Barcelona’s Retailing Icon

As a little girl, I remember hopping in the car with my Mom, grandmother and sister and driving to Garden City, N.Y., to visit Macy’s for the day. (This was when Macy’s and Stern’s anchored the town’s Roosevelt Field Mall. Today, Macy’s is joined by Nordstrom’s, Bloomingdale’s and J.C. Penney department stores, as well as 270 specialty stores, more than 20 fast-food eateries and restaurants, and a movie theatre. But I digress.)

A few times a year, we used to visit Macy’s to shop for Easter dresses, Christmas outfits, back-to-school clothes, shoes, housewares, even electronics. Then we would end our shopping excursion with a trip to the fourth-floor snack bar that only served fresh-squeezed juices and frozen yogurt (it was the newest rage back then).

As malls grew in size and added trendy specialty stores to draw in more shoppers, those daylong shopping excursions to Macy’s ended.

A recent visit to El Cortes Ingles in Barcelona, Spain, managed to stir up those old memories, of when shopping in a department store was truly something special. The location is the main branch of the oldest department store company in Spain. The store, which has a history that dates back to 1934, sits in the center of Placa Catalunya at the top of Las Ramblas—the central boulevard that cuts through the heart of Barcelona.

The eight-floor store features such standard department store offerings as menswear, women’s fashions, footwear, juniors and children’s clothing, and cosmetics and fragrances. It also has housewares and electronics departments.

But the store also managed to exceed all my expectations.

Besides a full-service supermarket complete with fresh meats, fish, baked goods and meal solutions, El Cortes Ingles also boasts a candy department, a tobacco merchant, a jeweler/watchmaker and a travel agency. A rooftop cafe nestled on the eighth floor overlooks the city and attracts shoppers and non-shoppers alike.

El Cortes Ingles operates in the heart of Barcelona’s shopping district that is also home to plenty of Spanish designers, as well as chic brands including Versace, Mango, Louis Vuitton and Burberry. While I love the glamorous, high-end designer stores, I couldn’t help but feel a sense of nostalgia (and a sudden urge for frozen yogurt) as I visited El Cortes Ingles.

— Deena M. Amato-McCoy

Looking for Answers

A side benefit to trade conferences is that industry peers will inevitably discover that no one has all the answers.

I’m blogging from real estate solution provider Accruent’s annual users conference in the company’s headquarters city of Santa Monica, Calif. (Considering it’s pouring down rain in my own home city of Lincoln, Neb., this is a pretty plum assignment.) Here, in both yesterday’s and today’s sessions, I once again was reminded that the size of the retail chain is not necessarily an indication of best-ever practices or enviable technological solutions.

I listened as a Panera Bread real estate executive described less-than satisfactory lease administration procedures. And as a Target attendee announced to a room of peers that she was there to figure out how to streamline project-management issues as the chain opens more stores than originally projected. And as a Home Depot real estate veteran explored ways to integrate a variety of third-party tech vendors into one manageable solution.

Target? Home Depot? Shouldn’t they know everything by now? Don’t they have all the answers?

Not a chance. Retailers need to remember that just because a chain is twice your size doesn’t mean it’s twice as far along in its methods of doing business. And that trade conferences are a great venue for sharing—and learning.

— Katherine Field

Safeway Takes on Health Care

Anyone interested in the future of health care should take a few minutes to read the Q&A on newsweek.com with Safeway CEO Steve Burd. (http://www.msnbc.msn.com/id/18043611/site/newsweek/). During the past couple of years, the California-based supermarket operator has taken a leadership role in health care reform, advocating disease prevention and behavior modification or lifestyle changes as key to reduced costs.

Safeway, which operates 1,761 stores in the United States and Canada, got involved in the issue out of necessity. Its health-care costs for employees reached $1 billion and were exceeding the chain’s net income by about 20%. Backed by research that 50% to 70% of health-care costs are driven by people’s behaviors, the chain redesigned its health plan to reward people for healthful behaviors, including receiving an annual physical, regular mammograms and a colonoscopy. The results have been impressive.

“We saved 15% of our health-care costs the first year, flattened our costs the second year and rewarded our employees with a premium reduction of 25 to 34%,” Burd said.

In the Safeway plan, each employee’s premium fluctuates with his or her personal behavior.
“We’re paying for 100% of preventive care,” Burd said. “But if you don’t take advantage of that, then your premium will go up.”

In the first year of the redesigned plan, about 45% of Safeway’s eligible employees signed up. In the second year, it was 71%. Employees have an alternative plan to chose from, an HMO, whose cost rose last year.

Critics say that Burd is mostly (only) interested in lowering Safeway’s costs and improving its bottom-line. But Burd’s basic belief—that prevention is more cost-effective than managed care because it addresses the fundamental causes of illness—makes sense. And if, by improving the health of the chain’s employees, he also helps its bottom-line, that’s fine by me.

— Marianne Wilson

Picking a Winner Isn’t Easy

It’s hard to come up with the name to put on the plaque of the Most Insensitive Retail Employer award. Should it be RadioShack for sending out 400 termination notices by e-mail? Or should Circuit City cop the trophy for chopping 3,400 mostly store-level workers because they earned too much and could be replaced by lower-priced personnel?

There are other contenders, but those two are the clear front-runners. Why? Because they have chosen to do things the “new” way. They broke with tradition, and in so doing they have opened our eyes to retailing, nay, all business, practices of the 21st century.

I’m often accused of being a bleedin’ heart liberal, especially when it comes to labor issues. But the reality is, many companies must downsize to survive and there is no easy way to accomplish that onerous task. We’ve downsized at our parent company in the last year (thankfully, not at Chain Store Age). I can tell you from personal observation that “gut-wrenching” doesn’t come close to describing the pain everyone in our organization experienced.

As business changes, the old ways of doing things evolve as well. Sure it was seemingly heartless for RadioShack to send out e-mail termination notices. But those e-mails were not the first notices those affected received. The whole company had been made aware of the pending reductions and how they would be communicated. It looked bad to outsiders, and probably insiders as well, but the layoff notices were not blindsided actions.

Circuit City, on the other hand, has a lot of explaining to do, and it is likely to do so in a courtroom as several fired workers are alleging age discrimination. Since Circuit City fired workers with above-average seniority who were making the most money, it stands to reason that those affected would be mostly older workers.

One of the arguments circulating in news stories about the Circuit City move is the impact less-experienced sales associates might have on the company’s revenue potential and customer service. Too early to tell, but I’m not one who subscribes to the theory that new, younger staffers will lack product knowledge. The young, after all, are generally more tech-savvy than their older counterparts, so there shouldn’t be any loss there, though they might lack the selling skills that come only from experience.

More telling might be Circuit City’s ability to attract talented personnel; why would anyone feel comfortable working for a company that publicly has demonstrated a disdain for their capacity to earn a decent wage? Why would anyone choose to work long-term for a company that publicly has turned its back on loyalty?

Labor strife is all around us in retail. Supermarket unions are threatening to strike again in Southern California. Wal-Mart acknowledges it monitors employee e-mails and phone usage, a perfectly legal practice that many companies employ. Wal-Mart is accused of being unfair to women, yet the National Association for Female Executives (NAFE) named Wal-Mart Stores one of the “2007 Top 35 Companies for Executive Women." NAFE selected the company for its programs and initiatives designed to support female participation and leadership in the workplace. Even Costco, that paradigm of good worker relations, is being sued for allegedly discriminating against women when promotions are considered.

No, it is not easy picking a winner of the Most Insensitive Retail Employer award. Applications NOT cheerfully accepted.

—Murray Forseter

Gap Update

The good news is that published reports say Gap Inc. has started interviewing candidates for its vacant top spot. Egon Zehnder International, which has offices in San Francisco, Manhattan and other cities around the United States, has been hired to conduct the search. Gap also reportedly has formed an internal search committee to draw up its own list of potential candidates.

Meanwhile, Gap chairman Robert Fisher, who has been filling in as interim CEO since Paul Pressler was removed a few months back, has been formulating his own plans to put the company back on track. While the decision to shutter its 19-store Forth & Towne division has gotten the most press, I’m more intrigued by Gap’s plan to narrow its core division’s targeted age range, which has been from 18 to 35, but will now skew to an older demographic. Just how old remains to be seen.

I’m all for Gap narrowing its sights and defining its market. But in order to be successful at it, the chain will have to commit itself 100% to the undertaking. Its marketing and promotion, in-store displays and signage, along with the product, of course, will have to reflect the updated positioning. Everyone has to be on same page. Lately, Gap’s record in this regard has been not great.

Last summer, Gap sent out mixed signals, running a “Summer of Love” promotion that appealed mainly to nostalgic baby boomers while stocking its stores with merchandise that appealed to (and was sized for) a much younger demographic. I laughed when I heard a well-meaning but clueless young employee trying to explain exactly what the summer of love was to some young shoppers.

As for Gap’s current “boyfriend pants” promotion, it seems designed for a teenage audience. I’m hoping it represents the final vestiges of the old management team, a team that never could seem to decide on one overreaching, well-defined strategy.

The next chief executive of Gap will have a full plate, from figuring out what to do about Old Navy (whose stores, in some instances, are starting to look worse than Kmart) to deciding whether to go forward with piperlime, the company’s online shoe store (dealing with Fisher, who seems to enjoy being at the helm, may be another hurdle). But the biggest challenge by far, at least in terms of the overall corporate investment, lies with Gap. Before any type of overhaul, before investing in any more design talent, before launching any more media, it needs to work on something much more basic: its identity. Only when it figures out what it is and whom it wants to appeal to will the other pieces of the puzzle start to take shape.

—By Marianne Wilson

The Promiscuity of Shoppers

It is no secret that today’s retail shoppers are looking for personal benefits and control over their shopping experience. This agenda is also causing more shoppers to be less brand-loyal.

While attending the inaugural World Retail Congress conference held in Barcelona, Spain, last week, this point was drilled home by Marian Salzman, executive VP for New York City-based advertising firm JWT Worldwide. During her very frank albeit humorous discussion, I almost felt chastised for not being part of this new genre of shoppers.

“A smart consumer is not brand-loyal. Today, these shoppers are called brand sluts,” she said during the conference’s closing session, “Tomorrow’s World: What Will the Future Hold?” on Friday, March 30.

“The brand-loyal shopper is considered stupid, while the brand slut is smart,” she added. “They want to spend their money at retailers and brands that will titillate them and make them feel special in the end. And they will only take their new brands ‘back to bed’ if they continue to excite them.”

Based on this description, I imagine Salzman would call me a brand prude.

I am a brand-loyal girl through and through. I like classic brands, styles and high-end and affordable luxury whether I am buying clothes, accessories, food, electronics or housewares. I opt for specialty retailers over department store chains. And I am not a fan of discount retailers.

For example, Ann Taylor/LOFT, Banana Republic and the Gap satisfy my career and leisure wardrobe needs; Nine West and Enzo Angiolini, Nike and Adidas are my favorite footwear brands. Coach is my handbag and leather accessory retailer of choice, and I buy most of my groceries at Stop & Shop. (While stocking up, I even stick with the consumer-product-goods brands I grew up with.)

Don’t get me wrong. I am not afraid to take risks and have no problem trying new retailers. More often than not however, these risks don’t seem to pay off for me.

I am not sure whether this is a generational issue, “an old school” mentality or the result of just being lazy. Regardless, I place my favorite chains on a pedestal and as a result, I do place high expectations on each of them.

Sure, I am disappointed at times. To me however, quality merchandise and positive customer service outweigh searching for the “flavor of the month” just so I can add a new notch on my retailing bedpost.

— Deena Amato-McCoy