Posted tagged ‘National Retail Federation’

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.


Seasonal Holiday Workers Face Fewer Options This Year

December 2, 2008

According to a survey from, retail stores plan to hire 33% fewer seasonal employees this year because of the sluggish economy. Many stores also started hiring earlier this year in September or October. “There are some opportunities out there, but there certainly aren’t going to be as many,” said Daniel Butler, a vice president with the National Retail Federation.

From CNN:

Nick Sciscione was standing in line at one of his favorite clothing stores when a cashier asked him if he would like to apply for a job.

With winter break approaching, it seemed like a good idea to Sciscione, an 18-year-old college sophomore who wanted to make some extra cash to spend on essentials like gas, clothes and parking tickets.

Sciscione took an application home, but decided that even though he had a solid offer from the store, he wanted to look for a better opportunity. He picked up an application from another clothing store at the Menlo Park Mall in Edison, New Jersey. This weekend he plans to look at other places to work between semesters.

“I wouldn’t limit my search to just retail,” said Sciscione, a dance major, adding that he thought he could pick up some hours teaching dance classes.

People like Sciscione might be wise to take the sure thing, said Daniel Butler, a vice president with the National Retail Federation. There are two things working against them: They are a little behind the curve in starting their search, and they will find that many retailers are curtailing the number of seasonal workers they will hire.

The federation forecasts that holiday sales will grow this year by 2.2 percent. The average increase for the past 10 years has been 4.4 percent.

A Web site that tracks hourly workers says managers who are adding staff for the holidays will hire fewer workers, and the number of stores hiring no additional help is increasing.

In a survey commissioned by, managers responsible for hiring said they would be bringing on about 33 percent fewer seasonal workers and 20 percent fewer hourly workers for the holidays.

Of 1,006 managers who responded to the survey, 57 percent said they will hire no additional help, 8 percentage points higher than last season.

Butler, who worked in retail for 26 years, said a majority of employers started their seasonal hiring in September or October.

“There are some opportunities out there, but there certainly aren’t going to be as many,” he said. “What happens now with many students is that with their class schedules, they don’t get out in time to be able to work at most stores in retail — unless it is a place they have worked before.”

Butler said that as a hiring manager, when he figured out his seasonal staffing plans, he would first think of who had been on staff and who he knew could come back for the holidays — when many retailers do a huge percentage of their yearly business.

Managers like to bring back such “floaters,” Butler said, because they already know the merchandise and don’t require any training. It’s important to identify during the summer those workers who can come back during November and December so it makes other elements of seasonal planning easier, he said.

Black Friday Starts Holiday Shopping Season with a Bang

December 2, 2008

Individual shoppers spent about 7% more this year than last year from Thursday through Sunday, the NRF found. Shoppers affected by the economic slowdown were more selective than in years past, with many drawn in by deep discounts from retailers. “It seems that not only did retailers do a good job of attracting shoppers, but it seems that shoppers were also excited again to take part in the tradition of Black Friday weekend,” NRF spokeswoman Kathy Grannis said.

So, if Black Friday was so great, what is the outlook for the rest of the holiday season? Will shoppers continue to spend? Let’s take a look at sales totals in two weeks and see how well retailers are doing at that time. It’s a very sad, and scary time right now with the state of the economy.

From the New York Times:

Sales in the nation’s stores were strong over the weekend, to the relief of retailers that had been expecting a holiday shopping period as slow as the overall economy.

But while spending was up, there were troubling signs in the early numbers. The bargains that drove shoppers to stores were so stunning, analysts said that retailers — already suffering from double-digit sales declines the last two months — would probably see their profits erode even further.

Also, after shoppers flooded stores on Friday, foot traffic trailed off significantly on Saturday and Sunday.

Retailing professionals consider the weekend after Thanksgiving a barometer of overall holiday sales, which account for 25 to 40 percent of their annual sales. And in a year marked by an economic crisis, they are desperate for any signs that consumers are still willing to spend.

Their first glimpse came from two industry surveys released on Sunday. ShopperTrak, which does research for retailers, said sales increased 3 percent on Friday, compared with last year.

The National Retail Federation, adding up sales Thursday through Saturday and projected sales for Sunday, said that each shopper spent about 7 percent more this year than last year. Shoppers spent an average of $372.57 Friday though Sunday, according to the federation, a trade group.

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 “Retailers have already given their best shots already.”

Retailers and Restaurants Get Smart to Retain Staff

October 6, 2008

Turnover is generally high in the retail industry because of numerous factors ranging from long hours and tedious work to competition for staff from other companies. Retailers and restaurants that have taken several approaches to worker retention include my client Burgerville, who makes affordable health care available to all employees who have been with the company at least six months and work 20 hours a week, all for just $15 per month. Another company, Finish Line, has developed distinctive strategies to attract and retain Generation Y workers, and a third company, Duane Reade, has deployed a work force management application to boost customer service and scheduling flexibility.

Susan Reda of STORES Magazine has written a great piece featuring these three companies which can be found on the STORES Website by clicking here.

From the article:

Recruiting employees to work in retail stores is the easy part; it’s convincing them to stay that can be grueling.

Turnover in the retail industry is notoriously high. For myriad reasons — everything from long hours and tedious tasks to the chance to earn a dime more per hour at the shop across the mall — retail employees suffer from a collective case of retention deficit disorder. Statistics reported earlier this year by the National Retail Federation estimate industry turnover at 58 percent for full-time associates and 114 percent for part-time employees.

Given the cost of recruiting, hiring, onboarding and training, retailers are understandably frustrated when an employee who has been with the company just a few short weeks or months decides to move on. The prospect of investing in an employee who departs before the season changes is unsettling at best, but return on investment is not the only concern: Customer service suffers when there are not enough associates to assist shoppers, process transactions or provide the knowledgeable insight that a seasoned employee can offer.

Headquarters: Vancouver, Wash.
Employees: 1,400+
Retention Strategy: Affordable Health Care

A 2005 employee survey spelled it out in black and white: The No. 1 concern of Burgerville workers was affordable health care.

“We bet that if we could find a way to make health care affordable for all our employees — most of whom are hourly employees — we could alleviate a huge concern and win their loyalty,” chief cultural officer Jack Graves says.

It was a sizeable bet — approximately $1.5 million — but it has paid off handsomely. Since it began offering an extended and improved health insurance plan, Burgerville has achieved a dramatic increase in employee retention and loyalty.

Prior to implementing the new plan, turnover rates hovered around 128 percent. In 2006, the first full year of the health care initiative, turnover dropped to 54 percent; today the rate is holding steady at 52 percent. Productivity and employee confidence are up, absenteeism is down and, by reducing turnover, Burgerville has conservatively saved more than $500,000 — capital the quick-serve chain would have had to invest in recruiting, training and onboarding.

Under Burgerville’s plan, employees who have been with the company for at least six months and work 20 hours a week are eligible for health insurance; it costs each employee $15 per month, or $90 monthly for family coverage. Burgerville’s parent company, The Holland, pays more than 90 percent of the premium for employees and their dependents.

The package, put together in partnership with Kaiser Permanente, has no deductible — a tipping point for employee acceptance, according to Graves. High school and college students, retirees and young moms working part time “are often on a tight budget,” Graves says. “What we learned, however, was that these employees were less likely to go to the doctor — even if they had some insurance — because they couldn’t afford the deductible.

“Offering affordable health care with a zero deductible was a game changer,” he says.

It didn’t happen overnight, however. “The program was so outside the box that people didn’t believe it at first,” Graves says. “We actually set up a field trip of sorts to a Kaiser clinic to demonstrate how it worked.”

Employee retention isn’t the only metric Burgerville uses to measure its return on investment. “With more skilled employees, our restaurants are running better and they look better,” Graves says. “The food is hotter and it’s served faster, too. There’s a renewed sense of pride and commitment.”

The changes are having a healthy effect on the bottom line, too; Burgerville reports a year-over-year increase in guest counts and a lift in sales.

“Being a local company, word spread quickly of our commitment to providing health care, and guests have rewarded us for that,” Graves says. The company has received substantial feedback from guests indicating that the care showed to its employees separates Burgerville from the pack.

“Many guests have written to us saying that it is this sort of program that keeps them committed to the Burgerville brand,” Graves says. “I’ve got the e-mails to prove it.”

Burgerville employees are at the forefront of what allows the company to live its values to their fullest extent. Without strong, vibrant and healthy people working in each of their restaurants, the company cannot provide the service which their guests expect.

Even more important, Burgerville has been able to live their mission “Serve with Love” and stand by their employees. Burgerville believes that thriving individuals lead to thriving families which helps build efficient and connected communities. This in turn supports a very healthy and sustainable business.