What’s Behind Retail Store Closings?

Retail Store Closing


by Bonnie McEwan  

Out of the Malls and Onto the Internet

Most of us who follow the retail industry are aware of the wave of store closings that has taken place over the last few years. Since closings occur intermittently, however, you may not realize that roughly 5,759 stores in the US have shuttered since 2012. These include apparel companies like Jones Group and The Gap, restaurants (Wendy’s, Qdoba, Applebee’s), home furnishing stores (Kirkland, Pier One) groceries (Food Lion, Kroger, Stop ‘n Shop), toy and entertainment outfits (Build-A Bear, Game Stop) and tech companies (Cellular One, Apple). You can find an alphabetical list of all US retail store closings through September 25, 2013 here.

Certainly the Great Recession has something to do with this, but that doesn’t account for the fact that many of the same companies closing brick-and-mortar stores are expanding their online operations. These moves to the Internet have dramatic consequences that reach well beyond employees and consumers to affect communities and related industries, and not in good ways.

Shopping Malls

The obvious example is shopping malls. Most real estate professionals acknowledge that vacancy rates are high in many malls across the country and rents are depressed. Green Street Advisors, an analysis firm that tracks commercial real estate funds, predicts that 10% of the 1,000 largest malls in the U.S. will fail within the next 10 years. Some mall CEOs think that’s a conservative figure.

There’s a website called Dead Malls that tracks those shopping centers that are already abandoned or well on their way. Of the 33 JC Penney stores slated for closing, three are on the Dead Malls site: Muscatine Mall in Muscatine, Iowa, Military Circle Mall in Norfolk, Virginia, and Singing River Mall in Gautier, Mississippi. Macy’s plans to close stores in two more: Fiesta Mall in Mesa, Arizona, and Medley Center in Irondequoit, New York. Abercrombie & Fitch is closing a store in yet another mall on the endangered list, Oaks Mall in Gainesville, Florida.

It appears that these particular malls, along with most of the others listed, while not going gentle into that good night, they are slouching toward oblivion, dragging community spirits down with them. Part of their woes are caused by the oversupply of mall real estate. The US has so many malls that when one closes shoppers can easily drive 10 or 20 miles to another. Add to this the ‘smart growth’ and walkable cities emphases in current urban planning theory and you easily see that the curtain is descending on the malls’ last act.

Malls Repurposed

So what happens to these dinosaurs littering the suburban landscape, becoming eyesores in the communities they once served? Sometimes mall owners just call in the demolition equipment. Occasionally, though, more creative solutions are devised. Although not located in a mall, an abandoned Wal-Mart in McAllen, Texas was turned into the largest, single-story library in the country by Minneapolis-based architects Meyer, Scherer & Rockcastle, Ltd. The conversion plan included space to establish a community gathering place, which serves as an updated version of the town square.

Wal-Mart, once roundly criticized for letting its abandoned stores lie empty to prevent competitors from moving in, now has a subsidiary called Wal-Mart Realty. According to its website, “Walmart Realty’s mission is to find businesses to open in our former stores and clubs and to locate in available property around our stores. At Walmart Realty, we believe we have a responsibility to work with communities to find a use that generates economic growth and opportunity.”

Online Rising

While this is a positive development, it assumes that there are companies interested in opening brick-and-mortar stores, a debatable idea. “If I were thinking of starting a new retail brand right now, I would unquestionably start it online,” writes Jeff Jordan, a partner at Andreessen Horowitz and board member for several online retailers. He points out that online retail will continue to steal business from brick-and-mortar stores and that will place even greater pressure on shopping malls.

Even online retailers that do move offline to open physical stores are doing them as Internet showrooms, where customers view samples and then place orders. This is a stark departure from the traditional retailer that stocks inventory in its stores. Jordan cites two, Bonobos and Warby Parker, that began online and are now employing this showroom model.

There’s a joke going around that says Best Buy, which recently closed 10 stores, has become a showroom for amazon.com. Consumers visit Best Buy, check out the product they’re considering, then go home and order* their preferred model online. I’ll admit that I’m guilty of doing this exact thing when shopping for a high-definition television, not because Amazon had a cheaper price, but because the delivery is so much less hassle than dragging a TV home myself. It’s small conveniences like this — and probably others that are less apparent — that are driving consumers online.

All this does not mean that the retail industry is in trouble. Only that the mechanics of selling are changing. As Bette Davis said, “Fasten your seat belts. It’s going to be a bumpy night.”

*Or order then and there from their Smart phone.

About Gevril Group

Gevril GroupWatchmaker and wholesale watch distributor Gevril Group is the exclusive U.S. agent for exquisitely designed and crafted European luxury and fashion watch brands, distributing and servicing some of the best affordable luxury, Swiss and fashion watches. Gevril Group also operates a full-service watch repair, staffed by master Swiss watchmakers. Contact Gevril Group by email or by calling 845-425-9882.

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Welcome to the Gevril Outlet


by John Sealander  

If you keep your watches in a glass case, this message will not interest you. But if you actually wear the watches you buy, you’re going to want to visit the Gevril Outlet immediately.

What’s the first thing that happens when you buy a new watch? It’s almost inevitable that you scratch it. Most of these tiny scratches are inconsequential and they don’t detract in the least from wearing the timepieces we love. Truthfully, just about the only way you can avoid these small blemishes is to put the watch in a drawer and never wear it.

What if you could buy a brand new watch at a very steep discount just because it already had a tiny cosmetic imperfection? You can at the Gevril Outlet Store! The Gevril Outlet sells brand new, unused luxury watches that are guaranteed to be in 100% perfect working order, shipped in the original box with full documentation and the manufacturers full warranty*. The only differences between these fine timepieces and other watches that Gevril sells are a few almost invisible imperfections.

Some of the Watches on Sale at the Gevril Outlet

The watches pictured here and more than one hundred others are available online at the Gevril Outlet at the time of this writing.

Gevril Group has always been extremely meticulous about the watches that leave our warehouse. If these fine timepieces aren’t 100% perfect, we send them to our Gevril Outlet and pass the savings on to you. The tiny scuffs or nicks which occasionally occur during shipping, or while the watch is on display in our showrooms are identical to the blemishes your watch will inevitably receive when you start wearing it. Why go through the stress of wondering when you are going to get the first scratch on your new watch, when you could be enjoying wearing it at a huge discount instead?

New Brand Name Watches Deeply Discounted

Every timepiece available for purchase at the Gevril Outlet is a brand new watch. These luxury watches have never been worn and are fully guaranteed to be in 100% working order. Each watch is shipped in the original packaging with complete documentation and a full manufacturer’s warranty*. Any imperfections are clearly detailed on the Gevril Outlet website, so there will be no surprises.

Savvy shoppers have already discovered that buying a watch at the Gevril Outlet is a win/win proposition. They have a unique opportunity to obtain their favorite timepieces at a significant discount, while eliminating the stress of wondering when they’re going to get that inevitable first scratch. If you want a blemish free watch, you’re going to have to keep it in a glass case. In the real world, watches get scratched and cars get dinged in shopping center parking lots. To start enjoying the next watch you wear, just go to the Gevril Outlet at http://stores.ebay.com/gevril-outlet and start shopping today.

*Unless otherwise indicated.

About Gevril Group

Gevril GroupWatchmaker and wholesale watch distributor Gevril Group is the exclusive U.S. agent for exquisitely designed and crafted European luxury and fashion watch brands, distributing and servicing some of the best affordable luxury, Swiss and fashion watches. Gevril Group also operates a full-service watch repair, staffed by master Swiss watchmakers. Contact Gevril Group by email or by calling 845-425-9882.

Join the conversation! Follow Gevril Group on Facebook, Twitter and LinkedIn.

Please subscribe to the Gevril Group newsletter and blog digest.

What’s Killing JC Penney?

What's Killing JC Penney?


by Bonnie McEwan  

Q: What’s Killing JC Penney: Bad Management, E-Commerce or Bad Branding?

A: Yes

JC PenneyFollowing-up on our article last week, we continue to examine implications of the troubles at JC Penney, which is in the news again this week for altering its poison pill plan to better defend itself against an activist investor takeover. The retailer has been on the ropes for some time now, a situation that was exacerbated by former CEO Ron Johnson’s failure to remake JC Penney by creating a series of boutiques within the larger store.

Losses and Fallout from Store Closings

Current CEO Mike Ullman, who also preceded Johnson in that position, is credited with stemming the chain’s losses, if not generating profits at this point. Nevertheless, analysts say that Penney’s average sales per square foot from all stores are too low to make the company profitable.

Store closings and layoffs at the chain will save about $65 million and will affect customers and employees in smaller cities and towns in 20 states. This is likely to present serious difficulties for those who become unemployed in a slow economy that has yet to pick up in many of the country’s rural and suburban areas. Customers too may suffer, as many of the stores targeted for closing are among the few retail options available.

Then there’s the real estate issue. JC Penney is an anchor store in malls throughout the American heartland. Once those stores go, it will be difficult if not impossible to replace them. Hundreds of aging shopping centers are already in decline. For some, Penney’s departure will be the blow that sends them into bankruptcy. At particular risk will be those malls that also face closings of other retailers, such as The Gap and Abercrombie & Fitch.

These negative effects are likely to cause JC Penny’s already shaky image to decline even further.

Competition From E-commerce

E-commerce is often cited as eroding business at traditional brick-and-mortar stores like Penney. However, the company does operate its own website, so loyalists will still have online access to Penney’s merchandise. In fact, Penney’s customers who prefer to buy online could have easily been doing so for years, which casts doubt on the idea that e-commerce is responsible for the difficulties at Penney — or any other old school retailer.

The term “old school” begins to get to the bottom of things. Although Johnson was not able to revitalize Penney, he may have grasped its underlying problem: lack of store traffic. Before customers can make purchases, you must get them in the door, and that begins with branding.

Branding

If you were asked to describe Penney, what would you say? (We pause here for a moment of silence.) Exactly. For most of us, nothing distinctive leaps to mind. If pressed, we might come up with “good value,” or “reliable,” or even “like Sears.” Some Baby Boomers may recall buying a prom dress at Penney or working there part-time during high school. You see, JC Penney isn’t a bad store. It’s just not on the radar screens of today’s GenX and Millennial shoppers.

Now think about, say, Macy’s. Founded in 1858, Macy’s is even older than Penney, but we don’t think of Macy’s as “old school.” It sells vacuum cleaners, hand mixers and steam irons, yet few people would say Macy’s is “like Sears.” Although Macy’s also announced store closings a few weeks ago, it said there would be an equivalent number of new store openings. In 2012, Macy’s sales per square foot were $184 while Penney’s were $116. At the beginning of today (January 30) a share of Macy’s sold for $54.00, a share of Penney’s for $6.33.

So What’s the Matter With JC Penney?

Bad management? Probably. Online competition? Maybe. Bad branding? Definitely.

Even Emmy-winning talk show host Ellen DeGeneres wasn’t able to attract new customer groups to Penney for the long term. When Ron Johnson brought her on as spokesperson, some conservative groups protested. In response, thousands of gays and lesbians vowed to shop at Penney to show support. Social media came alive with questions about Penney, showing just how poorly many people perceived the retailer.

  • “What can I buy at Penney’s?” asked a gay man in New York. The reply: “Just buy anything. You don’t have to wear it. Give it to the Salvation Army.”

  • Columnist Al Lewis in the Wall Street Journal: “Diversity, inclusion, acceptance for all—these are laudable values. The problem is, well, I have never actually met an openly gay person who openly shops at JC Penney.”

Can the Penney’s Brand be Saved?

Unlikely. Brand perceptions are built up over time. It takes many years to change an image, and it seldom works if those changes are dramatic and abrupt. Smart retailers may stick to a successful positioning strategy for years, but they adapt the way they present themselves as their customers and the culture change. Penney’s boxed itself into a corner because it remained relatively the same year after year. When Ron Johnson came along with his changes, loyal customers were repelled while the customers Johnson hoped to attract didn’t have time to become aware of the new Penney.

Meanwhile, CEO Ullman and Penney’s new board — chaired by Arthur Martinez, former Sears CEO (yes, really) — soldier on.

About Gevril Group

Gevril GroupWatchmaker and wholesale watch distributor Gevril Group is the exclusive U.S. agent for exquisitely designed and crafted European luxury and fashion watch brands, distributing and servicing some of the best affordable luxury, Swiss and fashion watches. Gevril Group also operates a full-service watch repair, staffed by master Swiss watchmakers. Contact Gevril Group by email or by calling 845-425-9882.

Join the conversation! Follow Gevril Group on Facebook, Twitter and LinkedIn.

Please subscribe to the Gevril Group newsletter and blog digest.

Store Closings at JC Penney: An Isolated Case or a Troubling Trend?

JC Penny on a Rainy Day - Photo: Justin Sullivan, Getty Images


by Bonnie McEwan  

JC PenneyIn mid-January, JC Penney announced that, in a bid to stem losses, it will close 33 of its stores and cut 2,000 jobs, resulting in about $65 million in savings per year. The announcement came just a few months after former CEO Mike Ullman returned to the retailer in an attempt to patch things up following a disastrous, failed makeover by CEO Ron Johnson, who was ousted in April 2013.

Macy’s Lawsuit

Johnson had attempted to transform Penney’s by remodeling its stores into a collection of boutiques. Not only did this strategy fail to charm customers, it resulted in a lawsuit filed against Penney’s and its would-be partner Martha Stewart Living Omnimedia (MSO) by Macy’s Inc.

Macy’s contended that the Penney’s deal infringed on its exclusive rights to sell Martha Stewart merchandise. In October of last year, Penney’s, now under the leadership of Ullman, scaled back its relationship with Martha Stewart. It agreed to sell 11 million shares of MSO, which it purchased in 2011 for $38.5 million, and to give up its two seats on the MSO board. While this move apparently placated Macy’s to some extent, it is still suing for damages.

Mike Ullman’s Actions

Meanwhile, Ullman has recruited Stephen Sadove, chief executive of Saks, to the JC Penney board and is restoring some of the features that Johnson cut, such as Penney’s popular private-label brands. In November, Penney’s reported its first monthly gains in same-store sales in two years and says it sees rising demand for men’s apparel, women’s accessories and home products. However, as of January 15 of this year, Penney’s had not provided sales data for December 2013, which leaves some analysts wondering if the gains are sustainable.

Other Store Closings

Paul Swinand, an analyst with Morningstar, told Bloomberg News that the closings indicate all is not well, although “it’s also not a massive restructuring.” In fact, the closings represent just 3% of Penney’s stores and 2% of its total workforce. Contrast this with other retail store closings in 2013, such as The Gap, which closed 21% of its U.S. stores (189 out of 889) and Abercrombie & Fitch, which is in the process of closing 18% of its U.S. stores (180 out of 1,014).

There were a number of other retail store closings in 2013, including The Jones Group (closing 170 stores out of 594, or 29%), Blockbuster and Fashion Bug — both of which went out of business — and Barnes & Noble (closing 189 stores over the next 10 years, or 14%). Macy’s announced that it would close five stores, but also open five new ones. In Macy’s case, the closings appear to be a move to generate efficiencies by consolidating some functions and territories.

Are Store Closings a Trend?

Over the past several years, many retailers have struggled with restrained consumer spending, a situation that continued throughout 2013. L Brands Inc. and Family Dollar stores, for instance, cut profit forecasts after a disappointing December, although U. S. retail sales did rise 2.7% overall in November and December. This rise in sales, combined with a closer look at the reasons underlying certain retail closures, seem to indicate that there is not an overall negative trend in the retail industry.

Rather, mature brands and retail stores like Penney’s — some of which have been in trouble for years — are adjusting to a changed operating environment where there are new competitors, including brick-and-mortar stores such as Uniqlo and Joe Fresh, seasonal and temporary pop-up stores, and online membership stores, like One King’s Lane and Rue La La. Changes in technology also play a major role. It’s no secret that brick-and-mortar bookstores and video rental chains have been under pressure for years from online competitors, e-readers and new devices that stream digital music and video.

The New Consumers

Consider too that the Millennial generation has come of age and now constitutes a large proportion of shoppers. These young adults are digital natives whose preferences and habits were shaped by a world that is very different from any generation that preceded them. They are a new breed of customer and the ways they browse, buy and consume require retailers to change some of the ways they’ve traditionally done business. This is natural and we are seeing it evolve before our eyes.

About Gevril Group

Gevril GroupGevril Group is the exclusive US representative for select European watch brands, distributing and servicing luxury, fashion and sports timepieces at a wide range of price points. Gevril Group also operates a full-service watch repair department staffed by master Swiss watchmakers. Contact Gevril Group by email or by calling 845-425-9882.

Join the conversation! Follow Gevril Group on Facebook, Twitter and LinkedIn.

Please subscribe to the Gevril Group newsletter and blog digest.

The Importance of Mobile Commerce for Retailers

Shopping on a Smartphone


by Bonnie McEwan  

Retail is Going Mobile

The latest trend in retailing is m-commerce, in which the ‘m’ stands for mobile. Increasingly, customers are making purchases directly from smart phones. According to Forrester Research, retail sales made on smart phones reached $8 billion in 2012, comprising 3% of total e-commerce sales. For 2013, Forrester predicts that smart phone sales will rise to $12 billion (5% of total e-commerce) and in 2014 $17 billion (6% of total e-commerce). By 2017, m-commerce is expected to account for $31 billion, about 9% of the entire e-commerce market.

Why is Mobile Going Global?

These m-commerce customers told the survey firm comScore that they buy with their smart phones for a variety of reasons. The top four were:

  • On-the-go convenience, cited by 63% of respondents
  • To get special offers and coupons — 52% of respondents
  • Ease of comparing prices to find best deal — 48% of respondents
  • Product was not found in a brick and mortar store — 41% of resondents

What Retailers Can Do About It

This preference for m-commerce has some significant implications for retailers:

  1. You must be sure that your website — in this situation, referred to as a mobile site — is optimized for the small screen, whose average size is about 2.5 x 3 inches.
  2. You should also offer free ‘apps’ — short for applications — for all the major smart phone operating systems. [An app is a small piece of software that is downloaded to a mobile device to facilitate online activities.] Pay special attention to developing a good app for Apple’s iOS, since iPhone owners do substantially more mobile shopping than owners of other brands.
  3. You may also want to investigate selling watches and other products via a virtual store within one or both of the two most heavily trafficked m-commerce sites, eBay and Amazon. Consider this: eBay receives 6,400 unique monthly visitors, each of whom visits the site an average of 7.5 times for an average of 10 minutes per visit. Amazon is close behind, with 5,824 unique monthly visitors, each of whom visits an average of 5.6 times per month and remains on the site for about10 minutes. Some major retailers sell on these sites, including Target on Amazon and Brookstone on eBay.
  4. If you sell retail from temporary locations, such as outdoor kiosks, pop-up stores or Christmas village shops, there are m-commerce products for your smart phone that make selling more convenient. For example, a company called Square makes a small device that attaches to your smart phone and enables it to take credit cards. There’s no need for card machines or electrical access. Just slide the customer’s card through the Square device. It will record the sale, send an electronic receipt to the customer’s phone and that’s it.


An interesting mobile development for watch retailers is the budding popularity of smart watches, which are predicted to be big for 2013 holiday gift-giving. Several brands are already on the market, although there aren’t many apps available at this point. You can read all about the new smart watches at SmartWatchNews.org, and perhaps be one of the first retailers to create an app for these novel devices. (Very Dick Tracy.)

About Gevril Group

Gevril GroupGevril Group is the exclusive US representative for select European watch brands, distributing and servicing luxury, fashion and sports timepieces at a wide range of price points. Gevril Group also operates a full-service watch repair department staffed by master Swiss watchmakers. Contact Gevril Group by email or by calling 845-425-9882.

Join the conversation! Follow Gevril Group on Facebook, Twitter and LinkedIn.

Please subscribe to the Gevril Group newsletter and blog digest.

US Postal Service and Amazon Team Up to Inaugurate Sunday Deliveries

Amazon Delivery


by John Sealander  

Amazon Makes Two-Day Deliveries a 24/7 Promise

AmazonFor the first time ever, the world’s largest Internet retailer will now be delivering orders on Sunday. In an unprecedented partnership with the US Postal Service, Amazon.com has started offering its online customers Sunday deliveries in select US markets. The new Sunday delivery service has already arrived in New York and Los Angeles, and Amazon plans to expand it to a large portion of the US population in 2014, including Dallas, Houston, New Orleans and Phoenix.

Members of Amazon’s popular Prime Service will pay nothing extra for this new delivery option. They can now buy products on Friday and get Sunday delivery for free. Non-Prime members can also take advantage of free Sunday delivery on orders of at least $35.

Saving the US Postal Service?

This innovative partnership with Amazon is a welcome new source of revenue for the financially struggling US Postal Service. The fastest growing segment of our business is the package business,” Postmaster General Patrick Donahoe said. “The future of package delivery is a seven-day-a-week schedule. We’ve got the capacity to do it.”

Could private companies like Amazon help the US Postal Service become profitable again? It’s entirely possible. The postal service already expects to deliver 420 million packages this holiday season. This represents a 12% increase over last year, and the new partnership with Amazon could significantly increase these numbers.

Amazon Getting Even Quicker

Amazon is committed to service. It has been spending billions of dollars building new warehouses around the world so it can deliver products more quickly. By offering seven-day-a-week deliveries, they can keep these sophisticated warehouses working for customers on a 24/7 basis, becoming even more productive in the process.

“The three big pieces of growth for us are selection, lower prices and speed,” says Dave Clark, Vice President of worldwide operations and customer service for Amazon “Adding an additional day to our delivery schedule is all about speed. Now, an Amazon customer can order a backpack and a Kindle for their child on Friday and be packing it up on Sunday for school on Monday.”

Sunday deliveries will benefit Amazon, the US Postal Service and customers everywhere. It is a win-win for everybody and you can only wonder why nobody thought of this before.

About Gevril Group

Gevril GroupGevril Group is the exclusive US representative for select European watch brands, distributing and servicing luxury, fashion and sports timepieces at a wide range of price points. Gevril Group also operates a full-service watch repair department staffed by master Swiss watchmakers. Contact Gevril Group by email or by calling 845-425-9882.

Join the conversation! Follow Gevril Group on Facebook, Twitter and LinkedIn.

Please subscribe to the Gevril Group newsletter and blog digest.