Sunday, August 27, 2017

Bra or Bralette? Know Your Dinosaurs

I wonder how many women reading this are wearing a bralette vs. a bra? Out of 7 days, how many days do you wear one versus the other? How many of each do you own now?

Recently, Victoria’s secret announced that it would be discontinuing bralettes in favor of its wheelhouse, structured bras. The rationale was, basically, that anyone could make a bralette, but it took special equipment and skill to make a bra. That decision would be defensible if this were an incidental trend that could be ignored. But with L Brands (Victoria’s Secret parent) earnings seriously down, you would think they might have thought more about the trend, and considered, could one of the world’s most respected bra makers dominate in bralettes?

Just this kind of stasis is what makes dinosaurs, and dinosaurs get extinct.

Edited magazine, in the article entitled, “The Lingerie Trend that Rocked the Entire Category, “(March 23, 2017, reported that  “sell outs of push-up bras have fallen by 50% compared to a year ago while sell outs of bralette, or triangle bras, have rocketed by 120%. “

In addition, they reported that price points at major retailers as well as brands had sunk significantly due to the increasing popularity of bralettes: “Bergdorf Goodman’s recent new-in focuses 44% of their bra products priced below $50, whereas last year that was little more than one per cent. Even Calvin Klein increased its emphasis on the $20-30 price point by 22%. “

Wow. So what is going on here? First, let’s say what it is not. This is not a price phenomenon. If you go by Victoria’s Secret decision, this is just a fad that can be weathered. I am not a category expert; nonetheless, I disagree: to me it seems that the bralette phenomenon is one of those disruptive trends that changes not only the item itself, but everything around it in fashion. OR it is one of those disruptive trends that is the result of changes in fashion or social changes. OR both at the same time. Fashion eruptions are a result of social changes, and designers who are part of those changes find a great way to express them through fashion. History bears this out.

I am saying that bralettes are not only here to stay, but that they will put the traditional bra out to pasture within a few years or shorter. Why?

1.     They are cheaper. Recently, it is documented that the US consumer is spending a lower percentage of their disposable income on apparel. Perfect.
2.     They reduce skus. Bralettes can come in 5 or 6 sizes, not the dozens that traditional bras need. So stores can carry less stock per style OR carry more styles.
3.     They are conducive to numerous looks and fabrics. Much more so than the traditional bra.
4.     They look and feel more natural and comfortable than a structured bra. (So I am told)
5.     They can be sometimes worn as sports bra or sports bra can be worn as bralette. Multifunctionality is a key to not only a wanted wardrobe item, but one you buy more of.
6.     Most important-They marry better with sportswear and dress styles popular today than the traditional bra.
7.     OK, maybe this is most important-They are accepted to be seen from outside, while a peek or more of the traditional bra looks like a wardrobe malfunction.

I am sure there are more reasons, but the above would be enough for me, if I were CEO of Victoria’s Secret, to rethink that decision.

I hope it is not monotonous to hear, again, that this is exactly what I have pointed out every time I have commented on the retail scene: Change or die. Focus on presenting value and excitement in what the consumer wants, not just price. And, most important, forget the idea that what you did yesterday is still valid today. IF you think it is, prove it by treating it like you would a new idea.

For those of us with some history in the fashion business, this is déjà vu. What is also déjà vu is the fact that those who recognize the disruptive trend and represent faster and better than their competitor, win. That is what I was taught during my years as department store buyer. Still true today.

Again- I am predicting the rise of the bralette and the marginalization, if not extinction, of the traditional bra.

But more than that, I am predicting the marginalization, if not extinction, of those who miss the signals of disruptive change, or see them and stand pat. I know a dinosaur when I see one.

Thursday, August 24, 2017

The Category Killers

Lidl, the German grocery chain which currently operates 10,000 stores in Europe, opened its first stores in the US on June 15th of this year. Plans are to open 20 stores in that region this summer. This chain opened its first stores in the UK in 1994 and now has dominated that country’s grocery retail, sending others into tailspin or oblivion; Lidl now holds 7% of the UK grocery market.

Lidl is what I call a category killer- a retailer with sniper focus on a narrow portion of their category, who aims to be the best at what they do and does not try to be all things to all people-- like a Walmart Supercenter or a traditional grocery/hypermarket. Years ago, it seemed the formula for success was to be bigger, bigger, bigger. One stop shopping. IF it exists, you can buy it there. The same formula was adopted and used by traditional department stores and category retailers such as Dick’s in building new stores, and in their business model.  I believe this formula is not the key to customer’s hearts anymore.

What is Lidl’s business model? What are the lessons for grocery and other retailers in the US?

Business Insider recently did a series of articles about Lidl, visiting their newly opened stores in the US. Here are some key takeaways from those visits:

·      Lidl’s stores are smaller, averaging 20,000 square feet. By contrast, a Walmart Supercenter is 260,000 square feet and a Kroger Marketplace can be as large as 145,000 square feet (Wikipedia).
·      90% of the products at Lidl are private label. (Business Insider)
·      Product selection is limited. Lidl averages 2,000 products in its stores while the average supermarket has about 20,000, with about 60,000 at supercenters (Business Insider)
·      Focus is on “fast moving items.” Narrow and Deep. Simplify to what customers want to buy, for the sake of argument, 90% of the time. By that logic, 90% of the space in traditional supermarkets or supercenters is for what consumers buy 10% of the time?
·      Cost efficiency-
o   It displays the goods in boxes they were shipped in-either vendor boxes or PDQs assembled at the vendor.
o   Customers weigh their own produce.
o   Presentation is kept simple- with the above packaging is super fast and easy to restock, saving on labor costs.
o   Natural lighting reduces energy costs (Business Insider)
·      AS a result, prices are amazing. Recently, CNBC visited the 14th Lidl store in Chesapeake, VA, where hundreds of people queued up to get in. Wow. Some highlights:
o   Pineapple-89 cents
o   Award-winning red wine- $2.89
o   A package of prosciutto(size unknown but have you ever seen one for this price?)-$1.99
o   Jar of wholegrain mustard-$.69
o   10 oz of fresh salmon-$6.49
o   Lidl’s prices, according to CNBC, were about 15% lower than Kroger, 10% lower than Walmart and 5.7% lower than Walmart Supercenters. NOTE: They were about the same as Aldi (another German supermarket category killer). (CNBC)

One customer, interviewed by CNBC at the time, flatly stated that based on her (brief) experience at Lidl, she would not be shopping anywhere else in the future. But let’s note: AS amazing as the prices were, they were not massively lower than Walmart Supercenters. My conclusion is: Category killers’ success is not totally about price; it is about merchandising focus,  the perception of value and the experience.

(I have not been to a Lidl or an Aldi other than Trader Joe’s (which is also about value and experience, not price). However, last winter, on a visit to Parma, Italy, I did visit a Conad supermarket, whose operating principle is similar to Lidl and Aldi. I was blown away by the prices, value, quality, and the freshness of everything. The vegetables were not fresh-they were sparkling)

Does this bring the point home? Consumers are not stupid; conversely, they are very savvy about where and how they spend their money. Sure, they will go to Dick’s to buy a basketball for $.99; but where will they spend most of their time and money on sporting goods in the future? That is the key question for retailers- where is the stable future?

Category Killers are the future of retailing; at least the main component of its future growth, OR those who will be taking up the space that traditional retailers vacate. Why will this space be vacated-or, why is it being vacated? Each retailer has their own unique situation. But the common thread is, as Edward Stack, CEO of Dick’s Sporting Goods said recently, that they are in “panic mode.” That statement does not include a clear plan for present and future stability other than frantic promotion. The tail is wagging the dog: consumers have figured it out, but some major, traditional retailers have not. And their passionate response is driving retail sales growth today.

I note that I unwittingly use the term “traditional” for retailers like Macy’s, Dick’s, Kroger, etc. The fact that I can use that word is indicative of the problem. Once I have a new characterization to hold on to, problem solved.

In my earlier article, “Wow! Fire Sale! Retailers in ‘Panic Mode.” I wrote about category killers and their business model as one antidote to the steep decline of American traditional retail. Maybe changing business mode to Category Killer is not the only road to survival and a bright future for American “traditional” retail, but it is a force to be reckoned with, and a really good model to learn and adapt.

LIdl plans to open 100 stores in the US this year. I hope one of them is in my neighborhood.

Sunday, August 20, 2017

Wow! Fire Sale! Retailers in "Panic Mode"

This week, Edward Stack, CEO of Dick’s Sporting Goods, announced that retailers are in “panic mode”:  "There's a lot of people right now ... in retail and in this industry in panic mode. They seem to be in panic mode with how they're pricing, and we think it's going to continue to be promotional, and at times irrational, going forward," Stack said.

His approach to this situation: "We're not particularly happy that we're in it, but we think we are ... one of the few that are very well-positioned to come out of the other side very strong and continue to be the leaders in this industry," 

So his answer is to be more promotional than, or at least as promotional as, the other guys. Who are the “other guys?” Amazon and Walmart? In Jim Cramer of CNBC’s words, “the dark star?”

Maybe. Traditional retailers like Dick’s and Macy’s are looking at not only declining sales, but plummeting market cap. Macy’s market cap shrunk from $24.11Billion 2 years ago to $5.935Billion today. In the same time frame, Dick’s decreased from $5.62Billion to $2.98Billion; Target from $52.45Billion to $30.40Billion. You knew this, but Amazon increased from $240.03Billion to $459.11Billion, and Walmart from $197.46Billion to $240.71Billion. (CNBC)

Ouch. The panic mode is not surprising. The question is, what can be done about the situation they find themselves in other than lower prices, which further lowers sales volume and margin: Will lower prices do anything more than bring in customers who know the store is in panic mode? Will temporary reductions promote customer loyalty? What is the target strategy for emerging from panic time?

The last is the real question. What Mr. Stack is saying is understandable as a survival move, but what comes next? None of these retailers can do this forever. Become a discounter? Price is a no-win area to compete in as someone can always be lower than you. Unless a pricing strategy in terms of value is where you live. And unless the shopping experience stimulates people to visit the store repeatedly, not just when you are madly promoting, giving product away gets you nothing but more losses.

So I would like to learn from Mr. Stack and other CEOs in this situation, what are you doing to prepare for the light at the end of this tunnel? How do you leverage current loss-making promotions for future profitable, sustainable success? In the old days of retail, as a Federated (A&S, RIP) buyer, we took aggressive markdowns to clear out the slow selling merchandise, opening financial and store space for the new items which we worked very hard to find; those which would sell out at regular price. The more times we were right, the better our sales and profit.

One key mark of the merchant prince of those days was the ratio between hits and misses. Then as now, successful merchandising is a combination of price, excitement, and value perception.

Really, then, the road map to success in the world of retail is no different than it was 40 or 50 years ago: Find something customers will get excited about, every day. We scoured the market to find those items, and racked our brains as to how to present an exciting retail experience on our sales floors. Should it be any different today? No.

Who will lead us to the promised land? Where are the “merchant princes” that produced an exciting shopping experience which led these now-in-dire-straits retailers to growth years ago?

Cramer says retail is a two horse race now-Walmart and Amazon. I don’t agree. In fact, with the current traditional retail leaders vacating space in the customer’s mind and pocketbook, it is a fantastic opportunity for a new breed of retailer to take the castle. There is no way everyone is going to shop at Walmart and Amazon only, or buy 100% of their needs online. Have you been in a Walmart Supercenter lately? Way too big, too confusing, and quality is still as questionable as it always was.

So who will take the castle space vacated by the traditional retailers? It will be what I call the Category Killers (further on that- the sequel to this article-coming soon). For example: in fashion-Inditex just opened its 94th market. In food-Lidl opened its first stores in Virginia, North and South Carolina June 15 of this year, and I can’t wait until one comes to my neighborhood. Is this totally about price? Not at all-it is about value and a simplified, FUN shopping experience.

I don’t believe for a second that the traditional retailers cannot play in this ballpark. Here’s my point: Even with their severely shrunk market cap, they still have the financial capability to make major changes-if they have the mindset, the leadership and the merchant power to do so. First, decide it is time to make the needed changes. Then-Simplify. Shrink and narrow the product offering. Reorganize your sales floors to reflect the new assortment-in a simple, attractive way. Get customers excited about something other than today’s discount. Maybe open category killer stores-not discount stores.

Since we haven’t heard about their future plans for stability and growth, I can’t say what they have and have not figured out. I hope they are passionately inspired to make the needed changes.

“Panic mode”-brings to mind a burning building. Hope the courage and cunning can be found to put out the fire and bring back stability.

This is truly an exciting time in retail.

Friday, August 18, 2017

Fearless Leader(s)

Who are the leaders that will carry your organization to a bright future? What are their leadership and management characteristics? Has today’s unprecedented world of business created the need for a new type of leader?


There is a Latin Proverb that is sometimes attributed to Virgil: Audentes Fortuna Iuvat. The common translation is, “Fortune Favours the Brave” or “Fortune Favors the Bold.” Virgil's original is audentes fortuna iuvat "fortune favors those who dare/act boldly.” The proverb has endured until today, and is used as a motto by the US Army and many families/clans.

In today’s challenging world of global business, I believe that leaders should adopt this motto in their business conduct, plans, and hiring criteria. Anyone who is a leader or has potential to be a leader should be comfortable with this as a paradigm for action. There is little positive in the future of those who are satisfied with the status quo (no matter how good it looks), or whose actions do not reflect bold visions. On the other side, daring and disruptive actions will achieve bold results. Of course, this paradigm must be shared, embraced, and valued as a key mantra by all participants.

Let’s look further at the character of the brave leader. Donald Rumsfeld is said to have characterized international politics in terms of three levels of knowledge: Known Knowns, Known Unknowns, and Unknown Unknowns.

The first is clearly when something is clear and transparent-no risk or speculation.

The second refers to situations where something is known to exist, but all the facts of the case are still unknown. Example: It is known that North Korea has nuclear weapons, but unknown as to what their real plans for them are.  Some knowledge to go on, but the unknown component carries danger and risk.

The third is the most dangerous and risky, and can be the Black Swan that nobody has seen or expected.

What does this have to do with management? The fit in international politics is clear. We can grade managers’ leadership abilities by how they embrace these situations in terms of business planning and actions:
·      Those managers who can only operate in the first area, Known Knowns, are those who will probably preside over stagnation.
·      The managers that live in the second, Known Unknowns, will be willing to lead their teams into bold new areas and ventures. Supplied with good research, due diligence, great business experience, vision and intuition, these actions, while not at all risk free, are a calculated way to win.
·      But what about the third? In business, doing something with no informational or experiential backup is generally viewed as reckless. I agree that if this is the main area where a manager lives, odds go way up for trouble ahead. That being said, the highest risk produces the highest reward; willingness to take a chance on something, sometime, when conditions are right, that is totally new and may even seem a little crazy, should be an essential part of the character of the manager.
·      So the exceptional manager lives in number two and always is curious about number three. Lynn Failing, in his blog on, suggests that curiosity is one of the 5 “C’s” for hiring criteria. In doing so, he elevates curiosity to be a top level characteristic for effective leadership.

Emma Cookson, in her blog, “Fearless,” ( Ep. 17, “The Simplifier, lists three takeaways for her podcast:
  • A willingness to follow your instincts.
  • The confidence to bet on yourself.
  • The ability to assess vast numbers of inputs and construct a cogent story of the future.

These characteristics correspond exactly to the profile of the effective manager I laid out above, with one more critical trait: the ability to simplify complex problems. She says further:

The simplifier. Modern businesses present their leaders with complex decisions. The speed with which those decisions have to be made are best served by a brain that's capable of absorbing, evaluating, filtering, prioritizing, combining and then acting upon hundreds, sometimes thousands of pieces of information. Of all of these leadership attributes, I think the capacity to filter is at the top of the list. To be able to cut through the noise and to sense, or even more than that, to know what's important almost in real time, is critical to modern leadership.

Brilliantly put! In order to effectively find and capitalize on the Known Unknowns, the ability to quickly filter the information down to actionable and logical plans is absolutely essential for the manager. I, too, have said repeatedly in this blog that the ability to simplify leads to efficient and cost-effective management.

Last but very much not least, the leader’s success living in the world of unknowns depends very much on the ability to inspire others to follow. The leader is nothing without the unconditional and enthusiastic support of his or her team.  John Quincy Adams said:

If your actions inspire others to dream more, learn more, do more and become more, you are a leader.

Vince Lombardi:

The achievements of an organization are the result of the combined efforts of each individual.

And my own:

Lead By Example.

Question: HR/Hiring Managers- Do you agree with me? Are you insisting upon only hiring individuals with the characteristics I described above for leadership/management positions? If not, why not?

Since this paradigm for leadership has existed for 2000 years, it would be a good bet to follow it.

(Personal note: My I, Sourcerer logo, whose statue can be found in Rome today, seemed to be embodying this type of bold and unafraid leadership, inspiring others to follow him.)

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