MERCHANDISING AND STRATEGY CHANGES
A glance at retailers that are restrategizing
Posted February 2005
Blockbuster Video is overhauling its business model to adapt to a superheated video rental industry, where grocery stores, Netflix and even Wal-Mart compete. Blockbuster's first major move was to offer unlimited rentals at retail stores under a program it called "Movie Pass," which started in March 2004. The next strategy shift was to enter the online movie rental market by announcing in August a model directly in competition with Netflix. To differentiate the service, Blockbuster offered lower fees and the opportunity to visit any retail location and select up to two videos from the store shelves every month. In a third major notable change, Blockbuster declared the end of late fees at its retail stores, allowing patrons to keep videos much longer without the need to hurry back to the stores to return the movies. Blockbuster Video is the largest movie rental chain with 5,500 U.S. stores and more than 9,000 worldwide.
Taco Del Mar has plans of moving from the 115 stores it had at the end of 2004 to 1,000 locations within five years. To get there, the restaurant chain has named David Huether as president of the Seattle-based company. Much of this growth is expected to come from the Taco Del Mar's master developer plan where it sells territories to individuals who then build franchises in these new regions. In the last couple of years, Taco Del Mar has entered such agreements with groups in Arizona, California, Idaho, Montana, Texas, Utah, Wyoming and British Columbia. Canada is one of the chain's biggest expansion areas with nine stores opening since the middle of 2004 and another four planned for the first half of 2005. Locally, two new restaurants are currently planned for Seattle in 2005.
Gateway, the third largest U.S. computer manufacturer, which last year shuttered doors at its 188 retail stores, including three in the region, has shifted its strategy to distribution through major electronics chains. Most recently, Gateway inked deals to distribute its computers through the more than 600 Circuit City stores in the U.S. This is in addition to existing agreements with Best Buy, CompUSA and Office Depot.
Gateway is trying to find its way through the ultra-competitive landscape that includes Dell, the ruling force in the Internet business, and Hewlett-Packard, whose computers are stocked by many big name retailers. To contend, Gateway bought budget PC maker eMachines last year and largely dropped its line of consumer electronics.
Brooks Sports was sold to Russell Corp. for $115 million. Brooks Sports, which sold about $95 million in athletic shoes, apparel and accessories last year, was purchased six years ago by Whitney & Co. for $41 million. Russell, with sales of $1.2 billion, was looking to broaden its product lineup, but the costs for starting a shoe company were prohibitive. The high-performance running shoe market where Brooks Sports competes is worth $8.3 billion.
Brooks Sports will remain in Bothell and retain all employees in the deal.
The Athlete's Foot, with more than 700 stores in 40 countries, filed for Chapter 11 bankruptcy in December. As part of its reorganization, Athlete's Foot will close 124 of 150 company-run stores and cut 1,047 employees from its payroll. The bankruptcy will not affect the 593 franchise stores across the country. Stores operating out of Alderwood, Northgate, Southcenter, Tacoma and Vancouver malls are liquidating merchandise and plan on closing by no later than March 2005.