Briefing.com -- Back to the Mall
[BRIEFING.COM - Robert Walberg] Last week, Briefing.com profiled a number of the apparel retailers in the first installment of our holiday review of the retail industry... The goal of this series is to take a first hand look a cross-section of retailers in an effort to determine which companies are positioned for a happy holiday season, and which companies will be left singing the blues... Today, we take a look at the department, discount and electronics retailers.
Department Stores
JC Penney (JCP) 24.75: Management at Penney's must operate under the assumption that if some merchandise is good, more is better, and much more is phenomenal... If you suffer from claustrophobia don't venture into Penney's, as the aisles are jammed with little tables filled with trinkets and other "impulse" merchandise... Though I must say the only impulse I had was to run screaming out of the store... Unfortunately, there wasn't enough space to run without bumping into something or someone -- the latter being less of a concern in that there was far more merchandise than shoppers... My distaste for the cluttered aisles and overstocking of merchandise aside, Penney's was Penney's... Clothes and housewares were poorly displayed but moderately priced... Traffic wasn't very heavy, but then again I haven't run into crowds in JCP for some time... Nothing here led me to believe that Penney's will enjoy a strong holiday season, and considering that same-store comps are going to be more challenging this year than last, Briefing.com won't be surprised if JCP disappoints.
Sears (S) 45.70: While the aisles weren't nearly as cluttered at Sears as they were at JCP, the clothing racks were cluttered with sale signs... Apparently, there's a new meaning to the "softer side" of Sears this year - prices... Virtually everything in the store -- especially in the clothing department -- was 30% off... And the store was still mostly empty! Math was never my best subject in school, but it doesn't take a numbers wiz to figure out that deeply discounted prices and sluggish foot traffic adds up to trouble for Sears.
Kohl's (KSS) 70.20: If you find yourself at either Sears or Penney's wondering where all the shoppers are, the answer is probably Kohl's... These better defined, better managed and better laid-out stores typically offer more current merchandise at better prices... Consequently, it came as no surprise to this shopper that the aisles were crowded (this time with customers) and the cash registers were humming... If memory serves correctly, KSS is running more sales events this year than last, but then again so is every retailer... All in all shaping up to be another very solid holiday for the new king of the department store space.
Discount Stores
Wal-Mart (WMT) 55.62: With its low prices, impressive product breadth and generally helpful sales team, it's no wonder that WMT continues to define success... From the size of the crowds and the length of the check-out lines, WMT looks to be untouched by the sluggish economy... In fact with many families feeling the pinch this holiday season, WMT is likely to experience even greater foot traffic... I've never liked the warehouse-feel of the stores and I often find them somewhat messy (clothes, toys, shoes, etc. strewn about in the aisles)... My personal dislikes aside, there's no denying that this year is shaping up as another winner for WMT. -
Target (TGT) 38.67: If I spent as much time at my health club as I do running in and out of Target, maybe I would still be wearing a 38R... Unlike WMT, I find TGT stores to be cleaner and better organized... Consequently, when the family heads out to one of the discounters, we usually end up at a TGT store... As I've indicated before, my wife and I refer to Target as the $100 store, in that we can never seem to get out of the place without spending at least a c-note... So far, this holiday season has been no different... While in TGT, I've noticed no material slippage in foot traffic relative to last year, and no significant change in the company's pricing policy... Therefore, Briefing.com expects TGT to enjoy another fruitful holiday.
K-Mart (KM) 6.00: Management has done a decent job of establishing some attractive product lines -- most notably the Martha Stewart housewares offerings... However, KM stores still have this somewhat depressing feel about them... Maybe it's because the stores are far less crowded than either WMT or TGT... I also noticed that in a couple of the remodeled stores, the food section was just kind of jammed into what looked like a preexisting space, with little attention paid to presentation and/or flow... Basically, only reason to shop at KM over WMT or TGT is if they win on price... And with margins already thin, having to consistently (and materially) win on price in order to attract customers doesn't bode well for the bottom-line.
Electronic Retailers
Radioshack (RSH) 28.80: Relatively small electronics retailer, often found within the mall, offers everything from DVD players, to cell phones, to battery powered gadgets for the kids... But with cell phone sales slumping, and the competition (generally) offering better prices on DVDs, PDAs and satellite systems, tough to get overly excited about the company's prospects... As they've been for past few years, electronic items look to be hot this holiday season... Though that plays to RSH's strength, company apt to be hurt (especially considering soft economy) by its relatively high prices and shallow product offerings.
Best Buy (BBY) 69.48: Best Buy is the category killer... Company continues to take share from the competition, and one visit to the stores explains why... Superior layout; depth and breadth of merchandise; and competitive prices across-the-board make BBY a one-stop shop for electronic goodies... Briefing.com's biggest complaint remains the company's service... Can rarely find a salesperson when you need one, and when you finally do find someone they typically don't know much more about their products than what can be gleaned from the side of the product box... Bad service or not, BBY should enjoy a very solid holiday season.
Circuit City (CC) 20.55: Tough call... On the one hand we like fact that CC exited the appliance business to focus on the higher-end electronics market... On the other hand, how many people are going to plunk down a couple grand on a new high-definition TV given the state of the economy... CC has other problems as well... For one, the layout isn't optimal... This is especially true of the older stores in which management threw software and gaming products back in the old appliances section without concern for flow or consumer buying habits... In addition, I wasn't overly impressed by the breadth of offerings in the PC area... This may have worked in company's favor last year, but with signs that the PC market is gaining some momentum, CC stands to lose customers to BBY or one of the major computer resellers like CDW Computer... Finally, foot traffic was light - especially when compared to rival Best Buy... Though CC has been a Value Core holding of Briefing.com's since the year began (+79%), we are taking advantage of the stock's recent strength to exit the position, as our checks left us concerned that holiday could be soft.
In the days to come we will provide our take on the specialty shops. Meanwhile, there's only 18 more days to Christmas, so get out there and shop, shop, shop.
Robert Walberg, Briefing.com |
