Not Enough Linens, Too Many Things

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Linens N Things‘ Chapter 11 filing should serve as an object lesson for recession-wary chain retailers. Like many big-box operators, LNT has stuffed its shelves with Chinese products. At the same time that traffic drops and spending slows, putting pressure on the top line, the price of Chinese goods is increasing 10 to 15 percent a year, not counting the cost of fuel to float them across the Pacific and drive them to LNT’s 589 stores. That leaves a lot less cash to service the company’s $650 million in debt. One wonders how many execs are rethinking their race to the bottom these days.

Damage to the brand could be significant. As Mae Anderson of The Associated Press points out, LNT may have just created 400,000 peeved consumers:

Brian Riley, senior analyst at research firm The TowerGroup, estimates the filing will freeze about $42 million in consumer gift cards, affecting about 400,000 customers. While consumers may think of the gift cards as cash, the bankruptcy court considers gift cards as debt, and therefore holders are not necessarily going to get paid.

The lesson is clear. In a recession, retailers survive by selling the things that people have to have, either because they truly need them (consumables like bedsheets or drinking glasses) or they’re hooked by an irresistible selling proposition (like iPhones). Given that set of parameters, check the Mother’s Day specials currently in rotation on the LNT home page:

Digital photo frame, $69.99
KitchenAid stand mixer, $299.99
Keurig coffeemaker, $149.99
Margaritaville “frozen concoction maker,” $299.99

Anything there you can’t live without? Anything so fascinating and new you just gotta have it? Does your mom really want a $300 blender? Didn’t think so. There, my friends, is the problem: too many things and not enough linens.

Tags: Card, Retail Company, Retail, Lisa Everitt

A Denver-based business writer, Lisa Everitt is a veteran of daily and weekly newspapers and trade magazines, including The Natural Foods Merchandiser, Rocky Mountain News, Inter@ctive Week, San Francisco Business Times, and the Peninsula Times Tribune.

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1

j.lucas

05/07/08 | Report as spam

Not surprised...

Having worked for both LNT and BB&B as a manager, I am not surprised at the downward spiral for LNT. The executive management never seemed to know what to do, how to plan or properly execute their plan.

Oddly enough, I have shopped very little in either store over the past two years for the same reason mentioned in the article-there are no MUST HAVE items in either store. BB&B does have more effective marketing and has been able to get both ends of the spending spectrum into their advertising. Assembling an ad for Mother's Day to include items over $200 is a clear indicator that they are not in touch with the spending habits of today's consumer.
2

fredbu

05/07/08 | Report as spam

RE: Not Enough Linens, Too Many Things

Excellent point about what we can live without. Marketing in America is sad. So many companies paying huge amounts to large internal or external marketing teams that consistently miss the mark. What keeps your customer up at night - solve that problem!
3

malverson@...

05/07/08 | Report as spam

RE: Not Enough Linens, Too Many Things

Ease up on the Mother's Day attack. The Marketing Dept at LNT knows that you can't offer 180 thread count sheets as a mother's day gift. Any Husband or Son who gets the Mother in their lives something they really need will soon learn about the "Woman's Scorn". LNT's problems probably aren't found in their Mom's Day promotions.
4

LisaGreim

05/07/08 | Report as spam

Personally, I'd be thrilled with sheets!

I asked for a particular cookbook for Mother's Day, but I'm not typical. And my own mom is getting a phone call. I learned about the relative unimportance of Stuff from her. Thanks, Mom.

The point, as acknowledged by other commenters, is that retailers must read the consumer accurately to be successful. You can buy the woman in your life a lot of restaurant margs for $300, and she won't have to clean the machine afterwards, either.
5

rtheil

06/29/08 | Report as spam

RE: Not Enough Linens, Too Many Things

BUy European - I think that this s why BOUTIQUE STORES LIKE JacKryn France (www.jackryn.com) do so well. They specialise in high quality linens and things.