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Lesson learned

BY DSN STAFF

Greed is good, a Hollywood actor famously said onscreen nearly three decades ago. Perhaps, but usually only for a few players in the overall market and, even then, only for a short time. Persistence and patience may be better characteristics for decision-makers, particularly in the ever-changing mass retail industry.

Take notes, and remember not to do what these chains did.

Case No. 1: Macy’s Nearly two decades ago, executives at the giant department store chain felt that doing well was not enough. So, they changed their merchandising approach to become much more mainstream and, hopefully, attract a broader consumer base. More shoppers in the store, more money in the cash register, they ascertained.

Well, it never quite worked out that way. As Macy’s became more pedestrian in terms of the consumer it attracted, it quickly found that its traditional shopper, those upscale consumers with lots of disposable income, would not have any of it. They stopped shopping the chain. Of course, it did not help that Nordstrom was making a big push for these more affluent shoppers at about the same time.

The result: Macy’s is now the department store of the middle class consumer — who unfortunately does not shop department stores as much as they once did — and must rely on nearly constant discounts to get its dwindling consumer base to shop the chain.

Consistent corporate press releases announcing more store closings are not helping the company’s status with shoppers, and most industry experts expect an even smaller Macy’s in the years ahead.

Case No. 2: Toys “R” Us It is pretty hard to determine when this toy chain started to cross the line in terms of greed. Some say it could be as far back as the late 1980s. Whenever it was, it is a classic case of greed. The chain was doing great during the go-go ’80s and early ’90s, but the decision to add other operations, such as Babies “R” Us and Kids “R” Us, cannibalized sales enough to start the operation on a downward spiral.

Of course, with pressure from Wall Street mounting, the chain’s executives turned to the ultimate get-rich scam — private equity money. Sure, they cashed out, but it left the chain with about $5 billion in debt and, as we now know, there was simply no way it was going to be able to dig out from under all that.

It took more than a decade, but the chain announced last month that it was liquidating, which caught absolutely no one by surprise. The big winners in all of this are the few remaining independent toy store operators who find a niche with shoppers confused about where to shop for toys in brick-and-mortar stores, especially around the Christmas holiday shopping season.

Case No. 3: Sears/Kmart This one is simple. Leadership in the 1990s failed to keep up with the times because it did not want to spend the money, and then it implemented some pretty bizarre merchandising strategies to grab the consumers’ attention — most failed.

Someone then got the bright idea to purchase Kmart, which may have been the only other chain in more dire straits than Sears, and merge the two operations together. Of course, no one bothered to update the store merchandising plans or even the stores themselves. Shoppers stopped shopping. Now, the merged chain is barely hanging on, and everyone in the industry says it is down to being a real estate play for its current ownership.

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