ATLANTA -- Frozen pizzas at Menards. Yoga pants at Walgreens. CDs at Starbucks. Gasoline and convenience store merchandise at Home Depot. Sometimes a channel-blurring strategy works, said The Chicago Tribune. For instance, Barnes & Noble changed the bookselling business by putting coffee shops inside its stores. Other times, it's a strategy that sends merchants far into the weeds. But the temptation to stray from what a retailer does best is hard to resist when sales need a boost. For example, Home Depot went too far off base when it opened a handful of convenience stores that sold candy [image-nocss] bars, cigarettes, coffee, fuel car washes in the parking lots of stores in Georgia and Tennessee.
The sixth and last store opened in June 2007 and there are no plans to open any more, Sheriee Bowman, a spokesperson for the Atlanta-based home improvement chain, told the newspaper. (Click here for CSP Daily News coverage.Click here to read a site visit. Andclick here to read "Orange Crush," the Home Depot cover story from the April 2006 issue of CSP magazine.)
Over the past year, home improvement chain Menards set up grocery aisles in three out of every four of its 240 stores, so shoppers can buy milk, canned goods, boxed dinners and frozen pizza alongside roofing materials and insulation. (Click here for CSP Daily News coverage.)
Drugstore chain Walgreen Co. introduced a clothing line, called Casual Gear, at most of its 6,000 stores in April. (Click here for coverage.)
And Starbucks garnered a lot of attention for selling books and CDs in its coffee houses in recent years. But now the Seattle-based chain is in the middle of a retrenchment, closing stores, laying off workers and refocusing on its main business of selling coffee. "Retailers are trying to give the shopper a reason to hang out in their store rather than just come in and purchase what they need," Barb Fabing, senior vice president of retail design and strategy at marketing services firm Arc Worldwide, told the Tribune. (Click here for coverage. Also click here.)
As the economy slows and the retail industry cuts back on investment in new-store construction, the time is ripe, according to the Tribune, for retailers to dust off a tried-and-true retail strategy: Sell more core-channel products in the stores you have.
Many existing retail concepts will reach the end of their "expansion runway" by 2015, at least in the United States, TNS Retail Forward and PricewaterhouseCoopers LLP predicted in a recent report. That leaves firms with limited options for growth: Look for new markets overseas, develop a new retail concept or get more out of existing locations.
"The limits of what these big boxes are leads retailers to continue to want to find a way to experiment," Neil Stern, senior partner at retail consulting firm McMillan Doolittle LLP, told the paper. "The question from the consumer is, what do you accept from the brand and what feels foreign."
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