THE 

MONITOR

Keeping Our Finger On The Pulse Of The Retail Industry

Volume VII,    Issue 7

July  2009

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U.S. Chain Store Sales Fell 5.1 % in June
U.S. chain store sales for June 2009 were down 5.1 % on a year-over-year, same-store basis, according to ICSC’s index. Analysts blame poor performance on the unseasonably cool weather that kept consumers from purchasing summer items. The ongoing economic depression also plays a big role in the poor results for the month of June. This time last year consumers had their government stimulus checks to shop with.

This June was the second coolest in 10 years, with record rainfall in cities including New York, Boston, and Chicago, according to weather research firm Planalytics. But financial worries are clearly discouraging shoppers, too. The latest federal jobs report showed wages shrinking and higher-than-expected job losses in June.

As retailers reported their monthly figures, a decrease in sales fell across all sectors, particularly clothing stores.

Some of the chains that managed to beat expectations include:

Aeropostale –-sales rose 12%, better than the 10.3% predicted
The Buckle –-9.6% rise

Some declines include:

Abercrombie & Fitch –-sales fell 32%
Limited Brands –-12% drop
Wet Seal –-fell 11.1%
The Children’s Place –-12% decline
Stage Stores –-sales slid 12.6%
Destination Maternity Corp. –-sales fell 10.7%

"Although June sales continued their very weak performance that has persisted since December 2008, there were some signs of improvement beneath the surface with a handful of teen and value retailers posting surprisingly healthy gains," said Michael P. Niemira, chief economist and director of research for ICSC. "These nascent signs of improvement are important since history suggests that consumer spending typically starts off sluggish prior to significant improvement," he added.

The Top 100 Retailers of 2008
The July 2009 edition of NRF Stores features their annual listing of the “Top 100 Retailers: The Nation’s Retail Power Players”, sponsored by SAP.  The Top 100 Retailers is the authoritative ranking of the largest U.S.-based retail companies by annual revenues.  The Top 100 companies are ranked by sales volume, with this year's figures compiled by London-based research firm Planet Retail
 
According to the article by David P. Schulz, 2008 was a bad year for most retailers — and 2009 hasn’t been great, either — but there is hope that we’ve reached the bottom and the economy might show signs of real improvement before the year is out.

But some retailers are experiencing quite different results than others. This is the time of the supercenter, the dollar store, price-impact grocers and selected other retailers with an off-price or deep discount business model. Food retailing has been driving the industry, along with merchants who say to consumers, “Come pinch your pennies with us.”

The earnings column in this year's edition of the STORES Top 100 Retailers chart shows that a fair portion of the nation's largest retail companies posted lower earnings than in the previous fiscal year. Even those with gains were largely limited to single-digit increases.

Like Wal-Mart, other names atop the Top 100 chart remain quite familiar: Kroger, Costco, Home Depot and Target hold the next four positions, though Home Depot dropped from the runner-up spot a year ago.

Best Buy wrestled the 10th spot from another Twin Cities-based retailer, SUPERVALU, which is still digesting its 2006 acquisition of the Albertsons supermarket operations.


How long will current shopping patterns continue? “Noticeable changes in consumer spending will take some time as the economy continues to rebuild itself through the rest of the year,” says NRF chief economist Rosalind Wells.
 
Stores Magazine goes on to rank the Power Players (leaders by sector) along with their ranking based upon 2008 revenues are:
 
Apparel: Gap (27)

Department Store: Sears (9)

Drug: CVS (7)

Entertainment: GameStop (44)

Home Improvement: Home Depot (4)

Large-Format Value Retailer: Wal-Mart (1)

Non-Store Retailer: Amazon.com (19)

Office Supply: Staples (29)

Restaurant: McDonald’s (16)

Small-Format Value Retailer: Dollar General (35)
 
Supermarket: Kroger (2)
 
We have listed the Top 5 from the list. To view the complete list, click on the following Link -
 
 http://www.stores.org/Current_Issue/2009/07/Cover.asp , scroll down and click on “Top 100 Chart”.
 

2008

2007

TOP 100 RETAILERS*

2008

2008

Number

Rank

Rank

Company

Headquarters

Revenues (000)

Earnings (000)

of Stores

1

1

Wal-Mart

Bentonville, AR

$405,607,000

$13,400,000

7,873

2

4

Kroger

Cincinnati, OH

$76,000,000

$1,249,000

3,654

3

5

Costco

Issaquah, WA

$72,483,020

$1,282,725

544

4

2

Home Depot

Atlanta, GA

$71,288,000

$2,260,000

2,274

5

6

Target

Minneapolis, MN

$64,948,000

$2,214,000

1,682

Bar Code Turns 35 Years Old

As reported by an article in the New York Times, the design was straightforward — 59 black and white bars. And the inventors’ objectives were simple enough, too — to speed up the grocery checkout line and give supermarkets a new tool to track their stock.

But the bar code has become much more than that since it was first used to read the price on a 10-pack of Juicy Fruit gum (67 cents) on the morning of June 26, 1974. Now they are used to board airplanes and track packages. Bar codes help people with diabetes calibrate glucose meters and researchers study the pollination habits of bees.
 
Today, bar codes are scanned more than 10 billion times a day around the world. And after 35 years, they are both the mundane minutiae of modern life and cultural icons of cold efficiency, identification and control.

“It was cheap and it was needed,” said George J. Laurer, who was already a veteran engineer at I.B.M. in 1970 when he was asked to lead a team assigned to devise a checkout system for grocery stores. “And it is reliable. Those three things probably contributed more than anything else.” Now 84 and retired, Mr. Laurer continues to be a cheerleader for his invention even as the bar code is challenged by newer and much more sophisticated competitors. Radio frequency identification, or RFID, is one such technology.

RFID uses the same technology as dashboard toll collectors and building access key cards and allows businesses to identify and track specific items without a direct line of sight. But even as big players like Wal-Mart and Procter & Gamble have pushed ahead with the RFID technology, the cautious retail business, in particular, has pushed back, in part because of concerns about price. Bar codes, after all, cost just half a cent each, while the electronic tags used in RFID cost more than 5 cents each. As a result, a significant portion of Wal-Mart’s suppliers rejected its mandate to adopt the newer technology.
 
Mr. Laurer recalled that several designs, including a circular symbol, were considered before the team settled on what is now recognized as the Universal Product Code, the name of the familiar format that uses 30 black and 29 white lines to convey 95 bits of data in binary code. The 12 digits give nothing more than “an address to look up information” in a database, Mr. Laurer said.

When the initial design was proposed to a committee of reviewers at the Massachusetts Institute of Technology in 1972, he said, “They were absolutely sure that within a few years no one would be reading the bar code,” Mr. Laurer said. “Well, they were wrong.”
 
Happy Birthday, Bar Code! We’re planning a big surprise bash for your 40th!

Governments Grab Unused Gift Cards


As Erica Alini noted in the Wall Street Journal, states facing lower tax collections and rising debt are targeting unused gift cards that bolster their revenue.

Since the recession began, states have been aggressively tapping so-called abandoned property -- anything from gift cards to dormant bank accounts and safety-deposit boxes. About half the states collect unused gift cards after a period of two to five years.

Each year Americans spend about $65 billion in gift cards -- excluding bank-issued prepaid cards -- but don't redeem $6.8 billion, according to research by TowerGroup, a financial-consulting firm.

What happens to the unused amounts varies, but they often revert to retailers as income. States that collect abandoned gift cards require retailers and third-party gift-card processors to keep track of when a card is issued and when it is used.

The National Retail Federation said retailers have opposed efforts to extend states' reach into unredeemed gift cards. Retailers are also unhappy about states' attempts to go after gift cards that have no expiration date.

"One of the benefits of offering gift cards which never expire is that it affords the guest the opportunity to use them at any time," said Target Corp. spokesman Eric Hausman. "The proposals under consideration would essentially impose an expiration date on our gift cards."

Meanwhile, consumers are also turning up at cash registers to trade in long-forgotten gift cards for anything from groceries to designer clothes, said Scott Krugman, a spokesman for the National Retail Federation. Between states' efforts and recession-strapped consumers, retailers are "getting squeezed," he said.

But most states are unable to attribute more than a small fraction of the abandoned property. Gift-card owners are particularly difficult to track because retailers usually sell them anonymously to protect consumer privacy.

The state of New York, which faces a $7.4 billion budget deficit, collected $9.6 million in unredeemed gift cards last year, according to data provided by the New York state comptroller.

For many years, states cooperated with consumers to pressure retailers to eliminate so-called dormancy fees, amounts subtracted from unused gift cards. "Now the state is trying to capture those funds," said Joe Ridout, consumer-services manager at Consumer Action, a consumer-education and advocacy group in San Francisco.

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:
Consumer electronics retailer Best Buy has made Neville Roberts CIO, a position that had been held by Bob Willett. Willett will remain as CEO international. Scott Wheway was named COO international and Sean Skelley as president international retail operations.

Omnicare:
At Omnicare (an institutional pharmacy services company) SVP and CFO David Froesel will retire by the end of the year. Jeffrey Stamps was promoted to SVP pharmacy operations, Beth Kinerk was promoted to SVP sales and customer development, and Jonathan Borman was promoted to VP strategic sourcing.

Borders:
Former IBM employee Scott Laverty has become CIO of bookstore operator Borders Group.

Zale:
Matt Appel, of jewelry retailer Zale, is now EVP and CFO. He had been VP and CFO at ExlService Holdings.

Levi Strauss:
Yahoo! CFO Blake Jorgensen has joined Levi Strauss & Co., the clothing maker as EVP and CFO. Interim CFO Heidi Manes will remain as VP and controller.
 
Stein Mart:
Discount department store operator Stein Mart is looking for a new CFO; SVP finance, CFO, and secretary James Delfs is planning to retire.
 
Alliance Boots:
Former HBOS boss Andy Hornby is now the group chief executive at drugstore chain Alliance Boots.

Gianni Versace:
Luxury fashion designer Gianni Versace has added Jil Sander CEO Gian Ferraris to replace CEO Giancarlo Di Risio, who will remain as director at Versace. CFO Alessandro Cremonesi is replacing Ferraris at fashion house Jil Sander.

PetSmart:
President and COO Bob Moran is now the president and CEO at pet food and supplies retailer PetSmart. Phil Francis remains chairman.

Foot Locker:
Athletic shoe and apparel retailer Foot Locker has named former J.C. Penney president and chief merchandising officer Ken Hicks as president and CEO. He succeeds Matt Serra, who will retire January 2010.
 
RadioShack:
Consumer electronics retailer RadioShack has hired former 7-Eleven executive Sharon Stufflebeme to SVP and CIO.
Every issue of The Hart Monitor will contain a 'TIPS' section of helpful information regarding Inventory or Loss Prevention for retailers, including some of the industry's "Best Practices."  If you have any Inventory or LP tips that you'd like to share, please CLICK HERE

    

Last month, Hart Systems attended the NRF Loss Prevention Conference & EXPO in Los Angeles, CA.
 


 

From the NRF Website:

The NRF Loss Prevention Conference & Expo is the Nation's leading retail-specific loss prevention conference. NRF's event focuses on key issues:  organized retail crime, on-line fraud, eFencing, interviewing, investigating, pandemic preparedness and more!

We spent some quality time with a number of our clients, and made many new acquaintances and friends as we demonstrated our rental system for self-scanned inventories - the most accurate physical inventory system available today.
 


 
Aside from discussing loss prevention through inventory control and raffling off a pair of 42” LCD flat screen TVs, we attended a number of presentations as well.

The LP Awards Presentation was one of the main highlights.  Congratulations to the 2009 Loss Prevention Case of the Year Winners – John Gay and Kausha Bass from GameStop (a successful organized crime prosecution for over $257,000 over a four-month period).

Congratulations as well to the inductees into the NRF Ring of Excellence (“for loss prevention professionals whose achievements and outstanding leadership have significantly shaped the industry”): Sandy Katz, Gary Manson and George Slicho.

The Loss Prevention Volunteers in Action presentation was especially touching, recognizing loss prevention professionals and organizations “making significant and measurable contributions to charitable organizations”.

Melissa Mitchell of LifeWay Christian put together and presented an outstanding video montage, and there were not many dry eyes in the house.  Some of the LP organizations recognized included Cracker Barrel, Gander Mountain, Genesco, Hibbett Sports, Kohl’s, LifeWay Christian Stores, Luxottica, TJX and Winn Dixie.

To find out more about upcoming industry events, or to learn more about Hart Systems scanning solutions, Click Here or call us at (800) 252-2818.

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 April, May, June

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© 2009 Hart Systems, LLC.

Hart Quote !!!

“Territory is but the body of a nation.  The people who inhabit its hills and valleys are its soul, its spirit, its life.”

James A. Garfield (1831 – 1881) Lawyer, Educator, Minister

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