ULTA SHOWS HOW ATTRACTIVE THE BEAUTY MARKET CAN BE

Ulta Salon, a specialty beauty retailer, is expanding its store count across the U.S. while reporting a 12.5% same-store sales increase during the fourth quarter. There were several factors attributed to their performance. Ulta’s gross margins got a lift by their shift from coupons to more targeted offers. They also managed to boost traffic into the stores. They added 100 new stores in 2015, seeing net revenues increase 21% to reach $1.27 billion. With its plans to add 100 more stores in 2016, taking them to over 1,000 stores total, it will build on its success in small markets and downtown/urban locations.

The beauty segment is attractive to department store retailers, because shoppers make frequent repeat visits when they run out of a certain product. Several retailers, such as Kohl’s and Sephora-Inside-JC Penney’s, have specific plans to expand their beauty departments.

Accelerated Analytics’ has a broad base of beauty vendor customers, such as L’Oreal, LVMH, Parlux Fragrances, Anastasia Beverly Hills, Chanel, Coty, Estee Lauder and more. Learn about our beauty industry reporting solutions at http://www.acceleratedanalytics.com/beauty/

Source: CNBC

OMNI-CHANNEL SWITCHEROO: ONLINE RETAILERS GET PHYSICAL WHILE RETAIL STORE STALWARTS SHRINK

Amazon.com opened its first brick-and-mortar store in Seattle in November, and announced plans to open another store in San Diego. Macy’s announced it is shutting down almost 40 stores this year. Kohl’s plans to follow suit and close 18 stores, stating its online sales increased 30% in the fourth quarter, causing their reevaluation of its store footprint. Similar announcements of closing stores were also made by Sears, JC Penney and The Gap, as 8% of total US retail sales are now online.

Companies that began their retail lives online, such as Athleta, Fabletics and Birchbox are now adding brick-and-mortar stores. They are moving into prime real estate that was once reserved for top-performing retail stores, such as Birchbox opening its first store in Manhattan.

Is this the new evolution of retail, blending the two worlds? Experts say the trend will continue to grow. The impact will be different in each retail category, such as electronics versus clothing. "For most products, consumers actually prefer to shop in store because they want to see and touch what they're buying," said Dave Parro, vice president of the retail technology practice at Walker Sands, a PR marketing firm. "But they also shop online regularly because of the convenience and range of products available."

The winners of the switcheroo? The consumer. Those who are omni-shoppers know which retail channel and retailer is best to fit their needs.

Source: Philly.com, WSJ

NRF REPORTS INCREASE IN RETAIL EMPLOYMENT

The NRF (National Retail Federation) commented on the Labor Department’s report that retail employment (excluding gasoline stations, automobiles and restaurants) was up 51,100 jobs in February. Compared with February 2015, retail jobs were up by 247,300. Apparel stores saw a significant gain of 11,100 jobs. The NRF noted that weather played a big part of the increase.

“Weather has a serious impact on the retail industry, and when cold winter weather finally made its appearance shoppers headed to stores and brought shopping patterns to a good level,” said National Retail Federation chief economist Jack Kleinhenz said. “This solid report shows that the consumer is confident and continuing to shop.”

Source: Retailing Today

MACY’S ANNOUNCES Q4 SALES DECLINED 5.2%; LOOKS FORWARD to 2016 EXPANSION

For the period ending January 30, 2016, Macy’s total sales declined 5.2% to $8.87 billion. Same-store sales fell 4.3%, slightly less than the 4.7% decrease analysts were expecting. Macy’s did announce it had another year of double-digit growth in its online business, attributed to high increases in mobile traffic and conversions.  In looking back on the year, chairman and CEO, Terry J. Lundgren, pointed out many expansion initiatives. “We expanded our online capacity with a new state-of-the-art fulfillment center in Tulsa, Oklahoma,” he said. “We announced licensed department arrangements with companies including LensCrafters, Men’s Wearhouse and Best Buy to add new categories to the Macy’s store assortment. We completed the acquisition of Bluemercury, which added capabilities to our signature beauty business. We developed and launched Macy’s Backstage, which will be piloted as an in-store concept this spring. And we began initial testing of online selling in China in a new joint venture with a Hong Kong-based partner.” Macy’s has $400 million of planned cost savings and will have more conservative inventory planning in 2016 to improve its operating margins. It does expect to see a 1% comp-stores decline in 2016.

Source: Chain Store Age

DILLARD’S SALES AND PROFITS DROP IN Q4 2015

Dillard’s announced a 35.6% drop in fourth quarter profit. For the period ending January 30, revenue was $2.07 billion for the fourth quarter, down from $2.1 billion a year ago. Same store sales declined 2%. In 2015, Dillard’s opened three new stores in Murray, UT, Slidell, LA and Cincinnati, OH. They also closed two clearance stores. The Southern retailer also announced the upcoming closure of their Aiken, SC location in Q1 of this year. As of now, Dillard’s operated 273 stores and 24 clearance centers over 29 states.

"The fourth quarter was difficult. As sales came in less than planned, we worked hard to control our inventory during an unusually competitive environment," said Dillard’s CEO William T. Dillard II. "Sales were particularly weak on the Southern border and in the energy producing regions. Higher markdowns affected gross margin, but we did the right thing as we move on to 2016.”

Source: Retailing Today

WARM WEATHER HELPS HOME DEPOT SALES RISE ALMOST 10% IN 4TH QUARTER, AS HOME PRICES INCREASE AND DEMAND FOR NEW HOME CONSTRUCTION STARTS 2016 WITH SLOW GROWTH

The Home Depot’s fourth-quarter sales included an 8.9% sales increase in US stores that have been open for at least one year. This is despite the challenges facing the rest of the retail industry. Sales were strong the entire quarter, but warm weather in December brought in a sales spike – Home Depot attributes $100 million in sales growth to the milder weather. High sales were seen for power washers and pressure-treated lumber by homeowners building decks.

Home prices also rose in December, showing the strongest gains since July 2014. The Home Price Index showed a rise of 5.2% in the 12 months ending in December, versus a 5.2% in November. The national median sale price for a home in December was $213,800, 8.2% from the previous year. There is a limited inventory of homes for sale, and demand for new homes is likely to drive more new construction and help keep a ceiling on the rising home prices, although January 2016 was a slow start for new home construction for the year.

Accelerated Analytics helps Home Depot vendors, such as WM Barr, Hillman Group, Alexandria Molding, and CPG Building Products to manage their sales and inventory data to drive results. Our vendors use our analytical measures, such as sell through, inventory shortages, out of stocks, weeks of supply and consumer purchasing trends, to take quick actions to ensure they are optimizing inventory and growing sales.

Source: Wall St. Journal

AMAZON ANNOUNCING INCREASED SHIPPING FEES AND A PRIVATE LABEL APPAREL LINE MAY BE ON THE WAY

Big changes are being announced at Amazon.com. Based on shipping price increases imposed by UPS and FedEx late last year, Amazon announced its threshold for free shipping is increasing by 40%, to $49 in orders. However, Amazon is not raising the threshold with an interest in shipping revenue, but instead to incent more customers to become members of Amazon Prime. Amazon Prime members always receive free shipping on all orders, but membership costs $99 per year. These customer spend on average double what Amazon’s other customers spend, and absorbing shipping costs will be nothing to them compared to the billions of dollars in sales the company may gain.

Amazon is also hiring heavily to staff up its Amazon Fashion Private Label unit, which could take on fast-fashion chains to sellers of basic apparel. An analyst at Women’s Wear Daily estimates Amazon could launch a private label apparel brand by early 2017. Amazon can undercut prices that other fashion retailers have at brick and mortar stores, and its ability to collect customer data can help them to give customers exactly what they want.

Many Accelerated Analytics’ vendors utilize our POS reporting and analysis tools to manage their Amazon sales and inventory. These vendors sell online with the retail giant in addition to selling at department store brick and mortar stores and online sites. Being able to compare sales trends between them is a key tool to help them win at retail and ensure customers are able to access the products they want to buy regardless of which retailer they are shopping with.

Sources: Wall St. Journal, New York Business Journal

NRF SAYS MILLENNIALS WILL SAVE THEIR TAX REFUNDS INSTEAD OF SPLURGING ON RETAIL

Retailers have depended on American’s using their IRS tax refund checks to boost February and March sales. However, according to a survey conducted by the National Retail Federation (NRF), more than half of those expecting a refund are planning to save their money instead of spend it. This is the highest level since the NRF has begun conducting the survey.

Millennials, ages 18 to 24, show 57.3% planning to save and 27.4% planning to spend their refunds on everyday purchases like gas or groceries. In the 25 to 34 year old bracket, 52.3% plan to save and 45% plan to repay debt.

In addition to saving, 22.4% of Americans will save their refunds while 11.4% will plan a vacation. “Consumers are building their spending power and boosting their confidence as they set aside their checks from Uncle Sam,” NRF president and CEO Matthew Shay said. “Americans this year see refund season as a time to improve their financial health by using their refunds to get ahead on savings goals and plan for bigger purchases in the future. Money saved is money waiting to be spent.”

As refund checks start to get into Amercan’s hands, it will remain to be seen if this holds true for future retail spending and whether they will actually save the money or decide to shop instead.

Source: Chain Store Age

NEW HOME CONSTRUCTION DROPS AGAIN WITH SLOW START IN 2016 – WILL HOME DEPOT EARNINGS BE AFFECTED?

Showing the lowest rate since October, new housing starts fell 3.8% in January from a month earlier. U.S. home builders are reporting a positive outlook as spring approaches, citing solid fundamentals for housing demand, such as job gains and low mortgage rates. Demand for housing has been strong over the past year but growth has been slow, with housing starts just 1.8% higher than January 2015.

Home builders are reporting shortages of land and labor, leading to project delays and higher construction prices, which lowers demand for new homes. However, new home sales in December were up 9.9% from a year earlier. “The weak showing in construction activity is broadly consistent with the recent souring in home builders’ sentiment, and when combined with the downdrift in permit approvals it suggests some slowdown in the months ahead,” said Millan Mulraine, economist at TD Securities USA, in a note to clients.

The Home Depot performed very well in 2015, giving investors better returns than competitor Lowe’s. The Home Depot opened 2016 with a large pullback due to fears about the general economy and the housing market in particular. An anticipated rise in mortgage rates has not happened and Home Depot is gearing up for spring, its busiest period of the year. The company will hire more than 80,000 workers for its 2,000 stores and 75 distribution facilities. The Home Depot’s domestic business has kept it in the lead, but with Lowe’s announcement of its acquisition of Canadian home-improvement chain Rona, international expansion could be important to future growth.

Source: WSJ

NORDSTOM IS RANKED FAVORITE RETAILER IN RECENT SURVEY

A survey of over 5,700 consumers found that Nordstrom ranked first among retailers in customer satisfaction. It specifically ranked highest scores for atmosphere, checkout speed and finding the correct size/product the customer was looking for. One in five customers surveyed indicated they were dissatisfied in general with their fashion retail experience across all retailers. 40% of these customers indicated that the sales experience was very important to them, and that less than half of them were approached by a sales associate, which was key to their satisfaction. Nordstrom’s sales associates assisted customers the most and received the highest satisfaction scores.

Coming in behind Nordstrom were Marshalls, H&M, Ross, Kohl’s and Macy’s.

With merchandise selection and ease of finding items and size selection the top of customers’ needs, retailers and vendors recognize the importance of partnering to share point of sale and inventory data in order to optimize store assortments. Many vendors, such as Brahmin Leather, Anastasia Beaute and The Sak, utilize Accelerated Analytics to monitor and act on inventory levels and customer buying patterns in Nordstrom and other retailers to maximize their effectiveness in this area.

Source: Chain Store Age

Macy’s Cost-Cutting Initiative Means Fewer Stores and Jobs in New Year

Disappointing holiday sales prompted iconic department store Macy’s Inc. to announce major cost-cutting moves on Wednesday.

During November and December’s uncharacteristically warm weather, Macy’s same-store sales declined 4.7%. "The holiday selling season was challenging, as experienced throughout 2015 by much of the retailing industry," said Macy’s chairman and CEO Terry Lundgren. "In the November/December period, we were particularly disadvantaged by the historically warm weather in northern climate zones where both Macy's and Bloomingdale's are especially well-represented. About 80% of our company's year-over-year declines in comparable sales can be attributed to shortfalls in cold-weather goods such as coats, sweaters, boots, hats, gloves and scarves. We also continued to feel the impact of lower spending by international tourists as the value of the dollar remained strong.”

In addition to previously announced closure of 40 stores in 2016, the retailer announced job cuts that total over 3500 positions across the remaining 770 Macy’s and Bloomingdales stores. The company will also implement voluntary separation agreements for approximately 165 senior executives and consolidate their four existing Macy’s credit and customer services center facilities into 3 after they close the St. Louis location in the spring.

LOWE’S ANNOUNCES Q2 EARNINGS RESULTS ARE UP, FALLING JUST SHORT OF ANALYSTS EXPECTATIONS

Lowe’s reported an 8.4% increase in profit for Q2 2015, with net earnings of $1.3 billion and $1.20 a share. This up from last year’s Q2 earnings of $1.04 billion and $1.04 per share. Analysts were expecting results of $1.24 per share.

The home improvement retailer’s net sales rose 4.5%, which was in line with expectations. Same store sales at stores open at least a year were up 4.3%.

“We posted solid results for the quarter and were able to capitalize on big-ticket market share opportunities with strong growth in categories like appliances and outdoor power equipment,” Lowe's CEO Robert Niblock said in a statement.

As of July 31, 2015, Lowe's operated 1,846 home improvement and hardware stores in the United States, Canada and Mexico representing 201.4 million square feet of retail selling space.

For fiscal year 2015, Lowe’s expects to add 15 to 20 new home improvement and hardware stores, and expects total sales to increase 4.5% to 5%.

Sources: USA Today, MarketWatch

US CONSUMER SPENDING IN SECOND QUARTER INCREASES AND MAY HELP THIRD QUARTER

US economic growth in second quarter 2015 saw a 2.3% increase in gross domestic product over first quarter. This gain was boosted by 2.9% growth in consumer spending.  Also, consumer personal savings rate went down to 4/8% from 5.2%, showing that consumers are starting to open their wallets and start spending again. 

Business investment for the period contracted and inventories remained flat. However, consumers and transportation companies are benefitting from lower oil prices. A growth in consumer spending in the third quarter will get more product flowing through supply chains.

Source: Wall Street Journal

JUNE CONSUMER SPENDING REPORT SHOWS OVERALL DECREASE BUT HOME IMPROVEMENT SPENDING IS STRONG

The US Consumer Spending Index increased 0.4 points in June. The percentage of consumers who rate the economy as excellent or good has continued to increase each month, at 30.9%, though is much lower than the 68% who felt the economy is fair or poor. When asked if personal finances were getting better or worse, 30.7% answered better, 33.1% answered worse and 35.2% answered the same.

The Retail Spending Index decreased 0.5 points in June. Expected spending for July slightly decreased in every category except discretionary personal entertainment expenses, which increased to 14.9% in June versus 13.7% in May. The category with the largest percentage of expected spending was household improvements at 22.9%. Expectations are that spending next month will remain about the same as 51.3% expect to spend the same. However, 28.2% say they will spend more in July, the majority being adults with children.

Source: Chain Store Guide

BACK TO SCHOOL SHOPPING EXPECTED TO RISE THIS YEAR

A Consumer Pulse survey of parents of K-12 and college students found that 56% of respondents plan to spend more money per child this year on back-to-school supplies.

K-12 parents plan to spend an average of $873 per student, while parents of college students plan to spend more than $1,100 per student. 38% of parents intend to purchase technology products, on average spending $400 compared to $278 on apparel. Technology products are needed as student use of technology in the classroom increases, requiring parents to buy laptops, tablets and mobile phones.

61% of those surveyed said store sales and promotions will be the main determinant of when and where they will do their back-to-school shopping.  74% of parents said they prefer to shop at big box retailers or chains to get a better deal.

Online shopping and mobile shopping are increasing with parents. 50% of the parents had clicked on an online ad in the past 7 days and 48% had clicked on a mobile ad. Over 40% of parents stated they made a purchase within the past week based on a mobile or online ad.

Source: Retailing Today

LOWE’S COMPANY SHARES RAISED TO OUTPERFORM

With an improvement in housing and overall economic activity in Southeastern states, Lowe’s is expected to witness accelerating sales and potentially narrow its comp store sales with Home Depot in the region. A report this week forecasts a 4% growth at Lowe’s following disappointing Q1 2015 sales of $14.1 billion versus $14.26 billion. However, Lowe’s Companies’ revenue was up 5.4% compared to Q1 2014.

Several equities research analysts issued positive reports for Lowe’s stock, setting buy ratings over $80 per share. Experts expect Lowe's to complete the year with $3.94 EPS. 

Source: The Legacy

AMAZON EXPANDS SELLING IN MEXICO

Amazon successfully launched its Mexican Kindle store in 2013. Now, the online retailer has launched a Spanish-language Mexican website and mobile app with millions of unique items.

“Our mission at Amazon is to be Earth's most customer centric company, and we strive to be the destination where people can find anything they want to buy online,” said Alexandre Gagnon, director, international expansion, Amazon. “With Amazon.com.mx, customers in Mexico will find more of what they want – the largest selection in the country, low prices, fast and reliable delivery, all with a trusted and convenient experience.”

Customers in Mexico can pick up their purchases from hundreds of locations across the country, as well as paid shipping options. There is free shipping available for certain purchase amounts. Amazon plans to offer more payment options, such as monthly payments.

Source: Chain Store Age

NRF SURVEY REVEALS INVENTORY SHRINK IS A $44 BILLION PROBLEM FOR RETAILERS

Inventory shrink, or the loss of product due to shoplifting, employee and vendor theft and administrative errors, costs retailers billions of dollars. The NRF and the University of Florida provided survey results this week stating that in 2014 inventory shrink averaged 1.38% of retail sales, or $44 billion.

Shoplifting accounted for 38% of the loss, followed by 34.5% in employee theft. The rest consisted of 16.5% administrative errors, 6.8% vendor fraud or error and 6.1% unknown loss.

While grocery chains have the highest shrink rate, home center/hardware/lumber/garden reported average shrinkage of 1.09%.

Tracking inventory effectively is key to managing shrink. Actual and accurate inventory counts eliminates the over/under counting in the results. Verifying product delivered is what was ordered and is accurately described in systems is also paramount – if an expected-sized item was not available, and the vendor ships a different size, but that difference is not noted, a retailer can end up with a surplus of one size, a shortage of another, and a dent in their inventory valuation. Inventory measurements should be looked at in both units and dollars. A retailer could be 99.5% accurate in dollars but only 94% accurate in units.

Shrink-related data is stored in different applications such as POS/point of sale, inventory, receiving and store applications. Having the ability to obtain reports that combine point of sale and inventory data in a timely fashion is imperative to take action quickly before the data becomes outdated.

Accelerated Analytics is a comprehensive service for collecting, analyzing and reporting on POS point of sale and inventory data, to increase sales, optimize inventory, recognize inventory shrink and respond faster to this information.

Source: Chain Store Age, ProSales

CVS TAKES OVER TARGET PHARMACIES

CVS Health and Target announced a $1.9 billion sale of Target’s pharmacy business to CVS. CVH will rebrand Target’s 1,700 prescriptions departments as CVS and CVS will acquire Target’s 80 clinic locations and rebrand them as MinuteClinic. Both companies also announced plans to develop 5-10 small format stores in the next 2 years that will be branded Target Express and contain a CVS Health pharmacy.

Both companies have stated goals of core business investments to drive growth, and focus on wellness as a signature category, focusing on consumers eating well, being active and finding natural and clean label products. The rollout will take place over a period of several months to ensure the smoothest possible transition for their pharmacy and clinic patients.

"This strategic relationship with Target supports the highly complementary customer base, brand and culture we share," said Larry Merlo, CVS Health president and CEO. “This relationship with Target will provide consumers with expanded options and access to our unique healthcare services that lead to better health outcomes and lower overall healthcare costs.”

"At Target, we've talked a lot about the evolving preferences of our guests and this partnership demonstrates that we're committed to putting them at the forefront of everything we do," said Brian Cornell, Target chairman and CEO. "By partnering with CVS Health, we will offer our guests industry leading healthcare services, and at the same time, sharpen our focus on elevating the way we deliver wellness products and experiences to our guests."

Source: Chain Store Age

HOME DEPOT IT INVESTMENTS IN OMNI CHANNEL FOCUSES ON CUSTOMER EXPERIENCE

The Home Depot discussed this week its IT investment and strategy that focuses on the customer buying experience. The company’s Common Order Management system, or COM, is the largest IT project in the history of The Home Depot.

COM is an inventory visibility platform that looks at millions of deliveries through small and large delivery trucks, direct fulfillment to DCs and in-store pick up transactions. COM will help identify the best fulfillment option for a customer, while allowing Home Depot to leverage its omni-channel options.

The focus on this area is based on the fact that 1) the retailer’s fastest growing ecommerce channel is buy-online, pick up in sore, 2) the average ticket for ecommerce transactions are considerably higher than physical in store transactions and 3) ecommerce chat and email are growing  in product information exchange.

“The IT investments we are making are really to optimize the whole supply chain offering,” said Home Depot Senior VP and President-online, Kevin Hofmann.

Source: Chain Store Age