J.C. Penney is Expanding it’s Relationship With Sephora

J.C. Penney’s successful 10-year relationship with global beauty brand Sephora is expanding. Sephora currently has over 1,780 locations in 29 countries including 370 in North America and 546 in-store shops inside J.C. Penney stores. The department store retailer announced that it will open 60 additional Sephora shops in Penney stores by June 17^th. Among the new shops will be a 3000 s. ft. flagship shop located in the newly relocated Penney at Northridge Mall in Salinas, CA. It will feature a larger assortment of emerging brands, merchandise displays and expanded room for service.

When Sephora made its debut inside J.C. Penney in 2006, it was a new concept.   

“J.C. Penney was one of the first department store retailers to forgo the traditional beauty counter and work with a global beauty brand to build a dynamic Sephora shop inside its stores,” Angela Swanner, senior VP for Sephora inside J.C. Penney. “Ten years and nearly 600 locations later, Sephora inside J.C. Penney has become a leading beauty destination that will continue to be a growth driver in 2016 and beyond."

The Penney-Sephora partnership isn’t limited to physical stores. Sephora also has a significant online presence on Penney’s e-commerce site.

Source: Chain Store Age

Three Factors Contributing to Continued Weak Retail Traffic

The second week of April continued to see sluggish retail traffic. According to reports by Citi Research analyst Kate McShane and Cowen and Co. analyst John Kernan, total U.S. retail visits for the week ended April 16 declined 6.58 percent year over year. Total U.S. retail same-store traffic slid 8.75 percent year-over-year for the week while year-to-date retail visits are down 3.4 percent. In a report released this week, Cowen and Co. outline several factors contributing to the decline.

E-commerce and Mobile Growth

According to the Cowen report, holiday e-commerce sales increased about 14%, while mobile currently captures 61% of consumers’ time spent shopping online. The increased competition from e-commerce and the pressure to maintain brick-and-mortar locations contributed to several large retailers filing for bankruptcy in recent months.

Lack of Trends 

Retailers continue to be plagued by what Cowen and Co. termed “product malaise”. Either brands and retailers are not creating /offering enough fresh and exciting product to compel consumers to spend, or consumers simply aren’t as interested in purchasing “stuff” these days.

Election Year Politics

Retailers have notoriously blamed sluggish traffic and sales during an election year on the hype and uncertainty surrounding a presidential election. The campaigns and debates may draw attention away from retail shopping, plus high-end shoppers may scale down their spending before an election if they fear an increase in taxes when the next president takes office.

One tactic vendors and retailers can use to weather the storm is remaining focused on inventory and consumer buying trends using POS data and analytics. Research continues to show that when people find a product that they really like, they will buy it. With comprehensive data and reports readily available, vendors can make informed decisions that help ensure their customers can find and buy their product.

Source: footwearnews.com

First Revenue Decline a Wake-Up Call for Retail Giant Walmart

According to its annual financial filing released on Wednesday, for the first time since the company went public 45 years ago, Walmart’s revenues declined from the year before.

With over 11,500 store in 28 countries worldwide, the retail giant brings in half a trillion dollars in sales each year. Is it possible that they’ve hit their growth limit? In February, Walmart lowered its annual net sales growth forecast to “relatively flat” from earlier guidance that called for an increase of as much as 4 percent.  Part of the 2015 sales drop is attributed to currency impacts and a decrease in fuel sales due to lower gas prices. Sales have also suffered from ongoing store closures, including its entire fleet of smaller, “Express” stores.

But, Walmart has acknowledged a shift in the way it runs the company. They’ve moved away from their previous focus on net sales and cutting operating expenses as a percentage of sales, and are now focused on making “strategic investments” to support the “long-term health of the company.”

What has been a mostly brick-and-mortar operation is morphing into one that meets the expectations and demands of consumers operating in an omni-channel marketplace. This can already be seen in its fast-growing app and its expanding grocery pick-up program.

While its first revenue decline should serve as a wake-up call, Walmart remains a massive retail force.

Calculating Sell-Thru

Sell through (or sell-thru) is a very useful metric for vendors to use in evaluating item performance, because it provides a composite measure of sales and inventory. But like many business measures, there is more than one method of calculating sell through.

The most common calculation is: Sell Thru % = Units Sold / (Units On-Hand + Units Sold). Sell thru is typically evaluated on a daily basis for fast moving products or weekly for slower moving or replenishment based products.  A higher value is better, indicating your sales velocity is good and your inventory is appropriately forecasted. If sell thru is low, this indicates either poor sales or too much inventory. In most cases, sell-thru for an item is compared in recent periods like current week and last week, as well as in aggregate across several months or even a year.

When evaluating sell-thru, it is also useful to group together products which have been selling for a similar period of time and/or which are sold into the similar store types. For example, comparing sell-thru for a product with 5 weeks of selling activity against a product with 20 weeks of selling activity most likely will not produce a useful comparison. In the same way, comparing sell-thru for a product in a group of stores in a highly affluent area is not likely to compare favorably to a group of stores with a low income level.

Most retail buyers have a set sell-thru percentage they use to judge vendors based on product category or department.  It is important for vendors to discuss the sell-thru expectations with the buyer in order to align with those objectives.

For reference, we've compiled sell-thru percentage data that you can use as a benchmark. The complete infographic includes the sell-thru percentage for eight retail categories each at 8, 13, 26 and 52 weeks. To download the complete infographic, simply complete the form below and we will e-mail you the link to download it.