American Express Announces Coalition Loyalty Program with Retailers

American Express announced a new coalition loyalty program, called Plenti. Macy’s, Rite Aid, ExxonMobil and other major companies are joining American Express for this new  offering not previously available to U.S. shoppers.

Shoppers can earn points when they make purchases with participating retailers, and then those points are good for savings at all of those stores. A customer could purchase a cream and lipstick at Rite Aid and then redeem those points to get savings when buying a dress at Macy’s. They can get points paying a cell phone bill with AT&T and then get a discount at their ExxonMobil gas station.

Participating companies believe this will be more attractive to consumers because it is flexible. Although the Plenti program will be operated by American Express, shoppers can use any form of payment as they earn or redeem their points.

American Express is selecting only one participant in every industry; there will not be multiple department stores or gas stations. Retailers will not get access to one another’s consumer data. If a consumer purchases an item at Rite Aid, Macy’s will not know about that purchase. Each participating brand will have control over how consumers accumulate points in their stores.

“Consumers today are busy and smart. They know good value, and they want to be rewarded for the dollars they spend day-in and day-out at their favorite stores,” said Martine Reardon, chief marketing officer at Macy’s. “Plenti will offer customers everyday opportunity to earn and to redeem those points with much more choice.”

Resource: Washington Post

Industrial Production Gets Small Gain Despite Drop in Manufacturing in February

Industrial production, measuring the output of manufacturers, utilities and mines, rose .1% in February from January. Cold weather caused an increase in utility output, but factory and mining production declined, lowering capacity utilization two-tenths to 78.9%, instead of economist expectation of gains to 79.5%. Lower capacity utilization could prompt businesses to wait on investments.

Manufacturing, the bulk of all industrial output, declined for the third straight month, a development the Fed attributed largely to weak demand for long-lasting goods. “Manufacturing has started 2015 on a softer note than we had expected and if we do not see a pickup in the next few months we will have to consider notching down our 3% real GDP growth forecast for 2015,” John Ryding of RDQ Economics said in a note to clients. Economists said cold weather, while boosting utilities, may have crimped factories.

Resource: Wall St. Journal

Home Depot and Macy's Inventories Hit Hard by West Coast Port Gridlock

Home Depot and Macy’s both posted solid earnings for the fourth quarter 2014. However, both retailers report that the situation with the West Coast ports will begin to really affect them now. This is after a report that a tentative deal was reached in the dispute that has affected retailers, manufacturers, farmers and merchants.

“The West Coast situation has been tough, with 12- to 16-day delays in getting our imports in,” Mark Holifield, Home Depot’s executive vice president for supply chain and product development, said on a call with analysts. “There’s still a fair amount of uncertainty what the new normal will be, once the ports get back to normal.”

Karen M. Hoguet, Macy’s chief financial officer, said that shipment delays were only just starting to hit inventory levels, and that its apparel and accessories departments were the most affected. About 12 percent of the department store chain’s first-quarter merchandise was delayed, Ms. Hoguet said, which may affect sales, gross margins and expenses in the first few months of the year.

Department stores, like Macy’s, were somewhat protected by allowances that enabled them to return some late products to their vendors. Discount retailers could benefit from getting merchandise the traditional retailers cancelled due to late delivery.

Source: The New York Times

Ulta Beauty Posts 11.1% Fourth Quarter Growth in 2014

Ulta Beauty announced fourth quarter growth in same store sales at a very high 11.1% and e-commerce growth of 55.2%. The 11.1% same store increase was after a prior year gain of 9.2%.

The company opened 100 new stores last year and are planning another 100 new stores for 2015. It is forecasting same store sales growth of 6% to 8% and e-commerce growth of 40%.

“Ulta Beauty wrapped up a very strong year of sales and profit growth with an excellent fourth quarter, which we are proud to celebrate as our first billion dollar sales quarter,” said Ulta CEO Mary Dillon. “Our best comparable sales increase of the year was driven by accelerating traffic growth, continued strength in prestige and mass color cosmetics, a successful holiday selling season, execution of more effective marketing and CRM strategies, a double-digit comp in our salon business, and a 55% comparable sales increase in our e-commerce business.”

Source: Retailing Today

Bon Ton Announces Omnichannel Initiative After Successful Fourth Quarter

Sales at Bon Ton grew 3% in the fourth quarter, attributing its success to top-producing sales in cold weather and active apparel and home.

The company continued its growth trend with double-digit sales growth in e-commerce, prompting them to announce expanded omnichannel strategies and opening an e-commerce fulfillment center.

“As we look ahead, we are excited for continued progress on our initiatives. We are looking forward to the opening of our new e-commerce fulfillment center, which we expect will facilitate significant expansion of our shipping capacity with improved operational efficiency and support the fastest growing area of our business,” stated Kathryn Bufano, President and CEO of Bon-Ton. “Investments such as this will continue paving the way for sustainable long-term profitable growth.”

Source: Retailing Today

US Retail Sales Drop for Third Consecutive Month

Inclement weather and low wage gains slowed consumer retail spending in February, which is the third straight month of decline. February showed a .6% decline, after a .8% drop in January. Sales declined in nine of thirteen major categories, led by auto dealers and building supply merchants. The 2.3% drop in purchases at building-material stores was the biggest since May 2012.

“Consumers aren’t really spending as much of their savings from lower gasoline prices as expected,” Tom Simons, an economist at Jefferies LLC in New York, said before the report. “It’s the bad weather, consumers not spending the fuel savings as much as expected, and subdued wage growth.”

One standout in February was non-store retailers, which includes online retailers. Purchases showed at 2.2% increase in demand, the largest since March 2014.

Household consumption, which accounts for almost 70 percent of the economy, is projected by economists to expand this quarter. It grew at a 4.2 percent annualized rate in the final quarter of 2014, the most since the last three months of 2010, according to revised figures from the Commerce Department.

Source: Bloomberg Business

How Important will Targeted Collaboration and Technology be to Retail in 2015?

In a report released by Price Waterhouse Coopers, it provided an overview of what will challenge retailers in 2015. The reports focuses on what retailers and suppliers must do to satisfy the needs of their customers in order to be successful and profitable in an ever-changing, customer-centric environment.

Targeted Collaboration between retailers and suppliers is listed as a key component for success. To achieve better alignment of goals and drive greater efficiency, retailers and suppliers need to become trading partners, sharing details and processes on product launches, trade promotions, inventory management and supply chain operations.

Technology greatly contributes to improved operational efficiency, and there will be a need to effectively manage the business through business intelligence. Customer demand-based management can only succeed with real-time POS sales, inventory and consumer data information. Retailing will become more personal and customer data and relationships will become a key asset for retailers.

Source: Price Waterhouse Coopers

TJX Companies is the Leading Off-Price Retailer in the US and Worldwide

TJX Companies revealed in their annual report net sales for the past fiscal year were $29.1 Billion. This is greater than Macy’s report of $28.1 Billion. This marks a 6.2% sales increase for the year, and 4^th quarter earnings jumped 15%.

TJX Companies operates retail stores in the US as T.J.Maxx, Marshalls and HomeGoods, and recently added Sierra Trading Post. In Canada, they operate Winners, HomeSense and Marshalls. In Europe they have T.K.Maxx and HomeSense. The company sources from more than 16,000 vendors in 75 countries.

The retailer features brand-name merchandise at value prices. Because the company has aggressive inventory management, assortments change quickly and customers have learned to buy what they like when they see it. Their offerings are unique, timely, attractive and at a perceived value. Other major retailers are taking note and they want a piece of the off-price action.

Shares of some top department store retail companies were mixed at the close of trading yesterday, March 9:

Kohl's Corp. rose $.80 or 1.1 percent, to $73.71.

Macy's Inc. fell $.42 or .7 percent, to $62.56.

Nordstrom fell $.52 or .6 percent, to $80.34.

J.C. Penney Co. fell $.32 or 4.2 percent, to $7.33.

Sears Holdings Corp. fell $1.80 or 4.6 percent, to $37.21.

TJX Companies rose $.20 or .3 percent, to $68.23.

Source: Forbes.com and Yahoo Finance

Sephora Announces Omnichannel Strategies for 2015

Sephora announced several strategies and technologies focused on omnichannel retailing, for both in-store and mobile shopping.

The first is “Sephora Flash”, an Amazon Prime style subscription service, offering customers free 2-day shipping on all products for $10 per year. The Flash will be free for their Rouge Beauty Insider members, who spend more than $1,000 in a calendar year.

Second is “Augmented Reality”, allowing customers to engage with custom content by placing their phone over the images of the nine female founders found in the retailer’s windows and display cases. Launching in April, scanning the images will show content options, such as interviews and product videos. The stores will also deploy beacons that a customer can opt-in on, receiving birthday alerts, loyalty program updates and events happening in the store.

Sephora is also launching “Pocket Contour”, a new mobile app, where a customer can upload a photo of herself and get personalized face contouring advice and product recommendations.

In their San Francisco corporate hub, Sephora has created an “Innovation Lab”, where the Sephora team can brainstorm and test ideas in a think-tank environment and the company can groom future management.

We’re completely focused on making shopping more efficient, intelligent and fun for our clients,” said Julie Bornstein, chief marketing and digital officer for Sephora.

Source: Retailing Today

National Hardware Show Will Host it's First Auction

The National Hardware Show, the largest industry event for home improvement retailers around the world, will be introducing an auction concept this year: The Outdoor Supply Auction.

The show, taking place at the Las Vegas Convention Center May 5-7, will host the auction in a 50,000 square foot arena. The North American Retail Hardware Association (NRHA) is co-sponsoring the show.

Show attendees can attend the auction for free. It will give attendees opportunities to bid via a mobile app on hundreds of different product lots of new, overstock, discontinued and seasonal and package changed products from all categories. Categories include plumbing and electrical, homewares, paint and accessories, hardware and tools, outdoor and recreational, and lawn and garden. Attendees can use the mobile app to preview, bid and get instant updates real-time.

The National Hardware Show exhibitors are provided this sales opportunity. In addition to immediate sales and new customers, those that participate in the auction have the option to receive real-time leads from attendees who preview their product detail and from buyers bidding on their product during the 3-day auction event.

Source: HardwareRetailing.com and NationalHardwareShow.com

Bealls Launching "Bunulu" Specialty Store Concept in 2015

The 100-year-old Florida based Bealls, Inc. announced plans to launch a specialty store concept in 2015, named “Bunulu”.

"Bunulu is an Aboriginie name that means a place of water," said Lorna Nagler, president, Bealls Department Stores, in a report by the Bradenton Herald. "Our tagline for our store is Land, Water and Style."

Bunulu will open 3 to 5 stores in the fall, and the stores will average 4,000 sq. ft. The stores will target a younger demographic, featuring coastal-inspired lifestyle apparel and accessories. They will feature national brands. It already has its own website, Bunulu.com.

The brand’s website describes Bunulu as the “next generation of outdoor active lifestyle brands. Personalized for the coastal lifestyle.” Based on the site’s renderings, the stores will have a casual atmosphere, with wood floors and shelving and beach décor accents.

Source: Retailing Today

The Home Depot Q4 2014 Investor Conference Call Notes

Fourth Quarter Results

• Sales $19.2 billion, up 8.3% from last year
• Comp sales were positive 7.9% for the full quarter.  U.S. store comps were positive 8.9%.
• U.S. stores positive comps 8.9%
• 9 departments had comps above the company average for the quarter.  They were: tools, lumber, millwork, lighting, décor, building materials, kitchen, bath, and hardware.  All other dept had positive comps in the mid-single digits.
• Millwork categories had double-digit comps in patio doors, windows, interior doors, and exterior doors.
• Maintenance and repair categories saw comps above the company average in products like water heaters, wiring devices, cleaning, conduit, and caulks.
• Décor products saw comps above the company average in vanities, bathroom fixtures, decorative holiday, interior lighting, and hard surface flooring.
• Transactions per ticket under $50, representing approximately 20% of U.S. sales, were up 3.1%.
• Transactions per ticket over $900, also 20% of U.S. sales, were up 10.3%.  Drivers behind big ticket purchases were appliances, water heaters, and installation categories like windows, roofing, and sheds.

Full year 2014 Results

• Comps for U.S. stores were positive 6.1%
• Online business grew over $1 billion, 36% growth rate.  Almost 40% of online orders were picked up in the store.
• Average ticket size grew 1.9%.
• Ended year with 2,269 stores

2015 Guidance

• Expect overall GDP growth and continued tailwind from the housing recovery will be the principle drivers of growth.
• Consensus 2015 GDP growth forecast calls for moderate growth, and most housing data points towards a continued moderate recovery in the U.S. housing market.
• Expect comp growth in the U.S. of approximately 4.5%.  GDP plus about 150 basis points.
• Mr. Menear commented “We’ve shared with you in the past that our number one priority is in stock.”
• Opening 6 stores in 2015, five in Mexico and one in Canada

Analyzing Retailer POS Return Data Critical for Customer Satisfaction in Omnichannel Age

Retailers are striving to minimize return rates and maximize customer satisfaction. In a recent survey from Voxware, it was revealed that 57% of consumers are returning items they purchased online. 42% noted the products they received were in the wrong size or color and 15% said they received the wrong product altogether. Nearly 20% of consumers say they received an incorrect item a second time.

By analyzing return data, retailers can gain a better understanding of consumer preferences and behavior, as well as survey their internal supply chain and warehousing abilities.

Retailers are focusing heavily on omnichannel. Customers expect to buy what they want, how they want, when they want and have it delivered quickly to wherever they want them. Consumers can order online and pick up in a store, order from a brick and mortar store and have it shipped to them or the store, and order directly online. This requires store operations to effectively manage picking and shipping, turning each store into a warehouse.

Retailers need to analyze their business processes though POS and return data to drive sell-through velocity, margin improvements and customer loyalty.

While customers may be willing to forgive retailers after one return experience, 45% of respondents stated that they have limited their shopping with the retailer – both online and in-store after a second return.

Resources: Retail Touchpoints, Multichannel Merchant

Hudson's Bay Company Expands Real Estate Ventures

Hudson’s Bay Company, which has 90 locations, two outlet stores, thebay.com and is the parent company of Saks 5^th Avenue and Lord & Taylor, is forming two joint ventures valued at $4 billion to bring more value to its property portfolio.

The company has entered into agreements with Simon Property Group Inc. and RioCan Real Estate Investment Trust. These joint ventures will enable them to build on the strength of its existing real estate assets and identify new real estate growth opportunities.

The transactions position HBC’s retail business for continued growth, the company said, while providing increased financial flexibility. The approximately $1.1 billion in expected cash proceeds from the joint venture transactions, net of expenses, will be used to reduce debt on HBC’s balance sheet, the company said.

“I am truly excited by these partnerships and what they mean for the future of HBC,” said Jerry Storch, CEO, Hudson’s Bay Company. “A stronger balance sheet and enhanced financial position will enable us to invest in growth initiatives across our retail business, including strengthening the connection between our store and digital businesses, expanding our off-price channel and investing in our world-class store base.”

Source: Retailing Today

Successful Retail Store Analytics

Retailers have much more sophisticated tools for in-store analytics of customer behavior, but a study conducted by Forrester Research, Inc. revealed pitfalls and recommended key actions for retailers to take to achieve success with in-store analytics.

Legacy store analytics only has allowed for slow reaction and limited breadth of activity measurement in traffic counting, merchandise productivity, labor management, loss prevention and shopper studies. Increasing use of analysis of smart mobile devices, wi-fi and surveillance technology creates an opportunity to address layout optimization, merchandise productivity and labor management coupled with customer behavior, proactive loss prevention, marketing attribution and store marketing performance.

For retailers to successfully utilize this technology, they should take some specific measures. First, address privacy concerns of the customers and be transparent. Nordstrom attempted to deploy in-store analysis in 2013 and it resulted in enough customer complaints to cause the company to cease implementation. Next, rather than simply measuring store traffic, measure the conversion rates of customers who enter the store – for example, improve practices of window display effectiveness and how it relates to store traffic.

Most important is to involve many teams, from store operations, merchandising, asset protection, and marketing, to use the analytics in cooperation. Retailers must merge store analytics with traditional retail data — including staffing, inventory, customer lifetime value, online customer behavior, weather, environmental conditions and existing historical behavioral data — into an enterprise data warehouse (EDW) to transform physical store operations. Retailers need to empower and train associates, local store managers, and regional managers to act locally with insights and provide staff with real-time guidance.

Source: Retailwire.com

CONSUMER SATISFACTION WITH RETAIL IS ON A DECLINE

The American Consumer Satisfaction Index (ACSI) reports that consumer satisfaction with retail is on the decline for the first time in four years.

The ACSI report states brick-and-mortar customer satisfaction fell flat or weakened, while Internet retail is up from last year. By category, overall satisfaction with department and discount stores stayed flat at 77, while the gap between best- and worst-ranked companies grew. Nordstrom was the top rated, gaining 4% to 86. They are followed by Dillard’s (81), Kohl’s (-1% to 80) and Macy’s (79). Walmart dropped 4% to 68 and is at the bottom of the category behind Target (+4% to 80), Meijer (78) and Sears (-5% to 73).

Among home improvement chains, Lowe’s rated best at 81, while Home Depot falls to the category’s bottom dropping 4% to 76.

Amazon remains at the top of the Internet sector, at 86. Netflix improved for the third straight year gaining 3% to 81. Overstock and eBay both dropped to 77 and 79, respectively.

The ACSI is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the US. The ACSI uses data from 70,000 customers annually for measuring satisfaction with more than 230 companies in 47 industries.

Resource: Retailing Today

FOSSIL LOOKS AHEAD TO 2015 – ADDS KATE SPADE WATCHES TO BRAND

Despite disappointing end of 2014 sales, Fossil is focused on the future, announcing Tuesday that it has reached a ten year licensing agreement with Kate Spade, assuming its existing watch business.

Fossil CEO Kosta Kartsotis called the agreement, “yet another great example of our ability to capitalize on lifestyle brands that are poised for global expansion.” The company already has partnerships with brands like Giorgio Armani, Michael Kors, Tory Burch and Emporio Armani Swiss.

Sales in 2014 were flat at $1.07 billion, missing their estimate of $1.12 billion.  Best known for its watches, this segment pulled in more than three quarters of the company’s total revenue. Jewelry sales increased but only accounted for $93 million of the total revenue.

The company is forecasting a sales decline of 5.5%-7.5% in the first quarter of 2015. “We are not entirely satisfied with our fourth quarter performance and begin 2015 intensely focused on taking advantage of the many opportunities available to us to drive future growth,” said Kartsotis.

Resource: Forbes

Suppliers Need Better Forecast and Demand Projections

A recent benchmarking survey of key consumer product metrics by Gartner and IDC Manufacturing Insights found SKU-level forecast error rates one month out had an average of 21.9%. For new products, the error rate grew to 48.3%. In that report, Gartner says consumer goods companies will continue to get better at using POS data and near-term demand signals to improve short term forecast accuracy and replenishment plans. Top performing companies showed forecasting error rates much lower than the averages, dropping to 11.7%, and 34.7% for new products.

Forecasts with high levels of error result in many supply chain issues, such as the wrong product mix – excess inventory of some products and not enough of others, higher overall inventory – excess cash tied up in inventory and poor cash flow, increased waste in production resources and customer service problems.

Gartner says performance leaders are not only working on their forecasting but also leveraging downstream data to better predict how much to replenish based on what is being consumed downstream.

Those leaders "are already working closely with their key retail accounts to manage vendor-managed inventory (VMI) replenishment based on retail warehouse inventory and movements, and some point of sale (POS) data reflecting consumer pull through the pipeline. They set inventory buffers based on product level, average daily demand, range of demand variation and supply reliability. These buffers are reviewed regularly to reflect recent patterns, rather than averaging two years of history to take out the highs and lows."

In addition, increased analysis of actual SKU-level demand to determine average daily usage, near-term demand patterns and range of variation will improve alignment of buffer inventory to cover demand volatility with less reactive disruption in the upstream supply chain than we see today.

As a result, overall inventory will be reduced because the mix is better aligned with what is selling. There will be less slow-moving and obsolete inventory for those products replenished based on downstream consumption. This will improve cash flow and cash conversion cycle time, and it will reduce write-offs.

Resource: Supply Chain Digest

SLUGGISH US CONSUMER SPENDING START TO 2015

January US consumer spending barely rose .1 percent, despite cheaper gasoline and a buoyant labor market. Economists are speculating that consumers were using their extra income to pay down debt and boost savings. This was below Wall Street’s expectations for a .4 percent increase.

"Should we be worried about the weakness of underlying sales over the past two months? Possibly," said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

"But all the conditions are in place for a period of very strong consumption growth. We still expect to see that strength come through in the retail sales data soon."

The economy has added more than a million jobs in the past three months and the number of those seeking jobs hit its lowest level since 2007 in December.

Resource: Reuters

WHICH RETAILERS' MOBILE APPS ARE THE MOST SUCCESSFUL WITH CONSUMERS?

Retailers need to figure out how to keep shoppers engaged with their mobile apps so they come back and shop for more, instead of downloading an app, using it once, and then forgetting it or deleting it.

In a recent panel of 250,000 US and 2 million global app users, an engagement measurement of monthly active users (users who shop an app at least once a month) who shop an app at least once a week indicated which retailers rank the highest.

Apps with the highest engagement levels include Neiman Marcus (64.3%), Kohl’s (63.6%), Victoria’s Secret (61.7%), and Groupon (47.8%).  Kohl’s success is attributed to doing a great job highlighting discounts, coupons and deals of the day.

Belk Inc. also has a high level of app engagement with 32.4%. Mobile apps are becoming much more important as digital commerce evolves,” says Ivy Chin, senior vice president of e-commerce and omnichannel digital at Belk. “Our shopper often uses her mobile device to complement her in-store experience, so we developed the Belk app to support that, with easy bar code scanning, coupon integration with Apple’s Passbook wallet, a Belk store finder, integration of e-mail, and social sharing.”

Resource: Internet Retailer.com

“It’s true that retailers have yet to fully make use of location in mobile commerce, but you have to do location right,” Chin says. “Location awareness has to be meaningful for customers and give them the right information and the right messages. This involves understanding how your customers engage with your brand whether they are in-store, online or on a mobile device—a 360-degree view of your customers.”