Wanted: Borders CEO -- Again

The big news this week is the sudden departure of Ron Marshall from Borders, which leaves the struggling bookseller forced to find another chief executive for the fourth time in five years.

When Marshall arrived at Borders last January, he was billed as a “turnaround expert.” But so far as I can tell, he did little to turn the chain around. Sure, he is credited with spearheading operational improvements (read: cost cuts) to drive increased cash flow and reduce debt. But cost-cutting, as many retailers are sure to learn in the coming months, can only get a chain so far. Marshall seemed to have a blind eye when it came to improving or defining the Borders brand and in-store experience. Improving a company’s cash flow without giving equal attention to improving its traffic flow is folly in the long run. Look at the numbers: Borders has reported three consecutive quarterly losses, and crucial holiday same-store sales dropped 14.6%.

On a macro-level, Borders’ struggle is indicative of a trend that has befallen Circuit City and other big-box specialty retailers: In today’s super-competitive environment where shoppers have so many shopping choices, there may only be room for one national brick-and-mortar big-box player in any particular category. Barnes & Noble has outplayed Borders in nearly every way. Sure, it’s had some rough sailing during the recession. But it is a rock of stability compared with Borders.

As for Ron Marshall, amazingly, he has already landed a new gig: He will report to duty as CEO of the Great Atlantic & Pacific Tea Co. (A&P) on Feb. 8. In some ways, he is jumping from the frying pan into the fire. The supermarket operator has been losing money since June 2008.

In the eye of retail: Holiday takeaways

One of my favorite sources is Retail Eye Partners, an independent equity research and consulting firm, which, among other things, offers up a real-time pulse on the consumer and the performance of specific retailers and brands. The company also has a consumer panel of 400 women that it surveys every month.

Here are the big takeaways from Retail Eye’s latest consumer panel (the comments in blue are from the firm’s principals, Lisa Walters and Sapna Shah):

• Shoppers spent more than they planned to on holiday gifts, so spending rebounded above 2008 levels, likely to have a very positive impact on December sales for most retailers. (We suspect that great deals in stores and online helped to boost spending and consumers ended up doing a little self purchasing as well, given they were able to stretch their budgets further given better-than-expected discounting by retailers.)
• While shoppers didn’t buy for more recipients, they did spend more on each gift. (Again, we believe that hard-to-pass-up pricing and doorbusters made shoppers want to spend.)
• Consumer electronics and gift cards were still hot this year, and gift-card purchasing rose to 2007 levels. (Our store checks show that CE was strong all month long with almost half of our panel buying at least one CE item as a gift this year, and shoppers favoring strong pricing at mass merchants over consumer electronics stores.)
• Mass merchants, off-price and online were the biggest channels that shoppers looked to for holiday buying. (Similar to what we saw for Black Friday, value-oriented retailers continued to have the best traffic and selling across each region of the United States.)
  

On the all-important teen front, the firm made the following observations:

• Teens received fewer gifts this year, with cash, gift cards, apparel and consumer electronics being the most popular gifts.
• Uggs are still hot -- 30% of our teen panel said they received Uggs boots, slippers or shoes this year.
• Most teens received gift cards this year, but haven’t spent the bulk of them yet. (We believe many are saving them for apparel and other purchasing later in the spring. As a result, we expect to see slow sales trends for most teen retailers until mid-first quarter.)