Through a special arrangement, presented here for discussion is a summary of a current article from the Emerson Advisors blog.
In recent posts, I've covered a major dilemma facing many retailers, namely the glut of selling space relative to a weak and uncertain demand. It appears that many retailers have begun to address the situation.
A
recent Wall Street Journal article outlined steps taken by some of
the bigger national players. These include:
- Sears has gone into the sub-leasing business, leasing space to Whole Foods in one store as well as a Century 21 store in another. Sears is offering deals on its website for virtually all its locations.
- Best Buy is venturing into new categories, including musical instruments and health and exercise equipment in its big box. They have also announced that they are slowing the growth of the big box format to focus on much smaller Best Buy Mobile locations.
- Walmart is experimenting with Walmart Express along with much smaller (40,000 square foot) traditional store formats.
- Home Depot is selling off portions of its huge parking lots to fast food and auto repair shops.
- Gap, which used its flagship to spin off separate formats (GapKids and
Gap Body), is now reversing the process, bringing its spin-offs back under
one roof.
Interesting. In addition, there was a story on CNet that Apple, one of the most productive four-wall retailers, is lowering store inventory (and working capital requirements) in order to increase the area devoted to customer training for all the new iMacs, iPads, and iPhones they are selling. This is not an entirely new idea nor is it restricted to electronics. Williams-Sonoma offers cooking demonstrations, some golf equipment stores have extensive indoor driving ranges with professional instructors, Home Depot offers courses on various DIY projects, and CVS has added in-store clinics. In each case, the brand and the shopping experience is extended and customer loyalty is built while reducing space and inventory -- no small matter in an environment where building market share is the only real growth vehicle.
Is this a strategy that can be applied through other channels and formats? Maybe. What is certain is that there is too much space and inventory chasing too few customers and this imbalance is relentlessly moving back to equilibrium. Just in the last month, Borders and Loehmann's have gone into bankruptcy. More are sure to follow. While this is a daunting time for retailers, it is also an exciting one. There has never been a higher demand for creativity and extraordinary new strategies. It will be fascinating to watch this period of retail history unfold.