Retailer Plans to Go Public. Wait…Now?…A Retailer?…Really?

Roots, a Canadian retailer, has filed a prospectus for a public offering.  Here’s the link to their web site.  As usual, the initial prospectus is missing a lot of key numbers, but I’ll do the best I can.

Roots has been around since 1973, so they must be doing something right.  “As of July 29, 2017, our integrated omni-channel footprint included 116 corporate retail stores in Canada, 4 corporate retail stores in the United States, 109 partner-operated stores in Taiwan, 27 partner-operated stores in China and a global e-commerce platform that shipped to 54 countries during our most recently completed fiscal year.”  They had 2,200 full time employees.

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Retailers and Landlords. Can’t Live With Each Other, Can’t Live Without

At this point, it’s common knowledge that diminishing mall traffic is leading retailers to close stores and/or renegotiate leases with landlords.  There are also some store openings going on as retailers, hopefully, find locations and configurations better suited to the fast changing brick and mortar and e-commerce world.

But relationships between retailers and landlords are not quite as cut and dried as, “Give me a lower rent or I’ll leave.”

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Retail, Technology, Consolidation, and Unintended Consequences

This morning, the Seattle Times featured this article telling us that REI wage hikes for store employee announced last summer will be costing the company $24 to $25 million.  The company’s net income for its last complete year was $38.3 million.

Meanwhile, my oldest son sent me this article from Investor’s Business Daily, telling us that fast food purveyor Wendy’s will have self-service ordering kiosks in 6,000 restaurants in the second half of this year due to rising minimum wages and tight labor conditions.

I’ve been writing about the potential impact of 3D printing and other kinds of manufacturing technology for a while.  Here’s my article on the apparel manufacturing system Intel plans to introduce.

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Some Waypoints in the Evolution of Retail

During the last couple of weeks, I’ve come across a number of articles that speak to the evolution of retail.  Here they are for your consideration in no particular order.

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The Shape of Brick and Mortar to Come?

I like to characterize a sudden good idea as getting whacked on the side of the head by a two by four.  Today, I got whacked by a lily.  My wife’s birthday is tomorrow and I walked into a convenient florist to order some flowers.  Except what I walked into was a little café.  Quite nice really, with people sitting on casual, older comfortable furniture eating, reading, drinking coffee.

For just a couple of seconds, I was a bit put off, thinking calling the place a flower shop was some kind of clever marketing I wasn’t cool enough to understand.  But the flower shop was in the same space, but towards the back.  I cannot believe I didn’t take a picture.

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Amazon, the Omnichannel, and the Impact of Retailers’ Brick and Mortar Legacy

On April 24th, the Seattle Times ran an article called “Amazon’s Imitation Game.”  It starts by describing how Amazon has knocked off an aluminum laptop stand by Rain Design that had been selling on Amazon for 10 years at a price of $43.00.  Amazon started selling a similar product last July for around half that price.

On Amazon, you can see various Rain Design products including a number of laptop stands and you can see the Amazon knock off at around half price.  Amazon Basics, the article tells us, includes low price copies of a number of an increasing number of products (900 right now including 284 added in 2015).

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Kohl’s New Retail Experiment

My family has a beach house on Long Beach Island, New Jersey.   I’ve been going there since I was a kid and still try to get back most summers. It’s where I learned to surf (I know- New Jersey surf? We work with what we’ve got).

Anyway, I was back there in September and as my wife and I headed back to the airport, Diane said, “Pull in there.” So I did. It was something called “Off Aisle” by Kohl’s and I gather this is their first store using this concept.

The store is a 30,000 square foot box with a cement floor. It’s filled mostly with racks on which apparel hangs, though they also offered some shoes, kitchen ware and bedding. Kind of like a Ross store.

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What it Takes to Succeed in Retail; Some Ideas from The Buckle’s 10-K

The Buckle’s results for the year ended January 31st are certainly not news at this point, but I do think they have a few things to tell us about retail. There are some commonalities emerging among retailers in the active outdoor/fashion retailers that I want to highlight.

The Buckle is a retailer I think does a good job. I’ve been particularly impressed with their ability to integrate owned with purchased brands and the way they merchandise them together. Just to review briefly they had, at year end, 460 stores in 44 states. For the year they had revenue of $1.153 billion, up just slightly from $1.128 billion the previous year. Their gross margin didn’t change much and gross profit was up just a bit from $499 to $507 million.

Expenses rose a similar amount with the result that both operating and net income were more or less unchanged. Net income of $162.6 million was the same as last year. They haven’t managed an increase in comparable store sales for the last two years. No balance sheet issues to discuss.

That’s the shortest financial review I’ve ever done, probably to the relief of some of you.

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The Evolution Of Marketing & The Future Retail Model

Recently, some companies have said some intriguing things about the omnichannel and the relationship between brick and mortar and online (for the record, when I say “online” I’m including mobile devices). I’ve also read some interesting things about generational behavior that made me think about the future of brands and retail structure.

It’s no surprise that buying patterns are different for the millennials (born 1982-2000) than they are for the baby boomer (born 1946-1964). Millennials have faced (and will continue to face) different and more difficult economic circumstances than boomers. And of course, they take technology for granted. They shop differently, have different priorities, and are less likely to be brand loyal.

I’ve written about brands that were originally focused on the boomers aging out, and the complexity around maintaining the loyalty of your original customer base while trying to appeal to younger customers. The first thing to note is that right now, boomers spend way more than the millennials. But, for obvious reasons, that’s going to change. If you’re a company that likes customers with money to spend, it’s hard, right now, to ignore the boomers.

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Lowe’s New Customer Service Representatives and the Minimum Wage

Lowe’s new in store service representatives won’t need bathroom breaks, vacations, or retirement account. They won’t get sick. Hell, you don’t even have to pay them a salary. And what’s even better, or maybe worse- I’m not quite sure- is that they may be able to help me find the esoteric piece of hardware I need better than the current human ones. And they will be able to do it in as many languages as are necessary.

They’re robots, and you can read about them here. Make sure you watch the video. Read more