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The only constant

Today’s retail landscape requires companies to stay ahead of the curve

BY Seth Mendelson

How are we doing? At the start of what is arguably the mass retail industry’s most important event, in Palm Beach, Fla., it also may be a great time to take a step back and see how retail is performing these days. The answer is, … well, it all depends on what chain you are talking to and what steps they are taking to stay ahead of the curve in an industry that is desperately trying to find itself and its footing.

Ask people who work for Toys “R” Us, Sears/Kmart or Southeastern Grocers, for example, and they would tell you that the sky is falling. Toys “R” Us is liquidating; Sears/Kmart is closing stores by the hundreds and remains on the brink; and Southeastern Grocers — operator of Winn-Dixie, Bi-Lo, Harveys and Fresco y Más — has just entered bankruptcy. Ask people at Walmart or one of the major drug store chains, and they would say things are look

ing pretty rosy — especially as they reach beyond the world of traditional retailing, embrace digital merchandising or develop unique strategies that attract more customers and broaden their respective chain’s horizons and profit potential.

Why are these the best of times for some and the worst of times for others? The answer, of course, is that retail has always been about change and making sure that the merchant has the right strategies, product assortment and pricing to satisfy the ever-increasing demands of their shoppers.

But these are not the good old days anymore. Intense competition from some heady online merchants — especially Amazon — has everyone else scurrying around for the right mixture of traditional, digital and service-related opportunities to not only successfully compete for the consumers’ attention and wallets, but also for the gurus on Wall Street.

Today, merchants must be savvier than ever if they want to survive this brutal retail environment. Toys “R” Us failed, in large part, because the company took on about $5 billion in debt when it was taken private more than a decade ago. There was no way the chain was going to dig out of that hole, and the arrival of Amazon only hastened its demise. Long ago, officials at Sears/Kmart failed to make the investments needed to keep their chain relevant. Winn-Dixie also failed to keep up with the times, never catching up with more cunning competitors in the Southeast.

On the other hand, one has to give a lot of credit to Walmart for taking bold chances to keep up with Amazon. The success of its $3 billion purchase of Jet.com may or may not pay off, but it was a necessary step to find a way to be a better online merchandiser. Even more so, CVS Health’s dramatic takeover of Aetna shows that company officials are thinking ahead as they try to figure out what retail — particularly as it relates to health care — will look like in the years and decades ahead.

Heck, one can even give credit to Amazon for realizing that it cannot win the battle for consumers’ hearts and minds when it comes to making dinner without a physical presence in the marketplace. Hence, its dramatic purchase of Whole Foods, a move that has everyone talking about what this really means for the retail market in years ahead.

The point here is that the good retailers understand that the marketplace is changing, and are taking the rational and realistic steps to stay ahead of the curve. In the end, that is all that is necessary to at least stay in the game, if not in front of your competition.

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New York City
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New York City: Growth in a multicultural mecca

BY Mark Hamstra

As a global center for finance, international trade, media, fashion and entertainment, the New York City metro area works hard to uphold its reputation as the “City that Never Sleeps.”

The greater metropolitan area, the largest in the United States, is home to nearly 24 million people and rising. It is a diverse mix that includes the largest population of foreign-born citizens of any metropolitan area in the world. The demographic makeup is about 52% white, another 21.7% Hispanic or Latino, 15.3% African-American and 9% Asian.

The region’s nominal gross domestic product totaled $1.74 billion in 2017, an increase of 4.7% over 2016, according to the U.S. Commerce Department’s Bureau of Economic Analysis.

According to a report from the New York City comptroller, the economy of New York City itself, which drives the economy for the metro area overall, grew 2.4% in 2017, slightly down from growth of 2.5% in 2016, but ahead of overall U.S. economic growth of 2.3%.

Although the economy pulled back slightly in the fourth quarter, unemployment fell for the full year and wages increased, the comptroller reported. The city added 71,400 private-sector jobs in 2017, after adding 83,600 in 2016. Leading industries adding jobs included education and health services, professional and business services, leisure and hospitality, financial activities, and construction. In contrast, trade, manufacturing and information all lost jobs.

Burt Flickinger, managing director of New York City-based consulting firm Strategic Resource Group, said the chain drug stores in New York City have become grocery destinations, competing with the city’s notoriously high-
priced supermarkets.

“New York is a leading indicator for well-developed urban markets, where it’s tough to get new permits or development sites, that drug stores will increasingly become substitute supermarkets,” he said. “Chain drug stores led by CVS, Rite Aid, as well as Walgreens, are filling the void.”

But that’s not to say drug stores don’t have plenty of competition from both grocers and big-box stores. Among the biggest developments in the area has been the expansion of Rochester, N.Y.-based Wegmans Food Markets into the New York City metro market, with new stores in northern New Jersey and a planned location in Brooklyn that would make it the first Wegmans within city limits. The Brooklyn store had originally been scheduled to open in 2017, but is now scheduled to make its debut sometime later this year.

The food retailing market was roiled by the bankruptcy of A&P/Pathmark in 2015, which saw 25 stores shut down immediately and another 120 sold to rivals — primarily Albertsons, which owns the Acme chain in the Philadelphia area; Stop & Shop, which acquired several Pathmark locations in New York City; and Key Foods, a cooperative that has emerged as one of the largest and fastest-growing retailers in the area.

Keasbey, N.J.-based Wakefern Food, parent of the ShopRite chain, together with its various ShopRite operators, is the dominant food retailer in the market, with close to a quarter of the market share, according to data from Chain Store Guide. Ahold’s Stop & Shop banner tallied about 16.6% of the grocery sales in the market, and Costco another 11.1%.

Although Target has expanded into New York City with a handful of stores, while rival Walmart has none inside the city itself, Walmart still captures a higher grocery market share in the metro area overall, with 2.9%, compared with 1.4% for Target. Minneapolis-based Target continues to expand in the market, however. Last year it opened one of its new small-format stores in Midtown Manhattan, and it has two more on tap for 2018 openings downtown, and more for Brooklyn and Queens in the coming years.

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Atlanta leads pack of Walgreens’ ‘Red Rally Markets’

BY Michael Johnsen

Walgreens released the latest rankings for its Every One Counts Hometown Challenge Wednesday. Atlanta presently is the top ‘Red Rally Market’ for overall Red Nose Day fundraising activity.

The challenge features 10 U.S. markets – deemed Walgreens ‘Red Rally Markets’ for their integral role in helping to rally their communities to help end child poverty and going nose-to-nose in a challenge to raise the most money for the Red Nose Day cause during an eight-week campaign.

Following Red Nose Day, which takes place May 24 with a special night of programming on NBC, Walgreens will announce the winner of the challenge with a formal proclamation to the victorious city, which will be designated as the “Red Nose Day Hometown Hero” for the next 12 months.

The top 10 markets are:

  1. Atlanta;
  2. Miami;
  3. Washington;
  4. Phoenix;
  5. Los Angeles;
  6. Chicago;
  7. Seattle;
  8. Philadelphia;
  9. Newark, N.J./New York City; and
  10. Houston.

The weekly rankings are compiled using store-level data for combined Red Nose Day sales (Red Noses and Red Nose Day related merchandise) across Walgreens store locations in designated Red Rally markets. Data for the progress report is analyzed at a geographic market level to measure total store performance of Red Nose Day sales.

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