RETAIL PERILS

Retail industry experts expect a tumultous summer for many retail chains, as they struggle with cost and convenience competition with the larger industry providers. Many are not well positioned in the online sector or even have a viable strategy.  Others simply struggle to maintain connection to core customers, while chasing the ever important millenial.

The increasing number of retailers owned and operated by hedge funds and venture capitalist firms may expedite their downfalls. While many might see improvements in available capital and cashflow, the shortterm focus on delivering results on Wall Street will overshadow the need to improve the performance for Main Street. Investors want better returns, but customer need better experiences and reasons to spend their limited time and money in your stores. While investors will flock back to the stock if EPS and other measures improve, customers may not if too many poor in-store experiences consistently occur.

Improving the customer experience is difficult task for the returns minded leadership, as many states increase minimum wage. Therefore, the same sales associates contributing to issues in the experience become more expensive and harder to replace. A big focus needs to be on reducing the reliance on sales staff by improving the natural layout of the store and the ease of item location. Self check out should be expanded with the needed security enhancement.

Another area of opportunity for retailers with investments in a network of brick and mortar stores is connecting online purchases with in-store pickup. Providing discounts or other perks for in-store purchases related to an online order picked up at the store will increase revenues and engagement. The goal should be having online customers walk in the door and peruse the aisle for items they might not have thought about previously buying.

Competiting against retailers with better established online channels will be difficult and expensive. But, the ability to leverage a well crafted in-store experience with online experiences may prove viable. The online channel is a must for all retailers. But, improving the in-store experience may be vital to ensure the current customer  base choses the same retailer in both delivery channels.

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GOING PRIVATE

Barnes & Noble Nearing Deal to Be Acquired by Elliott Management – The Wall Street Journal

Barnes & Noble is set to go private. The interesting part will be the change in strategy that Elliot Management may implement. The largest physical book retailer in the United States faced many years of decline, despite catering to the tech needs with the Nook devices and app.

The perpetual growth and expanse of technology severely impacted the viability of making bookstore chains and libraries. While some people enjoy the feel and smell of an actual book, others gladly trade away the experience for the convenience associated with digital books, possessing numerous books on a single device. Moreover, the availability of programs that read the book aloud is something hard to pass up.

Some libraries countered the trend by adapting their services and space utilization to better serve their communities. Many provide classes, worker assistance, tax services, and other services  beyond book and video rental. In addition, many provide convenient spots for people to study or work in quiet and semi-comfortable environments.

A path forward for Barnes & Noble may include some similar elements. One may suggest adopting an internet cafe model to some degree, reducing inventory cost by trading bookshelves for tables and chairs. Additionally, it might want to provide access to certain content exclusive to the in-store experience or subscriber network. Balancing the dwindling market for physical books with the desire for convenient spaces to work or surf the web may be appealing and profitable.

Barnes & Noble has partnerships with some colleges for supplying books and operating the related stores. Also, it has partnerships with Starbucks for on-site cafes, which could help expand the internet cafe idea. Barnes & Noble has many opportunities to avoid the fate of Borders and others if it makes strategic choices.

The public will wait and see.

ORGANIZATIONAL LEADERSHIP

There are some companies that all workers aspire to work for and others that struggle to find qualified candidates to fill openings. The difference largely resides around whether a firm is successful in growing revenue, retaining talents, and providing opportunity. Successful organizations tend to be ones that have strong leadership structure and maintain effective leadership values. These companies effectively identify leadership candidates and shape behaviors through programs that integrate corporate values with strategy development and management philosophy.

There are some people that want to alter the stigma around the term “bossy” and somehow make it appear as leadership potential. Regardless of gender, the trait of one being bossy is not a characteristic of a true leader. There is a clear distinction between a leader and a manager. A leader is a person that others inspire to emulate and hold in esteem, while a manager is simply a task master. Leaders make those around them perform better and aspire to be the best form of themselves.

Some feel like leadership qualities are naturally attained but people can develop and improve their leadership skills. Some people are naturally more assertive, but that does not necessarily make them good leaders. Others are accomplished but may lack critical people skills to manage subordinates.  Good leaders are people who passionate about what they do, can influence the behaviors of others, and seek to make teams better for everyone involved. Too many organizations hope to find good leaders when they need to work on programs to develop them.

Every organization should require new managers and supervisors to read the books written by John Maxwell, who provides useful frameworks of leadership and its different stages. In the book, The Five Level of Leadership, Mr. Maxwell explains how one can go from the basic level of leadership, a person with a title, to evolving to the highest level of leadership, which is organizational icon or pinnacle. The process requires development of functional performance, interpersonal skills, and forward thinking to maximize impact to positively change those around them and the entire organization. Although few may achieve the fifth level, all those lucky enough to gain a leadership can work to improve their ability to influence subordinates and inspire them to be the best versions of themselves.

Many organizations do not provide adequate frameworks or support to adequately develop the additional levels with some personal motivation and outside exposure. Many will need to invest in advancing their education by pursuing an MBA or expanding professional development with leadership seminars. Others may need mentorships, learning how to emulate productive behaviors of leaders they respect and value. For some, a combination of both will be useful. Many organizations do not have internal programs to help bridge the gap. The ones that do tend to be organizations that create leaders for internal needs as well as external entities.

Consider General Electric (GE). Despites its current struggles, the iconic American conglomerate maintained strong leadership and professional development programs, where leaders worked with subordinates to groom future leaders. While the organization typically demonstrates loyalty to the lead person at the helm, candidates for the top spot typically have little trouble finding C-suite opportunities elsewhere. Many organizations emulate the programs that started GE to develop leaders as well.

Why do so many organizations not create effective leaders? Many companies empower people to manage workflows and people around them with little consideration for process and quality. Managers are created simply to fill the need of taskmasters, checking off tasks from to do lists. Productivity and performance are important, but how susceptible is the team to turnover or technological advancement. Stereotypically, a manager is hired based on performance and skill set. Over time, without further development, the manager will struggle to retain talented employees, which may prove to threatening to their career.

Going back to GE, what made them successful for decades was the ability to select strong candidates for leadership opportunities and develop them. Changing how organizations evaluate worker performance to attain a complete picture of value created can help identify true talent. The traditional dogma is performance statistics, but other factors should be considered. Workers who effectively coach others and develop process improvements are ones that should attract the attention of leadership. Provide new challenges and expand their organizational acumen to these employees.

Identifying the right candidates is the first important step. The next step is developing programs that help shape the leadership styles and behaviors of these potential candidates. Potential leaders need to understand what standards their organizational will hold them to. Furthermore, frameworks need to be consistent across the organization, ensuring workers experience equitable opportunities regardless of function. Good leadership development programs can create long-term benefits for both the firm and candidates.

Successful organizations are ones with good leadership structures and create leaders. Struggles with employee retention, satisfaction, and turnover can be resolved by developing workers and affording them opportunity. People want to work for companies that value their contributions. Be that company.

Moved from The CRC Review

RETAIL REAL ESTATE IS NOT WHAT IT USED TO BE

Fifth Avenue Losing Luster as Vacancies Climb, Rents Fall – The Wall Street Journal.

Landlords marketing to premium retailers are finding it harder to lease out properties that would once attract top dollar brands. As the retail industry continues to shift, the vacancies in many malls and shopping outlets continue to increase.

The properties located in common luxury markets are no longer insolated from the issues facing the broader industry. In NYC, the famed Fifth Avenue is losing its attractiveness, despite being in the largest city in the United States.

People can buy many luxury brands and products via online channels without the hassle associated with parking, traffic, and other shoppers.

THAT WAS QUICK

Source – AAF to immediately suspend operations (ESPN)

Although not official, many sports news agencies are reporting that the AAF will suspend operations and move towards folding short of completing their inaugural season. The spring football league some hoped would serve as a talent farm for the NFL, where the fringe players could harness their skills. Unfortunately, the league is struggling financially.

Football is king in the American sports world, but it needs to fit into a convenient block of the calendar year. After the Super Bowl, sports fans continue to watch potential free agent news while shifting to other sports. One has to question whether competing with the NCAA tournament was the best approach. Combine the interest in the NBA playoff run and Opening Day in MLB, there might not be a convenient window for another football league.

Given the potential quick hook for the AAF, one must question whether resurrecting the XFL makes any sense. The financial situation for the XFL is much different.

TO PASS A DRUG TEST

Legalized Marijuana Gives Hiring Managers a Headache – The Wall Street Journal.

If hiring managers struggle to fill positions, they might need to reconsider their candidate pools. There are plenty of people who do not partake in marijuana, legal or illegal. In certain, the impact of influence while on the job could be catastrophic, like the building incident in Philadelphia not that long ago. Recreational use may be legal but companies need to consider whether use is an acceptable risk.

SEARS CUSTOMERS

How Sears Lost the American Shopper – The Wall Street Journal.

The above article is a great read on how an iconic American company lost it’s way.

Sears made many mistakes along the way. The lack of concern about the rise of Walmart, Best Buy, and Home Depot. The merger with a bankrupt KMart. The clear lack of concern for store maintenance and appearance. The biggest one was not really knowing its customers and prospective customers.

From the above article,Sears did a lot of things first that are now staples of retail. But, their customer base was not one that sought those conveniences. A clear lack of connection was Sears believing its customers would drive 25 miles to purchase an appliance if they had any other option.

Like many mature companies, Sears leadership valued returns more so than customer growth. Profitability in the near term placed greater importance than profitability in the long term. Sears needed to connect with new audiences to augment its base.

Sears was a great retailer that stood by its products. Sears was a fixture in the homes of many generations. The shame is many future generations may not experience the unique experience of shopping at a Sears.