On the offensive
The end of brick-and-mortar retail may not be imminent, if retailers play their cards right
Well, from my angle, the sky is not falling for the brick-and-mortar retail industry — at least, not yet. How do I know? I spent two solid weekend days in two different malls and three supermarkets a few weeks ago. I expected the malls to be crowded, but what I found were businesses that were overloaded with shoppers, cash registers humming and a general feeling among the store operators that things were good. For a moment, at least, I felt I was back in 1997.
First, I had to park a football field or two away from the buildings, and when I finally got in, the places were packed with people and, trust me, they were not just sightseeing or people-watching. They were walking around buying products, made clearly evident by the number of consumers with shopping bags in their hands at the mall and the crazy checkout lines at the food store.
This was not the week before Thanksgiving or Christmas. It was in mid-March in suburban New Jersey where the outside temperatures hovered around 50 degrees.
Let’s be clear: The digital era is here to stay, and these online retailers will gain their fair share of sales from consumers who are either looking for a great deal, too lazy to get off the couch or simply surfing the web. Plus, Amazon and others are making it very easy for consumers to shop their sites.
But traditional retail has its advantages, too. The big one is that people do not want to simply sit in their homes in front of a computer buying products, no matter what the advantages are. They want to go out and they want to go shopping to see what is new, what is hot and, yes, what other people are wearing and buying. We have heard a lot about the coming death of the American shopping mall. Perhaps only the poorly operated ones with few amenities are really dying.
As we enter the final day of NACDS Annual Meeting here in Palm Beach, Fla., perhaps it is time that our industry officials at this show recognize that there is still a lot to be gained out in the marketplace. The economy is humming along nicely and, hence, most consumers are in the mood to shop and buy.
Let’s stop being on the defensive and go on the offensive.
Consumers want to go to your store. But you have to do your part, which means a combination of carrying the right merchandise at the right price and in a convenient, clean environment. Just as importantly, it means that retailers need to make their stores more exciting to the shopper.
Putting merchandise on store shelves — even at great price points — does not work anymore. That is even true for the titans of our industry, some of which built their entire business model on low prices. Now, it has to be an experience for the shopper that entertains them as they shop, and makes them feel that the retailer is pulling out all the stops to get them as much information as possible about categories and individual products.
Take the right steps, and shoppers will keep coming back to the stores they know so well. Make a few hiccups, and these same people may look to another place for their needs. The onus is on the retail world.
Shaping pharmacy’s ‘story’ amid healthcare evolution
The National Association of Chain Drug Stores on Sunday helped to define the narrative of an industry that’s in constant flux. Even as the Trump administration and Congressional leaders seek to reshape what health care looks like in the United States, and even as such industry disruptors as Amazon continue to challenge traditional retail precepts, the retail pharmacy of late has been adept at taking changes in stride.
After all, it’s what NACDS has been doing for the past 85 years, Steve Anderson, its president and CEO, said during Sunday’s Business Program. NACDS and their members plan to keep pace with any ongoing changes for another 85 years, 85 months or even 85 days.
“The future is on our minds. With the speed and scope of change [today], 85 days, or a few months, seems to be the range of focus,” Anderson said. As part of the future value targeting initiative announced during last year’s NACDS Annual Meeting, the association has been refining the value to members now and in the future, he said. “Like your business, associations need to adapt. We need to press forward and evolve. The need for transformation is constant.”
To this end, both retailers and suppliers have continued to evolve their offerings in an effort to better serve their collective patients. “This mission that inspires each of us personally and the people with whom we work is more important than ever,” noted Jack Bailey, president of U.S. pharmaceuticals at GlaxoSmithKline. “It feels like a whirlwind of change. The industry is facing important questions about affordability. The nation is grappling [with] an opioid epidemic. We’re seeing increased talk about acquisition after acquisition. The implication of potential disruptors like Amazon and their venture into health care is on all of our minds.”
“What should all of us, as leaders of healthcare companies, do right now?” he asked.
Answer to Change: Keep Patient Care at the Center
“In health care, it has been about restructuring our industry to become more efficient in the marketplace, and in retail it really is about empowering the consumer — to see the choices and products available to them,” said Alex Gourlay, NACDS chairman, co-COO of Walgreens Boots Alliance and president Walgreens.
Gourlay stressed putting patients first by implementing changes across three key areas — healthcare affordability and price transparency; fostering convenience, efficiency and experience; and building trust by emphasizing community engagement and corporate social responsibility. “Redefining convenience has always been at the heart of the pharmacy model,” he added. “It’s about the marketplace that you create that brings it all together.”
Gourlay also announced the NACDS commitment to shape the dialogue defining retail pharmacy through the “2017 Chain Pharmacy Community Engagement Report,” which was published Sunday.
The report, available at Community.NADCS.org, shares the innumerable community engagement activities NACDS chain member companies make in support of their communities, including the $630 million in donations and 1.5 million hours in volunteer hours alone in 2017.
Journalist and author Peggy Noonan, a Wall Street Journal columnist, closed out the morning session with her take on what each successive president since Ronald Reagan might have learned from their predecessor during their respective terms.
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.