Lairig Marketing

Men’s Wearhouse Going No Wear

One of the biggest business stories that broke during our summer hiatus was the throwing of George (I’m not the guy with the gun in Florida!) Zimmer under the Men’s Wearhouse bus by the company’s board. Who then proceeded to stop, back up, and run over George three more times.

Long-time Lairig Marketing readers will recall that we tipped you off to the genesis of Men’s Wearhouse management troubles way back in June of 2010 with this post about a new CMO and a disastrous new ad campaign. The ad was pulled ASAP, and the CMO was eventually let go.

But everyone on the board, other than Sir George, couldn’t “let go” of the obsession with Millenials. A curious target, given how unemployed, broke, and hipster-clothed they are. It must have made for a Curious George, too. He stood alone, knowing his brand could never stretch that far.

But the Men’s Wearhouse board decided to go all in on Millenials. So?

So, the Men’s Wearhouse just reported a bleak outlook for the rest of its fiscal year, blaming – as most poor managers do – the economy, calendar “timing shifts,” even the “13” in 2013, a la “…the 13 in 2013 is causing a small but meaningful number of brides to avoid getting married this year.”

Oh, and we can’t resist: “[one-time charges included] some separation and legal costs associated with a former executive.” Wonder who dat be?

And how’s this for a macroeconomic view: “we've been through these kinds of turbulent times before…” What "turbulence"? The U.S. economy is as flat as a pancake thrown under a bus.

The other thing as flat as a pancake is the comp-store sales trend in the core Men’s Wearhouse business. Falling to a mere increase of 0.7% for Q2, management estimates that comps have started a decline in the “low single digits” already for the newest fiscal quarter.

“…recent sales trends in both Canada and the U.S. have led us to be less optimistic about the remainder of the year. We see that many other retailers, both large and small, are also predicting a difficult second half.” So, in essence, “f&ck it, we will too.”

Instead, we wish everyone involved would just cut to the chase. Rebrand the core retail stores with the name of the newly acquired and soon to be vertically integrated Joseph Abboud. Come up with a new name for the tuxedo and corporate apparel operations. And sell the Men’s Wearhouse name back to George Zimmer.

If you really want to guarantee a better future, let go of some of your past.

It’s (NOT) The Economy Stupid. It’s The Marketing. (Part 1 of 2)

As expected, the summer flew by with nary a mention by the marketing trade press of the sorry state of the U.S. economy, which – for four years now – fires on just a little over half its typical GDP “cylinders.” Into the breach steps the larger business press, which has apparently uncovered a new “new new new normal.”

>>> Consumers are no longer buying clothes so they can buy cars and home improvement items.

It started with Macy’s, which in mid-August reported lower comp sales performance for its latest fiscal quarter thusly:

“We believe that much of our weakness is due to the health of the consumer and the fact that consumers seem to be choosing to make purchases in non-department store categories such as cars, housing and home improvement.” [emphasis ours]

Target then picked up this theme a week later in its quarterly earnings call:

“And while emerging strength in housing and automotive sectors is a long-term positive, the near-term spending of these big ticket items is crowding out other spending.” [again, emphasis ours]

On the heels of these heels came Citi analyst Deborah Weinswig, who termed the faux economic trend “C.H.E.A.P.” – for cars, housing, e-commerce, appliances and home projects. No clothing or apparel in this set of purchases.

Then came the teen tsunami – Aeropostale, American Eagle, and Abercrombie all taking a sales nose dive in their recent fiscal quarters. Others were then thrown randomly onto the “no more clothes” pile – see Walmart and Kohl’s, for example – simply for lowering year-end forecasts.

Yet, there was Gap. And T.J. Maxx. And Ann (the old Ann Taylor, rebranded as we told you here). And Guess (formally known as GUESS?). These companies didn’t get Macy’s memo. All sold clothes like they were, er, going out of style. Comp-sales percentage increases in the mid-single digits and higher.

They weren’t “CHEAP”ed, because it doesn’t exist.

• Cars: U.S. auto sales have been on a steep climb since their last small trough in September, 2011
• Housing: Sales of previously owned U.S. homes fell for the second straight month in July…that’s some housing recovery, eh?
• E-commerce: Nonstop growth since roughly 1994
• Appliances: This category was the biggest underperformer in the most recent quarter for Sears, which has the leading (29%) share of U.S. appliance sales
• Home Projects: We’d love to share Home Depot’s and Lowe’s enthusiasm for the sustenance of pent up demand, weather disasters, and Blackstone home flipping (note that 50% of homes purchased in the past 18 months have been paid for 100% with cash), but we think each will be guiding analysts back down later this year

So, if the economy is not “crowding out apparel sales,” then what happened at Gap or Guess or Ann that didn’t happen at Macy’s?

Good marketing.

In Part 2 of this post tomorrow, we’ll take you through the most recent earnings call transcripts of the apparel winners, as well as that of Macy’s, to prove it.

Until then, realize that we still have the 1% versus the 99%. The 1% get how important marketing communications are. The other 99% blame someone or something else.

CMOs, Lies & Surveys (Part 5 of Many…)

We’re almost done drilling through the muck that is The CMO Survey, February 2013 version (multipart series began here). Today we examine the not-CMOs’ meager attempts at business and marketing analytics.

Another interesting question in the semi-annual survey asks for the marketer’s expectation for his or her company’s sales and profits. Revenue-increase projections have been in the neighborhood of 4% the past five surveys, pretty conservative when compared to what we showed you yesterday – that companies will need to grow sales 36% in order to match respondents’ budget expectations.

But much more enlightening are the profit projections. In every case, the “CMOs” forecast an increase in income that is LOWER than the gain in revenues. (A) This doesn’t match the record profit margins companies have been amassing the past couple of years – by slashing costs to the bone, mind you. (B) This is Finance 101, and implies that a business is going down the tubes. CMOs get an “F” for this.

Not to worry…Big Data will come to the rescue, right? Apparently not.

When asked to project their budget allocation to marketing analytics, survey participants said it would grow from 6% today to a measly 10% within the next three years. That’s not very Big. And remember from Part 3 of our series, CMOs said social media would get DOUBLE that allocation. Cart drives horse.

A nice mix of data and social media insight comes from the response to this question: “What social media metrics are you using?” Ten out of fourteen metrics DECLINED, most substantially, from the August 2010 survey to February 2013. Further, since February 2011, marketers’ self-rating on how well social media is integrated with overall marketing hasn’t budged one decimal point.

Even more Faux Big Data. To the question “What percentage of your projects use marketing analytics?” the percentage has FALLEN over the past three surveys. Worse, for the question “To what degree does the use of marketing analytics contribute to your company’s performance?” almost two-thirds of marketers gave a rating no better than neutral. If you were looking for a tutorial on “How To Spot A Meme,” this is it.

Without the basics of finance and marketing analytics, it seems all is lost for Marketing.

Thank God for CMO surveys. It appears they will be the only thing that saves us.

CMOs, Lies & Surveys (Part 4 of Many…)

How timely the economic announcements were last Wednesday through Friday:

>>> Payrolls: Awful
>>> Jobless Claims: Bloody awful
>>> Job Gains: Zombie bloody awful

Timely, because we’ve come to the part in our review of Duke/Fuqua’s February 2013 version of “The CMO Survey” (multipart series began here) where marketers-who-are-not-CMOs were asked for their prescient views on the state of the U.S. economy.

They must all be watching another channel.

For the question “How optimistic are you about the U.S. economy?” the percentage climbed from 58.4% (August 2012) to 62.7%. What hopeful signs did these marketers see? After all, the initial report on Q4-2012 GDP had just come in at MINUS 0.1%.

A related question asked “Are you more or less optimistic…?” The percent who chose “more” nearly doubled from the prior survey period. At the time of the February survey, the fiscal cliff had been can-kicked down the road, and sequester was the word of the day. Where is the optimism in that?

The answer to this riddle starts to come into focus when each of the non-CMOs rated his or her company against the economy in general. They were, of course, more optimistic about “own company” than “overall economy.” Welcome to Lake Wobegon, where all the CMOs are strong AND good looking, and all the companies are above average.

The optimism spreads all the way to the marketing budget. Since February 2010, as the U.S. economy has basically run in place, The CMO Survey has never shown an answer lower than 5.9% to the question “What is your expected change in marketing budget in the next 12 months?”

That is at odds with the oft-repeated mantra - in The CMO Survey and a billion other places - that traditional advertising spending is “plummeting,” with the spending shifted to digital. Zero sum does not equal budgetary growth of 6%.

Finally, some new math. When asked what their marketing spend is of the company’s total expense budget, the figure fell only slightly from the prior survey, 11.4% to 10.6%. But get this – when asked on a percentage-of-revenue basis, it - *drumroll* - PLUMMETED from 11% to 7.9%.

Even adjusting for the 6.1% marketing budget increase cited earlier, this would require nothing short of a 36% - THIRTY SIX percent – increase in revenues.

This isn’t Lake Wobegon at all. This is Loch Ness.

Get Ready To Have Your Marketing Budget Sequestered

Stock market indices at an all-time high. Weekly jobless claims gradually falling. Retail sales ahead of expectations for February. Good news for the U.S. economy, no?

No.

It’s all “head fake” data. The retail investor is still not back in the stock market. Jobless claims remain well above pre-recession levels. The details behind the retail data confirm that recovery is nowhere in sight.

And here’s a bonus, from the excellent Roger Arnold, who makes the annual subscription cost to RealMoney.com valuable all on his own:

“One of the principal operating goals the Federal Reserve has with respect to monetary policy is facilitating a cost of capital that induces both the owners of capital to make it available and for those needing it to access it…The problem now and for the past four years is that it isn't working.

Since the financial crisis of 2008 the value of deposits at banks has consistently increased quarter after quarter…the amount of these assets held in checking accounts has increased by about 100%...while the amount held in higher-yielding certificates of deposit has declined by about 23%.

The point is that retail owners of capital are doing the exact opposite with their money of what the Fed is trying to encourage.”

Main Street is f&cked. The GDP number for Q1 will be a positive surprise – well above 2% - but again the devil will be in the details. The gain will be driven by inventory, not the consumer, who refuses to contribute the “two thirds” we are always told he is supposed to contribute to GDP, but hasn’t in a very long time.

So get ready for the boss to come take your money away. To sequester your marketing dollars. Here is some guidance to what you should do with the major line items in your marketing budget. For Google-search-SEO-keyword-stuffing purposes, let us repeat that: here’s how to plan your marketing budget line items (joke of course, since Google no longer indexes this blog).

Staff
This is where you will make the most progress to meet the reduction. Get rid of someone at the highest level – a VP or even the CMO. The symbolism of such a move (i.e., removing dead weight) will be as valuable as the financial return.

Training
Don’t touch this one. For the staff that remains, this is the only way they will get smarter. Doing the same thing day after day won’t get them there. Keep looking for quality education.

Technology
Suspend all projects in progress for six months minimum. Require that all your tech vendors provide an update on project ROI, using your own data, not some B.S. survey-based input.

Vendors
As with training, don’t touch this one (other than the vendors related to projects in progress, as noted above). Your agencies and consultants are your lifeline to flexibility and expertise. Cuts here are penny wise, pound foolish.

Campaigns
Stop all social efforts ASAP. The hours you save (which somehow go unaccounted for in most companies) can be focused on producing better positioning and marketing content for your traditional, workhorse channels.

Measurement
Stop all weekly reporting, dashboards, and other such nonsense that no one ever looks at. Determine the five top metrics that prove marketing effectiveness. Track those only. Separately, force senior management to give you the five metrics they want to see each week – throw them that bone, and keep them dumb and happy.

Research
As we emphasized last December, this is one of your core focus areas for the year. Leave it alone.

Database Management & Analytics
If you’re not already working on it, commission a task force now to evaluate your data needs and capabilities, from top to bottom. This will be your longer-term solution to the “five metrics” recommendation (see “Measurement” above). You need “good data” before you can ever think of graduating to “Big Data.”

It might be sunny on your side of the street right now, but storm clouds are gathering in the distance.

Should Target’s 2013 Target Be Your Target? (Part 1)

Only 2% of the population listens to, or reads the transcript of, a public company’s quarterly earnings call (source: Lairig Marketing BS estimate). So make that your competitive advantage as you plan your own marketing strategies. Let’s use Target’s most recent earnings call as an example of the insights available to an inquiring marketing strategist.

But first, the backdrop. Last November, we accurately predicted that “Black Friday” would lead retailers nowhere:

“After that, the season will belong to the 53%. That is when the winners will separate from the losers. Keep your eye on Target, who plays the 47% and the 53% right down the middle. How Target does this holiday season will (or should) dictate its 2013 marketing strategies.”

So, how did Target do? And what did it learn? It all went as we forecast, and it was spelled out in the fourth quarter earnings call. It’s heady stuff, so we’ll break the analysis into two parts, maybe three. Come back tomorrow for Part 2.

It’s The Barbell, Dumbbell
It couldn’t have been scripted any better. The holiday shopping season is now a self-fulfilled prophesy for marketers who have blindly embraced Black Friday and, of course, this year’s Black Thursday/Thanksgiving. Here is Kathy Tesija, Target’s EVP of Merchandising:

“…our holiday season sales became even more concentrated around Black Friday and in the days leading up to and just after the Christmas holiday.”

>>>What We Expect To See, Generally: JC Penney to shut its doors between December 2 and 19. It will cost more to keep the lights and heat on than revenues can cover during that timeframe.

>>>What Target Will Do: “...we think that the opportunity to pick up sales is really the other three quarters. And in particular, the second and third quarters this year.”

So take your standard “retailers do 40% of the year’s business during Christmas” and shove it up your stocking. If any retailer has more initiatives planned to roll out over the next six months than Target, we’d love to know who it is.

Flat Is The New Black
Target was able to tack a good January onto a crap holiday season, and end up with comparable store sales that, as CEO Gregg Steinhafel reported:

“…fourth quarter comparable store sales in our U.S. retail segment grew 0.4% compared with an expected increase of 2-3%.”

>>>What We Expect To See, Generally: The correlation between Wall Street and Main Street has now hit a perfect “minus one.” Walmart is pretty much flat on its back, waiting for a stroke of luck with its target segment – maybe gas prices can fall 25 cents a gallon over the near term as predicted, for example.

Meanwhile, at the other end of the spectrum (see: rich people), Coach stunk out the joint during the holiday season in North America, with a drop of 2% in comps. It forecast flat comps going forward, and its stock price was taken to the leather shed.

TARGET SITS IN THE BIG FAT MIDDLE.

>>>What Target Will Do: “We’re planning full year 2013 comparable store sales to grow in line with our 2012 rate of 2.7%.”

Given the certain uncertain economy, we’d call that “aggressive.” But after reading Target’s earnings transcript from top to bottom, twice, we’ll modify that as “confident” aggression.

There’s no Ron Johnson hubris at Target. Just some well-thought marketing strategies. That we expect to be on Target.

The Death of Ecommerce

Just for fun, we thought we’d write one of those foolish link-baiting headlines so popular nowadays (see content farms such as Business Insider, Mashable, Motley Fool and LinkedIn). But there are some valid reasons to consider how much more room ecommerce really has to run.

As much as we hate research that tracks behavior through consumer surveys (versus just tallying up real data that exists), we found this one interesting:

“Although online shopping has leveled off overall, the boomer generation has increased their online purchases – up 4.5% since 2011 – while millennials’ online purchase behavior has declined 7% from that time.”

Let us repeat that last bit:

“…millennials’ online purchase behavior has declined 7%...”

This comes to us from “ongoing shopper behavior” research conducted by The Integer Group (capital “T,” mind you) and M/A/R/C Research (slashes in between letters, mind you). Not top-of-mind sources, but solidly reputable. Their output also included this gem:

“Since January 2012…the percentage of 18- to 24-year-olds who say they've purchased any products online, even once, has dropped in all categories except books, music and tickets.”

It would be hard to argue that this is nothing but an economic outcome. Millenials have been particularly crushed in the current environment – no or low-paying jobs, living in Mum’s basement, drowning in school loans.

But since there is no relief in sight, and because they overindex as a percent of the total U.S. population, Millenials could be the future depressors of commerce generally, and ecommerce specifically.

One other data point to consider that we’ve not heard anyone bring up yet. From age 30 and up, there are lots more women than men in this country. But from the Millenials on down, each “year” has about 100,000 more males than females. That translates to 3 million more male shoppers than female shoppers, a shift of 2.4%.

To restoke the online fires, retailers might want to start thinking about some he-commerce strategies.

National Retail Federation Plunges Over Its Own Cliff

Everyone was stunned by the headline earlier this week: “Weakest Holiday Retail Sales Growth Since 2008.”

Everyone, that is, except Lairig Marketing readers. We predicted in our “Crack Friday” post that the holiday season would be a “bloodbath,” and showed you the early, confirming data from the Thanksgiving week in our “Crack Friday Cracked Up” post.

While Sir Richard Branson was urging you to be happy.

It was all downhill from there. But that didn’t stop our friends at the National Retail Federation, the industry trade association whose holiday sales “growth” mythology we have tracked throughout 2011 and 2012.

On December 13, the NRF released two press releases. The first trotted out its typical survey of consumers (the NRF never surveys its member retail companies), asking how they were doing so far in the shopping season.

Remember, several data sources were already showing that sales were off to a horrible start.

“According to NRF’s latest holiday survey…the average person has completed 56.5 % of their [sic] shopping, up from the 46.5 % this time last year…‘Having made a list and checked it twice, holiday shoppers have been out in full force these last few weeks…’ said NRF President and CEO Matthew Shay.”

In full force? ShopperTrak had already shown that traffic to stores on Black Friday was down from the growth rate of 2011.

In full force? ShopperTrak would also soon show retail store traffic for the week ending December 15 actually declined on an absolute basis from 2011.

The second December 13 press release from the NRF was a bigger farce:
“According to the National Retail Federation…November retail sales increased 0.8 % seasonally adjusted from October and increased 4.4 % unadjusted year-over-year.”

Except that this was not NRF data. It came from the U.S. Census Bureau (Department of Commerce). By passing this off as its own data, the NRF added “thief” and “liar” to its resume.

And, then this: “With this news, NRF is still expecting holiday sales to grow 4.1 % over last holiday season.”

Mythology to the nth degree. ShopperTrak projected last week that holiday sales growth would be 2.5 % at best this year. And then we got ShopperTrak’s updated data from the week leading into Christmas Day – foot traffic down 3.3 % and sales estimated to be down by 2.5 % (both compared to the same period in 2011).

What has the National Retail Federation had to say about all this, since its two December 13 press releases?

Not. A. Thing.

Which, as we have told you a dozen times, is par for the mythological course the NRF follows. It has never ever – ever – compared its forecasts to actual sales results. As we speak, the NRF is no doubt busy cooking the books for a 2013 Valentine’s Day sales forecast of 11% growth over 2012.

Anyway, the NRF has bigger things on its mind right now. Come mid-January, it will hold its annual “Big Show” – five days of speeches from the biggest talking heads in retail. And not a single minute devoted to a discussion about the U.S. economy.

But if you manage to hang in there until the end of day 5, you can witness the teaming of two of the great myth tellers of all time – the National Retail Federation and Carly Fiorina, the CEO who ran HP into the dirt and has absolutely zero retail experience.

Her topic? “Doing Well By Doing Good.”

Even though this year’s holiday retail sales did neither.

Marketing’s Four Questions For 2013 – Part 1

We know it is Hanukkah season, but heck, Passover 2013 is right around the corner, a mere three months, to the day, from Christmas. Why not start preparations for the Four Questions?

OK, not THOSE four questions. Instead, let’s look at the four questions smart marketers will be asking as they turn the final page on an abysmal 2012, and plan for what will be an even more abysmal 2013 (for the first six months of the year, at least).

The First Marketing Question For 2013 goes like this:

For our 2013 media mix, paid and owned, why would we think of changing a single thing from 2012?

As a Lairig Marketing bonus, we’ll even give you the answer:

We wouldn’t.

That is the only correct answer, because you don’t have positive and/or satisfactory solutions for these “subquestions”:

>>> What data have we collected in 2012 that proves any one channel or touch point worked better than any other?

>>> Why would we believe some biased blogger or “guru” who touts a single channel as the “killer app” (see mobile advertising, The Year of Mobile – Part 7) and says it is the one we should move most, if not all, of our investment toward?

>>> What recent, relevant and comprehensive research have we done to understand just exactly which communications channels our target customers use to find out about us, shop for our products, make purchase decisions, and stay loyal to us?

>>> Where are the volumes of case studies we must have in order to understand the true and relative ROI of “emerging channels” like Pinterest?

The answer to the First Marketing Question of 2013 – why would we change our media mix? – is easy. We wouldn’t. So we won’t.

“Who” and “What” are going to require all hands on deck in 2013. “Where” will be the least of your worries.

Staying put will keep you from getting lost in the (media) mix.

Crack Friday Cracked Up

If you missed our forecast for Black Friday, read here first. We said it would be, in essence, a freak show for the 47% and a blood bath for retailers. Once again, we were right.

No Surprise: Consumer Behavior
Thuggery and savagery were on full display. Fists, guns, cars all used as weapons of choice. Replace the big crate in the YouTube video of consumers rioting over cellphones...with, say, a helicopter...and you can pretend you are watching a reenactment of the fall of Saigon.

No Surprise: NRF “Data”
The folks at Not Really Factual (aka, the National Retail Federation) were quick to publish a press release saying Black Friday sales were up by double digits over last year. As is their custom, the NRF built this finding on a survey of a statistically insignificant and unrepresentative number of CONSUMERS.

The NRF represents the RETAILERS, yet it SURVEYS CONSUMERS.

Basically, “here is a bullsh&t number.” But, this year’s bullsh&t number, even in double digits, is lower than last year’s. So even a lie can’t hide a trend.

No Surprise: Real Data
ShopperTrak, which counts real foot traffic, said visits to stores on Black Friday rose 3.5% from last year. That is down from 2011’s increase of 4.7%.

It also estimated that in-store sales fell 1.8% on Friday. Adding the early Thanksgiving openings, ShopperTrak thinks the two days netted out with less than a 1% gain in sales over 2011.

Who would know foot traffic better? How about mall operator Taubman, which found in a sampling of 10 malls that sales growth was unchanged/up to mid-single digits on Friday, and unchanged/up to low single digit on Saturday.

IBM, meanwhile, tracked retailer transactions. (How novel. Perhaps the NRF would be interested in purchasing said IBM data.) Although it found that online sales were way up, check this out, if you will:

• Average order value on Black Friday declined 4.7% from last year
• The average number of items per order dropped 12%

Further, if you want to know where many of the 47% went shopping this past weekend, here is telling data re:eBay…

“E-commerce software firm ChannelAdvisor said clients' same-store sales on eBay's online marketplace rose 27% on Thanksgiving and 31% on Black Friday, compared with a year earlier. Last year's growth was about 15%...”

No Surprise: Faux Media
The business, retail, marketing and tech trade publications are awash in the only good data from this past weekend – the enormity of online sales. How this caught anyone by surprise is, well, a surprise.

None of these guys will dare to write another article about what’s going on at brick & mortar for the rest of the year.

Two “Target” Surprises
There are a couple of surprises, though, and both involve Target, the retailer we cited in our original Crack Friday post as the “big tell” for holiday insight.

Firstly, Target has not released any press about how well things went this past weekend. Which means things must not have gone that well.

Secondly, a Target store in New Jersey was robbed of its Thanksgiving/Black Friday cash haul late Friday night. Two masked men tied up three employees in the back room, while others were replenishing the shelves for this week.

Come to think of it, though, none of that should be a surprise this “shopping” season either.