Data Analytics Among Strategies to Combat Loss in Omnichannel

With new technologies hitting the market on a regular basis, the retail industry is constantly evolving. Most retailers now operate in a technologically sophisticated omnichannel environment that includes strategies to enhance selling, including online, mobile retail and social media marketing.

In a 2015 retail industry survey conducted by PricewaterhouseCoopers, findings revealed that technology is making it more difficult for retailers to prevent, detect and manage loss.

“At the core of omnichannel is the concept that a customer can securely purchase and receive their product in any manner they desire,” Zawoyski says. “For many retailers with legacy pre-omnichannel operations and systems, ensuring secure and dynamic customer purchasing and fulfillment is a significant challenge. Beyond the well-documented data breaches and information security risks, many retailers struggle with ensuring supply chain inventory accuracy.”

According to the PwC report, many companies haven’t fully integrated new technologies that are needed to combat loss in omnichannel effectively. One key recommendation for the report: Retailers should embrace the process of root cause analysis while increasing their use of data analytics to better spot and mitigate shrink. Zawoyski says 59 percent of respondents reported they are employing data analytics and end-to-end root cause analysis as a primary tool to identify losses.

One of the many strategies that PwC suggests to enhance root cause analysis is to leverage data analytics.

“Effectively leveraging advanced analytics and end-to-end root cause analysis allows retailers to assess, strategize, plan and deploy risk mitigation programs,” says Zawoyski.

Sources: National Retail Federation: STORES magazine, June 2016, PricewaterhouseCoopers

Macy's Set to Unveil New Store Design

Retail giant Macy’s is set to debut a new store design at its remodeled location in Easton Town Center in Columbus, OH later this month. According to a report by The Columbus Dispatch, construction began on March 27th – with work taking place as the store stayed open – and the new store design prototype will be introduced on June 25th.

Everything from the lights to the flooring, fixtures and merchandise itself will be new. The model features “lifestyle” departments and leased businesses, a concept that recently gained attention when JC Penney tried it. For example, the new Restore, Nourish and Strengthen Department includes footwear from Finish Line, various brands of athletic apparel, Gaiam Yoga merchandise, Fitbit watches and a Berry Blendz full-service juice and smoothie bar.

“This is the new way Macy’s is looking at the customer,” said Andrea Schwartz, vice president of media relations and cause marketing.

Macy’s is hiring 117 additional employees at the Easton store to support several new initiatives and is counting on its heightened focus on customer service to make the physical changes to the store successful. One example is the Connect @Macy’s kiosk which will offer one-on-one service to customers as soon as they walk into the store. Additionally, Macy’s will offer a free personal-shopper service called My Stylist @Macy’s.

So far the Easton store is the only prototype.

Source: The Columbus Dispatch

Retail Sales Rose More Than Expected in May

According to the Commerce Department, U.S. retail sales rose 0.5% in May, beating a forecasted increase of just 0.3%. This followed a 1.3% increase in April and lifted sales 2.5% from a year ago.

The second straight month of gains was fueled by Americans purchasing automobiles and a range of other goods, suggesting economic growth despite a slowdown in job creation. Sales at clothing stores rose 0.8%, the largest gain in six months. Online retail sales, sporting goods and hobby stores all rose 1.3% last month and restaurant and bar sales climbed 0.8% Electronics and appliance outlets also saw a rise in sales with a 0.3% increase. Not everyone saw an increase in retail sales. Sales at building materials and garden equipment stores fell 1.8%, and furniture store sales dipped 0.1%.

The growth in retail sales could impact economist’s second quarter GDP growth estimates which are currently around a 2.5% annualized rate.

ACE HARDWARE RANKS #1 IN CUSTOMER SATISFACTION FOR THE 10th YEAR IN A ROW

The J.D. Power 2016 Home Improvement Retailer Satisfaction Survey awarded Ace Hardware top ranking for their 10^th straight year. The study surveys 2,995 customers who purchased home improvement-related products from a home improvement retailer in the last 12 months, and was conducted in January and February 2016.

On a 1,000 point scale, Ace Hardware scored 810 in overall customer satisfaction, followed by Menard’s with a score of 803. Lowe’s placed 3^rd at 799. The overall average across retailers was 795, up from 788 a year ago. The Home Depot was just at the average with 794. The study found that average drops significantly when an initial greeting in the store takes longer than 2 minutes. Customers also want the retailer to provide advice, and be able to answer their questions effectively in the store. "The retailer's staff is most critical to differentiating the experience provided to customers, especially when it comes to the timeliness of greeting customers, answering their questions or providing advice," said Greg Truex, senior director of the at-home practice at J.D. Power. "Retailers that train their employees to engage with customers proactively and assist them are more likely to provide them with a satisfying experience during these moments of truth."

Ace scored 855 in staff and service compared to 811 average.

According to the Home Improvement Research Institute, home improvement consumer spend is on the rise, with an expected 4% increase this year to $332 billion.

Source: Chain Store Age, JD Power.com 

TAKEAWAYS FROM ACCELERATED ANALYTICS’ GS1 CONNECT 2016 SESSION: ‘The Importance and Value of Data Sharing – Using Point-of-Sale Data to Deliver Outstanding Customer Experiences’

I had the opportunity to lead this session last week and came back with some takeaways that I wanted to share, as I feel they are reflective of the state of retail today and how retailers and vendors are using point-of-sale data to manage their business in this time of OMNI-channel, customer-experience driven retail.

Customers want a single-vision of brands and be able to have a consistent, complete and winning experience every time they shop, in whatever channel they shop in. To ensure products are available when and where the customer shops, retailers need real-time inventory visibility, a seamless order management system and the ability to deliver. Retailers and brands realize they need to work together to have both a single view of the customer and a single view of their data in order to be successful.

Some interesting, yet not surprising, statistics were gathered from the retailers and vendors represented in the room. When asked about managing their POS data week to week, 66% were using POS data that was not provided via an EDI 852 file, eliminating their ability to automate the collection and processing of the data electronically, and instead having to work with multiple sources and formats of data. This process of data management and then trying to create usable reports to have meaningful partnership conversations between retailer and vendor is extremely time consuming: 83% of the retailers in the room spend 11-50+ hours per week managing and processing their POS data. More staggering was 95% of the vendors in the session were spending 11-50+ hours per week: 30% spending 11-20 hours, 40% spending 25-50 hours and 25% over 50 hours per week!

The good news is over half of the attendees in the room felt they are getting better at managing and using POS data each week, but 30% still admit to ‘Barely Using’ their POS data. Recognizing that heavy resources are needed to use POS data, especially on the vendor side, is making vendors ask, “Do we build an in-house solution to manage this, or outsource it?” CLICK HERE for an infographic detailing the pros and cons of each, and the differences in resource and financial investment.

Based on the time and effort being made by most of those represented, it is clear that POS data sharing is important for effective collaboration between retailers and vendors to “get it right for the customer”. POS data can be used to not just track units sold overall, but can give product/store level details on out-of-stocks, weeks of supply, sell thru %, average sales, geographic trends, inventory investment and lost sales opportunities. CLICK HERE for our industry sell thru % guidelines infographic.

We need to do everything we can to exceed our customers’ expectations and deliver an outstanding experience for them when they come across our brand. Sharing POS data and then using it to partner together to analyze it will help shape the customers’ experiences and give us inventory visibility and fulfillment across channels to meet customer expectations.

Want to learn more? Contact Jennifer@AcceleratedAnalytics.com to start a conversation. CLICK HERE to download whitepapers on analyzing POS data like a pro.

- Jennifer Freyer, Director of Sales and Marketing, Accelerated Analytics

Five Below Exceeds Expectations

Specialty retailer Five Below had a strong first quarter, beating Wall Street projections for earnings and same-store sales over last year. Their net income for the first quarter of 2016 was $6.8 million, up an impressive 58% from the same time period last year. Net sales rose 25% from $153.7 million to $192.7 million and the company reported same-store sales growth of 4.9%.

“We are very pleased with our first quarter results that once again demonstrate the universal appeal of Five Below and the disciplined execution of our key initiatives,” said Joel Anderson, CEO. “Our top-line outperformance was driven by continued strength at both our new and existing stores.”

Five Below opened 21 new stores in the first quarter of 2016 giving them 458 stores in 28 states.  They expect to open a total of 85 new stores this year, including 28 in the second quarter.

Net sales and net income are expected to continue to grow in the second quarter, with projected net sales in the $216 to $219 range and net income expected to reach between $8.5 and $9.2 million.

Source: Chain Store Age

How Millennials are Revolutionizing the Beauty Industry

For the multi billion-dollar beauty industry, appealing to millennial consumers – the largest generation in America - isn’t just a good idea, it’s crucial.

According to market intelligence agency Mintel, the beauty industry saw revenues of over $46 billion in 2015 and is projected to grow to over $51 billion by 2020. Women ages 18 to 34 are the biggest portion of the $13 billion dollar cosmetics market and they’re the most likely to be heavy buyers, meaning they purchase more than 10 types of products per year.

But, when it comes to beauty products, millennials are suspicious shoppers. Burned by stressful counter experiences and exaggerated magazine reviews, they’re distrusting. Their skepticism is impacting how, why and where beauty purchases happen, and the industry is evolving in response, effectively changing the way all consumers shop for beauty.  Here’s a summary of the changes you may notice:

Try Before You Buy

Product testing is vital to today’s beauty buyer. Online beauty purchases are down and stores like Ulta and Sephora, where trial stations and testers are the norm, are growing. According to a survey conducted by TABS Analytics, Ulta experienced a 41% increase in regular buyer purchases in 2015 compared to 2014. And Sephora reported a 25% increase in buyer penetration and a 32% increase in regular buyer purchases last year over the previous year. Clearly, consumers want to try before they buy. And retailers are listening as more offer samples and bring products out from behind counters.

A-La-Carte Beauty Solutions

According to the TBAS Analytics report the big brands, like Accelerated Analytics’ customers L’Oreal, Estee Lauder and Clinique, among others, are still going strong. What does seem to be changing is the belief that any one brand can provide all solutions to all of their problems. In other words, millennials like to have a choice. This means the door is opening wider for niche and specialty lines like Anastasia Beverly Hills which has seen significant growth. “The consumer has demonstrated a very high capacity to try and use multiple brands and that tendency seems to be growing over time,” says Kurt Jetta, Ph.D., CEO and lead product developer for TABS Analytics.

Fewer Sales People

While 90% of beauty purchases are still made at brick and mortar stores, today’s buyers are researching before they buy and thus taking the experience into their own hands. Beauty consumers are turning to online reviews, beauty blogs, YouTube, and the advice of friends prior to their purchases. All of this pre-purchase research boosts buying confidence and helps match expectations with reality, but it also means that the traditional makeup counter salesperson is becoming obsolete. They’re being relegated to a supporting cast member that shoppers only seek out when absolutely necessary.

Source: www.racked.com

Save

Overregulation: Burdening America's Small Retailers

In an effort to gauge the views of small business retailers on the overall economic environment, the health of their individual businesses and the impact of public policies, the National Retail Federation commissioned a survey that was conducted online by GfK in December 2015 and January 2016.  752 small business owners participated and they represented a balance among demographic factors including gender, age, political ideology and geographic location.

The survey found that government regulation is a consistent point of difficulty for small retail businesses. Eight out of ten stated that government regulations actually weaken the appeal of owning a small business, and seven out of ten retail small business owners feel overwhelmed by rules and mandates on how they operate their business. The infographic below shows a sneak peak of the study and the full report is available on the NRF website at https://nrf.com/resources/retail-library/overregulation-burdening-americas-small-retailers.

Source: nrf.com

Build vs. Buy: Outsourcing your POS data-reporting and analytics is faster, easier and less expensive than building an in-house solution

Retail POS data holds the key to understanding how your products are performing at a store level. But it can be a daunting task, not to mention a drain on resources, to gather, analyze and report on EDI 852 and POS data from all of your retailers. Our newest infographic compares building an in-house solution to outsourcing your POS data-reporting an analytics. While there are beneifts to each approach, outsourcing the solution is faster, easier and less expensive. Complete the form below to request our FREE infographic!

 

US MANUFACTURING INDEXES TAKE A DIVE; STOCK LEVELS REACT

The New York Empire Manufacturing Index dropped to -9.02 from April’s positive 9.56 in May, missing estimates for a slight decline to positive 7.0. Stocks reacted negatively to the news, but were offset by gains in the energy and industrial sectors. Domestically oriented US manufacturers are seeing steadier business with bright auto, housing and job markets, while global manufacturers are struggling in markets from Brazil to Europe to China.

“Domestic demand is what has been supporting the manufacturing sector overall and preventing a sharper downturn,” said Gregory Daco, chief U.S. economist at Oxford Economics. “Domestic-oriented sectors are faring relatively well.”

Earlier in May, the Institute for Supply Management also reported its index results, but showed manufacturing activity already falling from March. A strong US dollar and low oil prices, plus weakness overseas, depressed demand for US exports.

The Philadelphia Federal Reserve also reported a decline in its index, reporting that mid-Atlantic manufacturing activity declined for the 8^th time in 9 months.

These reports maintain the overall picture of sluggish economic growth, and a newfound possibility that the Federal Reserve could raise interest rates as soon as June.

Sources: WSJ, Nasdaq.com, Investors.com, CalculatedRiskBlog.com 

CONGRATULATIONS 2016 GRADUATES! GRAD GIFT SPEND HIGHEST IN 10 YEARS!

The National Retail Federation (NRF) reports that 2016 graduation spending will reach a 10-year high this year, with spending expected to reach $5.4 billion. Americans celebrating high school and college graduations give special gifts, and retailers are offering a lot of options for the best gifts possible. Retailers will need to keep graduation gift items up front and in stock, and advertise locally for shoppers who look online before going shopping.

NRF’s 2016 Graduation Spending Survey revealed the average person buying graduation gifts will spend $106.45, up 3.9% from last year. Each individual graduate should not get too excited, though – the average shopper is buying for 2 graduates this year, so the spend is higher but spread out among more recipients.

Not helping retailers is the fact that cash is the most popular gift, given by 56%. Greeting cards, with the cash inside, will make up 39% of spend. This is followed by gift cards at 31%, clothing at 14% and electronics at 11%.

While the amount of spend averages $106.45, the age group of the gift giver makes a difference. Spending by those aged 45-54 will average $120.74, compared with $78.08 from those 18-24.

Source: NRF.com 

HOUSING GAINS AND MILD WEATHER KEEP HOME DEPOT GOING STRONG

The Home Depot’s stock opened at a record-high level today, after announcing they topped first quarter expectations. Mild weather and a strong housing rebound are attributed to their successful first quarter. Revenue increased to $22.76 billion from $20.89 billion. Same store year over year sales rose 6.5% overall,up 7.4% in US stores.

Chairman and CEO Craig Menear said the company saw “week to week demand spikes caused by weather variability”. Home Depot originally forecasted 2016 earnings of $6.12 to $6.18 per share, with revenue predicted to increase 5.1-6% and same store sales to rise 3.7-4.5%. With its positive first quarter, Home Depot now predicts 2016 earnings of $6.27, sales to rise 6.3% and same store sales to rise 4.9%.

Having cited a strong housing rebound as another reason for a strong first quarter, steady growth for the housing market looks like it will continue. The National Association of Home Builders reported continued strong sentiment in May. Low mortgage rates are fueling demand that have boosted expectations for home sales in the next six months to the highest level of the year. More housing data is due out later this week, including housing starts and existing home sales.

Source: US News & World Report, Wall S. Journal

APRIL RETAIL SALES REBOUND. WILL RETAILER STOCKS RECOVER?

Wall Street analysts are calling last week “Retail Wreck” due to numerous retailers’ news of poor sales, profits and future outlook on consumer spending. April retail sales came in higher than expected with a positive 1.3% gain, the highest gain in a year. Will strong sales in the first month of the second quarter help with a stock rebound for retailers?

Last week’s poor results were reported by many retailers, including Macy’s, Kohl’s and Nordstrom’s. Department stores are also responding to the strong online sales versus in-store that was reported, with online sales soaring 10.2% over last year. They are struggling with putting inventory in the right place to meet their increasingly complicated inventory and distribution demands.

Investors are waiting for home-improvement results this week from Home Depot, Lowe’s, Target and Wal-Mart to try to determine if the profit misses in the retail space is a problem just for department stores and apparel makers, or if it is a broader problem ahead for the consumer-driven US economy.

See the Accelerated Analytics’ blog from last week, reporting on the stock decreases across several retailers and apparel manufacturers: http://www.acceleratedanalytics.com/blog/2016/5/12/retail-stock-market-was-a-bear-yesterday-dropping-to-worst-l.html and continue to monitor our blog http://www.acceleratedanalytics.com/blog/ page this week as additional retailers report on Q1 results.

Sources: The Wall Street Journal, USA Today

RETAIL STOCK MARKET WAS A BEAR YESTERDAY, DROPPING TO WORST LEVELS SINCE 2011

There were stock declines all over the retail spectrum yesterday, as consumers spend less than expected and shift spending from traditional department stores and retailers to nontraditional online retailers. The SPDR S&P Retail ETF closed down 4.44%, the worst since August 18, 2011 and down 15% over the last 12 months.

Macy’s is getting the most news of the day, closing down 15.2%. This caused CEO Terry Lundgren to lower its full-year forecast. Quarterly earnings for Macy’s exceeded expectations, but revenue came in below estimates.

April retail sales will be announced on Friday morning, and analysts are waiting to see what stock impact these results will have.

Other retailers with dropped stock levels yesterday include Wal-Mart, Home Depot, Nike, Fossil, and Disney, who dropped 4.04%, its worst day since January 15.

Source: CNBC, Wall St Journal

JC PENNEY’S BRINGS DIY COMPETITION TO HOME DEPOT, LOWE’S, BEST BUY AND SEARS

JC Penny’s announced Monday that they will be doing a major expansion into home appliances. Starting in July, JC Penney’s will add an appliance showroom to almost 500 of its stores. The showrooms will feature kitchen and laundry appliances from Samsung, LG, GE Appliances, and Hotpoint, with over 100 appliances on display.

“Since launching major appliances in 22 stores last February, the response has been outstanding,” said Marvin R. Ellison, CEO, JC Penney’s. “The pilot confirmed that we should not limit our business to apparel and soft home in order to achieve significant revenue growth.”

The retailer also plans to allocate additional 25% of floor space to window coverings in about 500 stores, and pilot a new furniture line, Signature Design by Ashley, from Ashley Furniture, in 25 stores.

JC Penney’s is also testing an in-store flooring concept with Empire Today in stores in Tampa, Florida, and Washington, D.C., beginning this summer. "The current housing market presents a lucrative opportunity to diversify our Home assortment and strategically align with consumer spending patterns,” Ellison said.  “By combining our soft home and window coverings merchandise with the industry`s leading brands for appliances, furniture and flooring, JCPenney will become a destination for home design and redecorating, allowing us to weather-proof our business during seasonal periods of the year."

Source: Chain Store Age

TARGET’S NEW RULES FOR VENDORS TO TIGHTEN UP SUPPLY CHAIN AND INVENTORY

Target Corp is tightening its supply chain requirements for its vendors as part of a multi-billion dollar plan. The rules, effective May 30, include tighter deadlines for deliveries to warehouses, and fines for late deliveries and inaccuracies in product information.

Says Target’s COO, John Mulligan, vendors need to help keep shelves stocked, maximize sales and control costs. A letter was sent to suppliers. In the letter, Target stated the goal to keep products stocked to “lower missed sales for all of us.” Target US stores in 2015 held 8 to 9 billion items on store floors, in transit or in warehouses at any point in time.

The new rules will be phased on over the summer, with household, paper, and pet products needing to comply in June, health and beauty complying by July and apparel, home and electronics in August.

Source: Reuters.com

PARLEZ-VOUS FRANCAIS? RETAILERS IN QUEBEC MANDATED TO APPLY FRENCH SIGNAGE TO CANADIAN STOREFRONTS

The government in Quebec announced a proposed modification to the province’s sign rules that would require businesses ibn Quebec to add French to their outdoor signage. They did agree to retailers not having to alter their registered trademark names or logos. These retailers would be required to add a French word, description or slogan to their outdoor signage. The French words are not required to be larger than the non-French trademark name.

The government is requesting public feedback on the new proposed regulations for the next 45 days. WalMart’s regional president, Xavier Piesvaux, said the regulation “gives our companies the flexibility to communicate in French while keeping the integrity of our brand”. In 2014 major retailers, such as WalMart, Costco, Best Buy, Gap, Old Navy, Guess and Toys ‘R’ Us won a court battle ruling that storefront signs with their trademark in English does not contravene the Charter of the French Language.

Source: CBC CA NEWS

WILL IT BE A HAPPY MOTHER’S DAY FOR RETAIL? WILL IT TOP 2015 RECORD-BREAKING TOTALS?

In 2015, 84.2% of American celebrated Mother’s Day, spending an average of $173 per person, totaling spend of $21.2 billion. This was the highest spending per person, up from $163 in 2014. Will 2016 be a strong year for retail Mother’s Day sales? Expectations are that Mother’s Day spending will be similar to last year’s record-breaking totals. 7,000 consumers surveyed by the NRF (National Retail Federation) said they will spend the most on jewelry, followed by outings (lunch/dinner/brunch), flowers and gift cards.

Department and Specialty stores had the highest retail traffic in Mother’s Day sales last year, followed closely by online sales and discount stores:

Source: Fundivo, MarketWatch

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

Lowe's Launches New Social Campaign on Snapchap and Facebook in a Push to Reach Millennials

Lowe's Home Improvement is launching a new social campaign to make sure they’re reaching millennials as the tech-savvy generation begins to reach the age when they start settling down and buying homes. According to the Wall Street Journal, Lowes is turning to Snapchat and Facebook mobile video to help first-time home buyers discover home improvement tricks.

In the push to reach new potential customers who spend time on visual and video-driven social media platforms, Lowes is working with Omnicom advertising agency BBDO to create a new series of social videos. The Snapchat video series is called “In-A-Snap” and it allows consumers to follow along with home improvement projects and tap the screen to complete specific tasks. On Facebook, Lowes will be the first marketer to take advantage of a flip video application on Facebook’s mobile feed that allows viewers to change the orientation of the video. The “FlipSide” videos, which link back to Lowes.com, show simultaneously what can happen if a homeowner doesn’t tackle spring cleaning projects, versus what happens when a homeowner cleans the gutters, changes air filters or prunes overgrown shrubs.

Lowe’s Chief Marketing Officer, Marci Grebstein said, “The challenge as a marketer today is, how do you continue to engage consumers differently and within different social media platforms. We have been able to create informative and entertaining content based on how the platform works.”

Sourcse: The Wall Street Journal, Retailing Today