaround, the Journal said.

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REAL ESTATE

Holiday Mediocrity a Sign of Things to Come?

BY Jeff Green

After taking a look at some of the post-holiday sales figures, it seems like maybe I was a little too pessimistic. While the overall 2013 holiday season’s sales aren’t particularly impressive, they aren’t flat, either — which is an outcome that I had worried about.

The best numbers came from the Department of Commerce, which estimated that U.S. retail growth during the holiday season came in at 4.1% over 2012 sales. Other organizations released estimates that were a bit less robust: the National Retail Federation (NRF) reported 3.8% growth, the International Council of Shopping Centers checked in with 3.0%, and ShopperTrak announced that sales that were up 2.7%. The biggest surprise to me was how successful the last week prior to Christmas was: consumers were apparently waiting and holding out for the best deals. In some respects, that big final week really made all the difference and “saved” the season. Because, to be honest, I think the season was fairly lackluster leading up until then, especially the first half of December.

As for patterns and trends, we really didn’t see any category standing out or outperforming expectations. Luxury and consumer electronics, two categories that have been fairly strong in recent years, didn’t have an especially great holiday season. That was a bit of a surprise, especially in the case of electronics. I can’t help but wonder if part of that lackluster performance can be explained by the fact that electronics are continuing to evolve away from a special end-of-year splurge type of purchase, and are instead becoming more of a necessity (or at least a perceived necessity).

Apparel was slightly better than expected, perhaps because people were buying winter weather gear at a slightly higher clip. The much-discussed Target credit card number theft/scandal was obviously unwelcome news for a retailer that was already lagging a bit in sales, and it may have helped some of Target’s competitors (most notably Wal-Mart) get a short-term boost, but there’s no reason to think it had an outsized impact on seasonal sales as a whole.

Taking a step back, however, it seems clear that most retailers aren’t going to be particularly excited about the big picture for 2014 — which is tepid, at best. Consumers were so sale- and value-focused that I’m somewhat dubious as to whether profits will reflect the modest bump in holiday revenue. We might be in for some disappointing earnings reports in the months ahead.

One underwhelming holiday season isn’t necessarily a bellwether, but I suspect that some of the underlying factors will continue to play a big role in retail and retail real estate in 2014 and beyond. While I think we’ll see continued incremental economic improvement in the national economy, it is likely to still proceed at a very modest pace. And looking ahead to the planned store openings for 2014 doesn’t really give much reason for optimism, either.

The latest National Retailer Demand Monthly report from RBC Capital Markets indicates that, as of December, new store openings were projected to be up 1.2%. By itself, that’s not terrible (although it’s nothing to write home about), but the report also notes that 2014 might see significantly more store closings than in recent years. J.C. Penney has already announced that it will be closing 33 stores, and Macy’s and Dillard’s are also closing a handful of locations. I’ve talked quite a bit about the troubles that Sears and Best Buy have been experiencing, and it should come as no surprise to anyone that both of those brands will likely face some tough decisions about store closings in the near future. Finally, it is rumored that Coldwater Creek may be closing some stores in the near future.

To figure out what retailers will need to do to turn this sluggish ship around, we don’t need to look any further than the one big holiday season storyline that was extremely positive: the explosive growth of mobile commerce and the continued strong performance from e-commerce. In fact, e-commerce sales were up 12% over the holidays, and nearly one-in-three purchases were made on a mobile device! Not coincidentally, foot traffic in brick-and-mortar locations was down significantly.

Unless more retailers can follow the lead of brands like Apple and H&M and boost the experiential quotient of the built environment for brick-and-mortar locations, e-commerce and mobile sales are going to continue to take bigger and bigger bites out of the retail market. I think it’s clear that shoppers are going to continue to want and expect more of an experience (and more excitement) when they put the smartphone or tablet down and head to the store. And with shoppers continuing to prioritize value- and convenience-hunting in the near term, that’s only likely to exacerbate that trend. If we don’t want to be having this conversation every January, retailers are going to have to evolve and adapt.

How much of an impact do you think the growing demand for difference-making retail experiences and environments will have on brick-and-mortar inventories and marketing/sales strategies? Let’s keep the conversation going — leave a comment below of email me at [email protected].


Click here for past columns by Jeff Green.

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