Santa writes back: 'better days are coming.' - for retailing - Editorial

Discount Store News, Jan 15, 1996 by Tony Lisanti

Well, I couldn't believe how quickly the response came to the letter I referenced in my last column in the Jan. 1 issue. You may recall that I ran an early letter to Santa from a frustrated and troubled retailer who was looking for some answers, some help and some solace in the new year. Here's the response from the jolly man in the red suit--who just happens to be as dependent as everyone else on a strong retail Holiday season.

Dear Troubled Retailer:

Yes, Christmas '95 is finally over. But that doesn't mean you can sit back and relax like me. You should be proud of the fact that you performed as well as you did under some very competitive and cutthroat conditions. And you should welcome the new year with a more positive outlook. Consider the dreary month of January to be a time of re-engineering. Forget the past season and outline plans for 1996.

I understand how you feel about the tough Holiday and the lackluster performance of many chains. I know many of your long-time friends were affected by the consolidation, but many of them have assumed key positions elsewhere. Mike Bozic is at Levitz; Herb Douglas is at Weiner's; Tom Kiley is at McCrory's; and Tom Vellios is at Zany Brainy. Still others will eventually find their own new homes.

I know how nervous you are about 1996. There are many unanswered questions, but I have an inkling somewhere deep down in my jolly old belly (and you know, during my travels I do get to visit some analyst--of course, only the ones who have been good) that it's going to be a better year. Now don't get your hopes up too high, but retail sales might just get a little better.

I also thought I would share some predictions that came to mind as the reindeer and I rested after a hectic December.

* Wal-Mart's stock will finally,.begin to nudge up after almost two years of being stuck in the low- to mid-twenties, perhaps reflecting a greater confidence in international expansion.

* Contrary to the opinion held by you and many of your friends, Kmart will show some signs of a turnaround and enjoy a better-than-expected

* Venture will likely struggle with its repositioning efforts, but will eventually find its niche in the marketplace.

* Bradlees and Caldor will continue to struggle as they take the necessary steps towards emerging from Chapter 11 (probably in early 1997). And don't be surprised if the merger and acquisition talk that has taken place between these retailers resurfaces again.

* In the aftermath of T.J. Maxx's acquisition of Marshalls, expect more shakeout in the off-price apparel segment. I'm lucky that I wear the same red outfit all the time, because I would probably have a difficult time finding the right merchandise at the right price these days. You know what I mean. In particular, Today's Man, Clothestime and Filene's Basement will continue to face tough times in a fickle market.

* There will continue to be more development and growth for retailing on the Internet as Wal-Mart and Pricecostco, among others, blaze the trail in this emerging segment of retailing. Personally, I'm thinking of setting up a Direct-to-Santa Workshop.

There are many other trends and issues to watch, so keep reading DSN and get a subscription for a friend or coworker. Keep pace with the supercenter development. Be wary because shoplifting is on the rise, a wise man recently reported. Address the needs of the first wave of Baby Boomers; they're going to start turning 50 this year and could represent a whole new market. And don't forget about the Olympics, the presidential election and all those other fashionable holidays.

But most of all, my troubled friend, remember that the fundamentals of retailing haven't really changed since the early days of discounting--or even since the early days of Sears and JCPenney more than a century ago.

I know you wrote to me for help, as if I could just say "Ho, Ho, Ho" and all would be right with the world of retailing. I wish it was that simple. But I really do believe it will get better in 1996.

Yours truly,

Santa