Magazine Article | November 17, 2008


Source: Innovative Retail Technologies

Yes, some retailers are thriving. Here are a few examples, with some thoughts on their winning ways.

Integrated Solutions For Retailers, December 2008

Though it would be an easy write, I'll avoid joining my pundit colleagues with yet another nauseating recount of recent retail store closings and bankruptcies. Instead, drink a holiday toast to one of these 2008 retail success stories.

At midyear, Ulta's announcement of a 3.7% comp store sales increase, the opening of 18 new stores, and 24.3% overall sales growth bolstered the argument that beauty just might be recession-proof. Consumers might be scaling back on Starbucks and sundries, but they're hell-bent on looking good doing it. Ulta President Lyn Kirby says operational improvement   — quantified by a "70 basis point in SG&A (selling, general, and administrative) expenses," — the company's marketing strategy, and the resilience of the beauty category are the reasons for Ulta's success. I believe her, but I also think the $22.6 million IT and services expansion the company began late in 2007 — much of which targeted its Internet strategy — helped position the company well.

How do you chalk up's Q3 '08 31% increase over the same quarter last year? And, to what do you attribute its double-digit growth projection for Q4 '08? Prognosticating on Amazon's success is almost as cliché as the incessant pounding of the retail death drum. Amazon offers good deals on lots of stuff and ships a lot of stuff free. It's been around for a long time (for an e-tailer) and focuses relentlessly on the customer experience. 'Nuff said.

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 On The Web: Were there too many stores in the first place? Matt Pillar thinks so:

CVS Caremark reported a 3.7% comp store sales increase at the half. Drugstores are doing well in general, but CVS has benefited from the advance of its PBM (pharmacy benefit management)/retail model. CVS' acquisition of Caremark and its development of the PBM/retail model has bred such things as its Maintenance Choice offering, which allows consumers to purchase 90-day prescriptions at stores for the same price as by mail. The lesson here: adaptability. CVS is capitalizing by offering — and marketing well — solutions that address a common consumer pain point: the rising cost of healthcare. It's well positioned to tackle bigger socioeconomic problems with its product and services mix.

Then there's GameStop. As gas and entertainment prices climbed, people started staying home. Kids played more video games, evidenced by a 43% jump in new video game title sales in Q2 '08. That's why GameStop's Q2 '08 revenue was 34.8% higher than its Q2 '07 revenue and why Q2 comp store sales grew 20%. It's selling what people are buying.

Net sales at Lumber Liquidators increased 21.1% to $128 million in Q2 '08, up from $105.7 million in Q2 '07. Comp store sales increased 2.7% for the quarter. A few factors that contribute to success at Lumber Liquidators: While kids are playing video games, parents aren't buying cars and boats — they're putting the money they do have to spend into their homes. And they're doing so frugally, which makes Lumber Liquidators, with its off-price proposition, an appealing choice for flooring. Finally, Lumber Liquidators has made operational improvements that included a significant investment in technology.

So there you have it, a little inspiration for the holidays. I'll practice a little CYA here by reminding you that in a fickle economy, things can hurriedly go south for any retailer. But so far, these retailers are proving that success isn't entirely out of reach.