RETAIL PERILS

Retail industry experts expect a tumultuous 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 millennial.

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 short-term 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-checkout 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.

Competing 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 chooses the same retailer in both delivery channels.

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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.

INDUSTRY STANDARDS

The Problem for Small-Town Banks: People Want High-Tech Services

Small and medium businesses, especially new operations, have the challenge of matching service standards in competing for customers against industry leaders. Industry leaders benefit from brand awareness of not only their name, but their product lines. New players must generate both.

In many industries, there are minimal performance expectations that producers must meet to qualify as a viable option for consumers. In the above article, community banks struggle to meet the convenience standards big banks established in the minds of consumers. Online banking capabilities makes people less likely to go into a branch.

Community banks need to find strategies to provide similar convenience if they want to avoid bank runs.

TRASH TO POWER

SYNOVA Garbage In, Energy Out: Synova Power Turns Waste Into Electricity (Entrepreneur)

Free enterprise will always be the sources of our nation’s best ideas. In the above link, Synova might have found a direct solution to utilizing garbage for the creation of power, which would reduce landfill utilization and ocean pollution. While some on the far left of center want to create green armies, Synova uses innovation and entrepreneurship to identify rational solutions.

FREE MARKETS AND SPORTS

The broken winter: Why baseball must fix free agency ASAP(ESPN)

The anxiety for the fans waiting for free agent decisions is understandably high. But that does not mean market economics failed.

As mentioned in the article, baseball executives are learning from past spending mistakes. Utilizing data and information to make the best informed decision possible. To decide whether to bid or pass on assets. Doing so requires change in offer structures and more time for both sides to analyze contract value.

Market economics at its core reflect the true price a buyer is willing to pay for a product or service and the price the seller is willing to accept. Market economics at its best occurs when both buyer and seller are highly informed about the total value and impact of transactions. Baseball executives are now becoming more informed buyers and more efficient spenders.

Most unionized structures are the exact opposite of free markets. Many deny the individual of the opportunity to maximize value attainment. What is perceptually good for the gander may harm individual geese.

Baseball fans need to be patient. Teams are being more analytical in decision making and players are demonstrating greater patience to maximize value. Monster contracts of the past harmed both teams operation and the reputation of players not living up to fan expectations. Now, the market is correcting itself.