Wednesday, July 06, 2016

1665 Why You Don't Shop

There’s something wrong with a world in which big box bargain retailers can present stuff for sale more attractively than fancy department stores.

Been in a bigger Macy’s or Kohl’s lately? Some of them look Jackson Pollock paintings.  Pig pens.  Rats’ nests.  

As physical stores fight for survival against online sellers, they are busy shooting themselves in their feet.  There are two reasons: not enough people on the floor -- workers or customers -- and the death of the standard retail model.

Let’s look at the second one first.  The standard retail model is simple. The store buys stuff wholesale and sells it retail.  When it runs low on the item, they put it on sale to clear it out.  Sometimes they entice customers with a loss leader, a product on which they intentionally lose money to attract foot traffic.

What is replacing that is: buy wholesale. Post a retail price for ten minutes then put the stuff on sale.  At the same time find some items you can overcharge for.
What this is supposed to do is keep the cash flow steady and completely forget the value of any one piece of merchandise.  The hoped for outcome: overall profit by turning a lot of stuff into loss leaders while charging more than necessary for good selling goods.

During the recession, we sheep were all trained to use coupons.  Even those of us who hate them joined in.  The appearance of a bargain is just as good as a bargain itself.

Now, we can’t live without those coupons.

Kohl’s has a good trick:  spend a certain amount and you get a $10 “Kohl’s Cash” coupon at checkout.  But you can’t use it until some future date.  So you come back.  Once inside… gotcha.

Macy’s in king of coupon confusion.  “X dollars” off if you spend “Y.” “Z% off if you use your Macy’s Amex card.  

Now, about populating the sales floor.  Sales are down, so is hiring.  That’s partly because no one comes to shop.  That depresses sales further, so more coupons.  But there aren’t enough clerks to handle increased register traffic or to clean up and sort the stock that people have taken off shelves or racks and not put back.  There’s that Jackson Pollock thing again.

As a result: I’m not going back there any time soon because it’s a mess and you can’t find an open register.  This further depresses sales, discourages hiring and the cycle continues.

The only way to train a publicly traded corporation to do something or to stop is through its stock price because the corporation doesn’t really care about any breathing beings except shareholders.

So here’s an optimistic note.  Fancy retail stocks have been taking a huge beating.  That may cause some executive who hasn’t visited a selling floor since he was promoted from stock boy to wander out and see what’s going on in the jewelry or better dresses department.

And that could lead to more hiring, more open registers, neater sales floors and a rise in sales followed by a rise in stock price.

If you want to know what your Macy’s should look like, take a walk around a Target.

And here’s the best part:  If you get hired as a sales or stock clerk, and you do a half decent job, you’ll eventually end up in an executive suite.  They come with free ulcer medicine.  But they also come with a living wage and you don’t need a fancy education to land there.

At internet stores, if you get hired as a warehouse worker, that’s where you’re likely to remain as long as you work there.

Quote of the day: “May I wrap the blue one up for you?” -- James Cash Penney speaking to a customer who can’t decide between blue and green and may decide on nothing if not nudged a bit.

I’m Wes Richards. My opinions are my own but you’re welcome to them. ®
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© WJR 2016

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