Thinking Small, Merger News and 7-Eleven Package Pickup

Big-Box Retailers Are Thinking Small

SUMMARY: Many chains are closing poorly performing locations, closing earlier and building smaller-footprint stores.

 

By Lainie Petersen

Big-box and department stores are rethinking their business strategies and in many cases are actually taking a “small is beautiful” approach. Many chains are closing poorly performing locations, closing earlier or building smaller-footprint stores.

The cuts are happening all over, with Macy’s, Target Corp. and Sears closing stores or announcing plans to do so. Both Wal-Mart Stores Inc. and Target have been making headlines with their smaller footprint brands, such as CityTarget and Walmart Neighborhood Market.

Retail analyst Walter Loeb recently praised Target’s new direction in a piece for Forbes.com.

“Target will expand in dense geographic locations using its TargetExpress and CityTarget store concepts. These stores are different than the 1,800 super stores that have blanketed the United States. They are smaller and more focused on urban customers. I think most of these will quickly become very profitable, since they will have an edited assortment,” Loeb wrote.

Walmart has also made headlines with recent decisions to cut hours at stores that previously operated 24/7, and to trim in-store assortments. In the first case, the decision to take 40 stores from 24/7 to more limited hours, was attributed to simple lack of demand: People can shop online at any time, reducing the need for late-night or early-hour trips to a supercenter. Other analysts connected the decision with Walmart’s recent wage increases.

As for the inventory cuts, Walmart has decided to cut store displays and remove slow-selling items, while making its aisles wider so that customers have an easier time navigating the store.

The assortment cuts and aisle redesign are both part of Walmart’s ongoing campaign to improve the customer experience by making stores cleaner and more attractive, and the efforts seem to be working, as multiple media reports show Walmart’s customer satisfaction scores are the highest they’ve been in two years.

 

Kroger Merger, New Dollar Store Brand Make Headlines

SUMMARY: Kroger intends to purchase Roundy’s, and a new brand, Dollar Express, will emerge from the divested Family Dollar stores left over from its Dollar Tree acquisition.

 

By Lainie Petersen

Two retail mergers have been in the news lately: The first is Kroger’s merger agreement with Roundy’s. The second is the new retail brand that is emerging from Dollar Tree’s acquisition of Family Dollar.

Grocery chain Kroger ranks No. 2, right behind Walmart, in the National Retail Federation’s rankings, and is the largest grocery chain in the country.

In the past week, Kroger made headlines when it announced its intention to purchase outstanding Roundy’s shares. Roundy’s operates Copps, Pick ‘n Save, Mariano’s and Metro Market stores in Milwaukee and Illinois.

The announcement created interest and apprehension among consumers. The Mariano’s brand has become incredibly popular in Chicago, with stores that feature fresh sushi, barbecue pits, wine bars and even live music. Reports indicate, however, that Mariano’s will continue to operate as before.

In fact, some analysts have noted that consumers may end up benefiting from the merger, as Kroger will be able to use its buying power to reduce grocery costs.

According to a news piece from a Milwaukee station, “Because Kroger is such an empire, it orders product in much larger quantities than Roundy’s, which means Kroger can get it at lower prices. Analysts say that savings will likely be passed on to consumers at all Roundy stores, including Pick ‘n Saves and Metro Markets.”

The other big merger news comes from Dollar Tree. In 2014, Family Dollar was subject to a bidding war between Dollar Tree and Dollar General. Dollar Tree prevailed, but federal regulators required it to sell 330 Family Dollar stores. These stores have been purchased by Sycamore Partners, a private equity firm that owns such retailers as Torrid, Hot Topic, Talbots and Coldwater Creek. The divested Family Dollar stores will be rebranded as Dollar Express stores.

 

7-Eleven Expands Its Locker Pickup Service

SUMMARY: The convenience store is now in the e-commerce pickup business.

 

By Lainie Petersen

Retail is no longer just about price and assortment. It’s also about getting goods to the customer. Retailers are experimenting with different options, including in-store pickup of items ordered online, free shipping options, same-or-next-day delivery and even packages delivered by drone aircraft.

One market segment that appeared to be left out of the delivery logistics game was convenience stores. Assortments are smaller and prices are often higher than at big-box or traditional grocery stores, but these stores make up for these drawbacks by offering convenience. Many are open 24/7, every day of the year, and sell both household staples as well as ready-to-eat (and drink) food and beverages.  

Even better, convenience stores are strategically located to make it easy for consumers to get in and out of the store quickly. These stores typically inhabit high traffic areas and offer free parking. These stores are specifically designed for in-person shopping trips and it would seem that e-commerce and omnichannel innovations don’t have a place in the convenience store model.

Or maybe they do. 7-Eleven has been making headlines by offering consumers the opportunity to pick up e-commerce deliveries at local stores. Many consumers can’t be at home to receive deliveries and may not be allowed to receive personal packages at work.

Online shoppers who live near participating 7-Eleven stores can direct a participating retailer to deliver their package to a local store. The shopper then visits the store and picks up the item from a secure locker.

Of course, the customer who stops in to pick up their new tablet from the locker is also likely to remember that he or she needs some laundry detergent or decide that a Slurpie looks mighty good right now. The result? 7-Eleven finds its place in the new world of e-commerce, profiting along with the rest of its retail cousins.