América Retail | Homepage
Monday, May 29, 2017

La primera comunidad del retail en Latinoamérica

Opinión: Wall Street’s Misguided (And Dangerous) Fascination With Retail Store Productivity

Opinión: Wall Street’s Misguided (And Dangerous) Fascination With Retail Store Productivity
Abril 20, 2017

Autor/Fuente: Steven Dennis, Forbes 👤Periodista: María Luisa Ayala 🕔20.Abr 2017

 

An unprecedented number of retail store locations are closing this year and more announcements are surely coming–though perhaps not quite as many as I suggested in my April Fool’s post.

Given the lack of innovation on the part of traditional retailers, rampant overbuilding and the disruptive nature of e-commerce, this ongoing and massive consolidation of retail space was both inevitable and overdue. Yet much of the way the investor (and pundit) community sees the need for even more aggressive store closings is wrong and, one could argue, pretty dangerous.

One of the more ridiculous ways Wall Street firms have tried to determine the “right” number of store closings is to calculate how many locations would need to be shuttered to return various chains to their 2006 store productivity levels. A somewhat more responsible, though still alarming, analysis comes from Cowen, which focused more on the need to more closely align retail selling space supply and demand.

The most obvious problem with this type of analysis is its focus on ratios. The fact is that many stores with below average productivity are still quite profitable, particularly department stores, given their low rent factors. So while closing a lot of locations may yield a temporary productivity boost it often has a direct and immediate negative impact on earnings, which is a far better indicator of a retailer’s health.

Sugerimos: http://www.america-retail.com/opinion/opinion-zara-where-consumers-create-the-trend/

The bigger issue is an underlying misunderstanding of the role of brick & mortar stores in retail’s new world order. Just as “same-store” sales is an increasingly irrelevant metric, so are store productivity numbers. Yes, more stores need to close. Yes, many of the stores that remain need a major rethink with regard to their size and fundamental operations. But what many still fail to grasp is how a retailer’s store footprint drives a brand’s overall health and the success of its e-commerce operations.

A given store’s productivity can be below average and decline yet still contribute to a retailer’s overall success, particularly online. Stores serve as an important–and often low cost–channel to acquire new customers. Stores serve as showrooms that drive customers online. Stores serve as fulfillment points for e-commerce operations. Stores are billboards for a retail brand. Without a compelling store footprint, a brand’s relevance will likely decline and its e-commerce business almost certainly will falter. Stated simply, store productivity numbers, taken in isolation, no longer get at the heart of a brand’s overall performance in an omnichannel world.

While there surely is merit in closing stores that drain cash and management attention, store closings can often make a bad situation worse. Ironically–as Kevin Hillstrom from MineThatData does a great job of illustrating–closings stores to respond to e-commerce growth can actually have the opposite effect. In fact, from my experience, massive store closings often initiate (or at least signal) a coming downward spiral.

Store closings are hardly the panacea that Wall Street seems to believe. And the notion that a brand can shrink its way to prosperity is typically horribly misguided. Macy’s, J.C. Penney and a host of others need to close more stores. And Sears and Kmart just need to go away. But, as I’ve said many times before, show me a retailer that is closing a lot of stores and you’ve likely shown me a retailer that doesn’t have too many stores, but a retail brand that is no longer relevant enough for the stores it has.

The danger of closing too many stores is increasingly real. The danger that struggling retailers will continue to appease Wall Street’s thirst for taking an ax to store counts instead of working on the underlying fault in their stores seems, sadly, clear and present.

 

Autor: Steven Dennis, Forbes

Articulos relacionados

Opinión: Cómo hacer clientes frecuentes en tu ecommerce

Opinión: Cómo hacer clientes frecuentes en tu ecommerce
Mayo 26, 2017

  Sabemos que la cantidad de españoles que realizan compras en línea ya es bastante grande,

Opinión: How retailers are using in-store office space to get closer to customers

Opinión: How retailers are using in-store office space to get closer to customers
Mayo 26, 2017

  Have you been thinking about shop space all wrong? You use it to showcase products

Opinión: El alcance de la transformación digital en las empresas

Opinión: El alcance de la transformación digital en las empresas
Mayo 26, 2017

  Todos los días interactuamos, de alguna u otra forma, con diversos servicios al mismo tiempo.

Opinión: Proyecciones para Cyber Day

Opinión: Proyecciones para Cyber Day
Mayo 26, 2017

  Por sexto año consecutivo como socio tecnológico de la Cámara de Comercio de Santiago (CCS)

Opinión:  Es un deber de la agencia velar por el tiempo de sus pasajeros

Opinión: Es un deber de la agencia velar por el tiempo de sus pasajeros
Mayo 26, 2017

  El tiempo es el único activo disponible igual para todos.  Es imposible añadirle un solo

Últimas Noticias

Newsletter

SECTIONS

América Retail