Tag Archives: retailers

Mr. Selfridge got his start in Chicago’s department stores

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Henry Gordon Selfridge hit it big in London (and on PBS) but got his start in Chicago’s burgeoning department store scene:

“Within a short time after he entered the employ of the Field store he met the first Marshall Field and made a favorable impression by asking for a job as manager of his department,” the Tribune recalled upon Selfridge’s death in 1947. “He won the job and from then on his rise was rapid.”He proved to have a knack for advertising, then a rare business skill. He was the first to promote holiday sales with the reminder: “Only ___ shopping days until Christmas.” Some credit Selfridge with the department store’s celebrated motto: “The customer is always right.”

In 1890, he became a partner in Marshall Field’s and married Rose Buckingham, a member of a prominent Chicago family. One of Rose’s bridesmaids, Kate Buckingham, donated Buckingham Fountain in Grant Park. An entrepreneur in her own right, Rose bought property on Harper Avenue between 57th and 59th streets, where she built and sold 42 homes. She also was an accomplished horticulturist. The Tribune reported she had a collection of 2,000 orchids…

The girls got a shot at marrying into the nobility because their father transferred the family’s fortunes to England, almost on a whim. In 1904, Harry Selfridge sold his interest in Marshall Field’s for $1.5 million and bought another Chicago department store, a few blocks south on State Street…

Yes, there was a Selfridge’s in Chicago before there was one in London. But not for long. Having bought it in May, he sold it in June — and the new owners renamed it Carson Pirie Scott & Co. Selfridge then went for a visit to London, where he discovered two differences between doing business there and in Chicago.

Chicago contributed much to the development of department stores which helped transform American retailing. Perhaps London makes for a more attractive place to tell the department store story but Chicago would be a pretty interesting setting in itself with department stores around the turn of the century. Why continue the Dick Wolf Chicago Fire/Med/PD/Justice system when you could go back into an even quicker changing era. Additionally, it would be interesting to see someone tie together several strands of American stores: from general stores and department stores to the big box companies and ubiquitous chain pharmacies of today.

Adaptations to Walmart leaving communities

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Joel Kotkin considers the fate of smaller communities where Walmart has decided to close stores:

None of this suggests that the retreat of big boxes from smaller towns and some urban areas will be painless. Yet those who see this trend as the harbinger of the end of malls or Main Streets may be in for a surprise. Rather than die off, bricks-and-mortar shopping will change, adding new elements and moving from ever greater uniformity to more variety and differentiation, which are critical to independent business’s survival. Much of this change will take place in small towns, but also in suburban areas, which have long been the happy hunting ground of big boxes.

Why not in the big cities? One of the chief ironies of our times is that chains and their attendant sameness now define much of our most sophisticated urban core—Starbucks on every corner, global brands and restaurants serving the same trendy cuisine. The recovery of large cities, suggests New York researcher Sharon Zukin, has also made them more alike by “bringing in the same development ideas—and the same conspicuous textual allusions and iconic corporate logos inevitably affixed to downtown architectural trophies—to cities across the globe.” Efforts to make the city “safer and less strange to outsiders’ eyes”—tourists, expatriates, media producers, and affluent consumers—are making one global city barely indistinguishable from another…

Some small towns—and suburbs even more so—will be transformed by immigrants and millennials, who may want to set up their own unique shops along the very Main Streets once targeted by firms like Walmart. In wealthier communities, this may mean more boutiques and high-end restaurants. But among less affluent areas, other institutions, such as cooperatives—300 already nationwide and another 250 on the way, as well as farmers markets—could provide some of the products that many once found at Walmart…

As the retail world become more digitally focused, and less big-box-dominated, there is a golden opportunity to restore the geographic and local diversity that has seemed doomed for nearly a half-century, but now may enjoy a new burst of life.

There is little doubt that the retail industry will continue to change. Walmart and other large corporations may seem inevitable today but they didn’t exist decades ago and may not have much presence in the future. Yet, Kotkin seems pretty optimistic about online retail which requires its own set of adjustments as well as infrastructure that could be threatened in the future.

For small towns and many suburbs, do these future changes leave much space for residents themselves to create and experience local differences? On one hand, online retail offers customization yet relies on large companies located elsewhere and on the other hand, local diversity in things like restaurants and small stores draws upon local entrepreneurs. Is the secret to promote an experienced based consumption – local culture and food – as opposed to decades of goods based consumption?

Shopping malls adapting with new purposes and targeted groups

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Joel Kotkin argues shopping malls aren’t dead – they’re changing their purpose and targeting wealthier and ethnic consumers.

To be sure, there are hundreds of outmoded malls, long-in-the-tooth complexes most commonly found in working-class suburbs and inner-ring city neighborhoods. Some will never come back. By some estimates, something close to 10 to 15 percent of the country’s estimated 1,000 malls will go out of business over the next decade; many of them are located in areas where budgets have been very tight, with locals tending to shop at “power centers” built around low-end discounters such as Target or Walmart.

But the notion that Americans don’t like malls anymore is misleading. The roughly 400 malls that service more-affluent communities—like those typically anchored by a Bloomingdale’s or Nordstrom—recovered most quickly from the recession, and now appear to be doing quite well.

To suggest malls are dead based on failure in failed places would be like suggesting that the manifest shortcomings of Baltimore or Buffalo means urban centers are not doing well. Like cities, not all malls are alike.

Looking across the entire landscape, it’s clear the mall is transforming itself to meet the needs of a changing society but is hardly in its death throes. Last year, vacancy rates in malls flattened for the first time since the recession. The gains from e-commerce—6.5 percent of sales last year, up from 3.5 percent in 2010—has had an effect, but bricks and mortar still constitutes upwards of 90 percent of sales. There’s still little new construction, roughly one-seventh what it was in 2006, but that’s roughly twice that in 2010.

In other words, shopping malls today can’t afford to try to target everyone at once. Rather, the retail market has both exploded with opportunities and fragmented, meaning that malls and other retailers have to target particular groups. This is going to be easier in areas that have money or lack other retailers or have growing populations.

Of course, Kotkin isn’t particularly worried that shopping malls are taking over the Main Street function for suburbs and other communities. There are issues with this: this is privatized space that often requires a car to get to and its primary activity is consumerism. Indeed, if people focused on activities other than shopping (which remains a very popular activity), our version of  capitalism might ground to a halt:

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Still, many communities will be happy if shopping malls continue as they are economic boons through sales taxes and jobs.

Shopping the real favorite sport of Americans?

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At the bottom of yet another article about Black Friday, I found this interesting quote from a Sears executive about how Americans view shopping:

Sears, like many retailers, will make many Black Friday deals available online. At Sears, they’re available to the store’s Shop Your Way members (there’s no fee to join, and it can be done online).

“Shopping is a sport to many people, and this is the Super Bowl,” Hanover added.

Americans tend to like their sports so could shopping really supplant football, baseball, basketball, hockey, and other activities? Here are some reasons this could happen:

1. The average American probably gets a lot more opportunities to shop than to play sports. It is different to observe a sport versus participating in shopping.

2. Shopping can now take place in many different places. As brick and mortar retailers have noticed, online shopping makes it possible to look at, think through, and make purchases from virtually anywhere.

3. Shopping is a fairly frequent activity. Even if someone spends very little disposable income, that person still has to shop for groceries and essentials.

4. Shopping incorporates some of the same features as watching sports or cheering for sports teams. Shoppers are fans of particular brands. Shopping can be done with other people, building and cementing group bonds. Shopping can be ritualistic. In other words, the same sort of social benefits of group activity suggested by Durkheim that could apply to sports could also apply to shopping.

5. Shopping is a critical part of our economy. While people do need to purchase certain goods regularly, new products like the latest smartphones, cars, video games, and other things are important for corporations, the stock market, and thus, stockholders which includes a wide range of Americans.

6. Shopping in America is often tied to holidays like Christmas, Thankgiving, and Halloween. Spending can be easier to justify because it is for the holidays plus it is related to social interactions that take place those days.

7. Compared to most of human history, more people now have the time and income to devote to shopping beyond subsistence.

Shopping itself deserves more attention from sociologists. While plenty of sociologists in recent decades have looked at consumption patterns (often focused on the products or objects acquired through consumption), this isn’t quite the same as looking at the process of shopping. I have enjoyed reading Sharon Zukin’s work on shopping; for example, see Chapter 6 “While the City Shops” in The Cultures of Cities.

Zara devotes its full marketing budget to leasing expensive retail space near high-status brands

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Here is a way retailers can take advantage of space: locate near high-status stores.

How about advertising? Basically, Zara doesn’t do it. There is no ad budget. Instead, the company spends ungodly amounts of money buying storefronts next to luxury brands to own the label of affordable luxury:

“The high street is really divided according to brand value,” says [Masoud Golsorkhi, the editor of Tank, a London magazine about culture and fashion], who is also a consultant for fashion brands. “Prada wants to be next to Gucci, Gucci wants to be next to Prada. The retail strategy for luxury brands is to try to keep as far away from the likes of Zara. Zara’s strategy is to get as close to them as possible.”…

Zara stores cozy up to the most famous brands in the world to sing their luxury ambitions even as they profit off a brilliant, cheap, short supply chain that delivers similar fashion at a much lower price.

In this case, proximity matters. By being located near prestigious brands, Zara is pulled up more to their level. Additionally, shoppers willing to wander into the really high-status stores might then also wander into Zara. This seems to be the strategy of the shopping mall as well: utilize several important anchor stores (or anchor facilities/restaurants in “lifestyle centers“) to help bring in more customers who will then also visit other stores along the way.

I wonder: are there any streets or malls where retailers have found ways to expressly disallow stores like Zara? Imagine a high-end outlet mall where there are only high-end retailers and no middle-brow stores or aspiring stores are allowed. Leasing prices is one way to do this but this article makes it sound like firms like Zara can do an end run by paying those big sums and then not spend money on traditional marketing.

The shopping available inside the Pentagon

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The Pentagon has more than just military related offices and facilities within its 6.5 million square feet: it also has shopping.

The Pentagon is one of the largest office buildings in the world. But you are never more than a stone’s throw away from fast food. McDonald’s. Popeye’s. Burger King. There’s a Baskin Robbins barely 50 yards from the press pen, which is just cruel. The Taco Bell is more of a hike, but military life rewards the bold…

Imagine if Thomas Kinkade had served in uniform. That’s what you’ll get at the Pentagon’s paintings shop — gauzy, unsubtle oil-on-canvas depictions (and tasteful reproductions!) of military scenes. Why someone would want portraiture of being wounded in battle is a separate question…

Military life means changing addresses — a lot. To cope with the dreaded PCSing (that is, the verbed version of the acronym Permanent Change of Station; what we civilians call “moving”) there’s a luggage store a few corridors down from the office, and it sells the finest in leather goods. Especially if you like marked-down Louis Vuitton…

Bored by the endless PowerPoints that a day in the Pentagon promises? Sneak out to the Best Buy to figure out how you can finance an iPad on a bureaucrat’s salary. Or linger in front of the big flatscreens and get caught up in a Lost episode. The store has saved many a beat journalist whose voice recorder ate it right before a budget briefing.

It seems like you have quite a large captive set of consumers though it would be interesting to know how many employees visit these retailers. What kind of bidding takes place to get your business in the Pentagon?

This does make me wonder how much designers/architects of big office buildings design things so that workers will stay within the building to spend money at chain retailers. At some point, having a large enough building likely justifies placing a number of service businesses within the building itself. Are there any civilian structures that rival the selection of the Pentagon?

Occupy Wall Street to occupy Black Friday?

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There is a report that some Occupy Wall Street protesters want to take the movement to national retailers on Black Friday:

Some demonstrators are planning to occupy retailers on Black Friday to protest “the business that are in the pockets of Wall Street.”

Organizers are encouraging consumers to either occupy or boycott retailers that are publicly traded, according to the Stop Black Friday website…

“The idea is simple, hit the corporations that corrupt and control American politics where it hurts, their profits, ” states the Occupy Black Friday Facebook page.

A few of the retailers the protesters plan on targeting include Neiman Marcus, Amazon and Wal-Mart.

Besides wondering how many people will do this, it raises other questions:

1. Would most or even a sizable minority of shoppers welcome the protesters? I would guess not. People might think that the income and power situation in the United States is unequal but that shouldn’t get in the way of good sales.

2. Why are certain corporations singled out in this list (though they do suggest going after the top 100 retailers)? Why not Target? Walgreens? Kroger’s? Costco? If it is all big corporations that are the targets, will the protesters be evenly distributed or will they go for the typical targets like Walmart and McDonald’s that are often tied to sprawl and excessive consumption?

3. How exactly does one have a visible protest at Amazon.com? I guess the group could take over the comment boards. If Deadspin can prompt so many responses that ESPN can’t keep up, maybe Occupy Wall Street can do the same.

4. If protesters show up en masse, what will the response of stores be? Is the parking lot of Walmart a public space? (I assume not.)

Viewing the insides of stores on Google Maps

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Adding to its Street View capabilities, Google also will allow browsers to see inside some retail establishments that allowed Google to photograph their interiors:

A test program launched in April of last year was bearing fruit in a growing array of panoramic images taken inside businesses that volunteered to be part of the project.

“We’ve been seeing renewed interest in the past few days because, as promised, we’re getting more imagery online,” Google spokeswoman Deanna Yick told AFP on Monday…

Small businesses in Japan, Australia, New Zealand, and the United States have been able to invite Street View photographers into their shops or eateries to capture images then served up with Google online maps.

“With this immersive imagery, potential customers can easily imagine themselves at the business and decide if they want to visit in person,” Google Maps product manager Gadi Royz said in a blog post early this year.

My big question: will this actually bring more customers inside the shops? I’m skeptical: how many times would someone be wondering about whether they should visit a store, look up the interior image on Street View, and then make a positive decision. What if the image is actually a negative thing, perhaps due to the lighting (I wonder if they adjusted for this), outdated decor, or, for lack of a better term, a lack of “coolness”?

We could also ask whether Google’s efforts in these areas actually encourage in-person community. If given more information in general through search engines, images, and reviews (with Google recently buying Zagat), will people be more likely to venture out of their homes or away from their internet-enabled devices? Will they become overwhelmed with the choices (like Barry Schwartz argues in The Paradox of Choice) and be less likely to choose any?

In the end, Google must think that providing these interior images are going to help them make money.

The online “mega-reviewers”

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One of the innovations of online stores is the ability for users to rate what they like and then for other users to base decisions or comment on those previous ratings. A site like Amazon.com is amazing in this regard; within a few minutes, a reader can get a much better idea about a product.

But statistics from Netflix, another site that allows user reviews, indicate that many users don’t rate anything while there is a small percentage of people who might be called “mega-reviewers”:

About a tenth of one percent (0.07%) of Netflix users — more than 10,000 people —  have rated more than 20,000 items. And a full one percent, or nearly 150,000 Netflixers, have rated more than 5,000 movies. By contrast, only 60 percent of Netflix users rate any movies at all, and the typical person only gives out 200 starred grades.

This rating pattern might fit a Poisson or a negative binomial regression where many people rate none or very few movies while there is a smaller percentage who rate a lot. (A useful statistic in helping to figure out the shape of the curve: while there is 40% that doesn’t rate anything, of the 60 percent who rate any movies at all, what is that median?)

The Atlantic talks to two of mega-reviewers who seem to motivated by seeing what the system would recommend to them after having all of their input. Interestingly, they suggest Netflix still recommends movies to them that they don’t like after watching them.

Collecting online sales taxes

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With so many governments struggling to make ends meet, more states are looking at how to collect more sales tax revenue from online purchases. While Internet users may not like this, it seems like this is primarily being held up by complications about how to collect the money:

Under a 1992 Supreme Court ruling, businesses are responsible for collecting sales taxes on every sale they make in a state where they have a “physical nexus.” In other words, if the business has a store, an office or even a single sales rep in your state, it’s supposed to tack the state’s sales tax onto your bill.

Online retailers like Amazon.com typically don’t add the tax, except in the states where they’re based or where they have physical facilities like warehouses or distribution centers. Amazon, for example, collects sales taxes only in Washington (its home state), Kansas, Kentucky, North Dakota and New York.

The tax is still supposed to be paid, however. And if the seller’s not responsible, then you, the buyer, are. In general, you’re supposed to voluntarily file your own report and pay the standard tax on your out-of-state online purchases. (The appropriate forms are available on state tax agency websites, revenue officials are happy to remind you.)

But it turns out that the vast majority of Americans are completely unaware of those rules, so the forms don’t get filed and the taxes don’t get paid — to the tune of $8.6 billion in 2010 alone, the National Conference of State Legislatures estimates.

Two quick thoughts:

1. Why have states waited so long to get on this? Perhaps they didn’t want to look like the bad guys while things were relatively good.

2. If more of these taxes are paid, what effects would this have on Internet commerce? There would still be benefits to Internet purchases: no need to go out to a store, often a lot more options, delivery to your doorstep. At the same time, would this help traditional retailers?