OLD DOG, NEW TRICKS: Just because they’re big doesn’t mean that chains like Sears, Roebuck & Co. can’t reinvent themselves and prosper in challenging times. So says Walter Loeb, the keynote speaker at a Management Horizons retail conference of 90 people in Dallas Tuesday.
Sears, Loeb asserted, epitomizes the strategy of focusing on a specific niche, precisely identifying its customer, in addition to recognizing and cultivating employee talent, and exploiting technology.
Sears’ method was to shut its catalog and underperforming stores to focus on apparel, home and automotive goods, develop a detailed profile of its target customer and an ad campaign to reach her, offer incentive pay to employees, cut all tasks except selling from sales associates’ duties, start marketing to ethnic groups and wield computer systems to track merchandise.
Loeb also cited Wal-Mart’s move to deliver goods to stores six days a week instead of five to keep inventories low but adequate and fresh.
“The most important theme for the Nineties is for retailers to look for ways to innovate their operation — to have fresh, new, young ideas that will distinguish themselves from their competitors,” Loeb said.
BARNEYS’ NEW OUTLET: Barneys New York will open its second outlet store on Thursday. The 7,250-square-foot unit will be at the Potomac Mills outlet center in Prince William, Va., and will carry women’s and men’s apparel, accessories and footwear at 30 to 60 percent below regular retail prices. The company opened its first outlet in Woodbury Commons in Harriman, N.Y., in May 1993.
WAL-MART TECH: One key reason Wal-Mart Stores has rocketed to the top spot in U.S. retailing is its use of technology to speed management functions and slash overhead.
Randy Mott, vice president and chief information officer of the Bentonville, Ark.-based chain, revealed some of the secrets behind its automation on Monday at Retail Systems ’94, a technology conference at the Sheraton Washington Hotel in Washington.
Wal-Mart, which had sales last year of $67.3 billion, automated 16 store-level processes over the past year. But Mott said before the discounter considers automating any function, it first tries to eliminate it.
He said corporate applications developers spend time in the stores performing tasks manually and working with store employees before planning automations. This helps developers attack problems with end-users in mind.
“For receiving applications, our developers spent weeks unloading trucks and writing out the paperwork to understand how the process really works,” Mott explained. “We go to the highest-volume, most productive stores and talk to managers and clerks to see what they’re doing right.”
Another example was last year’s move to automate markdowns, a labor-intensive function that is plagued by shrinkage and redundancy.
Developers spent two weeks at stores and designed a system that was piloted in 20 units before being fully rolled out. The entire process took 3 1/2 months.
The new markdown system is completely paperless and has pared shrinkage and reduced labor costs. Data is gathered daily, by item, and the system saves Wal-Mart $6 million annually.