Agenda’s Got a Consumer Agenda

As usual, the Agenda trade show, Long Beach version, was held July 13 and 14.  What was unusual was that it was followed, on Saturday the 15th, in the same space with the same brands attending, by its first consumer show.  Having no intention of spending three whole days in the Long Beach Convention Center, I arrived late Thursday afternoon.   I walked the show Friday and spent four or five hours in the consumer show Saturday.

We are all aware of the long, ongoing conversation about the changing role of trade shows, their relevance, and role.  The consensus, as far as I can determine, is 1) we need some, 2) face time is important, 3) we’re not completely sure how to improve them and 4) there are too many of them.  I applauded the combination of the SIA show with Outdoor Retailer.  Step in the right direction.

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Damn- Turns Out the Customer Is Always Right- More Than Ever Before

Running an active outdoor business right now feels like a game of Whack-a-Mole.

  • There’s too much retail- right size yours. Whack!
  • Create product that can be meaningfully differentiated from competitors. Whack!
  • Careful on that distribution. Whack!
  • Manage your inventory and expenses cautiously. Whack!
  • Figure out e-commerce without cannibalizing brick and mortar. Whack!
  • Lower growth economy. Whack!
  • Find and keep enough quality employees. Whack!
  • Most children living with their parents since 1940 (World War II fixed that). Whack!
  • Slow to non-existent wage growth among our customers. What will they/can they buy?  Whack!
  • Close to 10 million American men not in the work force and not trying to get in it. What do we sell them?  Whack!

Whack!  Whack! Whack!  Whack!

I hope to get your attention by saying that these things are pretty much tactical- or in some cases issues you just can’t influence.  What in the hell would I consider strategic then?

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A Follow-up on Pop-ups- Popping Up in Interesting Ways

In early 2015, I wrote “The Evolution of Marketing & the Future Retail Model.”  It’s held up pretty well.  In describing that retail model, I hypothesized about how pop-ups might be used.

“Retail presence might be in pop up tents, in vans or trucks, on blankets at beaches, in a lift at a ski resort, in stores, in people’s houses. No location would be permanent. You might end up with 400 stores, but none of them would be in the same place for more than, maybe, a week. Your “stores” would be wherever your customers wanted them to be.  Maybe you announce where the stores are going to be. Maybe not. Maybe there are clues online.”

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Deckers Under Pressure from Outside Investor

Marcato Capital Management has taken what is now a 6% position in Deckers’ common stock.  That Marcato was buying Deckers’ shares first became public knowledge towards the end of May.  Partly in response to this and, apparently, to growing unhappiness on the part of other large shareholders, Deckers has undertaken a strategic review process to determine what should happen to the company.

Recently, Marcato sent Deckers’ Board of Director a letter saying that if the review process didn’t lead to an attractive sale of the company, “…we will be prepared to seek significant Board change at the Company’s next annual meeting by nominating a slate of director candidates to replace the entire Board.”

Here’s a link to the letter in its entirety.  It’s pretty damning of Deckers’ management and board and, if the letter is accurate, they aren’t the only ones unhappy.  I can see why they might be concerned that Angel Martinez, the former CEO and still Chairman of Deckers, is running for Mayor of Santa Barbara rather than focusing on the company.

I guess I see this as the final denouement in the purchase and destruction of the Sanuk brand.  That might not have been the only problem Deckers has, but it’s certainly a major and public symptom of what went wrong.

If I were to read between the lines of the Marcato letter, what I hear them saying is, “Look, UGG is a great brand with real potential, but your attempts to make the company into a big footwear player by buying all these smaller brands has fallen flat on its face.  It’s cost you a pile of money, time, and focus.  Get rid of them or sell the company or we’ll come in and do it for you.”

I will be interested in watching how this moves forward.

“You Just Have to Get Traffic”

Specialty beauty retailer Sephora (2,300 stores worldwide) seems to be a bit ahead of the curve when it comes to brick and mortar retail.  As this article describes, they are using technology to give control to the consumer and create a “fun” experience for them.  They are reducing the role of the sales person and giving the customer the power to interact with them or not.  They note that their customers tend to know more about the product than the sales person anyway.

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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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More Retail Perspective; Zumiez’s Quarterly Report

The conference calls get shorter and shorter as Wall Street and its analysts decide the retail sector just isn’t worth their attention.  I don’t and won’t invest in anything I write about but damn, this feels like one piece of putting in a bottom in the retail sector.  Maybe it will take the recession to finish the process.

Zumiez had a quarter which I’ll describe as uninspiring.  Like every other industry retailer, they find themselves in circumstances of declining mall traffic, sluggish demand and an uncertain future that changes faster than you can react to it.

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A Discussion of Retail Prompted by Deckers’ 10-K

When I report on a public company’s results, it’s always important to review the numbers. But the more I do that the more I realize my focus needs to be on how companies are trying to transition to the new retail environment in circumstances of high uncertainty. That is, they must transition to something they can’t solidly identify yet. That’s awkward.

Deckers ended their March 31st fiscal year with 160 retail stores worldwide. 96 of them were what they call concept stores and the remainder outlet stores. “During fiscal year 2017,” they report in the 10-K, “we opened 17 new stores, reclassified 12 European concession stores as owned stores, converted two owned stores to partner retail stores, and closed 20 stores.” Over the next two years, we learn in the conference call from President Dave Powers, “In regards to our global retail fleet, as we look out over next two years, we are planning to reduce our global company own brick-and-mortar footprint back 30 to 40 stores.”

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More of the Same: Tilly’s April 29th Quarter

These quarterly reports from retailers are getting kind of repetitive.  It’s not just Tilly’s; they are all controlling inventory, slowing store openings (or closing stores), negotiating with landlords, trying to reduce operating expenses, doing omnichannel things and being generally grateful for anything that improves traffic and generates some incremental sales.

Tilly’s conference call printed out to just seven pages, with questions from three analysts.  It’s just remarkable how Wall Street is losing interest in retail.  Someday, this will translate into a huge buying opportunity in retail in general- kind of like Mexico right after Trump got elected.

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What Keeps Jeff Bezos Up at Night- And Why What He’s Doing Should Keep You Up.

To my mind, Amazon’s biggest strategic advantage is that they started without brick and mortar retail.  The business was built for ecommerce and then, using the systems and data they’ve developed, they could look at brick and mortar making sure to have the right number of stores in the right places configured in the right way.  To put it another way, their brick and mortar business, whatever it turns out to be, supports their ecommerce.  With existing brick and mortar retailers, it’s the other way around.

As regular readers know, I’ve called the “omnichannel” the word that legacy brick and mortar retailers use to put a positive spin on the fact that, unlike Amazon, they have the wrong number of stores in some of the wrong places configured the wrong way.

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