Omnichannel Trips Target’s Supply Chain

The Wall Street Journal: “Target Corp.’s plan for a retailing future that marries its stores and online sales is being tripped up by a supply chain from the past. The Minneapolis-based discount chain is moving away from a largely one-size-fits-all model toward one that can be customized to give each of its 1,800 stores tailored layouts, product selections and ordering patterns.”

“But that approach is being stitched onto a distribution system designed before e-commerce demanded that its stores also become local distribution centers and showrooms for online customers … The problems Target is addressing are common to large brick-and-mortar retailers who have added new ways to serve online shoppers … these capabilities—like letting shoppers pickup online orders in stores and shipping from stores—are disruptive to retailers’ regular operations.”

“Customization isn’t just a means to get local delicacies on shelves, but also to tackle some basic problems—like how many feet of paper towels or boxes of cereal are needed to keep shelves stocked in very different locales. In the past, Target could adjust to those patterns more easily when the supply chain required moving goods from distribution centers to shelves. Newer problems are tougher.”

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JC Penney To Display Dresses Like Oreos

The Dallas Morning News: “What does a $2.49 package of Oreo cookies have to do with a $24.99 colorful summer dress? … A prominent display of Oreos in the supermarket includes pictures of the cookies, maybe with milk, and a discounted price in big print. Then there’s a rack of cookies right there. If you had to hunt down the Oreos, you might forget about them.”

At Penney’s, a “rack of dresses will be right behind the mannequins where shoppers can find them. Plus there’s a big sign with the price.”

“We’re making it as easy as possible to buy the dress,” says JC Penney CMO Mary Beth West, who “spent most of her career in the consumer packaged goods business devising ways to get us to spend billions of dollars on brands such as Ritz, Philadelphia, Nabisco, Kraft Mac & Cheese, Jell-O and Cool Whip.”

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Macy’s Simplifies Its Shopping Experience

The Washington Post:”This week, Macy’s announced that it is shaking up its discounting practices: The coupon system will remain in place for full-priced items, but the retailer is implementing a different strategy to get shoppers to pounce on its clearance merchandise. The move is effectively a bet that shoppers prefer simplicity over the thrill of demonstrating their shopping savvy.”

“Here’s how Macy’s new approach works: When an item is on clearance, you can’t apply coupons or other discounts to it. Macy’s said it will apply deeper cuts to the ticket price than it did previously, but the price you see on the tag is the price you will pay. The retailer has also moved all the clearance items to a centralized area in the store — one for men’s apparel, one for women’s — instead of having the racks scattered throughout the store. So far, Macy’s has seen upbeat results from the change.”

“In a conference call with investors this week, Macy’s chief financial officer Karen Hoguet offered this explanation for why the change was getting traction: ‘I think what happens is, customers want simplicity. And when you are looking for deep clearance goods you could just see the price of the item and not have to do the math in your head. And it’s easier.'”

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