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Keeping Our Finger On The Pulse Of The Retail Industry

Halloween Spooks October Sales

Same-Store Sales Increase is Lowest Since 1995

U.S. October retail sales increased 1.6%, the worst for October since 1995 (when the increase was a mere 0.2%), according to the International Council of Shopping Centers. The results, based on 42 chains, missed the New York-based group's 2% forecast and suggest a slowdown in holiday spending.

“Consumers are slowing down, being more discretionary in their purchases, and retailers are going to have to be promotional,'' said Lauri Brunner, a retail analyst at Thrivent Investment Management in Minneapolis, which has $70.6 billion in assets. “The promotions are starting earlier and earlier.''

Milder-than-normal weather continued to hurt store sales, wiping out consumers’ desire for winter wear. Amid such challenges, many stores including Wal-Mart and Toys “R” Us Inc. expected to jump-start the season early this year by offering door busters and big discounts starting last weekend. But shoppers don’t seem to be in a hurry to buy.

The winning retailers in October were as follows:

• Christopher & Banks - same-store sales surged 22%, well-above Wall Street forecasts.
• Target- sales gained 4%, surpassing the estimate for an increase of 2.4%
• Costco - sales rose 9%.
• Saks - posted a 10.6% gain in same-store sales, well-exceeding the 5.4% estimate.
• BJ’s Wholesale Club - same-store sales 4.8% higher, above analysts’ expectations.
• Buckle said Thursday its same-store sales jumped 14.9% in October.

"Although the trend in consumer spending clearly has slowed relative to last year, it is encouraging that in the face of increasing headwinds, such as higher energy prices and increased worry about the housing markets, that consumers continue to spend modestly," said Mike Niemira, chief economist at ICSC, who compiles the index.

All the best to you and your family… from your friends at Hart Systems

The Origin of the Thanksgiving Holiday

Many people are under the mistaken assumption that Thanksgiving became a yearly holiday after the Pilgrims celebrated their Thanksgiving feast in 1621, this is not so.  Thanksgiving was not celebrated on an annual basis until 1863, when Abraham Lincoln made it a national holiday with his 1863 Thanksgiving Proclamation. 

Today, our Thanksgiving is the fourth Thursday of November.  This day was established by President Franklin D. Roosevelt in 1939, who changed it from Abraham Lincoln’s designation as the last Thursday in November (that could occasionally end up being the fifth Thursday and too close to Christmas for businesses).  Therefore, the retail industry is responsible for determining the day that we celebrate Thanksgiving!

Anticipating a lousy holiday season, retailers are discounting early

It’s not even Thanksgiving, but the nation’s retailers, including Wal-Mart and Toys “R” Us, are jump-starting holiday sales with big discounts and door buster specials in what’s expected to be a lukewarm Christmas season.

The sales blitz — which comes three weeks earlier than the usual debut the day after Thanksgiving — is great news for consumers. But the new strategy shows the nervousness of merchants.

“This is clearly a win-win situation for consumers,” said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass. But he added, “This isn’t good news for stores’ profits...It’s just more evidence that this is going to be a highly competitive season.”

With Dec. 25 about eight weeks away, the retail industry is struggling with shoppers’ eroding confidence amid higher daily living expenses and problems in credit availability. Wachovia Capital Markets LLC analyst John D. Morris said another big problem is that so far there aren’t any must-haves this holiday season. A year ago at this time, shoppers were in toy stores looking for the hard-to-find T.M.X. Elmo from Fisher-Price.

“There is nothing out there,” said Morris. “And so the marketing itself becomes the message.”

In recent years, merchants have been pushing the holiday season earlier and earlier, dangling free shipping and discounts. But this year, the discounts — coming only a few days after Halloween — resemble the post-Thanksgiving day blitz, with special door busters and 50% discounts as generous as those usually found on Black Friday.

“This is definitely a preview of Thanksgiving,” said Geoffrey Webb, director of advertising and sales promotion at KB. “We heard this is going to be a competitive holiday so we are going to be right in the rings fighting it out.”

A survey from the NRF found about 40% of consumers planned to make holiday gift or seasonal purchases before Halloween. 

“We know that retailers are really focused on managing their inventory and preparing for this holiday season so they are trying to make sure that they don’t have too much and they have the right stuff,” said Stacy Janiak, national retail leader for Deloitte & Touche.   Deloitte predicts that holiday sales will increase 4.5% to 5%, slightly less than last year’s 5.1% increase. The NRF, meanwhile, forecasts an increase of 4.8%, which would represent the slowest holiday sales growth since 2002, when sales rose 1.3%.

Consumers to Take Conservative Approach to Holiday Shopping

According to NRF’s First Holiday Survey

Though shoppers still plan to spend more on the holidays this year than last, consumers say their spending will be a bit restrained this holiday season.  According to NRF’s 2007 Holiday Consumer Intentions and Actions Survey, conducted by BIGresearch, U.S. consumers plan to spend an average of $816.69 on holiday-related shopping.  In addition, these shoppers will spend an additional $106.67 on special “non-gift” purchases by taking advantage of special promotions and discounts to treat themselves.  This brings total planned holiday-related spending to $923.36, an increase of 3.7% from 2006 and in line with NRF’s economic forecast of 4.0%.

 “Shoppers will be a little more conservative with their spending as they become more aware of the softness in the economy,” said NRF President and CEO Tracy Mullin.  “It is safe to say that many retailers will be competing on price, causing this holiday to be very promotional and a tremendous win for consumers.”

WHERE will People Shop?

NRF 2007 Holiday Survival Kit - Part Two of Three

Turkeys are scrambling for cover, family gatherings are being planned, and excitement is in the air….is this for the Thanksgiving Holiday OR is it due to the Kickoff to the Holiday Shopping Season?  Part Two of our three-part Survival Kit provides some additional bits and pieces of information.

Black Friday is 15 days away and holiday shoppers are beginning to make their lists.  Traditionally known as the day when retailers went from being “in the red” to being “in the black”, today consumers are brought into the stores with sales and promotions.  Although important, Black Friday is rarely the busiest shopping day of the year.  In 2006 58.9 million people shopped on Black Friday and 1 in 4 consumers were at the stores by 5 am or earlier.

The next big shopping day is Cyber Monday (the Monday after Thanksgiving) which is the online retail equivalent to Black Friday.  Although retailers see sales spikes, like Black Friday, it is rarely the busiest online shopping day of the year.

Consumers prefer online shopping and Cyber Monday because:

72%      To avoid crowds
66%      More convenient to shop online
58%      To avoid lines at the store
52%      Easier to compare prices
47%      Easier to find items online
45%      Easier to compare products
31%      Better variety online
25%      High gas prices

NOTE:  CyberMonday.com is a one-stop website for shoppers to find online holiday deals.  When shoppers make a purchase through the site, retailers provide a percentage of that sale to Shop.org for a scholarship fund which helps students pursuing careers in eCommerce.

Tis’ the season to be staffed!

In 1997, the average monthly employment was 14,388,900, increasing to 15,036,700 during the holiday season; an increase of 647,800.  In 2006 the average monthly employment was 15,319,000, increasing to 15,816,000 during the holiday season; an increase of 596,000.

Part 3 of the 2007 Holiday Survival Kit will be found in the December Hart Monitor.  Have a great Thanksgiving!

Movers & Shakers

People you know, who are on the go…

This monthly installment to The Hart Monitor includes executive moves within the retail industry as reported in publications such as WWD, Hoover's, and various other sources.

Best Buy:

CFO, Darren Jackson has moved into the new position of EVP customer operating groups. Jim Muehlbauer (who is SVP and CFO, Best Buy, U.S.) was named interim CFO. Kal Patel's title changed to EVP emerging business SBU; Tim McGeehan to lead, Best Buy Mobile; Shari Ballard to EVP retail channel management; and David Berg to SVP, international strategy and corporate development. Former PepsiCo executive Rebecca Wanta was hired as CIO, North America. Additionally, Kevin Layden will become COO, Best Buy International on January 4, 2008, and Mike Pratt will take over Layden’s current position as president, Best Buy Canada.

The Bombay Company:

CEO David Stewart resigned from the furniture and decorations retailer which is under new ownership and has plans to shut all of its US locations.

Chico's FAS:

Women’s clothing retailer, Chico’s FAS has hired Kent Kleeberger (previously CFO at Dollar Tree) as its incoming financial executive. Charlie Kleman has resigned as EVP, CFO, and Treasurer.

The Children's Place:

The Children's Place board asked CEO Ezra Dabah to resign from the children's clothing retailer for not complying with its securities-trading policies and named director Chuck Crovitz as interim CEO.

Coldwater Creek:

Co-founder Dennis Pence will hand over the CEO title to president and COO Daniel Griesemer. Pence will remain chairman.

Deb Shops:

Clothing retailer Deb Shops went private, and president and CEO Marvin Rounick and EVP Warren Weiner left. Allen Questrom, an advisor for the private equity firm, Lee Equity Partners, that bought Deb Shops, was named chairman. 

Dollar Tree Stores:

CFO Kent Kleeberger resigned from the discount store company to take a similar role at apparel retailer Chico’s FAS. VP and controller Kathleen Mallas was named interim principal financial and accounting officer.

J.C. Penney:

Department store operator J.C. Penney will be plugging in former Best Buy SVP Ruby Anik as SVP and director of brand marketing, effective November 26.

SuperValu:

SuperValu has announced that Sue Klug, SVP, sales and marketing for SuperValu's Retail West region, is being promoted to president of its Southern California division.

Tesco:

Supermarket operator Tesco is shopping for a few new executives after the recent resignations of commercial finance director Keith Down and central European clothing director Julia Reynolds. Their departures follow those of development Program director Dido Harding (off to rival J Sainsbury), IT head John Browett, and Tesco Direct Head Steve Robinson.

VF Corporation:

President and COO Eric Wiseman will become CEO on January 1, 2008. He’ll succeed Mackey McDonald, who will remain chairman at the jeans maker.

Since there aren’t that many inventories scheduled in November, we decided to offer some tips that you could use this month (instead of our monthly Inventory Tip), so…

• Frozen turkey is fresher than a “fresh” turkey; it’s immediately frozen upon preparation.
• To avoid steaming the meat, use a shallow roasting pan. A darker roasting pan cooks faster.
• So as not to spoil the uncooked turkey, don’t stuff your turkey ahead of time.
• For moister meat, roast the turkey breast-side down on a v-shaped rack until the last hour or so in the oven. 
• To preserve moistness, let the cooked turkey rest for 20 or 30 minutes.  Keep it loosely covered with aluminum foil. The moistness is retained and the turkey is easier to carve.
• Cover the turkey with an aluminum foil tent and cook for 15 minutes per pound at 350 degrees, basting every hour.
• To keep the turkey moist cover entire turkey with bacon before cooking....or place pats of butter under the skin before cooking.
• Stuffing Tip - add one large crumbled corn muffin to your stuffing for added flavor and texture...yum!

HART SYSTEMS The Self-Inventory Experts 

To learn more about how we can help you achieve your physical inventory goals, please call us at 800-252-2818, click here -Tell Me More- to send an e-mail, or visit our website at http://www.hartsystems.com/.

To view a previous Hart Monitor, click August, September, October

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© 2007 Hart Systems, Inc.

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appreciation is not to utter words, but to live by them.”

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