sales_per_square_foot   7

Business leaders are blinded by industry boundaries
April 22, 2019 | Financial Times | Rita McGrath.

Why is it so hard for executives to anticipate the major shifts that can determine the destiny of their organisations? Andy Grove called these moments “strategic inflection points”. For some, he wrote, “That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end.”

Industry leaders would do well to focus on productive opportunities, even when they lie outside a fairly well-bounded industry. Want to survive a strategic inflection point? Stop focusing on traditional metrics and find new customer needs that your organisation can uniquely address.

Why do business leaders so often miss these shifts? Successful companies such as BlackBerry maker Research In Motion and Nokia did not heed the early signs of a move to app-based smartphones. Video rental chain Blockbuster failed to acquire Netflix when it had the chance, in 2000.

Senior people rise to the top by mastering management of the KPIs in that sector. This, in turn, shapes how they look at the world. The problem is a strategic inflection point can occur and render the reference points they have developed obsolete. Take traditional retail. Its key metrics have to do with limited real estate, such as sales per square metre. Introduce the internet and those measures are useless. And yet traditional systems, rewards and measures are all built around them.....British economist Edith Penrose grasped this crucial link, she asked, “What is an industry?” In her studies, executives did not confine themselves to single industries, they expanded into any market where their business might find profitable growth.

Consider the energy sector: Historically, most power generators and utilities were heavily regulated...The sector’s suppliers likewise expected steady demand and a quiet life....that business has been rocked by slow-moving shifts many players talked about, but did not act upon. The rise of distributed energy generation, the maturing of renewable technology, increased conservation and new rules have eroded the traditional model. Many failed to heed the warnings. In 2015, General Electric spent about $10bn to acquire Alstom’s power business. Finance chief Jeff Bornstein crowed at the time that it could be GE’s best acquisition ever. Blinded by traditional metrics, GE doubled down on fossil-fuel-fired turbines just as renewables were becoming cost competitive.

Consider razor blades: Procter & Gamble’s Gillette brand of razors had long enjoyed a competitive advantage. For decades, the company had invested in developing premium products, charged premium prices, invested heavily in marketing and used its clout to get those razors into every traditional retail outlet. A new breed of online rivals such as Dollar Shave Club and Harry’s have upended that model, reselling outsourced razors that were “good enough” and cheaper, online via a subscription model that attracted younger, economically pressured customers...... Rather than fork out for elaborate marketing, the upstarts enlisted YouTube and Facebook influencers to get the word out.
Andy_Grove  BlackBerry  blindsided  Blockbuster  brands  cost-consciousness  customer_insights  Dollar_Shave_Club  executive_management  GE  Gillette  good_enough  Harry's  industries  industry_boundaries  inflection_points  Intel  irrelevance  KPIs  metrics  millennials  movingonup  myopic  obsolescence  out-of-the-box  P&G  power_generation  retailers  reward_systems  sales_per_square_foot  shifting_tastes  slowly_moving  warning_signs 
april 2019 by jerryking
Schafer: Retailing's new reality spawns a new metric
JULY 8, 2014 | - StarTribune.com | LEE SCHAFER @LEEASCHAFER.

sales per square foot(print)

There aren’t many retailers left that don’t let customers buy anything online. What if a third of the total sales never go through a store at all? Should those be counted?

By tacking on “print” to foot, Rubin is measuring productivity by calculating total sales on all the selling space the company occupies, its entire real estate footprint.

What selling space should get added to the stores in the calculation? Rubinson decided to include those vast warehouses all of these companies seem to operate. After all, the stuff sold online has to be stored, picked and boxed up someplace before the UPS truck can take it away.
metrics  retailers  e-commerce  sales_per_square_foot  warehouses 
september 2017 by jerryking
Nordstrom Tries On a New Look: Stores Without Merchandise - WSJ
By Suzanne Kapner
Sept. 10, 2017

Nordstrom Local, doesn't stock clothes.....it's a new concept as retailers across the U.S. are wrestling with how to best to use their physical spaces and attract customers who are migrating to the web. For department-store chains like Macy’s Inc., J.C. Penney Co. , Kohl’s Corp. and Sears Holdings Corp. , one answer has been to shrink their footprint by closing stores or experimenting with smaller ones......consumer habits are changing.....“There aren’t store customers or online customers—there are just customers who are more empowered than ever to shop on their terms,”...Nordstrom Local, scheduled to open Oct. 3 in West Hollywood, Calif., will span 3,000 square feet, far less than the 140,000 square feet of one of Nordstrom’s standard department stores. It will contain eight dressing rooms, where shoppers can try on clothes and accessories, though the store won’t stock them. Instead, personal stylists will retrieve goods from nine Nordstrom locations in Los Angeles, or through its website. The stylists can also pull together looks for shoppers through a “style board” app.

“Shopping today may not always mean going to a store and looking at a vast amount of inventory,” said Shea Jensen, Nordstrom’s senior vice president of customer experience. “It can mean trusting an expert to pick out a selection of items.”..In addition to manicures, Nordstrom Local shoppers will be able to order wine, beer, coffee or juice from an in-store bar, and those who place orders on Nordstrom.com by 2 p.m. can pick them up there that day. They will also be able to return items at the store that they bought online or from other Nordstrom locations. Tailors will be available for alterations or to help members of Trunk Club, an online clothing service that Nordstrom acquired in 2014, select fabrics for custom garments.

Other retailers have experimented with inventory-free stores, including Bonobos, the men’s fashion brand bought by Wal-Mart Stores Inc. over the summer. Stores such as Pirch, a purveyor of high-end home appliances and decorative plumbing, have taken the experiential route, inviting shoppers to bring bathing suits to test their $1,000 showerheads....the traditional retail store hasn’t changed much over the years. One hindrance, according to Doug Stephens, founder of the consulting firm Retail Prophet, is that Wall Street measures success by sales per square foot and other metrics that are becoming outdated in a world where shoppers still visit stores but increasingly make their purchases online.
Nordstrom  Nordstrom_Local  Macy  personal_stylists  BOPIS  Doug_Stephens  retailers  sales_per_square_foot  physical_space  experiential_marketing  small_spaces  curation  department_stores  inventory-free  e-commerce  store_footprints  downsizing  Bonobos  metrics  in-store 
september 2017 by jerryking
The Future of Shopping
Darrell K. Rigby
FROM THE DECEMBER 2011 ISSUE

omnichannel retailing. The name reflects the fact that retailers will be able to interact with customers through countless channels—websites, physical stores, kiosks, direct mail and catalogs, call centers, social media, mobile devices, gaming consoles, televisions, networked appliances, home services, and more.......The experience of shopping.
Traditional retailers have suffered more than they probably realize at the hands of Amazon and other online companies. As volume trickles from the stores and sales per square foot decline, the response of most retailers is almost automatic: Cut labor, reduce costs, and sacrifice service. But that only exacerbates the problem. With even less service to differentiate the stores, customers focus increasingly on price and convenience, which strengthens the advantages of online retailers.

If traditional retailers hope to survive, they have to turn the one big feature that internet retailers lack—stores—from a liability into an asset.
retailers  future  HBR  omnichannel  bricks-and-mortar  downward_spirals  experiential_marketing  contra-Amazon  hourly_workers  sales_per_square_foot 
august 2017 by jerryking
A Tale of Two Metrics
August 7, 2017 | | RetailNext | Ray Hartjen, Director, Content Marketing & Public Relations.

Traffic can’t alone measure the effectiveness of demand creation efforts, but some well-placed math can show retailers strong correlations over a myriad of relevant variables. More over, as my colleague Shelley E. Kohan pointed out in her post earlier this summer, “Expanding the Scope of Metrics,” Traffic is foundational for meaningful metrics like Conversion and Sales Yield (Sales per Shopper), key measurements that help managers make daily decisions on the floor from tailoring merchandising displays to allocating staffing and refining associate training.
With metrics, it’s important to remember there’re different strokes for different folks, with different measurements critical for different functions, much like financial accounting and managerial accounting serve different masters. Today’s “big data” age allows retailers to inexpensively collect, synthesize, analyze and report almost unbelievable amounts of data from an equally almost unbelievable number of data streams. Paramount is to get the right information in front of the right people at the right time.
Sometimes, the right data is Sales per Square Foot, and it certainly makes for a nice headline. But, not to be outshined, other instances call for Traffic. As Chitra Balasubramanian, RetailNext’s Head of Business Analytics, points out in the same Sourcing Journal Online article, “Traffic equals opportunity. Retailers should take advantage of store visits with loyalty programs, heightened customer service, and a great in-store experience to create a long-lasting relationship with that customer to ensure repeat visits.”
metrics  sales  foot_traffic  retailers  inexpensive  massive_data_sets  data  creating_demand  correlations  experiential_marketing  in-store  mathematics  loyalty_management  the_right_people  sales_per_square_foot 
august 2017 by jerryking
Retail sales per square foot in decline | Retail Dive
Daphne Howland
@daphnehowland
PUBLISHED

Aug. 1, 2017

Which stores to close can be a tricky decision, though, because of how offline stores add to online sales. Moody's Investors Service last year warned that closing a physical location reduces a retailer’s presence in the market area and noted that online sales often decrease in zip codes surrounding a shuttered store. It behooves mall landlords and retailers to leverage new technologies and new math to account for that, in order to make educated decisions, according to Hongwei Liu, CEO and co-founder of Mappedin, an indoor wayfinding platform for premium North American malls.

"Fortress mall operators are under heavy scrutiny, along with the rest of their industry," he told Retail Dive in an email. "Everyone knows retail space is overbuilt in the U.S., shares are down 35% from a year ago. Our mall customers, who are almost exclusively premium operators, say that 'rents are up, sales are up, occupancy is up' in 2017. Flush with cash but seeing depressed market valuations, hostile takeover bids are increasing. Anecdotally, more is being invested in technology and consumer experiences to 'recapture' (or re-demonstrate) the value that premium malls and retailers are creating."
MappedIn  shopping_malls  retailers  Apple  Tiffany  LBMA  anecdotal  sales_per_square_foot 
august 2017 by jerryking
Mall Owners Flex Hidden Muscles Over Lenders - WSJ
increasing uncertainty over the fate of malls across the U.S., stemming from the rise of e-commerce and fickle consumer preferences, have led to more volatile valuations in recent years.

Landlords who owe millions of dollars on struggling shopping malls are finding they have serious bargaining power.

At a time when retailers are closing thousands of stores across the U.S., some lenders are deciding to renegotiate loans backing malls—and suffer guaranteed losses—rather than run the risk of being stuck owning or operating the malls themselves.

Shopping mall owner Washington Prime Group WPG -0.94% last June defaulted on an $87.3 million loan backing Mesa Mall in Grand Junction, Colo., and turned the keys over to creditors.
Rather than operate the mall, the creditors quickly sold the property—right back to Washington Prime—at a lower price. Late last month, Washington Prime told investors it had repurchased the mall and secured a discounted payoff of the original loan for $63 million.

While the creditors, a collection of bondholders such as insurers and other institutional investors, took a write-down of $24.3 million, they avoided having to own or operate the mall themselves.
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RESEARCH: MORE STORES NEED TO SHUT

In April 2016, real-estate research firm Green Street said roughly 800 stores should be closed to bring department-store retailers back to a level in which sales per square foot is in line with 2006 levels, a period considered normal.

Now the research firm is raising the tally.

“Just a year later, the 800 number looks much too light on a strict sales productivity standpoint and is much lower than what will ultimately be needed as the industry will likely need to massively rationalize its store count as it reinvents its business model,” Green Street said in a report.
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“There’s a secular change in how people are shopping at the mall, which is affecting short-term value-enhancement strategies,”
shopping_malls  creditors  landlords  commercial_real_estate  sales_per_square_foot  store_closings 
july 2017 by jerryking

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