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Retail wins still tempered by caution

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Winning strategies for retail still tempered by caution 3 retail turnaround success stories, and 3 turnarounds to watch
Retail Dive, Nov. 18, 2019

“Exciting” is an apt description of the constantly fluctuating retail space, said Dennis Cantalupo, president of Pulse Ratings. In Retail Dive, Cantalupo noted that retailers need three things for a successful turnaround: a strong balance sheet for time to turn the business around; strong cash flow for reinvestment in the business; and a strong management team that understands what’s not working and has a keen sense of what’s going to work going forward. Pragmatism is key to a “ruthlessly realistic view” that leads to a risk-adjusted business forecast, he added.

Retailers that “worked it” to make it work include:

  • Best Buy, which successfully answered retail challengers by building out its omnichannel capabilities and focusing on service
  • Target, which in a move that seemed counterintuitive sped up investment in its stores, digital infrastructure, private label brands, wages and prices
  • Walmart, which plowed money into its stores, employees, technology and digital platform

The retailers to watch as we move into a new year include Kohl’s, which struggles with making its brand attractive to shoppers seeking value and convenience but also luxury; Bed Bath & Beyond, which has lost customers to online specialists and closed stores; and JCPenney, which has a leveraged balance sheet working against it.

Grant Thornton’s View Kevin Kelly
Kevin Kelly
Leader,
National Retail Industry

Disruption is widespread in the retail industry, yet those retailers that thrive will be those that invest in and capitalize on the omnichannel experience, said Kevin Kelly, citing smart retailers that have invested in stores, technology and the ability to use data effectively. Integrating the digital with the physical has created strong customer relationships, he noted. “And I’ve always said, don’t overlook the store.” Kelly cited Target’s revamping of its brick-and-mortar stores to be a compelling destination, and how Nordstrom’s now serves craft cocktails in some locations. “Some stores have become showrooms, and select malls have evolved into experiences.” Mall of America, for example, offers family-friendly attractions to shoppers. He pointed out how some malls have reinvented themselves into small communities, with condos, boutique shops, health clubs and numerous dining options.

“Those retailers with a compelling product that invest in ways to give customers a good experience in-store and online demonstrate the way to go forward. Data analytics can help tremendously. Retailers evaluating their operations have an opportunity to measure store performance and identify best practices that can drive improvements in lower-performing stores and increase overall value.” Get more retail insights.