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VOLUME 20 ISSUE 06 • 2012

30 DAYS THAT

CHANGED RETAIL

THE LARGEST DRUG CHAIN IN THE WORLD

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CHANNEL BLURRING

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JC PENNEY “ADJUSTS”

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AFFORDABLE HEALTH CARE

5

LONDON RETAIL DAZZLES

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ON STEROIDS

STRATEGY & TEAM

CREATES MORE SHOPPERS

BETWEEN JUBILEE & OLYMPICS

30 DAYS THAT CHANGED RETAIL We say it (yet again), if you doubt retail is in the process of tremendous change...don’t. In one 30-day period over the summer there was the announcement of the formation of the largest drug chain in the world. One of the most revered retail marketers left his new company after only eight months in the midst of executing a turnaround strategy. There were a rolling series of announcements of strategic alliances between high-end and popular-price retailers that took channel blurring to an entirely new level. And there was the stunning US Supreme Court ruling on the Affordable Healthcare Act. (Yes, that too will have an impact on retail.)

THE LARGEST DRUG CHAIN IN THE WORLD Walgreens, the largest US drug chain, purchased 45% share of Alliance Boots including the UK's iconic Boots The Chemist, a global pharmaceutical wholesaling business, and access to European and Asian markets.

Our colleague Candace Corlett was quoted in Women’s Wear Daily as saying the transac-

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BOOTS OXFORD ST., LONDON, UK: PRESTIGE BEAUTY, PHARMACY & BOOTS ADVANTAGE CARD

tion was “brilliant and daunting.” Boy, was she right. Brilliant: Who would have thought of it? A global drug chain with 11,000 stores in 12 countries (8,000 of them in the US). However, that’s only part of it. There’s the highly regarded portfolio of Boots’ private label beauty and health brands, the likes of Boots No 7, Botanics, Sanctuary, Clearasil, and Soltan, to name only a few. There is the retail division's expertise delicately (and successfully) managing prestige and mass beauty brands in Boots stores. There’s the company’s experience running retail stores of various sizes – from its flagship, multi-story, 15,000 square feet store on Oxford Street, London, to its ubiquitous urban and suburban stores on British High Streets and small format convenience-focused stores at British railway stations and airports. There are its years of experience building loyalty with some 20 million-plus shoppers through the Boots Advantage Card. And last but not least, the power (often unrecognized in the US) of its global pharmaceutical wholesaling business. Daunting: For one, the obvious challenge of combining two culturally different businesses across 3,000 miles of ocean. Both companies


VOLUME 20 ISSUE 06 • 2012

WENDY LIEBMANN | CEO will speak at:

11.07.12 CONSUMER GOODS FORUM LOCATION:

Paris, France 01.15.13 NRF BIG SHOW LOCATION:

New York City

clearly understand retail pharmacy, however, there are many differences in how drug store retailing operates in the UK and US. There are differences between UK, European and US health care systems, and differences in how people in these countries shop, in general and specifically for health and beauty. And there’s the fact that Boots stores legitimately carry prestige beauty brands such as Estée Lauder, Clinique, Lancome, Clarins, and many others, while Walgreens stores would die for them. So why now? Only Walgreens' and Alliance Boots' management can say for a fact. But, from our point of view, there is so much happening in retail around the world that establishes the rationale for such a merger. In the US alone, so much is changing the retail landscape: most notably the realization (finally) that we have too many stores -- for the most part it’s a result of the impact the Internet and mobile technology are having on the way people shop. Retailers can no longer grow by opening more and more of the same stores. Retailers of every variety (including Walgreens) now ask themselves, “How many physical stores do we now need?”

© WSL MARKETING INC. 2012

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© WSL MARKETING INC. 2012

TARGET x NEIMAN MARCUS COLLABORATION

So how to grow? Smart strategy says you need different size stores, stores customized to local communities, more virtual stores -and possibly global expansion. Everyone from Walmart to Target to Best Buy, Starbucks, Macy’s are responding. So too is Walgreens -- with its Duane Reade acquisition, flagship strategy, focus on urban formats, addition of food, and purchase of drugstore.com and beauty.com.

NORDSTROM x TOPSHOP COLLABORATION

For Alliance Boots, the US has been a tantalizing market for a long time. Its successful test and rollout of Boots beauty brands in Target stores gave it a taste for the market. But where to go next? And where to grow its wholesaling proposition? Now, we know where. In the end, we say, “Brilliant trumps Daunting.”

CHANNEL BLURRING ON STEROIDS The wall between prestige and mass retailers continues to crumble. Luxury retailer Neiman Marcus and trendy big box Target announced a partnership to launch The Target + Neiman Marcus Holiday Collection this December. The limited-time collection will include products from 24 well-known fashion designers, including Marc Jacobs, Oscar de la Renta, Diane Von Furstenberg, Derek Lam, Rodarte and Tory Burch. The collection will feature

some 50 products in women’s, men’s, children’s apparel and accessories, home, pets, electronics accessories and sporting goods. It will be featured in all Target and Neiman Marcus stores, and on both retailers’ websites. The collection will be merchandised together in a single shop-within-a shop format in both retailers.

The big question for eager shoppers is how quickly will the merchandise sell out? If last year's Target program with Italian designer Missoni is any indication, we should all hold our place in line (or online) right now. Three days after the NM - Target announce-

TOPSHOP, LONDON, UK


ment, Seattle-based department store retailer Nordstrom and UK fast fashion retailer Topshop announced that Topshop and Topman would be sold in 14 Nordstrom stores beginning this September. Topshop is recognized for bringing runway trends to its retail stores in a fashion minute. Unlike other fast fashion retailers, such as H&M and Zara, Topshop has a wider range of price points, quality merchandise and categories (including collectable vintage fashion and beauty). This isn’t the first time Topshop has developed a relationship with a department store retailer. In the UK it's sold in Selfridges and in Canada in The Bay. The relationship with Nordstrom will help Topshop (currently with only three stores in the US) grow its US business faster. For Nordstrom, there’s the benefit of bringing new fashion into stores every week and, in so doing, attract younger and more fashionforward shoppers. Beyond the announced “official” reasons for the Nordstrom-Topshop, and Neiman MarcusTarget collaborations, the real reason is that this is the way shoppers buy today. Shoppers around the world are no longer willing to deal with the barriers of price point or the delay from runway to store. They shop with a “high-low,” “want it now” approach, and expect retailers to deliver. Retailers are beginning to recognize that – and so, the blurring will continue.

TOPSHOP, THE BAY DEPARTMENT STORE, CANADA

JC PENNEY “ADJUSTS” STRATEGY & TEAM All eyes have been on JC Penney’s turnaround strategy since the dynamic duo of Ron Johnson, formerly of Apple, and Michael Francis, formerly of Target, came to together to reinvent the iconic but floundering US retailer. The announcement of the company’s move to an everyday, low price strategy, after decades of its noisy, highly promotional approach, was welcomed by the retail intelligentsia, if not (yet) its coupon-conscious shoppers. Stylish new advertising presented the strategy way in advance of the redesign of Penney’s 1400 stores (only now rolling out across the country). It was an aggressive move to change the pricing strategy before shoppers had a chance to see the new value proposition fully articulated in their local store. Sales plummeted. And Francis left the company.

As global retail strategists and shopping futurists, we at WSL/STRATEGIC RETAIL are recognized for our ability to turn shopper insights into smart actionable strategies. Since 1989, in our HOW AMERICA SHOPS® studies, we have tracked the mindset, attitudes and behaviors that shape shopper trends, successfully predicting how they transform brands and retailers throughout the US. Check out our database at... www.wslstrategicretail.com For more info, contact us at: PHONE

212.924.7780

FAX

212.924.7608

EMAIL

Change is hard on everyone -- especially change on this scale when trying to alter the shopping behavior of millions of people. Whether the overall strategy proves to be right or not, the meager eight months Francis had to deliver success was definitely not enough.

info@wslstrategicretail.com

Now, we all wait (patiently) for the relaunch of the stores with their much talked about “Town Square” of shops with brands such as

Izod, Liz Claiborne, Arizona Jeans, L'Amour by Nanette Lepore, Martha Stewart, and Sephora, and hope that, in the end, JC Pen-

ney successfully rises from the turmoil.

© WSL MARKETING INC. 2012

JCPENNEY'S NEW PRICING STRATEGY

© WSL MARKETING INC. 2010

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CELEBRATION FOR QUEEN'S DIAMOND JUBILEE, LONDON


VOLUME 20 ISSUE 06 • 2012

AFFORDABLE HEALTH CARE CREATES MORE SHOPPERS is published by WSL STRATEGIC RETAIL

1 yr. Individual Subscription $300 2 yr. Individual Subscription $500 1 yr. Corporate Subscription $3000 2 yr. Corporate Subscription $5000 Send check to: WSL STRATEGIC RETAIL 307 Seventh Avenue, Suite 1707 New York NY 10001 CEO/EDITOR ART DIRECTOR CONTRIBUTORS

Wendy Liebmann KC Chung Candace Corlett Mia Gerardi Amy Marcus Paul Menichelli Elizabeth Neagle Desiree Phillips Cynthia Walsh Peggy Wang

We have lots of tools, research, shopper insights to help you. Drop by to find out more... www.wslstrategicretail.com

© WSL MARKETING INC. 2012

When the US Supreme Court announced its stunning 5 to 4 decision that the Affordable Health Care Act could stand it gave 30 million people access to prescription pharmaceuticals, access they did not have before the Act. Whatever your political leanings, view of the Act or the Court’s ruling, it is hard to deny the opportunity this aspect of it brings to US pharmacy retailing. Maybe we are naïve, but certainly as we see it, there are few opportunities of this scale to bring so many new shoppers (patients and their families) to retail.

LONDON RETAIL DAZZLES BETWEEN JUBILEE & OLYMPICS London retailers have always known how to throw a party. There was Selfridges department store’s 100th anniversary blast a few years ago that had half the shoppers on Oxford Street (home of its flagship store) carrying home purchases in the store’s iconic yellow shopping bags. Or, of course, Harrods department store that feels like a party everyday as tourists jam the stunning White and Black Beauty Halls and dazzling Food Hall. However, with the timely convergence of celebrations for Queen Elizabeth II’s Jubilee and the Olympics, London retail is made the most of the moment. On a recent visit, we saw UK retailers creating all manner of enticements for locals and foreign visitors. Department stores, Selfridges,

CELEBRATION FOR QUEEN'S DIAMOND JUBILEE: SELFRIDGES, HARRODS' GUCCI LINE, GUESS STORE WINDOW

Harrods, Harvey Nichols, Liberty of London were emblazoned with enticing brands and unique promotions. Anticipating the crush of shoppers for Gucci products, Harrods had set up a “shopping line” on the pavement, “Gucci Queue Starts Here” (a la the velvet rope at a night club). High-end Bond Street was draped with British flags. On a kitsch note, home retailer OKA had illustrated pictures of corgi dogs (the Queen’s dogs) on its windows. New stores opened in timely fashion, including Victoria’s Secret on New Bond Street. And right near the Olympic Stadium, in once undeveloped East London, there’s Westfield Stratford City, handy for visitors who wanted a break from the events. Once the Olympics were over, the 300-store mall will draw shoppers with its high-low fashion (from H&M to Hugo Boss, Primark to Prada), electronics (Apple of course), more beauty stores than a beauty junkie could dream of -- from the obvious, MAC, Kiehl’s, L’Occitane, to the esoteric Arabian Oud, the largest Arabian fragrance retailer in the world -- to everyday retail: supermarket (Waitrose), pharmacy (Boots), and banks. There are 80+ places you can eat or buy food, movie theaters, a bowling alley and casino. And more. A shopper’s delight -- with or without a Queen’s Jubilee or the Olympics. See you from the EDGE.

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WESTFILED STRATFORD CITY MALL, LONDON, UK


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