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Why Smaller Stores Are Going to Rule

BY CSA STAFF

More than 10 years ago, when I predicted that the Internet would become the conventional retailer’s best friend, I was thinking in terms of managing the business, particularly inventory optimization. I underestimated the boon the Internet would become to actual transactions. And I certainly never imagined that mobile devices were destined to play a sales role, or that social networking would prove to be a useful marketing tool. And we have only just begun. The Internet is only going to grow in importance.

Yet, the magnitude of the change wrought by the Internet is still not fully appreciated. Most retailers report comparable-store sales as separate from Internet sales, even though there are no guidelines as to how to classify sales of merchandise ordered online from home or a mobile device for store pickup, or merchandise ordered from a store online for home delivery. And why should retailers care? The consumer doesn’t. Today’s consumer expects to have the same choice from a store as from the Internet, and with the same level of service, including credit, delivery and return privileges. The customer isn’t thinking in terms of “the store” or “consumer direct,” which itself is a misnomer. Aren’t all retail transactions direct to the consumer?

The Whole Picture Is What Counts

Retailers need to think of serving the customer in whatever manner the customer chooses. Such an approach requires getting the entire organization to think of the Internet as a customer service tool and an integral part of the store’s organization. For starters, there should be a central fulfillment center with real-time information as to inventory availability by SKU in every location, accessible to everyone remotely involved in merchandise. Used properly, the Internet can enhance the brick-and-mortar stores’ business by stretching the breadth of the offering available at retail and by reducing lost sales from out of stocks. And the Internet can help the customer locate an item that is needed immediately. And so what if the Internet cannibalizes the stores? Stores that carry less inventory don’t need as much space.

But Smaller Stores Were Coming Anyway

We’ve been through an era of ever bigger stores, which tend to be more efficient to operate. But big stores create neighborhood voids for smaller ones, and smaller stores can collectively obtain a competitive advantage with their convenience to the customer. With reluctant sales growth in recent years, retailers have been looking at productivity and investing in new software. They have found that more targeted inventory by location and merchandise lifecycle management can enable higher sales and lower markdowns, often with less inventory. Furthermore, now that most big boxes are almost everywhere they can conceivably go, their owners are looking to conduct business in less space as they move into both more densely populated areas and smaller markets.

Smaller Stores Will Rule

With Internet fulfillment playing a pivotal role in rounding out a store’s offering to the customer, making available a much wider variety of merchandise than could ever be justified in a small market location, such markets become more viable for new stores. Yet, at the same time, and for the same reasons, really large stores become less necessary in more important markets.

With less square footage, retailers can pay less rent, and with shopping center developers needing less space for each retailer, the centers can accommodate more individual stores. This situation, in turn, enables a center to seek out interesting new tenants, to distinguish the property and to enhance its value to all tenants, as well as to the customer.

Everybody who can play wins with smaller stores integrated with an Internet offering.

Margaret A. Gilliam is president of Gilliam & Co., an independent research and advisory firm that specializes in retail and selected consumer products. For more information, go to www.gilliamco.com.

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Kmart launches Smart Sense

BY CSA STAFF

HOFFMAN ESTATES, Ill. – Kmart announced the expansion of its brand portfolio with the introduction of the Smart Sense line, its new Kmart brand that includes a wide range of items including everything from snacks and beverages, to oral care, paper products, household cleaners and over-the-counter medications. The quality of the Smart Sense line is comparable to that of national name brands, and on average costs 20% less, according to the company.

"With the introduction of the Smart Sense line, Kmart is looking to offer a more affordable Kmart brand product assortment that will rival the quality of more nationally recognized brands," said Mark Snyder, chief marketing officer, Kmart. "While the Smart Sense line will offer the everyday essentials, Kmart is also taking it a step further by providing unique products that you wouldn’t typically expect to see under a store brand."

The Smart Sense line currently consists of hundreds of products available in Kmart stores and the product line will expand to more than 1,200 items by early 2011, the company reported. Kmart said it will also support the Smart Sense line launch through multiple communications channels, including advertising, coupon offers, merchandising displays, sampling, digital marketing and event marketing.

In addition to the introduction of the Smart Sense line, a new look has been created for many other Kmart brand products, the company reported. The brighter and more vibrant packaging has been designed to capture the "colorful thinking" Kmart is demonstrating through its new product and brand announcements. In addition to the Smart Sense line roll-out, Kmart is also introducing products in a re-launch of its other exclusive brands, which include, Little Ones baby care products, Champion Breed pet care products, Image Essentials personal care products and VitaSmart vitamin products.

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Target to open ten stores on 10/10/10

BY CSA STAFF

MINNEAPOLIS Target announced that it will open 10 stores across the country, resulting in the creation of more than 2,400 jobs.

The stores will open in the following communities:

 

    * Sacramento East: 6507 4th Ave., Sacramento, Calif.     * Simi Valley West: 51 Tierra Rejada Rd., Simi Valley, Calif.     * Bakersfield Central: 2901 Ming Ave., Bakersfield, Calif.     * San Jose North: 95 Holger Way, San Jose, Calif.     * Azusa: 809 Azusa Ave., Azusa, Calif.     * Salt Lake City: 1110 S. 300 West, Salt Lake City, Utah     * Little Rock University: 420 S. University Ave., Little Rock, Ark.     * Christiana: 800 Christiana Mall, Christiana, Del.     * Flushing: 4024 College Point Blvd., Flushing, N.Y.     * Braintree: 250 Granite St., Braintree, Mass.

 

“These new Target store openings will help support local economies and make life easier for our guests by creating new jobs, spurring development and providing the utmost in convenience and value,” said John Griffith, EVP property development for Target. “We are looking forward to deepening our relationship with guests in communities across the country.”

As part of the grand opening celebrations, Target said each store will contribute to its community by initiating a local grant program, contributing to the United Way, donating food to Feeding America and product to the local Goodwill chapter and encouraging team members to volunteer their time to serve their community.

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