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Retailing in midst of transition

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The Christmas selling season is fast becoming a distant memory — which is probably for the best, given the final results. Few were the retailers that performed as strongly as anticipated. Many more turned in results that didn’t live up to initial projections or initial hype.

PrintMany factors contributed — the unseasonably warm weather, a lack of exciting or innovative merchandise, the Black Friday scheduling dilemma that had many retailers open and closed at odd hours on odd days, the confusion about sales events and, indeed, the timing of sales events.

Behind all these factors was a curious lack of focus on how best to approach the holiday, what merchandise to emphasize, how to effectively promote the season, and how best to attract consumers with money to spend but an absence of direction on how best to spend it.

In the end, Christmas was a disappointment in that performance generally varied from lackluster to average, with too few retailers accurately claiming that the holiday exceeded expectations. The strong performance of online sales was used, often, as a reason brick-and-mortar results faltered, though the truth was probably more complicated than the rush to buy on the Internet. And indeed, some companies — Target comes to mind — performed well despite the online ­competition.

Perhaps the true cause of the holiday’s disappointing results has more to do with the nature of retailing, as it is currently practiced, than to any real or imagined competition from newer forms of the art. When mass market retailers once known for simplifying the art of buying and selling complicate the practice unnecessarily by introducing all manner of wrinkles to confuse shoppers by deemphasizing price, the entire channel needs refocusing and reexamination.

In truth, retailing is in a transitionary period, one brought about by new management, new strategies, new formats and some confusion about what consumers want and how to satisfy their wants. Perhaps the business has become too complicated, with too many options vying for attention.

Is this a time to cut costs? Is it a time for aggressive merchandising? For new products? New formats? New operating principles? At too many U.S. retailers, these priorities are all vying for attention. And at too many no one priority is emerging as the priority, the one to ­emphasize.

Truth is, American retailing still leads the world in excitement, in innovation, in performance. Target’s recent stumble is more commonly noted for the speed with which the retailer is recovering than for the circumstances that initially tripped it up. Costco remains one of the world’s best retailers. The nation’s drug chains, both large and small, are performing well. The U.S. supermarket industry is more innovative today than it’s been in recent years. America’s specialty retailers generally enjoyed a strong Christmas selling season.

By contrast, many retailers in other countries are suddenly struggling. Tesco, until recently on par with Walmart in terms of performance, has hit a rough patch. So, too, have some of the grocery leaders across Europe. And some of the newer retail formats in Europe are suddenly struggling.

In summary, retailing around the world is in a transition period. Many of the concepts that once worked so well are no longer working quite so well. Many of the executives who led their companies to new levels of success are now struggling to maintain that success. Many of the ideas once considered unique have now become dated — and few new ideas have come along to replace or supplement them.

So the time has come to forget Christmas and concentrate instead on what’s really ailing the U.S. retailing community — and begin conceiving ways to fix things.


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