Retail Unwrapped from The Robin Report

Retailing During Wartime

Mark Cohen — Wed, 04 Mar 2026 05:01:00 +0000

The publicly stated explanation for this war, which is taking place between the U.S. and Israel in Iran, is the explicit intent to foment regime change. It’s anyone’s guess how this conflict will proceed or eventually end. Since World War II, regime changes have almost never succeeded as planned or anticipated. Not in Korea, Vietnam, Iraq, Yugoslavia, the USSR, Afghanistan, or Syria, to name just a few conflicts.

How will the war in Iran affect the retail industry? And the answer is: Disruptions in trade and travel will force retail to take a conservative path in 2026.

Retail Predictions on the War with Iran

Like it or not, a lot of economic—and therefore retail effects—of this brand-new conflict will hinge upon the conditions surrounding the safe passage of tankers through the Persian Gulf and the Strait of Hormuz. This is where 15 percent of the world’s oil and 20 percent of the world’s liquified natural gas originates and transits. Analysts estimate that even using alternate routing, a serious constraint in the Persian Gulf and at Hormuz could remove 8 to 10 million barrels per day from the market, enough to add perhaps $20 a barrel to crude oil prices if conditions worsen. Oil prices, currently at $72 a barrel, have already begun to climb and could easily hit, if not well exceed, $100 a barrel if this conflict isn’t quickly resolved, according to many economists who follow this lifeblood of the world’s economy. In trying to make sense of this new war, the prediction of a four-to-five-week engagement doesn’t sound credible. What is now happening in Iran is not in any way analogous to what just happened in Venezuela.

Is This Gas Shortage Déjà Vu?

So far, this war does not foretell the disastrous, albeit short-term, gasoline shortages that occurred in late 1973 and early 1974 when OPEC created an oil embargo on U.S.-bound petroleum shipments. Then, gasoline supply became extremely scarce; strict rationing took place in most major market centers. The retail business, broadly writ, was decimated for months on end. I was a Department Manager at A&S’s largest branch store in Hempstead, Long Island. Business dropped like a rock everywhere except in downtown Brooklyn, where gasoline was rationed throughout Metro NYC. If you couldn’t fill your car’s tank with a limited, every other day allotment of gasoline to get to work, you certainly weren’t predisposed to go shopping if you didn’t have to.

Since then, thanks largely to the onset of oil shale extraction techniques, the U.S. has developed significant oil independence. But this war does foretell a highly likely increase in already inflated energy prices. Historically, a $1 increase in crude can translate into roughly a 2 to 3 cent per gallon move at the pump; one analyst recently pegged the near-term pass-through at about 13 cents per gallon from the latest run-up. Higher fuel prices hit shoppers twice: directly at the gas station pump and through transportation surcharges embedded in the supply chain of the products on shelves.

More Economic Uncertainty

This new pressure on our economy will pile up on top of whatever replaces Trump’s illegal tariff strategy along with already rising retail prices of just about everything that is widely consumed by us all, and unprecedented increases in healthcare expenses. None of this bodes well for an already inconsistent retail environment with an industry struggling with uneven performances at the bottom of the retail food chain at stores like Target, instability in the middle at stores like Kohl’s and Macys, and chaos at the very top as Saks Global attempts to unwind its completely self-induced train wreck.

How will this affect Wall Street and all those consumers whose disposable incomes are directly or indirectly affected by the performance of the Street? Will a handful of tech companies, which have propped up the stock market throughout 2025, continue to provide air cover for an already stressed U.S. economy? Will the increased use of AI tech products continue to curtail new employment and fuel the increasingly evident presence of aggressive layoffs? I can’t predict the behavior of the stock market, but I think it’s clear that unemployment is going to become an increasingly problematic issue here. Reshoring remains a pipe dream as a near-term economic driver. The metal bending and needle trades are not, and maybe never will resurge in any meaningful way, certainly not this year.

Early Warning System

Retail, which has always been a canary in the coal mine with regard to the behavior of our overall economy, will now be under even more significant pressure this year. Retail does, after all, make up some 70 percent of the U.S. economy. The guarded prognosis, widely held by many, if not most, industry leaders, becomes even more problematic with a war underway in Iran. If this conflict becomes a “forever war,” which Trump promised would never occur on his watch, inflation could become explosive.

Reportedly, the American consumer, without regard to income level, currently lives paycheck to paycheck and is going to get hammered. They will support necessities as they have always done during difficult times, such as during Covid-19. But that’s it; discretionary purchases, otherwise known as general merchandise products, will get hammered as well.

Price will continue to be the primary driver of retail success and, as we’ve seen, not all retailers have the financial wherewithal and the assortment and merchandising disciplines to prevail. Is it possible that new fashion ideas will captivate the American consumer? Yes, but the consumers’ enthusiasm is invariably going to be muted. Add to all of this the upcoming November midterm elections will add fuel to the angst that seems to be increasingly blanketing consumer confidence.

A Forever War?

In my opinion, Trump will want to end this conflict as quickly as possible, but the Israelis are “in it to win it” and not predisposed to back off. Now, with the entire Middle East theater under fire, the likelihood that this conflict spills over into further disruptions in trade and travel is very real. In the face of all of this, conservatism in plans and outlook is vital for all retailers to navigate successfully, at least through the balance of this new year.

Tariff Chaos and the Widening Gyre

Mark Cohen — Tue, 24 Feb 2026 05:01:00 +0000

The U.S. Supreme Court’s ruling against Donald Trump’s unilateral imposition of worldwide tariffs should have been a slam dunk. The peculiar delay in the Court’s ruling was allegedly caused by a struggle between ideology and the integrity of the Constitution itself among the justices. Nevertheless, Trump’s “America First” April 2025 “Liberation Day” strategy, emboldened by repeated escalations, changes, and curiously granted exemptions, has now been deemed to be illegal by our highest court.

What does this ruling now mean for the myriads of trade deals this government has allegedly struck with countries around the world? I say “allegedly” because few if any of these agreements have actually been codified. Many, in fact, are based upon future promises of purchases of U.S.-made products and investment in U.S. enterprises that may be specious at best. After the ruling, Trump immediately engaged in a characteristic tirade, accusing the Court of all manner of impropriety and then immediately decreed, despite the Court’s ruling, that he would impose a 10 percent tariff on all U.S. imports across the board. Less than 24 hours later, he amended that decree to 15 percent.

How will retail be affected by the new tariff ruling? And the answer is: The industry will continue to experience more chaos and uncertainty resulting from the recent Supreme Court ruling. A retail CEO walks into their boardroom this week and, without a doubt, asks of his or her executive team, “What now?”

Based on his reaction to the Court’s ruling and his continuing bombastic criticism, it appears that Trump and his advisors presumed that the Supreme Court wouldn’t rein him in nor would the current majority party in Congress, which, by virtue of the U.S. Constitution, holds the only legal authority to impose tariffs. Despite the Court’s decision, he continues to falsely claim that tariffs have not been paid by U.S. consumers, the U.S. economy is booming, inflation is under control, and U.S. manufacturing activity is rising as a result of his tariff-driven actions. Unfortunately, his administration’s own recent statistics refute these claims – something he and his team are unwilling to accept. Underlying all of this, it’s also clear that Trump assumed that the world would bend a knee to his trade demands, something that has not occurred, given evidence of all manner of retaliatory actions taken by a host of trading partners.

So, how does a business leader who may have just breathed a sigh of post-Covid-19 relief in early 2026, now confronted by more confusion from the newly-illegal “Liberation Day” program, proceed? Business executives, both CEO’s and owners of small, medium, large and overlarge enterprises have always faced the vagaries of uncertain futures driven by rising inflation, rising interest rates, ever-changing consumer preferences, competitive challenges, etc. But these issues now all pale in the face of Trump’s ongoing incomprehensible and now illegal trade behavior. Unfortunately, this Supreme Court ruling does nothing to ameliorate the uncertainties that arise from Trump’s ongoing tariff program.

Next Steps

New questions to be resolved:

Will the U.S. Treasury refund the billions of dollars of tariffs that have been collected?
Will consumers and other stakeholders, who have borne an estimated 90 percent of these tariffs, demand and receive some form of recompense?
Will the “deals” Trump struck over the past 10 months remain in place?
Will his declaration of new replacement tariffs even hold?

What a Leader Can Do: A Practical Playbook

The legal authority for these new tariffs is written to allow for a duration of 150 days pending further legislative action. What should retailers do before these five-month actions expire?

Conservatize your sales forecasts and plans.

For businesses currently doing well, be very careful about line-extending current success. Similarly, for businesses currently struggling, be very careful about depending on turnaround assumptions currently in hand. Wherever prices must be increased, be very realistic about the possible negative effects on demand.

Conservatize your gross margin and expense plans as well as your profitability forecasts.

Where you cannot or choose not to raise consumer prices, be very realistic as to what effect that will have on gross margins and then on profitability. The tariff effect has to come from somewhere. If not the supplier or the customer, then where? Operating expenses will be more challenging than they normally are. Everything from service, supply and logistics costs, materials costs, labor and benefits expenses and energy costs will be subject to ongoing and unpredictable price inflation. Yes, the Big Beautiful Tax Bill will provide some offsets, but not nearly enough to cover the uncertainty that I believe businesses will face.

Solidify your relationships with all your stakeholders.

Suppliers: The integrity of your assortments relies upon the relationships you have with your suppliers, all of whom will face the same planning conundrum as you. Focus on your most important vendor partners and manage your relationships with them to a fault.

Customers: Your customers will inevitably continue to exhibit crises of personal liquidity driven by the ongoing inflated prices of goods and services, inflated housing costs and the burden of increasingly expensive child and healthcare. It is really important, now more than ever, to reach out to your most loyal and reliable customers to reassure them that you take their life challenges and continued patronage very seriously. Where you can, advise them in advance of upcoming price increases and changes in customer-facing policies such as shipping costs, returns restrictions and/or changes in hours of operations.

Associates: The viability of a company is always integrally linked to the relationship the company has with its workforce. This is especially true during stressful times, and now certainly fits that bill. Protect the employment of your most valuable team members from the shop floor up to those in corner suites. Unfortunately, this calls for limited hiring if not outright hiring freezes. The best way to avoid necessary reductions in force is to avoid inflating your labor force in the first place. Note, for many businesses, their Covid-19 hiring hangover is just now reconciling itself.

Shareholders: How to manage shareholder expectations is a constant “rock and hard place” issue. If you engage in inappropriate short-term actions to prop up your company’s performance, there will inevitably be a longer-term price paid. This is almost as irrefutable as Isaac Newton’s law of gravity. Having said that, you must protect the performance, if not the solvency, of your enterprise. My advice, admittedly now, from the sidelines, is to level with your shareholders as to the nature and details of the uncertainties you face.

Competition: Business performance, particularly during periods of adversity, is often characterized as a zero-sum game. Winners win by virtue of their ability to take business away from the competition. If ever there was a good time to size up a competitor’s weaknesses and capitalize on them, that time would be now.

Be wary of technology.

Do not view AI-based technology as a panacea during what I believe might be an unprecedented period of turmoil. Yes, increased use of new technology is vital and necessary, but only hand in glove with the use of common sense and good judgment in decision-making. Fear of missing out (FOMO) is something to be examined and managed carefully.

Use the lessons of the recent past.

The 2020-2024 Covid pandemic experience created a textbook of lessons learned for business. In the face of the adversities largely driven by uncertainties that we may be confronted with again, use your company’s past successes and failures as guideposts for the next several years while, hopefully, America regains its footing on the world’s stage.

Anticipate the November 2026 mid-term election

This consequential election may represent an inflection point, as will the 2028 presidential election. But, as it is impossible to foretell conditions and outcomes between now and then, as always, hope for the best but prepare for the worst.

Saks Global: Another Trainwreck

Mark Cohen — Wed, 07 Jan 2026 05:01:00 +0000

Saks Global is Richard Baker’s next and maybe his final retail failure. Lord & Taylor, The Hudson Bay Company in all its various iterations in Canada and Europe, and now the monstrosity he recently created by putting Saks Fifth Avenue, Saks Off Fifth, Neiman Marcus and Bergdorf Goodman together, teeters on bankruptcy. This recent disaster is the result of the company’s failure to make a required $100 million interest payment to lenders at year’s end.

Baker, as a real estate manipulator, gets high marks. As a retail leader and retail strategist, however, he has been an abject failure.

Baker Shadow Play

Baker suddenly appeared on the retail scene in 2006 when his real estate company, NRDC, bought Lord & Taylor from the newly branded Federated/Macy’s Corporation, which inherited L&T when it acquired May Company stores. Then, in 2008, Baker acquired control of The Hudson Bay Company following the untimely death of its majority shareholder. Three years later, in 2011, Baker’s HBC sold its Zeller’s stores in Canada to Target Corporation for $1.8 billion. Kudos to Baker, as most of the Zeller’s store locations were arguably worthless as hapless Target would soon find out.

When I was Director of Retail Studies at the Columbia Business School, I attended a student-led Retail and Luxury Goods Conference in 2012, keynoted by Baker. He gave a rambling off the cuff 40-minute presentation in which he regaled the 250 students and guests in the audience about how great it was to be rich; how he did little work at Wharton having surrounded himself with “good looking babes” eager to do his work; and how he had just “stolen” Lord & Taylor from Federated for $1.2 billion. Narcissism aside, he was likely correct in his view that Federated could not wait to unload L&T as an outlying May Company property. He went on to talk about how easy it was to master the art of merchandising based on his exposure to L&T’s business. Completely put off by this performance, I was unfortunately seated in a location that precluded me from leaving early.

Next in 2013, Baker acquired Saks Fifth Avenue and Saks Off Fifth stores in what might be described as another triumph of price over value. Saks’ management had failed to fully recognize the leverage it could have used on its own behalf based on its Fifth Avenue store’s real estate valuation. Baker, as a real estate manipulator, gets high marks. As a retail leader and retail strategist, however, he has been an abject failure. His stewardship of Lord & Taylor was pathetic.

In an effort to cut expenses, he attempted to rationalize back-of-the-house activities between Canada-based Bay stores and American-based L&T stores, which may have made sense to some clueless consultant but never worked in retail reality. He then came up with a scheme to downsize the L&T Fifth Avenue flagship and sold the building to that other paragon of business strategy, WeWork, eventually killing the L&T brand.

Baker and The Bay

The disruption and ultimate liquidation of The Bay’s principal competitor in apparel, accessories and soft home, Sears Canada, should have resulted in a once-in-a-lifetime opportunity, but The Bay failed to capitalize on it.

Moving Saks Fifth Avenue stores into The Bay stores spaces in Canada and introducing Saks Off Fifth in Canada was another failed initiative. In fact, moving Saks Fifth Avenue into a cavernous “low-brow” Bay location on Queen Street adjacent to the Eaton Center in Toronto was an incredible misstep in and of itself. The physical space was available, but the luxury customer certainly wasn’t there.

Opening over a dozen Bay department stores in the Netherlands in 2017 was another bone-headed move. Baker did a complex deal with Germany-based Galeria Karstadt Kaufhof, securing retail space in the Netherlands, but again the customer just wasn’t there. Allegedly, Baker believed that since the Canadian Army liberated the Netherlands from the Nazis at the end of WWII, the Dutch would welcome a Canadian company with open arms. It didn’t happen. The Dutch Bay stores were all closed by 2019. The customers who might have remembered being liberated in 1945 were either dead or too old to patronize a Canadian-owned department store. Baker claimed he made money on this ridiculous foray, and he may very well have, but the Dutch paid a terrible price for this catastrophe.

Baker Business Model

In 2024, Baker set his sights on acquiring Sak’s principal competitor, Neiman Marcus/Bergdorf Goodman. The timing wasn’t great. There was the disappearance of luxury competitor Barney’s, and the Saks business at best treaded water. Also, Neiman Marcus/Bergdorf Goodman was struggling to put a challenging Chapter 11 Bankruptcy proceeding behind it.

There was also the monetization of hbc.com and saks.com, which raised a considerable amount of money from a group of hapless investors. These investors did not realize how completely counterproductive this strategy would prove to be.

Along the way, Richard Baker has presided over a never-ending list of lead executives, many of whom barely lasted two years with the company. There was Tina Johnson, Jeff Sherman, Bonnie Brooks, Jerry Storch, and Helena Foulkes, among others. And then there was Marc Metrick, whose 30-year tenure with Saks has just come to an abrupt end. But maybe it was 30 years too long. Metrick was a planning executive at Saks who, in recent years, masqueraded as its lead merchant.

Debt Economics

The history of two weak and/or weakened retail companies merging and finding success is simply this: There is no history. Add to that the non-starter of two companies that essentially do business with the same customer and in many cases in the same geographic locations. But these hurdles didn’t stop Baker from consummating a debt-laden merger of two icons. And incomprehensibly, for well over a year, the company failed to pay many of Saks’ vendors either on time or in many cases at all. So, now both companies have just completed a poor 2025 in sales. And having been cut off from receiving fresh inventory by a cynical factor community, Saks Global just failed to make that $100 million year-end interest payment.

Baker in Bankruptcy

Maybe Baker will come up with a bundle of new cash. If business remains as poor as it has been, any new cash infusion would only be a stopgap measure. Alternatively, the company might come up with a prepackaged restructuring agreement with its creditors. Or it will surrender to a voluntary or involuntary bankruptcy proceeding.

I’m not a bankruptcy attorney, but having lived through Federated department store’s successful restructure, and an up close and personal experience with Bradlees stores eventual failed emergence from bankruptcy, I think the bell may soon toll for Saks Global.

If it files for Chapter 11 financial relief, creditors organize and line up based upon their preexisting credit agreements (or lack thereof). Secured creditors, typically the company’s lenders, rely on collateral rights while unsecured creditors, typically vendors and service providers, hope for some eventual relief through the bankruptcy process. All payables from the company, whether current or past due, are frozen.

In a bankruptcy, legal and financial restructuring professionals line up for a typically substantial fee opportunity. A new lender or a consortium of lenders emerges to provide Debtor in Possession funding to enable the company to stay upright while in bankruptcy. All vendors are asked to resume shipping based on the newly created surety of DIP financing.

But, lacking confidence that past due receivables will eventually be paid, many vendors resort to selling their company receivables to distressed debt (or vulture) investors for substantial discounted values. This, in my opinion, is a terrible flaw in the bankruptcy process in that unsecured vendors, who you would expect to have a stake in the company’s eventual successful emergence from bankruptcy, have now traded places with investors seeking a fast financial return.

Saks Global at Risk

If Sak’s Global were operating as a stable platform with a successful sales and margin track record, with capable senior leadership, a reliable operating strategy, and good relationships with its vendors and customers, there would be ample reason for the company to navigate through bankruptcy and emerge with new debt and a newly restructured balance sheet. But none of this appears to be the case. As 2026 unfolds to what will undoubtedly be a challenging year for all retailers, the prospects for Saks Global are truly grim. My sense is that many vendors long ago stopped shipping or have curtailed their support for Saks, Neiman Marcus and maybe even Bergdorf Goodman, and they are unlikely to get back on board after having been egregiously abused these past few years.

Many will find another retailer to serve their customers if they haven’t already done so or continue to build a direct-to-consumer model of their own. Why wouldn’t they? Who needs the sturm und drang of a failing retail partner who doesn’t pay its bills? If that happens, Saks Global is toast.

Holiday 25: Predicting Chaos

Mark Cohen — Tue, 25 Nov 2025 05:01:00 +0000

Every year numerous analysts, forecasters, pundits and prognosticators attempt to predict an upcoming holiday’s retail performance. Typically, modest increases in sales are forecast. But what is it about this holiday, Holiday 2025, that may turn out to be very different?

What effect will sharply rising unemployment have on consumer spending?
What effect will sharply rising retail prices, driven by Trump’s precipitous and erratic trade war, have on consumer spending?
What effect will lack of availability of merchandise, again driven by a precipitous and erratic trade war, have on retail sales?
What effect will the specter of sharply increased health care costs in 2026 have on holiday 2025 spending?

Where will consumers shop this holiday and what will they buy? Will they buy seasonal and fashionable merchandise as they have in the past, or will they bias their purchases toward basic and commodity products? Will they move sharply down market as they did during Covid in 2020 and the 2008 recession? If the consumer outlook remains increasingly pessimistic, and, their disposable income this holiday is significantly impaired, what will that mean for total holiday sales?

In my opinion, retailers whose year-to-date performance has been positive like Costco, Walmart and Amazon among others will be ﬁne. Poorly performing retailers like Macys, Kohls, JC Penney Target, and Saks Global, however, will continue to struggle as they have all year long. Prognosticators will have a much harder time this year accurately predicting outcomes this holiday. By Mark Cohen

A New CEO in a Turnaround Needs a Full Deck of Cards

Mark Cohen — Mon, 17 Nov 2025 05:01:00 +0000

Ideally, one would want a newly appointed Chief Executive Officer to enter their proverbial corner suite with a full deck of cards, all 52 in fact. In reality, of course, some have less than a full deck—either because their CV does not accurately portray their qualifications, their experience is limited, or they are merely succeeding someone for whom they have worked. As unfortunate as it is sometimes the case, they have limited or no skill or positive experience but have somehow hoodwinked whoever it was who considered them into giving them the job. Maybe it was a board that simply sought an easy way out of an organization’s failed performance.

A turnaround is a bumpy ride, complete with false starts, exhilarating successes and disappointing failures. A new CEO must have the personal fortitude to recognize the successes and failures of their efforts and be willing to course correct as necessary.

52-Card Pickup

On the other hand, a newly appointed CEO may have the benefit of significant and relevant experience and may have the good fortune to be given the helm of an enterprise that is already doing well. One example is the appointment of Tim Cook as CEO of Apple. He was a senior Apple executive with consequential knowledge and experience of all things Apple, and he took over as its chief executive at a time when Apple’s performance was ascendant. This “perfect” succession path is rare, maybe never in a company in need of a turnaround.

Our new turnaround CEO’s deck of cards should ideally consist of four suits:

Leadership skills, which include personal integrity, interpersonal and communication skills
A deep understanding of the enterprise’s past and present condition and performance.
Industry insight
Competitive insight

In unpacking the deck, a new CEO lacking in leadership skills is a nonstarter. Can a new CEO missing any or all of these suits in their deck acquire them or surround themselves with people who can make up for their absence? I don’t think so. Are there retail CEOs who have found their way into a top job despite these deficits? You bet, and in fact, you probably know who they are. Have they succeeded? Few, if any, that I’m aware of.

Shuffling the Deck

Now focus on the added challenge of leading a retail enterprise badly in need of a turnaround. To pull that off successfully, a new CEO absolutely needs a full deck of cards. They need relevant experience, vision, strength of character and sense of purpose. They also need a modicum of good luck. I know this, having led and participated in a handful of successful turnarounds such as Lazarus, Sears Roebuck, Sears Canada and one notable failure, Bradlees.

To lead a retail turnaround, you must have a starting point as well as a sense of what future success will look like. In my view, you must start with everything that a customer comes into contact with. Your stores may not have the right merchandise or go-to-market and pricing strategies, but there is one dealbreaker. They must be neat, clean and friendly and have merchandise available for sale. That includes parking lots, restrooms, and pick up docks. That includes clean floors, clean fixtures, functional HVAC, elevators, escalators and lighting. This calls for immediate physical remediation efforts in advance of any necessary renovations. It requires housekeeping standards and associate behavioral standards. Your stores cannot be described as a place customers feel is unsafe, unfriendly and unattractive. On the ecommerce side, this calls for clear and concise web presentation, pricing information, delivery standards and delivery execution. Your ecommerce deliveries cannot look as if your packages fell off the truck on the way to your customers. These remedial efforts must start on day one. This may sound awfully simplistic to you, yet how many failing retailers (even your favorites) have been guilty of dark, dirty, disorganized, poorly stocked and downright unfriendly stores?

Merchandising 101

More complicated and challenging in a turnaround is getting a store’s assortment right, as in having the merchandise customers expect to buy from you on hand. Again, awfully simplistic but, in fact, enormously challenging. First, you have to start with an accurate understanding of who the store’s legacy customer is. Next, where does the store hold and where has it lost market share to competition? Unlike the lunacy that went on years ago at JCPenney, it is vital to not precipitously walk away from existing customers and the businesses they support. On the other hand, it is also vital to liquidate old age and outmoded inventory and cull and curtail investment in assortments that clearly are outliers. Think, for example, of the irrational decision to put home furnishing merchandise into Banana Republic.

Successful assortments are the codex of successful retailing, but successful assortments require enormous effort to deliver and sustain them. To that end, I have always been devoted to an enterprise-wide, repetitive “style out” or “line review” process. This is where all things that make up assortments, past, present and future, are examined in tremendous detail. That means looking at actual merchandise, including touching, feeling and trying things out and on. It also means analysis of merchandise performance, merchandise presentation, marketing and marketing effectiveness and last but certainly not least, customer satisfaction or the lack thereof. During this process, leadership’s vision, intent and need for enterprise-wide congruity becomes alive and in full view to the organization.

The Insidious Challenges of Managing Change

A turnaround effort at both the HQ and in the field (read that to mean stores and facilities) requires tremendous articulation, buy-in and support from the myriads of people in the organization who will make or break the outcome. I have never been associated with an enterprise that wasn’t comprised of large numbers of talented, ambitious and motivated people. On the other hand, the missing link, in my experience, has always been a lack of capable leadership. But not everyone in an organization is ever truly aligned. There is a need to move promptly to remove “active blockers” who aggressively oppose change, as well as passive aggressive “surreptitious blockers” who seem to sign up for change but balk at it at every turn.

You can only succeed at influencing an organization’s actions, point of view, behavior, and buy-in through dedicated contact and relationship building. This can’t be achieved remotely: period. Further, a CEO, mounting a turnaround, must become a physical presence throughout the entire organization. That means sitting with teams throughout, including regular “town halls” that are open to freewheeling Q&A, and extensive travel to the far corners of the enterprise. Some failed retail CEOs famously never traveled to stores or facilities or only traveled to the places where they were guaranteed to have a good visit (or in one case, were adjacent to a favorite golf course).

Field Report

A turnaround is a bumpy ride, complete with false starts, exhilarating successes and disappointing failures. A new CEO must have the personal fortitude to recognize the successes and failures of their efforts and be willing to course correct as necessary.

Macy’s is currently led by a new CEO who knows, by virtue of his pronounced past success at Bloomingdale’s, how to clean up the company’s “act.” He is following years and years of incompetent senior managers and appears to be making good progress in that regard. It remains to be seen, however, if he can successfully chart a new strategic path for the future of Macy’s.

Can a new CEO at Target, who has been a senior executive at Target for 20+ years, and bore witness to and participated in, the company’s recent poor performance, mount a turnaround? Color me cynical. We’ll have to wait and see.

And finally, as for Kohl’s, like Target, the company is presently lost in the wilderness. In Kohl’s case, the company has been lost for many years. Kohl’s poor performance was masked for years by the ongoing collapse of competition like Mervyns, JCPenney and Macy’s, among others. Can an interim CEO, who also bore witness to the company’s long-standing poor performance, preside over a turnaround? We’ll also have to wait and see.

Kohl’s Latest Surprise: CEO Ashley Buchanan’s Termination

Mark Cohen — Wed, 07 May 2025 04:01:00 +0000

If Kohl’s were a cat that had nine lives, it used up life #8 on May 1, 2025, with Ashley Buchanan’s termination. But before I offer up any opinions about Kohl’s future, if in fact, it has one, I feel compelled to share my past history and insight into the company. And it’s personal.

Kohl’s also needs a more appropriate balance of national branded and private label branded merchandise – national brands for legitimacy and promotional draw, and private label brands for comparative pricing legitimacy and gross margin performance.

The Past as Prelude

In the late 1970s, Kohl’s joined a retinue of retailers seeking to take advantage of a powerful emerging retail category, called at the time, “Junior Department Stores.” Kohl’s was a little-known grocery chain headquartered in a suburb of Milwaukee seeking newfound relevance and growth in the face of JC Penney’s sizable market share and the emergence of a newly acquired Dayton Hudson store called Mervyns. (Note: Mervyns originally had no apostrophe because when the company was first founded the sign builder left out the apostrophe which no one caught in time. When the mistake was discovered Merv Morris said leave it as he was too cash-strapped to fix it.) Circa 1981, I was a Senior VP/GMM of Men’s and Boy’s at California-based Mervyns, and then in 1983, President of its South-Central Territory based in Plano, Texas.

Back in the day. Mervyns was growing top and bottom lines in no small measure by carefully catering to a middle market customer’s desire for fashion and value. Customers enjoyed shopping in a well-located and well-presented store that also offered attractive credit through its own store card. Mervyns was a store that consistently carried exciting assortments of men’s, women’s, kids’ and home goods. This merchandise was carefully promoted every week in a very methodical way to have the entire store appear to be on sale while at the same time protecting a promotional-to-regular-price balance of 35 percent sale, 65 percent regular price. Mervyns’ secret sauce also included a mix of powerful national brands, hand in glove, with carefully crafted private label programs throughout the entire store.

Alas, Mervyn’s fell victim to overreach, ill-advised merchandising decisions, over-involvement on the part of its corporate parent and a greenmail attempt mounted in 1986/1987 against Dayton Hudson. I had to close Mervyns South Central territorial headquarters which I had opened. Over 30 stores in the Texas, Oklahoma, New Mexico and Louisiana area closed when the “Oil Patch” slid into recession coupled with weakness in Mervyns California base business.

Enter Kohl’s Stage Right

Kohl’s executives had been repeatedly shopping Mervyns’ stores in California and Texas, cameras and tape measures in hand. When over 600 Mervyns South Central Territory, Texas-based executives were laid off in 1986, Kohl’s swooped in and hired 49 of them. As Mervyns went into decline along with JC Penney and newbies like Federated Department Stores Mainstreet division (which was an attempted Mervyns knockoff), Kohl’s emerged with a newly crafted and improved operating playbook of their own. With success in hand, Kohl’s moved to rapidly open stores throughout the U.S.

My next encounter with Kohl’s was while serving as CEO of Cincinnati-based Lazarus, then a division of Federated Department Stores. Kohl’s opened clusters of stores in our midwest trading areas and immediately launched their Mervyns style weekly brand promotions. We operated in a similar promotional fashion but had to lower our promotional prices to remain competitive with them.

Cracks in Kohl’s Veneer

What I observed then were the seeds of Kohl’s eventual downfall, masked by the disappearance of Mervyns, the ongoing collapse of JC Penney and even Macy’s weaknesses as well. At that time in the mid-1990s, Macy’s was trying (and failing) to go upmarket and was moving away from Kohl’s mid-market customers.

Notably, Kohl’s was adding more and more brands to fuel their weekly and biweekly promotional offers, while at the same time beginning to violate comparative pricing rules adjudicated at state levels. In a nutshell, they were beginning to over-assort their stores and were blatantly over-rotating their price promotions across the calendar.

Kohl’s became known as a store that never turned down a brand that they could somehow force onto their selling floor and onto their promotional calendar. Despite this poor stewardship, for quite a few years Kohl’s appeared to remain at the top of the retail leaderboard in comparable store sales, month after month, quarter after quarter, and year after year. To Kohl’s credit their central checkout format, which was very well received by customers, remained a powerful positive differentiator. But over assortment and balance of sale shifts toward 100 percent on-sale volume becomes the bane of a high/low driven promotional strategy and Kohl’s was no exception.

Kohl’s Shenanigans

Now, fast forward to 2004, while I was serving as CEO of Sears Canada, Kohl’s CEO Larry Montgomery and President Kevin Mansell traveled to Toronto and, uninvited and unannounced, toured a handful of Sears Canada stores. Montgomery and Mansell liked what they saw in Canada and as a result aggressively sought to meet with me. To provide context, at that time I had enormous misgivings about what was beginning to transpire with piratical Eddy Lampert, a substantial Sears Roebuck shareholder (which owned 51 percent of Sears Canada).

As a courtesy, I agreed to meet with Montgomery and Mansell during one of my regular trips to Chicago. The meeting took place in a suburban Chicago hotel, where Montgomery immediately offered me a job. He acknowledged what he had seen in Canada and what he had learned with respect to our efforts there to “detox” the company from several years of unsustainable promotional behavior. He freely admitted to the struggle that Kohl’s was facing in the U.S. in that same regard.

He more or less said, “Name your title and role and we will make it happen.” Before this meeting took place, I did do some due diligence as a cursory attempt to get up to speed on what Kohl’s was and was not doing at that time. No surprise to me, I quickly saw the corner that Kohl’s had been painting themselves into. I was flattered by Montgomery’s’ open-ended offer but immediately turned it down. I wasn’t looking for another assignment, let alone another turnaround in what would have been as a third chef in a kitchen whose recipes needed dramatic changes. Montgomery was very disappointed. Mansell was very relieved.

Sears CEO Alan Lacy got wind of this meeting and incorrectly accused me of conspiring to join Kohl’s. I was pushed out of Sears Canada shortly thereafter. In short order, Lampert acquired Sears Roebuck using Sears Roebuck’s own cash and merged the company with Kmart. Lacy was pushed out of Sears Roebuck, and the sickening demise of iconic, in the aggregate, $50 billion retail brands Sears Roebuck, Sears Canada and Kmart began in earnest.

Kohl’s Recent CEO History

Back to Kohl’s – Larry Montgomery eventually retired. Kevin Mansell became CEO and, in my view, merely acted as a caretaker to a troubled but outwardly successful strategy. He recruited, as an eventual successor, Michelle Gass, a marketing executive from Starbucks with no experience in fashion, multi-classification merchandising or promotional retailing. She eventually replaced him when he retired. Gass’ claim to fame as Kohl’s CEO was a less than meaningful deal with Amazon to make Kohl’s stores drop-off centers for Amazon returns. I always suspected, because of the warrants involved in the agreement with Amazon, that this deal was really an attempt by Gass to convince Amazon to buy the company.

Kohl’s performance continued to be, at best, lackluster. The Amazon returns strategy did not move the needle at Kohl’s in a meaningful way. During her tenure CEO Gass exhibited a consistent habit of blaming failure on her senior subordinates, which in my opinion is unacceptable. With the backing of a lead director, Peter Bonaparte, Gass fended off a series of activist efforts to remove her. To her credit, she did a deal to bring Sephora to Kohl’s from a bankrupted JC Penney. But unfortunately, as had been the case at Penney, this deal was far more valuable to Sephora than to its Kohl’s host.

Revolving Door

Once Gass was pushed out, Kohls’ hired the well-regarded former CEO of Burlington Stores, Tom Kingsbury to right the ship. Kingsbury also had little or no merchandising or promotional experience. He moved quickly to make major changes to Kohl’s strategies. But to no avail. By his own admission, he failed to understand the foundations of Kohl’s business and the changes he put in place just didn’t resonate with customers.

Kingsbury eliminated and/or scaled back categories such as women’s petites, fine jewelry and a host of embedded private label programs to make way for additional national brands. He did work toward cleaning up Kohl’s stores, inventories, and inventory and expense management practices etc. But it is more what he didn’t do that stalled Kohl’s business. Namely, focusing on a compelling, balanced and attractive mix of national brands and private label programs that would successfully differentiate Kohl’s from the competition. His mandate was to restore Kohl’s as a destination for its customers but he just didn’t accomplish that.

Recently, in January 2025 following Kingsbury’s departure, the company brought on board former Michael’s Stores CEO Ashley Buchanan. Prior to serving at Michael’s, Buchanan had served as a senior merchant at Walmart. He was viewed as a breath of fresh air considering Kohl’s ongoing, chronic poor performance.

Surprise, surprise, on May 1 Buchanan was terminated for cause for having engaged in a series of inappropriate transactions with a former business associate and personal friend. There is some evidence that the Kohl’s board was warned about Buchanan’s behavior before he was hired but we will have to wait for the inevitable litigation for all the details to be revealed.

An Indeterminate Future

Needless to say, Kohl’s now needs yet another new leader. This time it had better be someone with real and relevant chops who can quickly mount a transformation path leading to a successful turnaround strategy – one which will quickly turn this company around before it’s too late. My advice? Kohl’s needs powerful assortments of broad categories of merchandise, encompassing men’s, women’s, and kids’ apparel and accessories and important elements of soft home furnishings and housewares – notably the categories that made Kohl’s famous in the past.

Kohl’s also needs a more appropriate balance of national branded and private label branded merchandise – national brands for legitimacy and promotional draw, and private label brands for comparative pricing legitimacy and gross margin performance.

Next, and maybe most importantly, Kohl’s needs a far more powerful (and legal) promotional strategy that leans heavily on calendar management and calendar disciplines and introduces appealing deflective promotional efforts. Examples might include features such as purchase with purchase, gift with purchase, sweepstakes, points rewards, and other techniques to restore its promotional appeal and act as a regular draw for customers.

It also goes without saying that Kohl’s must have a successful ecommerce strategy that is hand and glove with what it is doing in its stores. This is not to imply that anything here is easy to contemplate or enact, but it is to say that, at the end of the day, successful retailing has always been, and always will be, about an organization led by leaders and teams with vision and executional capacity to create, present, and promote assortments that are compelling, profitable and replicable, season in and season out.

It’s an understatement to suggest that Kohl’s has its work cut out for itself. Maybe, just maybe, the company has a 9^th life left.

What Can Retailers Do About Trump’s Tariffs?

Mark Cohen — Mon, 14 Apr 2025 04:01:00 +0000

The $8+ trillion retail industry is the backbone of the American economy and like all industries, success in retail relies on the presence of orderly strategies and planning disciplines. It’s difficult enough to accommodate the ever-changing landscape of consumer preferences and the recurrent disruptive effects of war, weather, pandemics, etc., but now add chaos and confusion to the challenges at hand based on the whims of a mercurial president.

The damages that this “plan” has caused in just the last few days has not reared its actual head in stores yet. Explosive price increases, interruptions in service, delayed supply lines caused by U.S. Customs facilities ill-prepared to efficiently process tariffed shipments, widespread product shortages, plus an increasingly likely recession with a typical rise in unemployment and all manner of financial hardships all await us.

It must be pointed out that this president was reelected in 2024 with the slimmest of margins, hardly the mandate he and his supporters claim. It must also be pointed out that, historically, almost every one of this president’s business ventures throughout his entire career has failed. The notable exception was his role in the entirely fictionalized “Apprentice” reality show. Here’s the real reality check: Donald Trump’s actual lack of business acumen must be considered in light of the bomb he has just planted underneath the entire world’s marketplaces and trading platforms.

The Tariff Effect

The president’s long-standing beliefs regarding tariffs are viewed by economists and historians as incompatible with past precedence and current realities. Historical precedence is in light of the abject failures of the 1930 Smoot Hawley Tariffs; the current reality is Trump’s notion of bringing widespread product production back to the U.S. Both are seen by most, if not all in the retail and manufacturing business as completely unrealistic.

So now, the Kraken has been unleashed. Unfettered by a remarkably complicit Republican Party and an extraordinarily wealthy donor class lusting for the renewal of the 2017 tax cuts, Trump moved with lightning speed to impose so-called reciprocal tariffs on almost every country on the planet using a “so-called” formula-driven schedule that most experts say defies logic or reason. The backdrop of this “plan” is that all of America’s trading partners will take note and promptly comply. But, surprise, surprise, surprise, the rest of the world is in full retaliatory mode and not showing any signs of capitulation or much of any accommodation.

Retail Fallout

The damages that this “plan” has caused in just the last few days has not reared its actual head in stores yet. Explosive price increases, interruptions in service and supply lines caused by U.S. Customs facilities ill-prepared to efficiently process tariffed shipments, widespread production disruptions and product shortages, plus an increasingly likely recession with a typical rise in unemployment and all manner of financial hardships – all await us.

So, how can retailers and manufacturers, who almost all are led by logic-bound and organized leaders, react and respond in the face of a worldwide trading crisis that has suddenly been thrust upon them? Rise up and speak out against this false “Father Knows Best” Trump narrative despite the ever-present likelihood of some form of retribution. Well, they must. Whether individually or, in concert as an industry, voices must be heard in opposition to this “plan.”

Tariff Action Plan

What to do? How to proceed — today, tomorrow, next season and next year? Well, despite over 50 years of experience in retailing and worldwide manufacturing, I have no bromides. I have never faced as ridiculous a set of circumstances as what Trump has just wrought (nor has anyone else that I know). Nevertheless, here are some suggestions:

First, be careful trying to “game” what is going on now, or what may go on in the near or longer term. There is a pronounced lack of rhyme or reason to much of what Trump does. On April 7 Trump’s full suite of retaliatory tariffs were turned on. Then, out of the blue, two days later, he abruptly created a 90-day moratorium on retaliatory tariffs for all countries except China. This was, allegedly to allow for negotiations and “deals” to be struck. In reality, however, this decision, appears to have been triggered by a fear of a sudden collapse of the U.S. Bond Market.
Second, get in touch with all overseas, yet to be shipped merchandise commitments; merchandise whether finished or in production that you are you legally committed to taking possession of. Can you renegotiate costs, if only to share the risk with partners? Raising retail prices will almost certainly mute demand and cause future orders to be affected. Much care must be used here, however. In my own experience, overseas vendors will sometimes accommodate requests for price concessions, if only to avoid merchandise or production cancellations. But then they will either raise prices on future orders or reduce features, benefits and/or quality in the future to recoup their losses. Next, rather than move deliveries forward, I would hold shipments of some non-seasonal merchandise back as a hedge of sorts against what may happen with regard to actual tariffs over the next several months.
Third, resist the temptation to presume where this is all headed. The president doesn’t know where this is going. Yes, there are long-standing issues of American trade inequities, but they will never be solved in the way. This grand “vision” of restoring U.S. manufacturing to some past historical level is delusional. Only you can accurately determine whether reshoring, all or in part, is possible. Needless to say, this crisis calls for highly flexible and conservatized sales forecasts, inventory and expense planning. The actual reactionary U.S. tariff position looks like it may continue to change on an almost daily basis for the foreseeable future despite the administration’s claim that they are following a preset plan.
Fourth, be sure that you are adequately prepared financially to pay tariffs before being able to command higher prices for your merchandise to cover those tariffs. The sudden imposition of substantial tariffs will require a prompt reset of cash flow consumption schedules to avoid any possible liquidity crises.
Fifth, customers usually notice price increases immediately when they occur and almost always direct their displeasure at the stores and brands with whom they do business — as if to say the retailers are somehow to blame. I think that all tariff-driven price increases that take place should be clearly noted as such on all merchandise ticketing, signage and marketing. This is to counter the ongoing and ridiculous false narrative that countries not consumers pay tariffs.

The Collective Pushback

The good news, if there is any, is that a drumbeat of public unease and outright criticism from some Republicans and high-profile financial players may very well cause Trump to walk back the trade war he just started. It will certainly help if the rest of the world, specifically China, Japan, The EU and The UK fight back. Optimistically, maybe the republican party will man up, regain their constitutional right to control tariffs, and rein Trump in. And then just maybe the next 3-½ years will pass without any more of this kind of unwarranted chaos.

The bad news, unfortunately, is that the breach of trust and faith that Trump is responsible for may not be repaired anytime soon. The consumer space has always been fraught with uncertainty and disruption although this latest artificial and unwarranted calamity is one for the ages. Customers and the businesses they rely on, are still alive if not entirely well, and hopefully we will be able to navigate these trying times.

The Retail CEO’s Dilemma

Mark Cohen — Mon, 24 Mar 2025 04:01:00 +0000

The job of serving as a successful retail CEO carries responsibilities above and beyond those of leaders of less public-facing businesses. I qualify as successful because, as history has shown, the garden of retailing is littered with the dead bodies of failed CEOs. Those are CEOs who were never qualified from the outset, or who were unable to master “The Retail CEO’s Dilemma.”

A particularly challenging dilemma facing a retail CEO’s management of assortment strategy, leadership and execution is discerning the difference between catering to a broad group of customers’ needs and wants and pandering to a lesser number of them. Common sense and good judgment play a very important role here.

A Retail CEO’s Constituents

A retail CEO is responsible for the care and feeding of four principal constituents: customers, shareholders, associates and vendors. Though all four are vitally important, first and foremost is a need to serve customers. Without the successful creation, presentation and sale of an assortment of merchandise and services, a retailer has no viability. Ultimately, merchandise assortments create the basis for a retailer’s brand identity and brand positioning in the marketplace. And those assortments are dynamic; they must change every day, every month, every season and every year based upon the success and failure of the business. And they also have to deliver in light of ever-changing consumer needs, wants and preferences, competitive challenges, and the ever-present specter of adverse weather, marketplace disruptions, and now, politically induced mayhem.

Setting Boundaries

A particularly challenging dilemma facing a retail CEO’s management of assortment strategy, and execution is discerning the difference between catering to a broad group of customers’ needs and wants and pandering to a lesser number of them. Common sense and good judgment play a very important role here. Just as it would be unwise, logically, to offer a large array of New England Patriots jerseys in your Kansas City stores, an overlarge display of LBGTQ+ merchandise in support of Pride Week in all stores, would be, and in fact was, equally unwise, as Target discovered. Making the vast majority of your customers consistently happy with your assortments is a ticket to everlasting success. Pissing off a discernable number, for whatever reason, is never a good idea.

Serving the Short Term

Like it or not, a retail CEO (or any CEO for that matter) serves at the discretion of their company’s owners — its shareholders. “Doing the right thing” in support of the long-term health and success of the business often does not readily align with shareholder expectations. This dilemma is particularly pronounced in companies owned or controlled by shareholders whose expectation of performance is calibrated in quarters rather than years. In fact, many retail CEO’s tenure and compensation are aligned with shareholders’ expectations that are most definitely inconsistent with the long-term health and well-being of their enterprise. I think this dilemma is particularly evident in retail companies that have been hollowed out through lack of investment in stores, operating systems, facilities and human talent – all short-term strategies activated to prop up poor operating results.

Political Pressure

Now add to add to our retail CEO’s challenge to meet shareholder’s profit expectations is the added pressure of this president’s on and off again tariffs. Whether real, subject to exception, or just bluffs, a CEO must come up with an actionable plan to deal with affected overseas-sourced merchandise. Clearly, shareholders are not likely to be willing to see their holdings diminished in value because of tariff-driven losses in profitability. Therefore, a retail CEO’s dilemma is to determine how to pass tariffs (whether real or threatened) onto customers in the form of higher retail prices. This is a double-edged sword, as we know in most cases, higher retail prices cause sales to decline.

Workforce Dependency

Retailers, more than many other business sectors, are far more reliant on associates who create, support and propel their company’s efforts. Retailers don’t manufacture most of what they sell; they don’t hold proprietary patents or rely upon industrial processes. Instead, retailers rely upon the efforts of large numbers of people, working in concert, to build assortments, keep them viable and profitable, and to delight customers enough to keep them coming back to shop time and time again.

Therefore, a retail CEO’s dilemma is also centered around the creation of, and sustainment of, a positive associate culture coupled with the paradoxical need to limit workforce expense and expand productivity. Associates’ compensation, benefits, working conditions and supervision are always large expense components of a retail operation compared with many other industries’ labor burdens. Attacking associates’ costs too aggressively in search of operating “savings” has been the death knell of countless retail companies and their CEOs who have mismanaged this dilemma.

Think of the ill-advised decision of now-defunct Circuit City, which in search of expense reductions eliminated all associate commission compensation which it deemed to be too expensive. This promptly killed its business. Think of the ugly and unnecessary demise of Sears Roebuck which historically had a committed and productive workforce both centrally and in stores that acted as champions of the company’s brands. All became completely disenfranchised as support for their efforts disappeared. Think, also, of the dilemma that Macy’s new CEO faces as he attempts to rebuild a central merchandising, marketing, planning and control organization, as well as store-based selling team whose productivity had essentially disappeared. All this while fending off the ever-present threat of hostile shareholder engagement. A poster child for the successful behavior and performance of a workforce, in contrast, is Costco. Costco has always provided its entire workforce with premium compensation, benefits and working conditions and in return has enjoyed extraordinarily low associate turnover and high productivity, along with attendant incredible customer loyalty and satisfaction.

Cultural norms are exquisitely difficult to create and oversee. Let a selling culture go to hell, as for example Starbucks did, and your army of eager and committed frontline associates begin to treat the management of your company as an enemy. It can take decades of enlightened leadership to build a successful organizational culture and only a year or two of poor decisions to destroy it.

Supply Networks

The last, but not least, dilemma that a retail CEO must face is his or her company’s relationship with its vendors. Granted, there is, always has been, and always will be, tension between retail buyers and wholesale vendors. Left unchecked, a failure to recognize a need for vendors to be successful in their own right is always the source of an impending upset. Years ago, at the outset of my retail career while working as a buyer at Abraham & Strauss, (then the largest division of Federated Department Stores,) I reported to a legendary Divisional Merchandise Manager who was a proponent of truly ruthless vendor negotiations. He was a take-no-prisoners kind of guy. But at the same time, he believed that vendors must be treated as true business partners – partners who could be counted on for support through good and bad times — especially bad times. His credo was “You have to dance with the ones who ‘brung you’ to the party.” This was seemingly inconsistent with a never-ending need to deliver results and was always a dilemma to be carefully considered and managed. Dealing with this inherent paradox properly has, in my experience, always served a retailer well. This was particularly evident during the years of Covid 19’s worldwide service and supply disruptions and its aftermath, where retailers, who had always maintained balanced vendor relationships, were well served – others much less so.

And then there is the truly ridiculous position that newly created Saks Global has recently taken. The company’s CEO publicly broadcast, by way of a unilateral proclamation, the conditions under which vendors who have not received payments for merchandise (long after those payments were due) will receive those payments, how they will receive them, and what the company’s payment terms will be going forward. Add to that a thinly veiled threat to “play ball” or lose future support. You just have to know how poorly this vendor dictum has been received. Saks Global is in for a series of rude awakenings when it discovers how little future support they will receive when they are in need. Negotiate fiercely, you bet. Make arbitrary demands, never.

Mastering the CEO’s Dilemma

I served for several decades as a retail CEO and as a result, I think I’m qualified to comment here as I have. Like all retail chief executive positions, dealing with constant never-ending challenges is a mainstay of one’s job description. I’ve chosen to describe these challenges as a series of dilemmas. However, all a CEO’s actions taken with regard to assortment, customer engagement, expense management, and vendor relations really are issues to be managed with care rather than merely as problems to be solved. Confront these dilemmas properly as I have presented them, and success is at hand. Fail at this and success will always loom darkly ahead.

A Requiem for the Hudson Bay Company

Mark Cohen — Mon, 17 Mar 2025 04:01:00 +0000

Question: What do Eddie Lampert and Richard Baker have in common? Answer: They have, are currently, or soon will be destroying everything they have had control over. Lampert singlehandedly killed nearly $50 billion in retail volume at Sears Roebuck, Kmart and Sears Canada. Now here comes Richard Baker. As you may have read, Baker has just sent Canada’s oldest corporation, The Hudson Bay Company, into bankruptcy.

Seemingly from out of nowhere, a South Carolina based industrialist acquired HBC. Richard Baker, scion of a U.S. based family real estate business took a minority stake. But the new owner died suddenly, his widow sold her husband’s stake to Baker and voilà real estate Baker became the HBC Governor and an instantly minted retailer.

Baker’s Legacy

Over the years following his improbable purchase of HBC Corp. from the widow of its previous owner, Baker hollowed out and eventually closed all of Hudson Bay Company’s divisions and operating strategies in Canada other than The Bay. In time, he kneecapped Lord & Taylor in the U.S. Then he came up with a completely specious strategy to separate The Bay Stores from thebay.com. This bad idea was eventually reversed but not before investors foolishly bought into the model which they also did when Baker separated Saks from saks.com. And now he has driven a set of coffin nails into The Bay itself. Spoiler alert, he’ll do the same thing to this monster he’s created called Saks Global.

Land Grab

To give Baker a modicum of credit, he did, by his own characterization “steal” Lord & Taylor from Macy’s and then he hoodwinked a hapless Target Corp. into buying HBC’s Zeller’s real estate portfolio. Macy’s had no use for L&T which they acquired with their ill-fated May Company acquisition. Then, Target failed to realize that at least half of the former Zeller’s stores were on the wrong side of the tracks. Baker also appeared to have “stolen” Saks Fifth Avenue from its original shareholders. But then there was a truly ridiculous foray into Europe when Baker entered into a real estate partnership with German department store, Galleria Karstadt Kaufhof, resulting in the opening and then closing of Hudson Bay Stores in the Netherlands. As if the Dutch were in any way interested in patronizing a Canadian store. Baker, however, claimed that he made money on this European deal. If that’s actually true, he probably was the only one. Along the way there was a failed investment in gilt.com, failed store openings of Saks Fifth Avenue in Canada and an overreach in expanding Saks Off Fifth in the U.S. and Canada. Mindlessly throwing darts in the hope of hitting a target somewhere is not a winning strategy.

To add some historical context to the Hudson Bay Company’s fortunes – in the early 2000s Sears Canada came close to buying The Bay. Fortunately, that deal never took place but then Sears Canada did foolishly buy Eaton’s. I converted the seven acquired Eaton’s stores across Canada to Sears about a year after I joined Sears Canada as CEO when it became abundantly clear that we had no viable strategy to operate these stores as a stand-alone banner. We then focused our efforts on taking market share away from our principal competitor in apparel, accessories and soft home, namely The Bay.

Unlikely Partners

During my 3½ years at Sears Canada, HBC made two attempts to convince us to purchase them — once through a friendly outreach and then by way of subversion in an appeal to Sears Canada’s majority shareholder, Sears Roebuck. I was curious during that first effort but was faced with a near mutiny on the part of my senior management team who wanted no part of The Bay. They cited extremely troublesome inconsistencies in performance and productivity. They were right in their assessment of HBC. I then scotched the second effort, an end-around attempt, by telling Sears Roebuck’s CEO that there was no way we would even remotely consider participating in a deal. We were having too much fun standing on The Bay’s throat.

Baker Manifest Destiny

Then, seemingly from out of nowhere, a South Carolina-based industrialist acquired HBC. Richard Baker, a scion of a U.S.-based family real estate business took a minority stake. But the new owner died suddenly, his widow sold his stake to Baker and voila real Baker became the HBC Governor and an instantly minted retailer.

Now, after putting Saks Fifth Avenue on a slow pay/no pay footing with vendors for the better part of a year, Baker consummated his alleged long-standing dream of combining Saks with Neiman Marcus. What to make of this? Taking on billions of dollars of new debt to pull off a merger while you publicly inform your longstanding vendors that they will have to continue to wait to be paid — and if they don’t like it risk being abandoned? Add to this, presiding over a collapse in volume and customer service particularly at Saks and a truly ham-handed exit from Neiman Marcus’ hometown HQ in Dallas Texas. What is it about this picture that doesn’t look attractive?

Questionable Odds

For additional perspective, since the 1970’s virtually every retail merger/acquisition in the U.S. resulted in failure. This was particularly true when two troubled retail enterprises tried to turn their sow’s ears into silk purses. There is no amount of “synergistic” savings that offsets poor strategy and execution. And Saks and Neiman’s have both certainly exhibited less than stellar strategies, execution and overall performance in recent years. Is there some well-thought-out, yet-to-be-revealed, grand view as to how to assort, present and differentiate these two luxury banners? Maybe – we’ll have to wait and see. Is there some compelling, yet-to-be-revealed, strategy to coax major luxury brands to be supportive despite the abuse they have been exposed to rather than continue to invest in their own vertical networks of stores and websites? Maybe – we’ll have to wait and see. All we have seen so far are announcements of reductions in force. But if the past is prologue for the future, Richard Baker’s consistent legacy of “winging it” and then failing surely should be of abiding concern. This is the requiem for The Hudson Bay Company.

The Retail Buyer’s Dilemma

Mark Cohen — Mon, 03 Mar 2025 05:01:00 +0000

I’m going to use a loosely analogous reference here to a classic game theory thought experiment known as the Prisoner’s Dilemma. In a nutshell, the Dilemma demonstrates that, in a set of adversarial or confrontational circumstances, everyone involved benefits from a mutually agreeable outcome, or not.

There is urgency for every buyer to make plans now and deal with an arbitrary crisis of the moment. Our buyers will likely need to raise their retail prices immediately whether the threatened tariffs are ever actually imposed or turn out to be mere bluffs. As for future planning, depending on production cycle realities – the time it takes from the commitment of merchandise to availability of sale at retail – where time frames typically range from months to over a year, our buyers are in a real bind.

The Buyer’s Dilemma

Consider that a buyer or procurer of merchandise to be sold at retail faces an ongoing challenge when dealing with a counterparty from whom that merchandise has been bought. If both parties, buyer and seller, can mutually agree upon terms and conditions that satisfy each of their need to be successful financially, then their relationship is likely to continue. But now, consider the sudden presence of an abruptly imposed tariff placed upon the merchandise that has already been bought for resale at retail from the country of origin that manufactured it that is now being encumbered by a tariff. This now becomes a Buyer’s Dilemma.

For the record, whether the buyer is an owner or an employee of a retail enterprise — small, medium, large or over-large — they invariably engage in an organized planning process necessary to carry out their duties. That process entails examining past performance of merchandise regarding sales and profitability as a steppingstone to future inventory investment. A knowledgeable and experienced buyer purportedly would have a well-honed point of view about, not only customers’ needs and wants but pricing that is acceptable to customers and the relationship that pricing has on sales volume. Suddenly, the merchandise that the buyer has committed to is likely to be arbitrarily inflated in price due to a tariff being added to that merchandise’s cost.

What should a buyer do? Ergo, the Buyer’s Dilemma. Should they just accept that their profitability will be diminished by the effect of the tariff? That’s not particularly workable as profitability in a retail enterprise as most other businesses represents a non-negotiable mandate. Should the buyer go back to their overseas manufacturer counterparty and insist on a cost reduction to offset the effect of a

tariff? That might work in the very short run because that manufacturer doesn’t want to face a cancellation or loss of a customer. But that manufacturer has their own profitability requirements.

So, as has occurred in my own experience over many years of procurement, that manufacturer will either inflate the cost of ongoing future orders or take some features, benefits or quality considerations out of future goods to make up for the differences at issue. This, in a nutshell, is the Buyer’s Dilemma.” If two parties cooperate, mutual benefits accrue. If not, at least one party likely will suffer at the hands of the other.

Today, in the face of highly publicized aggressive, unprecedented and threatened across-the board-tariffs on merchandise procured from Mexico, Canada, China and now even the EU, whether a bluff or actually imposed, buyers faced with soon to be received, and potentially tariffed merchandise have only one viable decision before them. And that is to raise the retail prices of these incoming tariffed goods to offset this burden. This, of course, sets off a cascade of potentially suboptimal outcomes; like Sir Isaac Newton’s Law of Gravity, higher prices lead to lower sales volumes.

Future Price Proofing

As for future commitments, this issue poses a whole raft of future Buyers’ Dilemmas. Should a buyer knowingly “cheapen” the merchandise they are procuring to protect a historical retail price point? I can tell you from experience that is a fool’s errand. Customers are not stupid and readily see through that kind of nonsense. Should a buyer seek future merchandise from another country of origin that is not threatened by tariffs? That’s a more intelligent course of action but fraught with risk. First off, a new country of origin may eventually be swept into this tariff mania, and, more importantly, new production in a new country of origin may very well be more expensive and less efficient than where merchandise has historically been procured from. This assumes new production is even available in the first place. Once again, anything that results in higher costs, whether driven by tariffs or more expensive and less efficient production, inevitably winds up causing retail prices to rise.

Made in America, Not

As for reshoring, seeking domestic manufacturing to replace merchandise procured overseas may be the ultimate dilemma. Let’s get right to the heart of this fantasy that is being bantered about by our president, various government leaders and some pundits, none of whom have ever likely held a buyer’s job of any sort. It’s just not a realistic decision in many cases for our actual beleaguered retail buyers.

First off, merchandise manufactured domestically is, with few exceptions, almost always far, far more expensive than merchandise manufactured overseas which, then results in significantly higher retail prices. That’s why so many categories of manufactured merchandise have moved overseas in the first place. And then there is the time, cost and complication of creating new production facilities and the reintroduction of production expertise that has been absent here at home for decades.

Gameplan Deadline

There is urgency for every buyer to make plans now and deal with an arbitrary crisis of the moment. Our buyer will likely need to raise their retail prices immediately whether the threatened tariffs are ever actually imposed or turn out to be mere bluffs. As for future planning, depending on production cycle realities – the time it takes from the commitment of merchandise to availability of sale at retail – where time frames typically range from months to over a year, our buyers are in a real bind. Just when Covid-driven inflationary pricing and customers’ lifestyle needs and wants have begun to be more manageable, here’s an upcoming tsunami of issues to be confronted somehow.

The Customer Decides

When all is said and done, consumer uncertainty has already reared its ugly head just based upon the hysteria that the president has fomented. In light of inevitable new price spikes in finished merchandise or merchandise componentry, that may now be subject to tariffs, plus increasingly visible employment reductions in force, both driven by normal industry performance rationalization, and “abnormal” federal government actions being taken daily, as Bette Davis once famously said, “We need to fasten our seat belts, it’s going to be a bumpy night.” Truly a Prisoner’s Dilemma.