Posted tagged ‘Consumer’

Retail Sales in the US…Rise?

February 12, 2009

U.S. retail sales jumped 1 percent in January, reversing a six-month declining trend and defying economists’ expectations by posting the biggest increase in 14 months.

From the Associated Press:

The data are a glimmer of hope for a recession-hit economy, but higher gasoline prices and sales, and buyers snapping up other items on post-holiday discounts, appeared to aid last month’s results. Analysts cautioned that the relief is unlikely to last.

The Commerce Department reported Thursday that January retail sales rose 1 percent from December after having fallen for six straight months. Wall Street economists surveyed by Thomson Reuters had expected January sales to show a drop of 0.8 percent. They plunged a revised lower 3 percent in December, which marked the weakest holiday selling season since at least 1969.

“This is a big surprise, though the net rise in sales is less impressive than it looks because (December and November) were revised down by 0.3 percent each,” Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a research note. “The headline relief today is welcome but it is unlikely to last.”

The January report shows strong increases in sales of automobiles and in general merchandise stores — the “big box” outlets — though sales by department stores, carrying fewer varieties of items, posted a decline. Wal-Mart Stores Inc., the world’s largest retailer, is an example of a discounter that has benefited from strapped consumers’ focus on necessities like groceries and on bargains for other items.

Macy’s to Eliminate 7,000 Jobs

February 2, 2009

Macy’s announced Monday that it will cut 7,000 jobs and slash its dividend as the department store chain looks to lower expenses and preserve cash amid a severe pullback in consumer spending.

From the Associated Press:

Cincinnati-based Macy’s said the job cuts, which include some unfilled jobs, will come at offices, stores and other locations. The company currently employs about 180,000 people.

Macy’s had already announced last month that it would close 11 stores, affecting 960 employees, after retailers suffered through the worst holiday season in decades.

Macy’s said it expects the latest job cuts and other actions to lower its selling, general and administrative expenses by about $400 million annually starting in 2010.

The company also slashed its quarterly dividend to 5 cents from 13.25 cents. The dividend will be paid on April 1 to shareholders of record March 13.

Department stores have been especially hard-hit by the poor economy as shoppers turn to discount stores. Last month, department store chain Gottschalks Inc. put itself up for sale and said it had filed to reorganize in a Chapter 11 bankruptcy. Neiman Marcus Group Inc. said it was cutting about 375 jobs.

Macy’s also announced plans Monday to roll out its strategy to localize merchandising to specific markets on a national scale. It began testing the strategy in 20 regional markets last spring.

As part of the restructuring, the company will begin eliminating its Macy’s division structure and integrating all functions into a single organization. Macy’s central buying, merchandise planning, stores senior management and marketing functions will be located primarily in New York.

Obama To Broaden Financial Bailout

January 9, 2009

Barack Obama’s economic team is broadening the mission of the $700 billion bailout for the financial sector, aiming to unfreeze credit for homeowners, consumers, small businesses and local governments.

From the Associated Press:

The overhaul is aimed at the $350 billion remaining in the Troubled Asset Relief Program and comes amid mounting criticism from lawmakers and watchdogs that the Bush administration has administered the money in an inconsistent way and has not made banks accountable for the money.

The head of a congressional panel overseeing the $700 billion bailout program said Friday that lawmakers need to “take a very hard look” at how banks have used the money and she welcomed Obama’s attempts to better define the program’s mission.

Obama’s selection for Treasury secretary, Timothy Geithner, is developing a “comprehensive set of investment principles,” an Obama transition official said Friday. The official, speaking on the condition of anonymity because the plan has not yet been fleshed out, said the economic team will include measures to mitigate rising foreclosures and will place tougher conditions on financial institutions that receive the money, including limits on executive compensation.

With 11 days left before Obama is sworn in as the nation’s 44th president, the task of requesting Congress for access to the remaining funds will now likely fall on the new Obama administration.

Geithner is expected to face a confirmation hearing before the Senate next Thursday and he can count on being quizzed vigorously on his TARP proposals.

Though the Obama team is not offering any specifics, the mere fact that it is setting goals for the money won support from the head of a congressional panel that is charged with overseeing how the money is being spent.

“These are powerfully important initiatives,” said Harvard law professor Elizabeth Warren. “I’m very pleased that the incoming administration is focused on these issues.”

She offered no specific advice on how to free up more credit. “It’s going to take a variety of tools,” she said. “They may have to move through multiple approaches.”

Retailers Worry Shoppers Are Getting Too Accustomed to Deals

January 7, 2009

With shoppers used to steep discounts and competition from liquidating businesses, retailers are worried that they’ll have to cut prices quickly on spring merchandise as well. Frankly, I wish prices would stay low, but I know that retailers are losing a lot of money offering the deals that they’ve had to offer.

From the Associated Press:

Shoppers are getting used to those 75 percent off sale signs, and that’s bad news for merchants who worry they will also have to quickly slash prices on spring goods to attract customers.

Anxieties about how rampant discounts have affected shoppers’ psyches and stores’ profits are running high ahead of expected dismal December sales figures on Thursday. The holiday season is anticipated to be the worst in decades.

Already, retailers including Bebe Stores Inc. and J.Crew Group Inc. are cutting prices on selected spring styles to lure sale-savvy shoppers.

“It is a vicious cycle that no one wants to continue,” said Gilbert Harrison, chairman of Financo Inc., an investment banking firm specializing in retailing. The discounts will be a key topic at Financo’s annual dinner on Monday for retail chief executives.

In addition, retailers expect competition from a rise in liquidation sales _ the fallout from the horrible holiday period.

Merchants struggling to clear out mounds of deeply discounted coats and sweaters are wondering how they are going to get nervous shoppers to splurge on new spring products.

KB Toys Files for Chapter 11 Bankruptcy

December 12, 2008

KB Toys has filed for bankruptcy protection and plans to close its 277 mall-based stores and 114 outlets. In its Chapter 11 filings, the chain blamed “sudden and sharp decline in consumer sales due to macro-economic concerns.”

From the Associated Press:

In another sign of the grim holiday season, KB Toys filed for bankruptcy protection for the second time in four years on Thursday and plans to begin going-out-of business sales at its stores immediately.

The 86-year-old company said in a filing that its debt is “directly attributable to a sudden and sharp decline in consumer sales” because of the poor economy.

That a toy retailer filed for bankruptcy just before Christmas shows how bleak things have become, since such stores make up to half of their sales during the holidays. But analysts expect toy sales this holiday season to be flat or down slightly from last year’s total of $10.4 billion, according to market research firm NPD Group, because consumers are cutting back amid the recession.

In response, toy retailers, including KB Toys, amped up their discounts.

KB Toys had aggressively cut prices to entice cash-strapped shoppers, offering hundreds of toys for $10 or less. It also expanded its value program, which offers deals on new items each week, and offered “Buy 2, Get 1 Free” promotions.

But the deals weren’t enough. In the filing in U.S. Bankruptcy Court in Delaware, KB Toys said that between Oct. 5 and Dec. 8 sales in stores open at least one year, a key retail metric known as same-store sales, fell nearly 20 percent.

The company said it considered its alternatives and decided the most viable way to cover its debt was to begin liquidating its stores via immediate going-out-of-business sales. KB Toys also plans to sell its wholesale distribution business, according to the filing.

Jobless Claims Reach 26-Year High

December 11, 2008

The number of Americans filing new unemployment insurance claims jumped last week to a 26-year high, surpassing the number of filings economists had predicted.

From CNN Money:

The Labor Department reported Thursday that initial filings for state jobless benefits surged to 573,000 for the week ended Dec. 6. That was an increase of 58,000 from a revised 515,000 claims in the previous week.

It was the highest number of jobless claims since Nov. 27, 1982 when initial filings hit 612,000. Economists were expecting jobless claims increase to 525,000, according to a consensus compiled by Briefing.com.

The four-week moving average of jobless claims, which works to eliminate fluctuations in data was 540,500 last week, an increase of 14,250 from the previous week’s revised average of 526,250.

One economist said the number of initial claims decreased in the previous report because the data from that report represented the week of Thanksgiving. Some of the surge in initial filings in this current report could be a bounce from that week.

However, “the underlying trend in the labor market is that it continues to weaken,” said Jay Bryson, global economist with Wachovia Economics, and that is evident in the 4-week moving averages of initial claims.

The number of people continuing to collect unemployment rose to 4,429,000 in the week ended Nov. 29, the most recent week available, which was also a 26-year high. The measure was an increase of 338,000 from the preceding week’s revised level of 4,091,000.

Office Depot to Cut Over 2,000 Jobs

December 10, 2008

Office Depot has said that it will close about 9 percent of its North American stores and cut 2,200 jobs over the next three months while planning to open fewer locations next year in an effort to cut costs.

From the Associated Press:

The plan to shutter 112 stores will reduce the chain’s base to 1,163. It plans to close 45 stores in the Central U.S., 40 in the Northeast and Canada, 19 in the West and eight in the South.

Office Depot, which began the year with about 49,000 workers, also will close six of its 33 North American distribution facilities.

Meanwhile, the Delray Beach, Fla.-based company said it plans to shut another 14 stores next year while opening just 20 new sites, half of what it planned.

Analysts said the move was needed and will likely give the company a much-needed short-term financial boost. But they said they doubted the effort would be enough to fix the company’s financial condition.

“It’s not enough to really close the gap and make a meaningful impact compared to Staples and the mass merchant competitors,” said Morningstar analyst R.J. Hottovy. “But it’s probably a Band-Aid on a flesh wound.”

What are Social Media’s Next Steps?

December 3, 2008

Great posting today by Jason Falls who imagines the Web getting smarter and getting more semantic and sensory input about what users are paying attention to — and responding to it. He also sees a future in which every online development either has a mobile application or is doomed to obscurity.

From the post:

Last night I spoke to the Social Media Club gathering in Chicago where I pontificated a bit on the future of social media. I’ve talked about the future of the agency and social media before in a guest post on Valeria Maltoni’s Conversation Agent, but hadn’t tackled the topic with such a wide-angle lens before.

As social media becomes more widely accepted as a communications channel, more and more businesses will find ways to use it. Some of them will innovate. Others will just follow, but because the core of social media and the corporation is connecting directly to one’s consumers, which makes them happy, we still only sit at the front end of the bell curve of this movement.

Without putting a time frame on my thoughts, here are some notions I shared last night. While I have no way of knowing if any of this will ring true, it’s fun to imagine what our world will look like a few years down the road. Take good notes. I’d love to hear what you think the future of social media will be like in the comments.

The Web Will Get Much Smarter

Semantic search and artificial intelligence are upon us. As our browsers, social networking platforms and software packages evolve, they will all function more intelligently. They will track our every click, every keystroke and perhaps even eye movement, not to impose on us in some big brother sort of way, but to serve up smarter search results, more intuitive navigation options and almost frightening sets of information. One day, we will look at the suggested text or contacts our email software or Facebook offers and say, “Yeah … that was what I was thinking. I’m not sure if I should be impressed or scared.”

But it will be more than just smart text. The barriers of our social networks will dissolve as OpenID or similar cyber-identification takes precedence. Everyone will have access to all online applications and our browser, perhaps, will suggest the networks and tools that might be most meaningful to us based on our usage, profession, network of contact’s online behavior and more. Imagine having conversations on Twitter or in the comments of a blog and having your browser pop up with a message that says, “You’ve been talking about your Saturn a lot lately. Would you like to join other Saturn users at imSaturn.com?” Or perhaps the browser just imports imSaturn.com content into your experience seamlessly?

Social media savvy and philosophy, paralleled by the open source attitude on the technical side of things, will lead to advances never before thought possible as companies open their code and trust the consumers to contribute to their success in code, just as they do in service. Dell is already openly discussing product innovation with the public. Yahoo has hinted at opening their code set. Why is WordPress perhaps the world’s best blogging software? Because any developer in the world can work to improve it. This will become the standard, not the exception.

If It’s Not Mobile, It Won’t Exist

The iPhone, new models of Blackberries, the Google Phone or even the open source approach of Google Android are already showing that the future of the web is in the palm of your hand. If you haven’t seen a touch screen smart phone yet, know that when you do, you’ll immediately want to run out and get your own. And as the web gets smarter, so will the hardware that accesses it. My guess is that instead of having laptops or desktops, we’ll simply have universal docking stations at work and at home — or even better, in public places, Starbucks, airports, etc. — but we won’t plug in our laptops. We’ll plug in our smart phones. They will be our hard drives. They will be our entire computers. Software and webware companies are already learning if they aren’t mobile-enabled, they’ve lost half the battle. That will only become magnified as smart phones become more ubiquitous.

Journalism Will Not Die

Media is changing because of social media, but as much as I’ve picked on old-school journalism, there’s still a need for accuracy, ethics and quality in reporting. Newspapers may very well die. Traditional media outlets that don’t shift their focus to a web-first approach certainly will. But journalism will never go away. We need it as a society because it keeps our world — government, industry and more — honest. Where will the journalists go? That I’m not so clear about, though it will certainly be in web-centric opportunities. But all the social media evangelists and bloggers in the world can’t tear down one of the world’s most noble professions.

Marketing Will Continue To Be More Consumer-Centric

In very general terms, social media has reversed a century-long trend that has made brands, corporations and businesses think they know their consumers better than the consumers know themselves, or at least has made them take their consumers for granted. Thanks to social media, brands are becoming more focused on customer service, whether it’s through listening to feedback, crowdsourcing innovation or just responding to inquiries. The more social media savvy that breaks through to the C-Suite and to marketing managers everywhere, the better the consumer experience will be. You’ve probably heard Internet marketers say, “Content is king.” It is only if it’s relevant to the website’s audience. The more true statement is, “The customer is king.” This will not change.

Less Travelers Expected over Thanksgiving Holiday This Year

November 26, 2008

Despite plummeting gas prices and unusual last-minute holiday deals on airplane tickets, more people are expected to stick close to home this Thanksgiving.

Well, I hope it’s less crowded where I’m driving today! Napa Valley, here I come!

From the Associated Press:

The Automobile Association of America says the 41 million Americans expected to take trips at least 50 miles for Thanksgiving is about 600,000 less than traveled last Thanksgiving.

The reason, as a surly economist might say? It’s the economy, stupid.

“The economy is in such bad shape. … They’re still really hesitant to take that trip,” said Beth Mosher, spokeswoman for AAA Chicago.

In comparison, over the July 4 weekend when gas prices were far higher than the same weekend the previous year, the number of travelers dropped just 2.3 percent, she said. At that time, the economic news wasn’t as dire as it is now.

Still, some are undeterred. Carpenter Michael Layman, 59, left Tampa, Fla., early Tuesday to drive about 1,200 miles home to Clinton Township, Mich., for Thanksgiving with his wife, their two children and four grandchildren. He moved to Florida three years ago because of better work opportunities than he could find in Michigan.

“I’m looking forward to being with my family. I wouldn’t miss Thanksgiving and Christmas,” Layman said after he stopped to sleep for a few hours in the back of his minivan at an Interstate 75 rest area about 30 miles north of Cincinnati.

He said he was pleased when gas prices began falling several weeks ago. Layman said he had been paying about $70 dollars to fill up and now pays less than half of that. “That felt pretty good,” he said.

Forecasters said travel weather was dry from the Plains through the Southeast, but heavy rain swept southern California early Wednesday.

Retailers Ready for Black Friday

November 24, 2008

Retailers and mall owners are gearing up for Black Friday, which is more critical than ever as shoppers cut back their spending. Black Friday falls on November 28, the day after the Thanksgiving holiday, and many retailers have already begun advertising HUGE discounts to attract shoppers as early as midnight.

From Reuters:

Black Friday, the traditional start to the U.S. holiday shopping season, means more to retailers this year as they struggle to win over consumers with a recession looming.

Retailers that fail to rack up sales during the three-day weekend face the prospect of clearing out merchandise at profit-crunching prices closer to Christmas.

“While Black Friday sales and promotions have been tremendously successful for the last few years, the day itself takes on a bit more importance when consumers are struggling,” said Ellen Davis, spokeswoman for the National Retail Federation. “In a down economy, people are willing to get up at 3 a.m. and sit in a line outside a store.”

Retailers ring up roughly 10 percent of total holiday sales during the three-day weekend, best known for the deals offered on Black Friday — named for the days when store chains used to turn a profit for the year.

The weekend’s results do not always indicate how overall holiday sales will fare, but with the United States likely in a consumer-led recession, it has added importance.

Consumers will look for bargain-basement prices to help meet austere budgets, while retailers from Wal-Mart Stores Inc to Saks Inc learn if they have the right products at the right prices.

“This year, the Black Friday weekend has profound impact on how consumers and, more importantly, how retailers are going to view the holiday season in totality,” said Janet Hoffman, managing partner of Accenture Ltd’s global retail practice.

From the Associated Press:

After pushing steep discounts throughout November that are usually reserved for the day after Thanksgiving, retailers from Kohl’s to Toys “R” Us are offering even bigger cuts and promotions for Black Friday in a frantic bid to pull in shoppers.

But the bargain hunters showing up for the early morning specials on toys and TVs are not expected to buy with the same gusto as a year ago, as they fret about tightening credit, massive layoffs and shrinking retirement funds.

Not to mention that consumers are already jaded by all those “60 percent off” signs plastered on storefronts. Analysts say shoppers may stick to smaller gifts like cosmetics rather than $1,000 flat-panel TVs in a holiday season expected to be the weakest in decades.

Another concern? There aren’t any must-have items so far, even in toys – though some items have been popular, such as Spin Master Ltd.’s Bakugan.

“I will be careful,” said Joanna Rizzo, 20, an executive secretary from Medford, N.Y. who plans to stick to her budget of $200 for the day after Thanksgiving. Rizzo has just finished paying off her credit cards, and will use cash to pay for her presents. Overall, she plans to spend about $600, less than the $1,000 she spent on presents last year.

In recent years, merchants including Wal-Mart Stores Inc. and Toys “R” Us Inc., have been pushing earlier the sales and expanded hours that were typically reserved for Black Friday – named because it historically was when stores turned a profit – to jump-start the season.

But in this year’s deteriorating economy, stores from luxury retailers to consumer electronics chains, pressed the panic button – slashing prices up to 60 percent on even new merchandise. After reporting the worst October sales in at least 39 years, stores are seeing more weak sales in November, according to the International Council of Shopping Centers-Goldman Sachs Index, which measures sales at stores opened at least a year.

Kmart, a division of Sears Holdings Corp., started offering products at what it calls “Black Friday prices” earlier in the month – the first time it had done so. Drugstore chain CVS Caremark Corp. will launch a weeklong “Black Friday” promotion on Sunday, offering early morning deals on items ranging from GPS devices to digital photos frames.

“Black Friday is going to have some very impressive deals, but overall the deals won’t be any better than what you saw before,” despite all the hype, said Dan de Grandpre, founder and editor-in-chief of dealnews.com. “Retailers have already given their best shots already.”


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