The Power of Retail

Shoppers in North Texas put up with bad weather to stock up on back-to-school products, clothing and other items on the state’s first day of its 10th annual tax free shopping weekend. Even though the crowds weren’t too huge, retailers hoped to do some brisk business in the course of the weekend. All purchases of clothing and shoes and other selected items under $100 will be exempted from state and local taxes during the weekend. According to the Texas comptroller’s office, shoppers will save an estimated $54 million in shopping this weekend.

It has been found that consumers who regularly buy organic food products are significantly open to trying out new things than regular shoppers. The study conducted by Mindset Media and Nielsen Online, found that marketers of brands of organic products don’t necessarily have to target these customers in organic magazines or TV shows but can reach them across networks and websites, as they appeal to the open mindset of this segment of consumers.

According to Sarah Welch, COO and co-founder of Mindset Media, “Marketers that have organic products can certainly go offline and advertise in places like a yoga or green magazine. But niche print titles tend to reach 90[,000] or 100,000 people. When you start to understand that what makes someone interested in organics is a mindset–then you can reach millions of people with that mindset with a simple online buy.”

The continuing rising costs of construction are making retailers push back or even back out of some shopping center projects. Major retailers such as Home Depot, J.C. Penney, Toys R Us and Michael’s stores do plan to continue with their expansion, although they are scrutinizing theiir plans more carefully now. Many markets just cannot take any new shopping centers. Take the Dallas market for example, where there will be more shopping centers than the market can support.

According to John Webber, president of Weber and Co, the rising construction costs are due to higher commodity prices and not labor costs. Michael Stores plan to have 45 new stores this year, which is the same amount that it has opened each year for the past ten years, but will be backing out of a project if it is the only retailer left in it.

Retailers are cutting back on newer projects and are researching prospects much more carefully now due to the slowdown of the economy. Major retailers such as Home Depot, Michaels, Toys R Us and J C Penney will still be expanding but will be paying closer attention to all the details. According to Hunter Stansbury, a senior real estate manager at Home Depot, the company needs a “cooling-down period”. Rising construction costs are a major factor in this issue. Texas is getting more store openings than other states, as it is perceived as a growth state for several of the large chain stores, including Home Depot.

“Texas is our growth state,” said Home Depot’s Mr. Stansbury. Its Texas stores are performing better than the chain as a whole, with comparable store sales increases or slight declines.

“I’m in Texas every month,” said Toys R Us real estate director Bill Oughton. The chain has no plans to retrench.This year, the New Jersey-based chain is building 20 combination Toys R Us and Babies R Us stores under the same roof and plans to put Babies R Us stores inside 25 existing Toys R Us stores.

Sears is working hard to change its image and has teamed up with MTV to create a new back-to-school movie and will be adding to its line of street clothing and accessories that are designed by LL Cool J. The company has been redoing its image for quite some time now, trying to change people from thinking that all it sold was hardware, but sales have not been all that great and the so the company is trying to woo the young and the urban hip with this new line of clothing and branding.

According to Sears CMO, Richard Gerstein, “While mom may decide what the acceptable place is to shop, the kids are deciding what clothes they want and what places have it. If we come out of our season with much more relevance with this group, and improving our sales and profitability with this group, we think it’s a big win.” No one is sure whether these new initiatives will turn the tide for the company and rejuvenate its image and it will be interesting to watch.

…Some industry observers said they don’t believe Sears has the credibility to compete in the increasingly crowded teen market. Nor are they sure whether this latest effort will yield more success than previous initiatives aimed at bringing back shoppers.

“Trying to be everything to everybody is difficult because consumers have so many choices,” said Morningstar analyst Kim Picciola. “If they can manage to reinvent themselves, I think it will be a big win for them. But I think that’s going to be a challenge in this current environment.”

Steve & Barry’s clothing company will likely be filing for bankruptcy this week itself. The company has been trying to raise finances in the past few weeks but has not been able to do so and will not have to sell its assets. The company has been discussing with Sears regarding a partial sale or a bail out. If the stores close, it will be a huge blow to the hundreds of mall owners who paid the company to move into empty spaces in their properties. If all of their 275 stores close, it will be the end of all 17,000 employees as well.

Steve & Barry’s has an annual turnover of $1.1 billion, but has been severely affected by its policy of keeping a razor thin profit margins. The company also makes a practice of opening stores in run-down and distressed locations on getting special payouts from the landlords, which has become unsustainable as the economy has weakened. Besides selling sports logo products, the company has become famous for its tie up with Sarah Jessica Parker for her Bitten line of clothing.

Walmart is no longer Wal-Mart! Yes, that’s right, the hyphen is gone, as is the star in the middle and it has been replaced by an organic looking flower at the end instead. Walmart has changed its logo several times before as well, and the last time was in 1992. This change was long overdue, since it had started looking very dated. The new logo will appear on stores by the fall, but is already coming in new print advertisements and TV commercials so consumers are getting quite familiar with it already.

Furniture and home giant Ikea is keen to focus on developing markets such as Russia, China and Eastern Europe after the cut down in spending in some of its major markets. At the opening of its 35th store in the US, located in Brooklyn, NYC, Anders Dahlvig the company’s chief executive stated that the housing downturn in the US had led to the slowdown in its global sales and did not expect a recovery for at least two years. He added that growth in many European countries was slowing down and that “A lot of things are going in the wrong direction.”

Besides the US, countries like the UK and Germany have been badly affected and even strong markets such as Spain have been effected with the downturn. The company’s outlets in Spain and Portugal had a record turnover of GBP1.19 billion this year, an increase of 42% over last years figures. So far the company has 11 stores in Spain and will be opening additional stores in Jerez, Granada, La Coruna, Valladolid and Madrid, aiming for a total of 40 stores by 2020. In total Ikea has 279 stores in 36 countries and hopes to reach 300 by the year end.

Sales for the month of May rose higher than forecasted levels showing that consumers did have more cash in their wallets thanks to the US government’s rebate checks that had been distributed. According to the US Commerce Department, there was an increase in retail sales that was more than double of what was expected by economists on Wall Street. On average sales rose 1.2% as compared to the 0.7 % forecasted by economists, even considering the higher prices for gasoline. One of the only sectors that did not see an increase was the automobile sector.

Staples recently announced that it will be offering a small selection of DVD movie rentals starting in June at its US stores. According to the Staples sspokeswoman, “A new in-store ‘no-return’ DVD rental service, called Flexplay, will let customers rent the latest movie titles without having to return them to the store.” The system is perfect for business travelers as well as small business owners. The Flexplay system will let you view a fresh selection of movies anytime and anywhere. The original DVD gets erased 48 hours after opening it and can be recycled with other plastics.

According to its website, Flexplay Technologies Inc. of Atlanta is a developer and a supplier of limited-life optical media technology; Flexplay time-limited DVDs offer unlimited, perfect quality DVD playback in any standard DVD player, but only within a pre-set viewing window that begins when the use opens the sealed Flexplay DVD package.