Retail Report: Unkempt Stores, Shifting Delivery Standards

Whole Foods 365 Rents Space to Smaller Businesses

A few decades ago, space in shopping malls was at a premium, and only larger retailers could afford to set up shop in America’s larger shopping centers. Still, consumers were interested in purchasing unique products from smaller merchants.

Mall management hit on the idea of permitting small businesses to open up stalls and kiosks along the walkways. This gave malls the flavor of open-air markets and allowed customers to shop as they strolled.

Whole Foods Market is now bringing a similar concept into its new 365 stores. The company’s website recently solicited proposals from business owners who are interested in becoming a “Friend of 365” and opening up shop directly within one of the company’s new stores. Most of the “friends” selected so far offer healthy food and beverage options. A New York City-based vegan restaurant called by CHLOE. is the first business to be selected for the program.

Both the 365 and Friends of 365 are experimental, so it will take some time to see how well this type of partnership works out.

A few years ago, J.C. Penney tried something similar in its stores, and the approach proved unsuccessful. Granted, this was during the tenure of former Apple exec Ron Johnson, whose attempts at reviving the retailer’s fortunes generally proved disastrous.

Another thing to consider is that many retailers, including Amazon and Wal-Mart Stores Inc., have had success in allowing third-party businesses to use their e-commerce platforms to sell products directly to consumers.

It’s been said that we are living in a sharing economy, something that may well extend beyond consumer-driven Uber and Airbnb and now be embraced by traditional retailers.

Consumers Turn Up Their Noses at Unkempt Stores

Brick-and-mortar retailers beware: Customers are taking note of poor facility conditions and are simply not returning to stores that don’t meet basic standards. Cintas, a company that specializes in workplace safety, uniforms and cleaning services, recently commissioned a Harris Poll asking consumers about brick-and-mortar retail turnoffs.

Respondents had a host of complaints, many of them about store cleanliness and maintenance. The number one reason consumers won’t return to a store is that the building has an unpleasant odor. Many believe that smell is our most primal sense, so it’s not surprising that consumers have such a strongly negative reaction to stores that simply don’t smell right.

Other top complaints include dirty bathrooms, disorganized dressing rooms and unkempt entryways. Less cited responses but still significant were complaints of noise levels. Fifty-two percent of respondents indicated that ringing phones and loud employees were an issue.

Some analysts, such as managing editor Tom Ryan at RetailWire are wondering if store maintenance issues might be driving some customers to shop online rather than visit stores. While some poor store conditions are largely the responsibility of maintenance workers and facility management companies, others, such as general messiness, may be connected to staffing issues, Ryan reports.

“The New York Post last week blamed a drastic cut in associate hours since mid-April by J.C. Penney to shore up first-quarter results for widespread untidiness at the chain in the latter part of that month. An employee told the Post, ‘If you walked into a J.C. Penney store during those two weeks, you would have seen clothes on the floor and fitting rooms in disarray,’” according to the RetailWire story.

Just as online retailers have to make sure their websites are easy to navigate and have a clean design, brick-and-mortar management needs take control of store conditions in order to keep customers.

Shifting Delivery Standards Present Retailer Challenges

The definition of “speedy delivery” has evolved over the years. In the early days of mail order, customers could wait weeks, even months for an item to arrive. Nowadays, delivery times are measured by days, even hours.

Similarly, the cost of shipping has also dropped. Consumers have long complained about excessive shipping charges, so many retailers have either lowered or dropped these charges altogether.

While these changes have made online shopping more convenient and affordable for consumers, retailers have their concerns. Absorbing the cost of delivery, particularly fast delivery, has been challenging for smaller retailers that can’t negotiate steep discounts.

In a recent RetailWire story, managing editor Tom Ryan noted: “The bigger players, including Amazon, Target and Walmart, can secure significant volume-driven discounts with the major carriers.”

Ryan pointed to a Shipware survey, cited in a Wall Street Journal story. The survey of about 560 shippers showed that some who spent about $100 million on shipping that year qualified for savings of more than 80 percent on overnight shipments and up to 60 on residential ground delivery. 

At the same time, large retailers have restrictions on who gets free, speedy shipping. Amazon and Walmart both have paid membership programs (Prime and Shipping Pass, respectively) that offset some of the costs of free shipping. In addition, Amazon, Walmart and many other retailers only offer free shipping on orders that total over a certain amount, usually in the $35-50 range.

The ongoing changes in fulfillment systems are likely to cause further disruptions in shipping, perhaps making fast delivery more cost-effective for consumers and retailers alike. Amazon, for example, is taking shipping in-house by buying planes, adding fulfillment centers and relying on a growing army of independent contractors using their own vehicles to deliver products. Third-party services, such as Instacart and Postmates, are also working closely with retailers, albeit mostly grocers and restaurants.

Come next year, the delivery game (and its rules, winners and losers) may be entirely different from what it is now.