Home Depot: Retail ‘Oasis’ Against Amazon

The Wall Street Journal: “Do-it-yourself chains Home Depot Inc. and Lowe’s Cos. appear to have built a retail oasis mostly walled off from the reach of online behemoth Amazon.com … Executives from the home improvement chains cite a litany of favorable housing trends for their good fortunes. New households are being formed and housing turnover remains steady. Millennials are even willing to buy homes … All that spurs trips to large chains to pick out appliances and paint colors, and plan projects around the home.”

“But the e-commerce giant doesn’t have a toehold in large parts of the home improvement space, like lumber, paint and gardening supplies. Home Depot says just 25% of its business—smaller, easy-to-ship items like power drills and small hand tools—faces tough online competition.”

“That doesn’t mean either chain is immune to Amazon. A UBS survey in June found that 11% of consumers planning a home improvement project themselves planned to buy something from Amazon. That is far behind the 36% who said they planned to shop at Home Depot and the 21% at Lowe’s, but up from just 7% a few months back.”

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Michaels: The Art & Craft of The Retail Experience

“We’re not Apple. We don’t make the new iPhone that people will line up in advance for. We need products that people want in an environment they want to shop in,” says Chuck Rubin, CEO of Michaels, in Forbes.

“Michaels is one of the most surprising retail successes of recent years. It has stuck to transforming its brick-and-mortar stores while almost completely ignoring e-commerce … While the company’s core hasn’t changed–it sells cheap craft supplies–Rubin has modified its stores to make it easier for novice crafters to find items. They’re bringing in more of those types of customers by moving beyond sewing-room basics, adding cooler items, like those coloring books, and Michaels-exclusive products, such as Isaac Mizrahi-branded yarn.”

“The most striking part of Michaels’ success is how it contradicts the digital era’s implied mandate for retailers–that survival hinges on selling online. But Michaels hasn’t wasted millions competing with Amazon.com on e-commerce. It’s grown while focusing squarely on improving what’s within its stores’ four walls … The Web remains a no-man’s-land for Michaels … Rubin knows all that stands between Michaels and Bezos is the in-store experience.”

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Luxury: It’s Not What It Used To Be

USA Today: “People around the world who usually flock to luxury goods are worried about events that threaten global stability including terrorism fears, the United Kingdom’s withdrawal from the European Union and China’s slowdown. At the same time, luxury retailers are losing share to online sellers, the same issue bedeviling mainstream store chains. They’re also suffering at the hands of discounters and fast-fashion luxury lookalikes.”

Milton Pedraza, CEO of The Luxury Institute, comments: “The story with luxury is it’s just not as a exclusive and it doesn’t justify the price like it used to. Too many of them are discounting and there’s not enough consumer demand.”

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Cadillac House: Not Your Father’s Dealership

The Verge: “The next stage in transforming Cadillac is to bring its 925 dealers up to snuff. That’s where the Cadillac House comes into play, a chic public space where anyone can drop by and steep in the brand’s past, present, and future. Each detail of the facility has been carefully considered — it sells Joe Coffee (a local favorite), offers free Wi-Fi, stages art installations … it hosted a block party bash featuring a short set by My Morning Jacket. The Cadillac House has a few cars on view, but it’s not a car dealership. Discreet product specialists are trained to answer questions about features on new models like the CT6.”

Cadillac president Johan de Nysschen comments: “Our office, the Cadillac House, this is what our dealer experience should be like. Our focus here must be on increasing the overall quality of the business. It must be about increasing transaction prices. It must be about brand positioning and upgrading quality of the dealer and doing so in a way that we continue to build the relationship between Cadillac the manufacturer and our dealer network. We have to navigate a very difficult path.”

He adds: “It’s really those small dealers that we want to turn into powerhouses. We want to create a boutique experience, separate from the rest of the GM brand, and we want to help our dealers.”

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Project Sync: Home Depot Streamlines Shelves

The Wall Street Journal: “Instead of filling its warehouse-style racks to the ceiling with Makita drills, rolls of Owens Corning insulation and cans of Rust-Oleum paint, Home Depot wants fewer items on its shelves and it wants them to be within customers’ reach … It is a shift happening across the retail sector as companies try to figure out ways to profitably serve the growing needs of online shoppers while making their network of stores less of a financial burden.”

Home Depot has “instituted ‘Project Sync,’ a series of changes that include developing a steadier flow of deliveries from suppliers into its network of 18 sorting centers … When the shipments get to stores, workers move them right to the lower shelves, eliminating the need to store and retrieve products from upper shelves using ladders and forklifts … Savings can be used to have more workers on the floor or finding orders for shoppers who are picking them up.”

“This also keeps stock from collecting dust out of reach. ‘You would stack it high,’ says Jessica Thibodeaux, manager of a Home Depot just outside Houston, ‘but it wouldn’t fly’.”

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Indie Bookstores: Something Better Than Amazon

The New York Times: “The pronounced stock shortage inside the Librairie des Puf … is not the result of an ordering mistake, but the heart of the shop’s business model. There are books, but they are not delivered in advance from wholesalers. They are printed on request, before the customer’s very eyes, on an Espresso Book Machine … It is a radical reinvention of a store that first opened its doors in 1921.”

“Independent bookstores … are beginning to carve a path out of their business’s decade of decline. ‘It’s an industry which is very much starting to rebound,’ said Nick Brackenbury, one of the founders of NearSt,” which “aims to help local shops adapt to the needs of the modern customers by making local shop inventories ‘shoppable’ from a smartphone, allowing customers to search for titles, find local stores that sell them and see routes there.”

“We just want local stores to be able to offer customers something which is just better than Amazon,” Mr. Brackenbury said.

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Small Bore: Is Apple Thinking ‘Different’ Enough?

“Apple’s view increasingly feels like an outdated way of thinking about tech. Many of its competitors have been moving beyond devices toward experiences that transcend them,” writes Farhad Manjoo in The New York Times. These new technologies exist not on distinct pieces of hardware, but above and within them … it’s hard to tell if Apple is thinking big enough.”

“Apple still seems to view online services as add-ons to its devices — not as products or platforms that rise above them.” For example: “Siri, as Apple is positioning it, is becoming a better app launcher for your phone … But it’s not clear that it’s becoming a truly intelligent assistant.”

“One problem is that the new Siri will not integrate with all kinds of apps … It’s hard to shake the suspicion that Apple is using Siri to give its own apps a leg up … Another problem is that Siri is still hopelessly tied to each Apple device … If Siri is an intelligent assistant, why … can’t she call Uber from the cloud, regardless of which device you happen to be using?”

“Google, Amazon and several start-ups seem to be rushing headlong to build such a system. But … I’m not sure Apple is,” Manjoo writes. “It’s taking a more moderate app-based, device-centric path. Many of its voice features will be fine — useful, even. But it sure isn’t pushing for a revolution.”

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Cutting The Cord: Not Just for the Poor Anymore

The Washington Post: “Low-income Americans are still one of the biggest demographics to rely solely on their phones to go online.” However, “even people with higher incomes are ditching their wired Internet access at similar or even faster rates compared with people who don’t earn as much.”

“In 2013, 8 percent of households making $50,000 to $75,000 a year were mobile-only. Fast-forward a couple of years, and that figure now stands at 18 percent. Seventeen percent of households making $75,000 to $100,000 are mobile-only now, compared with 8 percent two years ago. And 15 percent of households earning more than $100,000 are mobile-only, vs. 6 percent in 2013. Stepping back a bit, as many as 1 in 5 U.S. households are now mobile-only, compared with 1 in 10 in 2013. That’s a doubling in just two years.”

“This suggests that having only one form of Internet access instead of two may no longer be explained simply as the result of financial hardship — as might be the case for lower-income Americans — but could be the product of a conscious choice, at least for wealthier people, who are deciding that having both is unnecessary.”

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Is Mall Shopping Greener Than E-Commerce?

The Wall Street Journal: “Could going to the mall be better for the environment than shopping online? That’s the surprising claim in a new study from Simon Property Group, the nation’s largest mall landlord. The argument is that mall shoppers often travel in groups and buy more than one item, reducing their environmental impact. Online shoppers, meanwhile, return products more often, and the shipping requires more packaging.”

“Among the factors Simon looked at was how many people went on the trip and ‘the idea that shoppers combine mall shopping trips with other errands.’ The report also examined the impact of product returns both online and in stores … The report found that online shopping had an environmental impact that was 7% greater than mall shopping, if shoppers bought the same number of products both ways.”

“The issue isn’t settled, however. A 2013 master thesis at the Massachusetts Institute of Technology’s Center for Transportation & Logistics, for example, examined various ways consumers could shop in stores or online. ‘Results show that online shopping is the most environmentally friendly option in a wide range of scenarios,’ the thesis concluded. The MIT thesis examined how some shoppers combine the two channels, sometimes researching products both in stores and online, or buying online but picking up or returning in a store. As a result, the thesis also found, ‘as more consumers leverage traditional brick-and-mortar alternatives to their online buying behaviors, some of the environmental savings quickly erode.'”

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