An example: Cracker Barrel’s children’s apparel assortment will be priced at $19.99 and below—an attractive deal Cochran believes the chain needs to illustrate.
“In addition, we're working to refresh our assortments regularly to maintain merchandise at affordable prices, ensuring guests can find compelling products at any price point, and we believe this is the right approach to grow our sales gap and to achieve our long-term business growth,” she said.
From a revenue standpoint, Cracker Barrel reported a 0.3 percent increase to $611.3 million. Retail revenue, however, declined 3 percent to $131.9 million. Retail cost of goods sold was 48.2 percent of retail sales compared to 50.9 percent in the prior-year quarter. Retail inventories at fiscal 2017 year-end were $119.4 million versus $114.6 million in 2016. Cracker Barrel also expects retail sales in the range of flat to 1 percent moving forward, showing confidence in their coming initiatives.
One of the main issues, Cracker Barrel chief financial officer Jill Golder said in the call, is the fact fewer guests are being converted to a retail purchase.
Cochran said she expects Cracker Barrel will have to “really sharpen the pencil on value” and that it could leave margins flat to slightly down depending on the quarter.
The “Amazon Effect,” or essentially the impact of the digital marketplace on traditional retail, is something Cracker Barrel is grappling with.
“You do need to eat but you might not really need to shop for really discretionary purchases. So we've got guests coming into our stores in a number of places who are dealing with different issues in their environment,” she said.
And like its food, Cracker Barrel needs its retail to project something deeper.
“One of the probably benefits to our brand and our retail story is that our focus is on fun, unique, nostalgic items and heavy on the unique, fun and at a price point that tends to lend itself to an impulse purchase,” she says. “So although some retailers are finding that their assortment can be easily bought online exactly the same product, and actually it's more efficient, a lot of ours cannot be found anywhere else. And it's at a price point that while they're dining, this is something else for them to do.”
The key, she said, will be making sure Cracker Barrel’s assortment delivers against the customer’s needs. The fact mall traffic is sagging, though, remains another roadblock.
“If consumers are shopping online, they're not out making a trip to the mall. And to whatever degree that's preventing them from saying, ‘I'm going to stop for a meal,’ and an opportunity for us to sell them, that's having an impact,” she said. “If they are not going to the movies. If they're not to the degree that the shift to e-commerce is impacting consumer behavior in ways that is impacting visits to restaurants. We are having to compete within that environment and are working hard to ensure we can.”