Another retail casualty: the CEO of Stein Mart

The retail industry is under siege, if you haven’t already noticed. Stores are closing, CEOs are leaving (being either fired or retired) and few know what to do in the battle against Amazon.

I have written plenty about this issue, maybe even more than you know. I am a regular contributor to RetailWire, which you can read about here. The single biggest question asked is, “Where do retailers go from here?”

Stein Mart
The resignation of the Stein Mart CEO is another demonstration that retail is dying.

The latest shoe to drop is the resignation of Stein Mart CEO Dawn Robertson, who left after same-stores sales declined 4% this past quarter. You sense a trend here. Office Depot and Staples, once thought to be merger partners, are looking for new CEOs. Macy’s is closing stores even though it promoted a national holiday hiring day.

It’s a mess out there for retailers.

The problems facing Stein Mart and others

The problems are two-fold for retailers, such as Stein Mart. First, they have never gotten the basic strategies of creating preference right. Secondly, they are behind the curve when it comes to online retailing.

Retailers were once powerful, thriving during the days when malls took over the marketplace. Malls were a community of stores, aping a downtown marketplace. Shopping at a mall was efficient and easy for buyers. Retailers reaped the rewards of shoppers buying more than they intended. (Think the Sam’s Club model. You go for a great deal, but stroll up to the checkout counter with loads of merchandise.)

In good times, brands often get lazy. They live off their success, thinking that there’s nothing they need to do to prepare for change. So few, if any, actually built brand preference. Instead, retailers fought over price, some adopting the Walmart model of always having a low price with others holding sales every week (that’s what has gotten Stein Mart in trouble). When you do that, you teach audiences to shop on price because you haven’t given them any other reason to choose.

So shoppers choose Amazon.

That second issue, failing to be a strong presence online, caught retailers with their pants down. They were slow to prepare and any preference they did have disappeared. In essence, retailers have reaped what they sowed.

What do retailers do now? They have to go back to the basics. Build a brand that actually stands for something, one that is different and better. That better part is difficult, but the different part is what has befuddled them. The retail choices all look, sound and, frankly, are the same. There’s not a squat of difference between Stein Mart and Kohl’s from the point of view of the customer.

No wonder we all shop on Amazon. At least we know what’s different there.

Macy’s national holiday hiring day is disingenuous

Troubled retailer Macy’s is creating yet another made up holiday – national holiday hiring day. The holiday will be on September 30th when Macy’s plans on hiring 83,000 seasonal workers to fill holiday positions in their call centers, distribution centers and fulfillment centers.

The move reeks of terrible PR and feels incredibly disingenuous.

national holiday hiring day
Macy’s national holiday hiring day is a joke.

Earlier this year, Macy’s announced that it was closing about 15% of its stores. This came amid six straight quarters of sales declines that were blamed on an increasing number of consumers moving to online purchasing – because as we all know, no one saw Amazon coming.

We have written a lot about the soft brick and mortar retail environment as well as the problems with Macy’s. Too many stores were built too fast with no vision of the future. Isn’t that the real reason?

National holiday hiring day should be laughable.

Now Macy’s is touting national holiday hiring day. I get the need to hire temporary people during this time of year. However, Macy’s bragging about creating the first national hiring day is simply a bad idea. It’s a naked attempt to get people to forget it is shuttering 15% of its stores and firing the countless people affected by those closings.

Have you ever watched a bad movie for a little longer than you should have just to see how bad it was going to get? Macy’s is much like that bad movie, getting a little worse with each passing minute. This blatant PR move once again demonstrates just how far Macy’s has fallen. Its brand is in decline, stores are closing, sales are declining and yet it is touting a national holiday hiring day. It’s a major disconnect and a failure of the Macy’s brand.

Will the holiday work? Of course it will, but not because of Macy’s. People need jobs and others need a second job to make their children’s Christmas special. Most people won’t be bothered by it, save the ones who are getting laid off in the store closings.

But Macy’s has lost its way and this is yet another example.

Staples Workbar won’t fix the overall problem

Oh boy. As Staples (and its failed merger partner, Office Depot) tries to recover from disappointing sales, it has partnered with Workbar to set up office spaces for customers in a few stores around Boston.

Staples Workbar
The Staples Workbar space is nice, but who cares?

The space is far back from the retail area where customers can work without having their own real office. Said Evin Charles Anderson, whose video production company has been using the space, “On the weekends when we’re here, we see people peering in through the windows.”

Yeah. They’re wondering what the hell Staples is doing. The office supplies stores are in a free fall with Office Depot closing stores and regulators ending the proposed merger between Staples and Office Depot.

Staples Workbar is a tactic, not a strategy

Both supply stores, in fact, are looking for new CEOs to lead the retailers into a new era where all retailers are becoming more and more irrelevant. The Workbar additions, just in beta stage at this point, won’t hurt but it won’t fix the problem either.

For one thing, who wants to work in the back of a Staples store? FedEx, off its successful merger with Kinko’s, has something similar that has now existed for nearly a decade.

More importantly, however, the working world is no longer dependent on having a traditional office or even one that resembles one, such as the Staples Workbar situation.

As many employees at very large companies will tell you, working from home is the new normal. (The sheer number of them doesn’t even consider freelancers.) You may go to FedEx Office for shipping but you can buy just about anything off the internet. There’s no need to go to a Staples store to work.

That is, unless Staples had a brand that compelled you to seek it out.

But there’s no emotional reason to go to Staples or even the Staples Workbar space, which is the only reason to create preference. As Napoleon said, “You must speak to the soul to electrify men.”

That’s what the office supplies stores are missing. They believe they can out-tactic their way out of their dilemmas, rather than looking at a complete overhaul of what they provide and what they mean.

I’ve been thinking recently that the entire brick and mortar retail market is in serious trouble. Malls are becoming a thing of the past and the industry as a whole is losing their shirts to Amazon.

So, there’s now Staples Workbar. OK. So what?

Office Depot, Staples and new CEOs

What the future CEOs of Office Depot and Staples should know

Changes are afoot among the office supply chains with both Office Depot and Staples looking for new CEOs. This comes on the heels of the expected merger between the two retailers coming to an end over antitrust concerns.

That leaves both of them in a quagmire. What to do now? What do the future CEOs of these chains have to look forward to when they take office?

Office DepotFor one, they both will find declining sales and profitability. Office Depot will close hundreds of stores, including an exit out of Europe. Staples is doing much the same with sales declining 5% in the last quarter.

Both retailers have blamed the rise of internet spending for the kinds of products they both offer, and they are right about that. Amazon has become the go-to retail space and threatens the entire retail industry, not just the office supply chains.

From the perspective of consumers, why buy from office supply stores – especially in bulk – when shopping online is believed to be more convenient?

Where Office Depot, Staples stand now

The proposed Office Depot Staples merger was irrelevant anyway. Consumers never saw a true difference between them, so a Office Depot Staples merger would have largely gone unnoticed among them. (That is, until prices went up.)

Now that a federal judge has nixed the merger, both must think of the other as the enemy, not a potential partner. Stealing market share from Amazon is possible, but it’s impossible if target audiences cannot distinguish between the two suppliers. Consumers can’t choose either Home Depot or Staples when they cannot tell why they should choose one over the other. Audiences couldn’t tell you which is which.

Closing stores will mean nothing if consumers have no compelling reason to choose one of them over the competition. In fact, if Office Depot and Staples don’t uncover those reasons for choice, they will become the next Circuit City and Radio Shack.

Right now, neither has a brand claim that makes them relevant. The theme line for Staples is “Make More Happen.” Office Depot claims you shop there to “Gear Up for Great.”

StaplesWhat do those mean? Is either of them emotional enough to create preference? Both themes are used in current back to school advertising, but neither are emotional or say anything truly meaningful about who their individual customers are.

Taken at its word, the definition of a Staples customer is some one who wants to make more happen. The definition of an Office Depot customer is that they gear up for great.

Does either of these retailers truly believe these are the most emotionally intensive triggers for target audiences when buying office supplies?

What the CEOs of Office Depot and Staples should do

Let’s take one step back. Retail as a whole is an industry in crisis. Amazon has taken a big bite out of the market share of brick and mortar brands, and retailers have been late to respond. It’s not too late, but audiences prefer Amazon in greater and increasing numbers, thanks largely to its Prime membership.

But there are larger issues involved. Retailers have long taken for granted that the shopping experience will draw customers. Therefore, there is an entire science devoted to making the experience more fulfilling and enticing.

What if shoppers don’t want to experience a store at all? What if they would rather do something else and leave the shopping chores (such buying back to school supplies) to Amazon for the convenience or Walmart for the prices?

Office DepotThe answer to those questions is simple, but difficult to achieve. You must create preference for your brand.

Strangely, retailers invest very little in their brands. Instead, most focus on products, sales and sub-brands. The problem with that strategy is that you train audiences to shop based on convenience – which store is closer – and that means opening more stores, not closing them. Convenience becomes the rational trigger because all retailers sell similar products, hold sales and promote sub-brands. Customers can get them anywhere (even online).

Instead, investing in the parent brand as the reason for preference gives the meaning to why those products, sales and sub-brands are important. It demonstrates the difference between you and your competition to offer a true choice.

It’s the reason why Nike has rarely talked about the advantages of its shoes, instead saying the Nike user will “Just Do It.” The Nike wearer is a winner, who does not have time for indecision.

For the new CEOs of Office Depot and Staples, there is also no time for indecision. There is a future where both chains could close and the new executives will wonder why they couldn’t prevent it. Don’t be that CEO.

Losing strategies from AT&T, Target

You know a brand is failing when it gets desperate to find new customers and keep its current ones, often by reducing prices. It’s the last gasp of brands in markets where brand meaning is ineffective and often similar across the board.

That’s what has happened for both cell phone carriers and retailers. Two cases in point: AT&T and Target.

AT&T
AT&T is in defense mode…

AT&T is doing away with overage fees for data plans, instead reducing the speed of data customers receive if they go over their limit. AT&T is hoping customers will opt to buy bigger data plans or simply be satisfied that they are not getting unexpected fees.

AT&T is following in the footsteps of both Verizon and Sprint, who have similar processes. (Although Verizon actually charges for what it calls its Safety Mode.) This is a defense tactic. And once you are in defense mode, your brand message isn’t working.

Target isn’t doing any better, and maybe worse.

Then there is Target. CEO Brian Cornell told investors that it will double down on the second half of its brand promise: The Pay Less section of “Expect More, Pay Less.”

Target
…and so is Target.

Great. That means Target, which saw a dip in sales of 1.1% last quarter, will reduce prices (and, therefore, margins) to compete with Walmart, which already owns the “Save Money, Live Better” space in retail.

One thing retailers like Target have not learned is that, if you copy the market leader, customers will default to that market leader because market leadership becomes the only reason to choose.

You see that strategy all the time in many markets. Someone takes market leadership with a unique claim and everyone in the industry follows suit, thinking it’s a winning strategy for them as well.

But that’s not how it works. To steal market share, especially if you are not the market leader, you need to be different and better than the market leader. You have to present yourself as a true choice.

AT&T could hold onto its customers with a better brand message than “Mobilizing Your World” because that’s just a definition of its category. If it had something more meaningful, then reducing data speeds to eliminate overage fees wouldn’t need to happen. It would already have true preference.

Same with Target. Give customers a reason to prefer you, not just put your thumb in the hole of a collapsing dam.