Inside This Issue - Opinion
Merchants move to forefront
March 11th, 2013
by David Pinto, Editor
Recent events have confirmed a fact that the brightest and more perceptive retail analysts have long since realized: Mass retailing is at the dawn of a new era of merchant dominance.
• Walmart recently announced a series of changes, promotions and personnel shifts within its merchandising organization that speaks both to that retailer’s newfound respect for its merchants and to the fact that no mass retailer has developed a merchandising staff with the experience and expertise to rival that of the world’s largest retailer.
• The departure of Joe Magnacca, Walgreens’ chief merchant, who left last month to assume the CEO job at RadioShack, has sent shockwaves through a supplier community that had come to look to Magnacca for innovative ideas, quick and accurate assessments of new products and opportunities, and smooth implementation of new programs. Even those industry people who had trouble understanding why Magnacca would leave Chicago to face the daunting task of reviving RadioShack grasped the fact that he would not easily or quickly be replaced — both for what he accomplished and for what he came to represent at a company whose fortunes he had been instrumental in reigniting.
• Late last year Cheryl Mahoney, longtime head of beauty care at CVS, was given a change of assignment, one that saw her abandon the beauty category in favor of the challenging job of customizing CVS’ assortment by market, store location and customer preferences. Though the job is critical to CVS going forward, it nonetheless leaves a huge void in one of the drug chain’s most vital and important categories, one that has long anchored the CVS merchandise assortment. Much to the dismay and disappointment of the supplier community, Mahoney has been replaced by a newcomer to CVS, a former management consultant who is new to the beauty care category. This supplier reaction is not so much directed at the replacement as it is at the disappearance of Mahoney, a hugely popular merchant without peer as a retail beauty care merchant. Indeed, those suppliers who know Mahoney best are showing both kindness and restraint in telling her successor that he has big shoes to fill. Truth is, he has very big shoes to fill.
At mass retailing enterprises across the land, merchants are emerging as the driving force behind sales and promotional initiatives — while frequently making the difference between results that are barely acceptable and performance that is outstanding.
So it is that such merchants as Duncan Mac Naughton and Carmen Bauza at Walmart, Jill Turner-Mitchael and Jason Reiser at Sam’s Club, Kathee Tesija at Target, Doug Ratto at Safeway, Bill Anderson at H-E-B, Judy Sansone at CVS, Bryan Pugh at Walgreens, Tony Montini at Rite Aid, Mike Bloom at Family Dollar and countless others have assumed more significant roles than their counterparts of the past ever dreamed of. Indeed, retailers that have traditionally been operationally driven — Walmart and Walgreens come readily to mind — are now focused more intently on the role of their merchants in producing and driving sales.
Many reasons exist for this monumental shift. Foremost among them, however, is the blurring of retail channels, a fact of retailing life that has not only produced similar merchandise assortments but, in doing so, has altered the way consumers shop throughout America. Where once, for example, food was the exclusive province of America’s grocery retailers while health and beauty dominance resided with its drug stores, such rules have become antiquated. Today consumers buy merchandise, regardless of type, where they find it easiest to do so. And while convenience and, to a lesser extent, price remain primary determinants, merchandise selection and assortment and promotional support for that merchandise have assumed more important roles.
Anyone doubting that need only study the “flagship” stores Walgreens has been opening of late. They have made obsolete the traditional definition of a drug store while, in the bargain, attracting a younger, often more affluent shopper who shops the store more frequently, spends more time on each shopping trip and, of course, spends more money than does the traditional drug store shopper.
On the other hand, look at Walmart, a retailer whose sales have disappointed of late. To the Walmart consumer, that retailer, regardless of the strides it has made in ginning up excitement over its stores and merchandise assortment, the Bentonville chain remains all about price. And price, in many instances, is no longer enough to carry the day, given the location options now available.
The result is a new dependency on the retail merchant, a dependency that is creating more exciting, more productive and more performance-oriented retail stores. And, in the bargain, a more energetic retail environment.