Tag Archives: retail

Deadmalls.com

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The site has not been updated for a year or so but there is a lot of interesting retail information at Deadmalls.com. You can even purchase your own memorabilia (though I was hoping for something more ghastly)!

Four quick thoughts:

  1. The shopping mall was a marvel of the post-World War II suburban era. Today, there are still thriving malls – even in urban locations as they figured out that they needed to play in this game – but plenty of dead ones (27 listed in Illinois alone). The wonder of having all of those stores in one location that is easy to reach by car.
  2. Have the shopping malls been replaced by anything? Shopping online is not the same visceral experience. Perhaps it is big box stores: occasionally when I wander into a Home Depot or Costco or Walmart, I am astounded by the vast size, the number of products, and the relatively low prices.
  3. There are a lot of efforts to renovate or revitalize shopping malls including turning them into lifestyle centers, adding housing, and incorporating new features like skating rinks. Such efforts will probably succeed in a number of malls..
  4. I’m reminded of the portrayal of a dead mall in the book Gone Girl which portrayed it as a suburban wasteland (along with the McMansions). It would be worthwhile to go back to these dead malls sites in a decade or two to see what has become of them. Urban/suburban ruins? New uses?

In economic terms, 1 baseball team = 1 midsized department store

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Following up on the academic consensus that sports do not economically benefit communities, one economist notes the economic impact of sports teams:

“If every sports team in Chicago were to suddenly disappear, the impact on the Chicago economy would be a fraction of 1 percent,” Leeds says. “A baseball team has about the same impact on a community as a midsize department store.”

The reason?

Economists say the biggest reason sports teams don’t have much impact is that they don’t tend to spur new spending.  Most people have a limited entertainment budget, so the dollars they are spending when they go to a game is money they would have spent elsewhere, maybe even at a restaurant or small businesses where more money would have stayed in the community. Plus, Matheson says, rather than draw people to a neighborhood, games can actually repel them.

Don’t underestimate the money generated by large retail stores. When I worked a short stint at a local Target at the end of high school, I remember seeing the board in our office that listed daily sales. The figure was typically around $100,000. That generates a lot of tax revenue through sales taxes and property taxes.

This is more evidence that the more important feature of sports teams in major cities is their social and cultural value. Teams provide something for a city to rally around and contribute to the city’s collective identify. In major cities with millions of people, it is difficult to find features or events that can bring large numbers of people together. Sports teams also provide opportunities for leisure, whether through enjoying the stadium experience or experiencing the game from afar. Now, if only we could find politicians that would admit the taxpayer money going to stadiums or teams was due to the interest in having a common sports identity and leisure experience rather than some grand economic impact…

IKEA in China allowing all sorts of activities in addition to shopping

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IKEA in China is allowing patrons to hang out:

Sociologist Sangyoub Park forwarded us a fascinating account of Ikea’s business model … for China. In the U.S., there are rather strict rules about what one can do in a retail store. Primarily, one is supposed to shop, shop the whole time, and leave once one’s done shopping. Special parts of the store might be designated for other activities, like eating or entertaining kids, but the main floors are activity-restricted.

Not in China. Ikea has become a popular place to hang out. People go there to read their morning newspaper, socialize with friends, snuggle with a loved one, or take a nap. Older adults have turned it into a haunt for singles looking for love. Some even see it as a great place for a wedding.

This stands in contrast to efforts in some McDonald’s in the United States to limit how long patrons can stay. But, this stance might be ingenious for more companies:

1. It may raise the image of the company. It is a cool place to be. Oh yeah, you can buy stuff there as well.

2. In areas that lack public spaces, these retail locations can serve an important function.

3. It may just lead to more sales. Unfortunately, stories like this often don’t include this information.

How the history of mannequins reveals sociological changes in American society

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You might not think to look to mannequins to learn about significant changes in American society:

Mannequins have a rich century-old history. They’re what Dr. Marsha Bentley Hale, one of the world’s leading experts on mannequins, calls “significant sociological reflections of our consumer society.”…

– Until the early 1900s, the most common mannequins had no head, arms or legs. But by 1912, with the rise of mass production clothing, full-fledged human figures became popular.

– During the Depression era, mannequins were inspired by Hollywood starlets as many Americans took refuge in movie theaters, according to Eric Feigenbaum, chair of the visual merchandising department of LIM College, a fashion college in New York City. But during World War II, the displays took on a somber tone to reflect more subdued fashions, he says.

– After World War II, mannequins started looking playful again. But sexuality was squelched during the 1940s and the 1950s. In fact, many American retailers removed the nipples of the older mannequins because they were considered too sexual, says Dr. Hale.

Read on to reach the present day where there are more realistic mannequins. I wish there was more analysis here to further explain how mannequins reflect American ideals and perceptions about the body. Plus, are there big differences in mannequins aimed at men or women or in different class settings (like differences between cheaper clothing lines versus higher-end retailers)?

Stores have cash registers, give receipts to prevent cashier theft

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Megan McArdle explains that businesses don’t have cash registers or receipts for the good of consumers; it is to prevent cashiers from taking money.

The great innovation of the National Cash Register company was to market registers not so much as adding machines but as devices for preventing theft. Here’s Walter Friedman’s “Birth of a Salesman” on how these machines were made ubiquitous:

Because of the high price of NCR cash registers, sales agents had to convince proprietors that the machine would eventually pay for itself. NCR’s early advertisements resembled the contemporary flyers of life-insurance. In both, the aim was to heighten customer fear and uncertainty. In the cash-register trade, the fear centered on stolen revenue. One of Patterson’s advertisements, proclaiming “Stop the Leaks,” depicted shop owners ruined by clerks who stole from their cash drawers. This marketing strategy posed problems for NCR, because clerks and bartenders resented the implication that a mechanical “thief-catcher” was a necessary coworker. Some even organized protective associations to keep the product out.

In instances of intense opposition by clerks to newly installed registers, Patterson sent detectives to supervise the machine’s operation. NCR for June 1888 printed a letter from a merchant in Detroit whose store had been watched by an NCR-hired detective. “Your operative’s report relative to my man not registering is at hand. I was very much surprised, as it caught a man, above all others, I have relied upon, not only in the bar but in other matters in the house.”That’s why cash registers ring loudly when the cash drawer opens — so that a clerk with decent mental arithmetic skills can’t pretend to register your sale and then pocket the cash. And that’s why you get a physical receipt — so that the clerk can’t ring up part of your sale, and then siphon the rest into his own pocket.

In other words, NCR helped create the market for their goods by playing up certain fears. Friedman’s link to life insurance is an interesting one; sociologist Viviana Zelizer has written about how life insurance was once viewed as morbid but came to be viewed in the 1800s as a necessary provision for one’s family. This is like the cash register as the good businessperson has to have a cash register. It also sets up an interesting new source of alienation between companies and workers: the basic retail employee can’t be trusted with money.

One reason to look at the social history of products is to note how they are not objects humans inherently need. They are social constructions.

When Dominick’s stores close, suburbs lose tax dollars, gathering places

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Amidst the news stories detailing the closing of Dominick’s stores in the Chicago area, one article highlights its effects on suburban communities:

Bruce Evensen, a DePaul University journalism professor, compared the news with the closing of Marshall Field’s in 2006. He said he has been a longtime Dominick’s shopper after living in the Arlington Heights and Mount Prospect area for the past 20 years.

“It’s a sad day,” said Evensen, 62. “To see it close is not just the closing of a store but the closing of an experience. After years of checking out, you get to know the staff, their families and their dreams. It’s the ending of that part of their lives.”…

Naperville City Manager Doug Krieger called the stores significant sales tax contributors, and expressed hope that new tenants would fill the locations.

Michael Cassa, president of the Downers Grove Economic Development Corp., said that it’s too early to know the potential effect, but the village’s only Dominick’s sits in a busy commercial complex along the main business corridor.

There are two arguments as to how closed stores will affect suburbs:

1. They will lose out on tax dollars. Grocery stores are the sort of businesses that have regular consumers – we all have to eat. Additionally, it can be hard to refill big box stores that close down. New businesses might want to construct new buildings and it would be hard for a single large company to take over all of the closed stores. That means individual suburbs will have to try to attract new businesses into large buildings.

2. In suburbs which are marked by fragmentation and more home-centered social life, persistent social institutions are limited. Local schools and religious congregations help fill that void but grocery stores could also play that role. Again, since people have to eat, customers are likely to be in and out regularly. They may even be there enough to know a lot of the details about the store as well as get to know employees and fellow customers. Interestingly, the same claims are rarely made about Walmarts or Targets – but perhaps similar arguments will be made in the future once these stores have been in communities for decades.

It is interesting to watch the sadness over Dominick’s closing. There are certainly lots of workers affected and it is unclear where they will all end up. However, this cycle of corporate merging and sell-offs seems fairly normal to me. Perhaps that is because I grew up in the Chicago area going to other grocery stores. Or perhaps it is because I’m used to our times where companies are viewed less as community institutions and more of places providing services that could be here one year and not the next.

Painting the church of Walmart

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Lots of “normal” activities take place at Walmart so why not spiritual matters as well? Artist Brenden O’Connell has taken up the subject:

For the past decade, O’Connell has been snapping photographs inside dozens of Wal-Marts. The images have served as inspiration for an ongoing series of paintings of everyday life — much of which involves shopping, which O’Connell calls “that great contemporary pastime.”

“Wal-Mart was an obvious place” to look for inspiration, he tells The Salt. “It’s sort of the house that holds all American brands.”…

Wal-Mart stores, he notes, are “probably one of the most trafficked interior spaces in the world.” In the tall, open, cathedral-like ceilings of Wal-Mart’s big-box stores, he sees parallels to church interiors of old.

“There is something in us that aspires to some kind of transcendence,” he told me back in February. “And as we’ve culturally turned from religious things, we’ve turned our transcendence to acquisition and satisfying desires.”

In conversation, O’Connell comes across as thoughtful and urbane. He’s well aware that, as a company, Wal-Mart can be polarizing. But “regardless of your feelings about it,” he told me back then, “it just is. It’s like an irrevocable reality that’s part of our experience.”

On the occasions that we go to church and then Walmart afterward, I have joked that we are visiting America’s two kinds of churches. This may not be too far from reality considering the number of shoppers at Walmart, its yearly sales, and the power of its brand. But, it is really that surprising that a retail store could be the contemporary version of a spiritual space when our country is so devoted to consumption and shopping?

In response to emergencies, companies seek out more distribution centers

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A number of companies are now pursuing a new distribution center strategy in order to be better prepared for disasters and other disruptions:

Major storms like Hurricane Sandy and other unexpected events have prompted some companies to modify the popular just-in-time style of doing business, in which only small amounts of inventory are kept on hand, to fashion what is known as just-in-case management.v

The shift has led retailers and logistics companies to alter supply chains by adding distribution hubs, according to the CoStar Group, a real estate research firm in Washington. In turn, the hubs are creating real estate opportunities in markets on and off established distribution paths, including growth in markets outside the traditional seaport hubs on the East and West Coasts…

Just-in-case is a response to the vulnerability of just-in-time supply chains, said Rene Circ, CoStar’s director of industrial research. Since the 1990s, just-in-time has made sense for many companies looking to reduce the cost of keeping large inventories on hand. Technology enabled retailers and manufacturers to closely track and ship items to replace merchandise sold or components consumed in production…

The tendency toward numerous distribution facilities runs contrary to a strategy that was common just after the recession, when some companies sought efficiency by consolidating warehouse operations, according to Bob Martie, executive vice president for the New Jersey region at Colliers International, a real estate service provider.

Consumers may not pay much attention to this distribution chains. In fact, they may only really notice them when major events disrupt them. However, the distribution system is incredibly important for the American consumer economy. The reason products are on the shelves when consumers want them is due to this. Companies argue more efficient systems help them keep costs down. Better planning can reduce truck traffic on local roads.

This article adds another twist to the distribution center story: there is money to be made in distribution center real estate. Perhaps quite a bit of money.

Fighting over the most expensive Christmas tree lot in New York City

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Prices are higher in New York City. This even extends to the cost of renting Christmas tree lots which has led to a battle between two New York City Christmas tree entrepreneurs:

“SoHo Square,” says Scott Lechner, who pays the New York City Department of Parks and Recreation close to $50,000 a year to sell trees here, “is the most expensive site in the world.” He doesn’t sound proud of it.

But Lechner must bid high to stay ahead of his onetime protégé, George P. Smith, who has been on something of a spending spree since he outbid Lechner and took over his Washington Market space in 2007. Smith has also made waves with a huge takeover bid for the Marine Parkway spot in Brooklyn, and has tried to do the same in SoHo and elsewhere.

Smith now has seven locations; Lechner has nine. The two are bitter enemies. Lechner calls Smith an “unsavory individual,” who was “fired by my organization for malfeasance and dishonorable conduct.” (“He hates my guts,” Smith says.)…

The contested Washington Market space — one of 21 the parks department has auctioned off to vendors for the month — was the site, in 1851, of the first urban tree lot in the United States, for which a Catskill woodsman named Mark Carr paid a silver dollar in rent. Today, Smith says he plays close to $30,000 a year for a mere 33 days of sales.

Even in the nation’s most expensive ZIP codes, these rents are, for the moment, somewhat unusual. Rents for many other tree sales sites in the city remain in the low thousands. In 2011, a space on Central Park West was $1,150. DeWitt Clinton Park on West 44th St. was $2,500. Essex Playground, $3,960.

The rest of the story notes that this has been a good thing for the city’s parks department whose is raising more revenue in the competitive bidding for these lots. With many cities facing fiscal issues, I’m sure New York City is happy to have this extra money. Of course, this has repercussions: people buying trees at these lots now pay higher prices.

This could lead to an interesting discussion about whether Christmas trees should be treated more like public goods that shouldn’t be so expensive. For a resident of Manhattan who has no individual vehicle, acquiring a Christmas tree, real or fake, could be a difficult task. This sounds like a more limited market where the consumer is already behind and may not be able to comparison shop much. The average suburbanite, on the other hand, has more options.

This also reminds me of sociologist Mitchell Duneier’s ethnography Sidewalk. Toward the end of the book, Duneier discusses how a family who comes to the city for a month each year to sell Christmas trees is treated much differently than the homeless black men who are street vendors in the community all year long. The contrast is striking: because the tree vendors are white and respectable, local residents interact with them regularly while having more antagonistic relations with the black street vendors. Apparently, getting into the Christmas tree game in New York City takes some major money and this limits who can can sell such goods and participate in community life.

Sears hopes Moneyball addition to its board can help revive the company

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Here is an odd mixing of the data, sports, and business worlds: Sears recently named Paul Podesta to its board.

Paul DePodesta, one of the heroes of Michael Lewis’ “Moneyball: The Art of Winning an Unfair Game,” a great 2003 baseball book (and later a movie) about the 2002 A’s that’s more about business and epistemology than baseball, has been named to the board of Hoffman Estates-based Sears Holdings Corp.

To be sure, he’s an unconventional choice for the parent of Sears and Kmart. But Chairman Edward Lampert is thinking outside the box score, welcoming the New York Mets’ vice president of player development and amateur scouting into his clubhouse…

“What Paul DePodesta … did to bring analytics into the world of baseball is absolutely parallel to what needs to happen — and is happening — in retail,” said Greg Girard, program director of merchandising strategies and retail analytics for Framingham, Mass.-based IDC Retail Insights.

“It’s a big cultural change, but that’s something a board member can effect,” Girard said. “And he’s got street cred to take it down to the line of business guys who need to change, who need to bring analytics and analysis into retail decisions.”…

“Analytics has been something folks in retail have talked about for quite some time, but they’re redoubling their efforts now,” Girard said. “Drowning in data and not knowing what data’s relevant, which data to retain and for how long, is the No. 1 challenge retailers are having as they move into what we call Big Data.”

Fascinating. People like Podesta are credited with starting a revolution in sports by developing new statistics and then using that information to outwit the market. For example, Podesta and a host of others before him (possibly with Bill James at the beginning), found that certain traits like on-base percentage were undervalued and teams, like the small-market Oakland Athletics, could build decent teams without overpaying for the biggest free agents. Of course, once other teams caught on to this idea, on-base percentage was no longer undervalued. The Boston Red Sox, one of the biggest spending baseball teams, picked up this idea and paid handsomely for such skills and went on to win two World Series championships. So teams now have to look at other undervalued areas. One recent area that Major League Baseball shut down was spending more on overseas talent and draft picks to build up a farm system quickly. These ideas are now spreading to other sports as some NBA teams are making use of such data and new precise data will soon be collected with soccer players while they are on the pitch.

The same thought process could apply to business. If so, the process might look like this: find new ways to measure retail activity or hone in on less understood data that is out there. Then maximize a response to these lesser-known concepts and move around competitors. When they start to catch on, keep innovating and stay ahead a step or two. Sears could use a lot of this moving forward as they have struggled in recent years. Even if Podesta is able to identify trends others have not, he would still have to convince a board and company to change course.

It will be interesting to see how Podesta comes out of this. If Sears continues to lose ground, how much of that will rub off on him? If there is a turnaround, how much credit would he get?