Posted tagged ‘Consumer Spending’

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.

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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.

Retailers Giving Bargains to Shoppers Who Ask

December 23, 2008

Shoppers are asking for bargains beyond retailers’ marked discounts, and in many cases they’re getting them. Best Buy, for instance, is matching competitors’ prices, and store managers at J. Crew are refunding the difference between the original price and the sale price. Stores that won’t haggle are loosening their return policies.

From the Associated Press:

With holiday sales shaping up to be the lowest in years, possibly the worst since the industry began annual comparisons in 1969, retailers say they’re taking consumers’ demands for good deals seriously. Some are extending return policies, while others are matching competitors’ prices. Many are volunteering on-the-spot discounts and even letting customers haggle prices well down from what’s marked in a desperate bid to make the cash register ring.

“You’d have to be a moron not to ask for a discount,” said Stephen Hoch, a retailing expert at the Wharton School at the University of Pennsylvania.

More and more consumers are doing just that, treating a trip to the mall like a visit to the used car lot.

Allen Chen, a part-time cashier at a J. Crew store in White Plains, N.Y., said shoppers with two-month-old receipts are asking for partial refunds for items now on sale. Normally, the store’s policy is to refund the difference between an item’s purchase price and a later sale price only if it goes on sale within seven days of the purchase.

“When I tell them it is past the seven-day policy, they tell me that they will just return it and re-buy it” at the sale price, he said, adding that his store managers are now allowing customers to do so most of the time.

Shoppers are also being far more savvy about asking retailers to match a competitor’s lower price.

While shopping for Blu-ray discs at a Los Angeles Best Buy, Luis Levy used his cell phone to check the price at nearby competitors. Each disc was $10 cheaper at Circuit City or Wal-Mart. Best Buy matched the lower prices.

Diana Thang, manager of Grace Jewelers near San Francisco’s Union Square, said she and her staff are bargaining more than she ever has in two-plus decades in the business. But it’s not working wonders.

“They have a budget,” Thang said of most customers this season. “We give a low, low price and they still can’t accept it. They’re looking at more than $1,000 stuff, and they want to spend $200 or $300.”

Retailers Hope To Attract Shoppers With Huge Discounts

December 22, 2008

Over the last weekend before Christmas, retailers were offering huge discounts. Macy’s sold designer purses for half price, and jewelry was knocked down 40%, while more than a dozen of its stores are staying open around the clock until Christmas Eve. At some Kmart and Sears locations, shoppers lined up in search of deals before the stores opened.

From the New York Times:

The deals were there and, by most accounts, so were the shoppers. But at the close of the final holiday shopping weekend, consumers confessed they were still nervous about buying.

”This is going to be a poor Christmas,” said Dee Dobbins, a 31-year-old from Goldsboro, N.C., who finished her holiday shopping with money she’d received from her recent graduation from North Carolina State University. ”At least I had it, because I don’t know what I would have done.”

From flagship department stores to main street shops, consumers found packed parking lots, massive markdowns and extended hours — in some places, around-the-clock shopping — as merchants hope to salvage one of the worst shopping seasons in decades, brought on by the recession and growing economic uncertainty.

For those willing to spend, the deals abounded.

In Miami, Ana Solis bought T-shirts from the Disney Store featuring Kermit the Frog and Tigger. One shirt — original price $24.99 — was marked down to $7.99 before another 40 percent discount.

At the flagship Macy’s store on 34th Street in New York, shoppers swarmed racks offering 65 percent off women’s clothing. Elsewhere, the store was offering 50 percent off handbags by designers such as Dooney & Bourke and Coach and 40 percent off gold earrings.

Chris Moscardelli snagged a cashmere blanket for more than half off.

”It’s been a great day,” the 38-year-old said.

But not for Ahmad Parpia, the store manager of Marquise Jewelers inside Dallas’ Valley View Mall, who’s seen his most profitable period of the year fizzle out. Few shoppers are coming inside the jeweler’s four stores to buy diamond-encrusted chains, gold watches and jewelry, despite signs advertising: ”Financing available up to $10,000. Will beat any competitive price.”

”It’s almost like 80 percent down over the last two years,” he said. ”I’ve never seen before a Christmas like that, and I’ve been in this business almost 15 years.”

The International Council of Shopping Centers expects established stores to post their worst performance for the holidays since at least 1969, when it began tracking such data. It predicts same-store sales — or sales at stores open at least a year — will fall as much as 1 percent for the November and December period, and fears the decline could even be steeper.

Still, shoppers were out at Kmart and Sears stores this weekend as customers stocked up on last-minute gifts and electronics like Nintendo’s Wii, Blu-ray players, digital cameras and tools. In some cases, shoppers lined up before stores opened for weekend doorbuster deals.

”For the most part, we beat our previous week, which was a great kind of benchmark, because last week was strong for us,” said Tom Aiello, a spokesman for the stores owned by Sears Holdings Corp.

Retailers Catering To Late Night Shoppers

December 22, 2008

Macy’s, Toys R Us and H&M are just a handful of retailers aiming to appeal to night owls during this holiday season. The chains will stay open 24 hours at select locations, hoping to capture last-minute shoppers.

From the Wall Street Journal:

At 4 a.m. Saturday, while most people in the city that never sleeps were nevertheless sleeping, Camille Joseph was wandering the aisles of Toys “R” Us in New York’s Times Square.

Saying she hates crowds, the 37-year-old Ms. Joseph was thrilled to be able to finish her shopping when no one was around. Surrounded by packages filled with a dollhouse, videogames and a robot, she sprawled on the floor next to a cash register. “Could you imagine being able to do this during the day?” said Ms. Joseph, who by day is a manager at Starbucks.

Starting this past Friday and continuing until 8 p.m. Christmas Eve, Toys “R” Us is embracing procrastinators, night owls and curiosity seekers by keeping its New York flagship — billed as the world’s largest toy store — open continuously for 134 hours.

In the final countdown of one of the worst holiday retail seasons in decades, more retailers have extended hours and are staying open for 24-hour periods or more in a last-ditch effort to capture sales. Macy’s Inc., L.L. Bean International, Wal-Mart Stores Inc. and Hennes & Mauritz AB’s H&M chain added extreme hours at select locations this year, they said, as a way to enhance customer service, reduce congestion and compete for last-minute sales.

“In this kind of environment, you do whatever it takes,” said Michael Niemira, chief economist at the International Council of Shopping Centers.

Snowstorms across the country during the last shopping weekend before Christmas are expected to make the already-dismal retail season even worse, some retailers said. Numbers weren’t available Sunday, but ShopperTrak RCT Corp. said that the final weekend before Christmas typically accounts for 11.5% of holiday sales. Last year, Super Saturday brought in $8.7 billion in retail sales. Retail sales for the six weeks to Dec. 13 are down 2% from a year earlier.

Marshal Cohen, chief industry analyst at market researcher NPD Group, has been visiting malls in North Carolina, South Carolina, Florida and Georgia since Friday. He said “traffic was on par with last year,” but noticed fewer purchases per person. “Last year, people couldn’t carry their bags out of stores,” he said. “This year, half the shoppers had one hand free.”

Kathleen Waugh, a spokeswoman for Toys “R” Us, said it was premature to say whether the benefits of keeping the Times Square store open continuously outweighed the costs. “We will evaluate its success once the event is over at 8 p.m. on Christmas Eve,” she said.

Holiday Shopping is Far From Over

December 16, 2008

Shoppers still have a lot of holiday shopping to do — the typical consumer has finished 47%, compared with 53% this time last year, according to an NRF survey. NRF President Tracy Mullin said a late Thanksgiving might be to blame. “Retailers will try to manage the rush of last-minute shoppers with expanded hours, extra employees to stock shelves, and a lot of sales and promotions,” Mullin said.

From CNNMoney:

With just over a week to go until Christmas, consumers have completed less than half of their holiday shopping – and millions have not even started yet, according to a report released Tuesday.

The procrastination comes as retail industry experts say a worsening economy and mounting job losses mean households will likely buy fewer gifts this year and possibly for fewer people.

According to the National Retail Foundation’s “Holiday Consumer Intentions and Actions” survey, holiday shoppers said they had finished 47% of their gift shopping by the second week of December, which is a significant drop from the 53% of gift purchases they had completed at the same time last year.

Only 8% of respondents said their shopping is complete, and more than 41 million people have not even begun their holiday shopping.

The big procrastinators were men and 35-to-44 year-olds – 21% of each group said they haven’t started their shopping.

The NRF cited this year’s shortened shopping season as a likely culprit. There are five fewer days between Thanksgiving and Christmas this year than there were last year.

The shortened shopping season “means that the holidays have snuck up on many of us,” NRF president Tracy Mullin said in a written statement. “Retailers will try to manage the rush of last-minute shoppers with expanded hours, extra employees to stock shelves, and a lot of sales and promotions.”

Kmart Enlists Bloggers for PR

December 12, 2008

Six influential bloggers have been given $500 gift certificates to spend at Kmart in exchange for blogging about the experience. The posts were not censored by Kmart, and the bloggers clearly disclosed their agreement with the retailer. The blog posts seem to be the tip of the spear for a larger marketing effort which will include contests and more traditional advertisements meant to persuade holiday shoppers to revisit Kmart stores.

From MediaPost Publications:

A sponsored social networking campaign enlisting the help of six well-known bloggers is yielding big buzz for Kmart and encouraging consumers to give the retailer another look during the critical holiday season.

Kmart gave each of six influential bloggers a $500 gift certificate to go on a shopping spree in the store and then blog about their shopping experiences in any way they saw fit (no censorship). The bloggers clearly disclosed this sponsored arrangement in their respective postings.

In addition, Kmart is sponsoring a contest in which one community member from each of the six blogs will win a $500 gift certificate to go on a Kmart shopping spree.

In their postings about their own shopping sprees, the original bloggers let those in their communities know that they could enter to win a $500 Kmart shopping certificate in one of two ways. They could either place a comment on the blog’s post, consisting of a holiday wish list of items totaling under $500 that are carried at Kmart (including a description and SKU number for each item), or use Twitter to tweet the message provided on each blog’s posting area.

An added exposure element is also involved, via social media marketing company Izea, through which the campaign is being run. In addition to managing formal campaigns like Kmart’s six-blogger shopping spree/postings effort, Izea enables advertisers/sponsors to link up with selected bloggers within its network of approximately 250,000 participating blogs who want to carry transparent, paid-for sponsor ads or postings. (Participating bloggers adhere to a code of ethics that requires disclosure of those posts that are sponsored.) This provides added “long tail” exposure for sponsors, explains Izea founder/CEO Ted Murphy.

Bloggers can review paid sponsorships being offered through Izea’s SocialSpark blog marketing network or its PayPerPost program and sign up to participate in specific sponsorships that appear to match up to their blogs’ content/demographics. The sponsor determines the amounts offered; the terms range from pay-per-post to pay-per-day to CPA. In this case, bloggers could sign up to run a Kmart banner about the shopping contest.