Drate Berry's Blog

My retail observances

This afternoon I had several hours to kill and decided to go to the mall in Denton since the various brands have been sending out emails promoting their Spring lines launching in stores.  Based on this trip I had some observances, some of which I think could be things retailers/brands are missing when they talk about an absence of sales.

First off, I would like to state my shopping philosophy for 2012.  I own a ton of clothing, so much to the extent that a standard closet won’t hold everything.  Since I really don’t have a “need” for additional clothing, everything I buy in 2012 must either fill a hole in my wardrobe or it must replace an item and the replaced item has to be donated.  With that in mind I’ve become a much more critical shopper.

1. Having an excessive amount of identical merchandise - I know that retailers have to hold a rather large inventory when they roll out new seasons, but what I observed today in Dillard’s were several stacks of identical shirts, probably 30 in all.  These shirts had even been marked down to 50% off so I can only imagine the original inventory.

2. Using noticeably inferior materials - One item on my to-buy list is a new pair of Sperry’s because I want a brown pair with a white sole and I think one can never own too many pairs of boat-shoes.  The pair of brown with white soled shoes I picked up today though don’t seem worthy of carrying the “Sperry” name.  I don’t know why, but the leather felt like plastic, definitely uncharacteristic of all previous shoes I’ve owned.

3. Overcrowding merchandise - In Macy’s today I noticed what seems to be a common trend for them, cramming in as much merchandise as possible in an effort to appeal to every possible customer.  This is one reason that I almost never shop at Macy’s, I don’t find it appealing to squeeze through racks of clothing that I would never wear just to get to the few racks of clothing that I find appealing.  One of the things I hear in almost every business class is “Know your market.” and I think this is an area where Macy’s is failing.

An example of a store that is doing a fast turnaround and doing it well: JCPenney’s

Everyone who knows me knows that I’m an Apple fan.  I love their products, the simplicity, but most of all I love their stores and will go out of my way to buy a product there just because I like the way their stores feel and function.  What a lot of people may not know is that there’s a similarity between the being-reinvinted JCPenney’s and Apple’s retail stores, the same man, Ron Johnson, is responsible for both.  Since taking the helm at JCPenney’s last year Johnson’s hand can be seen in any JCPenney store today.  Not too long ago they announced several new strategies, some of which have been implemented and others are in the pipeline for later this year.  

A big change is the way they do sales.  Retailers often rely on bargain basement sales to bring shoppers in to their stores and they want shoppers to feel like they are getting a great bargain.  I like sales just as much as the next guy, but what I don’t like is when I make a purchase and then for the next month or so that same item’s price fluctuates because of deep sales (sometimes 50-60% off the price I paid for it before it returns to full price)  Apple has developed a retail of model of maintaining the same price point and have very rare sales.  Yet their products still sell far better than their bargain basement competitors. Why?  As Johnson says it all comes down to the value you offer the customer.  If an item is worth $40 then Johnson says JCP will sell the item for $40, not $80 and mark it down 50% after the first week it’s on the sales floor.

Another big change is their inventory.  In my opinion JCP has always tried to be everything to everyone, similar to my gripe about Macy’s in the above post.  JCP is now getting back in touch with their core-customer, the middle American who places a high importance on an item’s value.  I’m really interested in how this plays out for JCP.  One major change that is occurring in Fall ‘12 is the discontinuing of the Ralph Lauren down-market brand, American Living.  While I mourn the loss of American Living, which was always good for purchasing the Ralph Lauren style items you would only wear once or twice, I believe it is the right step for JCP and shows that they understand their market.

As we continue throughout 2012 I hope that the retail economy recovers but I also hope designers realize that the American consumer now wants more from a company than just a name, and that there needs to be a certain level of quality both in the manufacturing process and in the materials.  

Facebook IPO

Facebook filed their S-1 today which is a move that has been expected by analyst for several months with some analyst predicting the filing would happen years ago.

The S-1 has given us a glimpse inside of Facebook that has proved both interesting and slightly frightening.  If nothing else, I believe that the S-1 gives us a glimpse at what will happen once Facebook becomes a publicly held company.

A few facts I found interesting:

1) Facebook generates almost no revenue from mobile products (applications and mobile website)  -  This doesn’t really surprise me since their revenue sources are advertising and purchases for 3rd party application credit.  Neither of these sources are present in the mobile versions of Facebook.

2) One company, Zynga, accounted for 12% of Facebook’s revenue in FY2011.  -  This is actually kind of surprising to me since Zynga has said that less than 1% of their users purchase credits for game play.  This would worry me about Facebook if I were planning to invest, but it does play very favorably to Zynga who depends on Facebook as a primary distribution channel.

3) Monthly active user growth in the United States is significantly less (16%) than the over 100% growth seen in other nations.  -  I don’t find this that peculiar since Facebook has been THE social network in the United States for the past several years.  I do find it disturbing that Facebook is potentially relying on foreign countries that could have less stable governments and infrastructures to build their growth.  I’m hopeful that this won’t lead to Facebook being built for the lowest common denominator, which in this case would be bandwidth constrained customers.

With this being said, I do hope Facebook is successful in their IPO.  Not so much because I care about Facebook one way or another, but because they will be the first of the successful VC funded tech startups to go public in a big way which can only help other startups receive VC funds since everyone will want to be involved in the “next Facebook.”  Wishing the best to Mark and company.

My brief thoughts on SOPA/PIPA

As someone who supports the Republican party’s philosophy I think it is sad and embarrassing that it is a Republican representative that has authored SOPA which would give more power to the Federal government. If we were to look at this through the lens of Republican philosophy then we would agree that individuals/companies should solve their own copyright issues in court and not be crawling to the government to have a site shutdown. The current SOPA/PIPA legislation sounds to me like something a Communist country or dictatorship would use to preserve their power over their citizens.