Frozen and Refrigerated Buyer – Will an upcoming merger with Rite Aid be enough to turn things around at the nation’s second-largest supermarket chain? Industry observers aren’t so sure.

Plain vanilla,” “mediocre at best,” “generic,” “tired,” “middle of the road,” and “meh.” Those are some of the ways a panel of industry observers described Boise, Idaho-based Albertsons. So why the heck did we name it our 2018 Retailer of the Year?! Well, keep in mind that the title doesn’t necessarily go to the best operator. For better or worse, we’re looking for a chain whose actions over the past year have influenced the industry in a significant way, and Albertsons clearly fits the bill.

While Amazon-Whole Foods may have been the obvious choice for Retailer of the Year, the truth is we’ve done that story to death. Yes, e-commerce is the wave of the future, but “traditional” brick-and-mortar isn’t going any- where anytime soon, and after its mega-merger with Rite Aid is completed later this year (more on that coming up), Albertsons will have a whopping 4,900-plus locations nationwide, serving more than 40 million customers per week. It also announced several unique initiatives in the past few months and recently welcomed a new president and COO with a history of transforming under- performing companies, so there’s reason for optimism.

Comments from Perry Kramer – Page 24:

On the flip side, the merger will also allow Rite Aid to increase its presence in the grocery business, says Perry Kramer, senior vp and practice lead at Boston Retail Partners, Boston. “Rite Aid has a very significant urban foot- print, and many of their stores have recently been refreshed or remodeled,” he reports. “Those locations provide a great opportunity to expand frozen and refrigerated offerings, including Albertsons private label brands, which will help extend brand recognition and improve margins in those stores.” Another benefit of the merger with Rite Aid is the addition of a large amount of consumer data to enhance Albertsons’ customer data analytics, says Kramer. “Analyzing the data will enable the company to build a much more extensive view of its customers,” which will help it improve the customer experience both online and in stores.

Comments from Perry Kramer – Page 26:

In addition to using POS and loyalty data to improve customer analytics, Albertsons is likely to utilize real-time transactional data to improve its in-stock positions, which will become even more important as the company grows its digital presence, including online ordering and home delivery, adds Kramer.

One area that could truly become a competitive advantage for Albertsons is its own brands, most of which originated with Safeway, which many pundits list as one of the chain’s greatest assets. “The company has done a good job with its private labels in individual stores,” says Kramer, citing sales of more than $11 billion in fiscal 2017. However, “There’s a significant opportunity to continue to expand store brands across Albertsons’ many banners. When consumers see the same brands in different stores and when they shop and browse online they will become household names.”

Comments from Perry Kramer – Page 28:

But Kramer likes the idea of partnering with an established player in the meal kit space. “It allows Albertsons to rapidly roll out this new capability while learning the meal kit delivery business without a major investment of capital or time. Once it has an understanding of this rapidly changing market, the retailer will have the ability to bring the operation in-house if it makes sense.” He adds, “I think the move demonstrates Albertsons’ recognition that it needs to be ahead of trends if it’s going to continue to grow.”

Read Full Article: RETAILER OF THE YEAR: Albertsons (pages 22-28)

Retailers Take Stock of the Winners & Losers Post Bon-Ton

Sourcing Journal – Though the press has had a lot of fun with the retail apocalypse storyline, former Macy’s CEO Terry Lundgren said the reality is a lot less dramatic.

Speaking to CNBC, Lundgren said rumors of the demise of department stores circulated throughout his 40-year career, but even with the recent turmoil, it’s not going to happen. “There will be a shake out,” he said. “There’s going to be winners and losers.”

On one end of that spectrum is Amazon and on the other, he said, there’s The Bon-Ton Stores, which recently began liquidation sales following the company’s February bankruptcy filing.

“Amazon has done a great job of attracting this loyalty customer through their Prime program but they’re the only pureplay—if you can still call them that—online retailer in the top 100 retailers,” he said. Further, he said those who are putting too much stock into e-commerce at the expense of brick-and-mortar, are missing the fact that it still only accounts for 10 percent of retail.

As for Bon-Ton, he said the company, which had a mountain of debt, made a fatal mistake that’s all too common these days. “The key is don’t be a highly leveraged retail business because you cannot survive the ups and downs of consumer changes.”

With Bon-Ton out of business, Perry Kramer, senior vice president and practice lead at Boston Retail Partners, a retail management consulting firm, told Sourcing Journal the effects will be felt across the landscape, resulting in a boon for some and a misfortune for others.

Given that Bon-Ton’s travails were well documented, Kramer said it’s likely the retailer’s competitors were already laying out plans to capitalize on the vacancy.

“The biggest winners will be the regional competitors who already have a strong understanding of the merchandise mix and customer experience that resonated best with Bon-Ton’s customer base,” he said, listing Boxcov’s and Belk as possible benefactors. “The most opportunistic competitors have already been working to negotiate discounted merchandise for the next few seasons to take advantage of the procurement gap that will be created by the Bon-Ton closure.”

Beyond snapping up stock, he also sees opportunity for these stores to tap into Bon-Ton’s credit cardholders, who could be wooed with favorable perks.

Ultimately though, Kramer sees a dim future for some of the company’s landlords. “In many cases, the closing of these stores, which are most often an anchor store in malls, may be the straw that breaks the back of several malls impacted by the store closures across 26 states,” he said, adding the smaller stores in those centers may be hurt as well.

Read Full Article: Retailers Take Stock of the Winners & Losers Post Bon-Ton

Tampa, St. Petersburg: Convenience is king for older-skewing shoppers

Drug Store News – The growing Tampa/St. Petersburg, Fla., market is becoming one of the more competitive retail battlegrounds in the country. Buoyed by retiring baby boomers from the North, the area is seen as a great place for retailers to grab market share. Several small, innovative retailers and discounters are chipping business away from operators of big-box stores: Walmart, the struggling Winn-Dixie and Publix, the dominant grocer in the area.

Over the last few years, Publix has lost market share to Trader Joe’s, The Fresh Market, Whole Foods Market, Sprouts Farmers Market and Lucky’s Market. Also, Save-a-Lot, Aldi and soon Lidl lure shoppers with their blend of limited assortments, private labels and low prices. These smaller-than-average formats appeal to millennials, a key demographic, because they will soon be starting families. Many of them tend to prefer smaller stores with unique offerings instead of the traditional grocery store.

“Elderly shoppers, which is an expanding segment in these metro markets, want shopping to be more convenient and easy,” Ken Morris, principal at Boston Retail Partners, said. “In-store product displays should be at appropriate heights, especially for products more frequently purchased by people who are potentially in a wheelchair. Some stores are carpeting more areas to help prevent slipping and falling. Offering magnifying glasses near packages with fine print or working with manufacturers to offer product packaging with larger print are added conveniences for shoppers with limited vision. Drive-through lanes at drug stores are becoming expected and are especially popular with elderly people who have difficulty getting in and out of their cars.”

Read Full Article: Tampa, St. Petersburg: Convenience is king for older-skewing shoppers

Denver: Retailers court Hispanic, millennial shoppers

Drug Store News – Two major demographic shifts are happening in Colorado. One is a surging Hispanic population, and the other is the emergence of millennials, who in 2015 became the largest generational group, surpassing baby boomers, resulting in nearly 40% of residents being under the age of 18 years old. These factors are affecting the retail marketplace throughout the state and especially in Denver, the biggest city.

Meanwhile, there isn’t a competitive situation in the drug store channel. ARM Insight reported that Walgreens controls the business with an 86% market share. Rite Aid and CVS Pharmacy are behind at 10% and 4.0% respectively.

Whether it’s the drug or grocery channel, winning retailers are adapting their product mix, promotions and services to appeal to the market demographics that are growing — a health-and-wellness focus for millennials and Latino food and beverages for Hispanic shoppers.

“Adding bilingual signage and packaging will make shopping easier for non-English speaking customers, and will increase brand loyalty,” Ken Morris, principal at Boston Retail Partners, said. “Retailers are also expanding product offerings to appeal to various ethnic interests, including specialty food items, makeup with broader skin tones, broader clothing sizes and styles, etc.”

Read Full Article: Denver: Retailers court Hispanic, millennial shoppers

‘It was a stalemate’: What a split from Kering means for Stella McCartney

Glossy – Control matters now more than ever for luxury brands, and Stella McCartney is forging her own path.

On Wednesday, WWD reported the brand was officially buying back Kering’s 50 percent stake to become an independently owned company. Rumors had swirled for months that Stella McCartney and Kering were in talks to end their 50-50 partnership, which was part of the brand’s initial launch in 2001.

“It was a stalemate,” said Ken Morris, retail consultant at Boston Retail Partners. “When both sides have equal control, there’s no tiebreaker, which can be an interesting scenario. Now she has the freedom to do as she pleases.”

The decision to buy back Kering’s stake in the brand comes after years of efforts to differentiate revenue and extend the business beyond women’s ready-to-wear, where it started. Since 2001, Stella McCartney brand has grown into a multi-pronged business, expanding to include handbags and footwear, children’s and menswear collections, an ongoing partnership with Adidas for activewear, an eyewear collection, a line of fragrances and beauty products distributed by Procter & Gamble, and a lingerie line in collaboration with Bendon.

“Responsible manufacturing is not a quick turnaround game,” said Morris. “No major overhaul is. That’s why you’re seeing a company like Nordstrom attempting to go private.”

Read full article: ‘It was a stalemate’: What a split from Kering means for Stella McCartney

What Went Wrong at Toys ‘R’ Us?

RIS News – Toys ‘R’ Us is closing. Allow me to pause for a second and wipe my eyes as one of the happiest places of my youth begins to sell itself off and fade into memory.

Last week the retailer announced that after 70 years the massive toy store chain is ceasing its U.S. operations, citing massive financial responsibilities and a changing retail landscape for its failure.

Obviously, you cannot judge an entire chain on one successful location. I guess my nostalgic view of the brand, coupled with my continued patronage led me to believe the toy store would find a way to survive…I was wrong.

Ken Morris, principal at BRP, takes it a step further. To him it was not just the crippling debt and technological issues that did Toys ‘R’ Us in, it was a changing marketplace that has made commodity retailers easily beaten by the nimble digital-first competition.

“The other big challenge was the nature of their business of selling “commodity items” that can be easily purchased online at Amazon and delivered to their doorstep or at their local Walmart – where customers can also buy groceries, clothes, electronics, and other needed items in one trip,” he says. “The survival of retailers selling commodity merchandise requires new approaches to differentiate the brand with personalized services and experiences. Maybe Toys “R” Us would have been more successful if they had established their stores as destinations by creating interactive experiences and events in the store. People enjoy the theater of shopping – that is the value of the physical store.”

Read Full Article: What Went Wrong at Toys ‘R’ Us?

Luxury co-opts drops to build hype through exclusivity

Luxury Daily – As the luxury business looks to drive sales in an increasingly competitive retail environment, it is turning to a streetwear-style tactic to create consistent newness.

A growing number of luxury labels and retailers have been adopting the drop retail format, opting for a series of limited-edition releases per year rather than the traditional seasonal store arrivals. Drops have proven a successful strategy for streetwear, but is this a winning strategy for luxury?

“Luxury brands are using this fresh tactic, as they’ve seen the success it has had for other retailers,” said  Laura Sossong, manager at Boston Retail Partners, Boston. “It absolutely aligns with the objective of luxury fashion, which is creating a sense of exclusivity based on limited timing and availability of product.

“This approach serves to build consumer appeal and offers enough opportunity for a brand to gain a following, while happening infrequently enough to keep desire elevated.”

“Today’s consumers are looking to be surprised and delighted, with experiential elements trumping predictability when shopping,” Boston Retail Partners’ Ms. Sossong said. “Any strategies to that end are sure to help retailers hold relevancy in the marketplace.”

Read Full Article: Luxury co-opts drops to build hype through exclusivity

Retailers Must Become More Customer-Centric

CRM Magazine – Although customer-centricity is the top strategic initiative for 47 percent of retailers, customer demand is making it essential for all retailers to become more customer-centric, Boston Retail Partners (BRP) concludes in a recent report.

The report then lays out five key practices for retailers to become more customer-centric: align the organization, integrate planning processes, implement the right technology, prioritize customer insight, and take action.

This first step, which involves shifting internal culture and organizational mind-sets to a view of the enterprise as a whole rather than as a collection of separate divisions, is one of the major challenges facing retailers because most of them still operate within functional siloes, the report notes. With this in mind, BRP analysts urge companies to establish cross-functional teams equipped to work collaboratively to plan, manage, and execute the functions necessary to run omnichannel organizations and deliver seamless customer experiences.

“For retailers to start making profits, especially with the increase in demand for omnichannel, buy-anywhere-sell-anywhere-pick-it-up-anywhere [mind-sets], retailers really have to get the right product in the place where the customer wants it so that they only have to touch it once,” says Perry Kramer, senior vice president and practice lead at BRP. “The challenge for retailers is that quite often they break even at best on omnichannel sales. When you put in the labor, transportation cost, shipping fees, and all of that, they generally have a much more profitable sale when they have it in the store. If they actually have to touch the product more than once to move it to a place to get it shipped, it really becomes very unprofitable.”

Good customer service today means having the right product in the right place, “and to do that, you have to understand your customer and you have to anticipate where they’re going to be, where they’re going to want it, and you have to have that right product mix close,” Kramer says.

Read Full Article: Retailers Must Become More Customer-Centric

Retailers’ Digital Transformation Requires New Thinking

Signifyd – There is good news for retailers who feel the ground shifting under them as they contemplate the stark choice of change or die. You’re not alone. And not just because practically every retailer has been, at one time or another, faced with the same unenviable reality. You’re not alone because there is a big and burgeoning ecosystem of technology partners — each an expert in some aspect of the retail transformation — that is anxious to help.

Retail technology has developed at an accelerating pace since the dawn of the internet and the answers to merchants’ challenges are becoming more sophisticated by the day.

But even in the good news there is some gloom. Providing a memorable and personalized customer experience has become increasingly vital to success. As a result, technological and business minds have answered the call with a dizzying array of products and services. In fact, there are so many choices that merchants can become paralyzed trying to select the best solution for any given omnichannel challenge.

Vetting technology can’t be all consuming

Retailers can’t make vetting new technologies a full-time job. After all, they have companies, stores and websites to run. They have customers to understand and serve.

These are all facts of retail life that Scott Langdoc, SVP and practice lead at consultancy Boston Retail Partners, has grappled with. I talked with him at NRF’s Big Show. In the video below, he shares some of his thoughts about the potential that technology partners provide and how old-school culture is preventing some retailers from taking full advantage of that potential.

Read full article: Retailers’ Digital Transformation Requires New Thinking

Vetements visualizes fashion’s waste problem in Harrods takeover

Luxury Daily – British department store Harrods is working with streetwear label Vetements to draw attention to the issue of overproduction.

The Zurich-based brand has taken over four of Harrods’ windows for an installation that showcases how much fashion is wasted. While potentially a counter-intuitive message for a brand and retailer, the project aims to inspire a more sustainable fashion strategy.

“The focus on overproduction will help position Harrods as socially responsible and elevate consumers’ perception of the brand,” said David Naumann, vice president of marketing at Boston Retail Partners, Boston. “I hope this initiative on overproduction translates into improved merchandise planning strategies for Harrods that result in smarter buying and production decisions that are better aligned with consumer demand.”

“It is an interesting juxtaposition for Harrods to team up with Vetements for this sustainability initiative, as the pragmatic, down-to-earth culture Vetements doesn’t seem like a good fit with Harrods’ luxury, upscale image,” Boston Retail Partners’ Mr. Naumann said. “However, the association with Vetements may create more brand awareness for Harrods among younger demographics who wouldn’t normally shop at their stores.”

“Many consumers’ shopping decisions are influenced by the personality and image of brands,” Mr. Naumann said. “While it might encourage some shoppers to think twice and ask themselves if they really ‘need’ to buy another clothing item, when they buy the next item they need, they might be inspired to shop at Harrods.”

Read Full Article: Vetements visualizes fashion’s waste problem in Harrods takeover