The Hart Monitor - May Edition

THE

MONITOR

Keeping Our Finger On The Pulse Of The Retail Industry

Volume VII, Issue 5

May 2009

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Retail Sales Better Than Expected in April

U.S. Chain Store Sales Grew 1.2% in April

Retailers nationwide reported better than expected monthly sales figures for a second straight month in April, showing signs that consumers might spend more as the spring weather warms up.

According to Thomson Reuters’ revenue-weighted same-store sales index, overall sales rose 1.2%, surprising analysts who expected a decline of 0.2%. Of the retailers that reported April same-store sales, about 64% topped Wall Street estimates and a handful said they plan to report better first-quarter results than they had expected. Reports indicate that many stores that have been losing business are still seeing declines, but at a lower rate. A number of retailers that have been posting growth are seeing bigger increases. Many retailers benefited from the shift of Easter to April this year, but analysts said all of the improvement cannot be chalked up to the calendar change.

Teen apparel retailers reported mixed results for the month, as has been the case for the past several months. The strongest performers in the sector were The Buckle and Aeropostale. Aeropostale, which turned in its best performance yet, a 20% rise, when analysts expected an 8.5% gain. The Buckle, whose advance came in at 18.2%, was well ahead of projections for 10.6%.

Wal-Mart posted a rise of 5%, well ahead of projections for a 2.9% gain, with apparel the only category of its six segments to see a falloff in sales year-over-year.

The recession continued to take a heavy toll on sales at higher-end department store retailers in April, with Saks reporting a 32% drop in same-store sales, more than analysts expected. Neiman Marcus reported a 24.6% decline in April same-store-sales for its namesake unit and Bergdorf Goodman, seeing weakness in all merchandise categories.

Consumers are still contending with high unemployment, the housing crisis and less use of credit cards, all of which will continue to keep spending relatively muted for some time, analysts said.

Consumers Cautious on Mother's Day Spending

Americans will spend an average of $123.89 on Mother's Day gifts this year, down slightly from last year's $138.63, with the majority purchasing flowers, according to the latest research from the National Retail Federation.

According to the NRF's 2009 Mother's Day Consumer Intentions and Actions Survey, conducted by Big Research, total Mother's Day spending is expected to reach $14.10 billion, which is slightly more than Easter.

Of the four in five Americans (83.3 percent) who will celebrate Mother's Day this year, the majority will focus on the women with whom they are closest. Most people (62.4 percent) will purchase gifts for their mother/stepmother or wife (21.7 percent) and scale back on gifts for daughters (8.8 percent vs. 9.4 percent in 2008), friends (6.8 percent vs. 7.1 percent in 2008) and godmothers (1.6 percent vs. 2.1 percent in 2008) to save money.

"No one will forgo celebrating Mother's Day because of the bad economy, but they will put careful thought into what they buy and how much they spend," Big Research Executive Vice President of Strategic Initiatives Phil Rist said in a media release. "Moms will understand that kids may be spending on a budget, so inexpensive, personal gifts will go a long way."

The majority of people (66.8 percent) will buy flowers for mom, spending a total of $1.9 billion on those purchases. Slightly more than half (54.8 percent) will treat mom to a special outing such as dinner or brunch, for a total of $2.7 billion. People will also spend $2.3 billion on jewelry, $1.5 billion on gift cards, $1.2 billion on clothing or clothing accessories, and $1.1 million on personal services such as a day at the spa. In addition, consumers will spend $857 million on electronics or computer-related accessories, $587 million on housewares and gardening tools, and $487 million on books or CDs.

"Retailers understand that people are on strict budgets, even for important holidays," NRF President and Chief Executive Officer Tracy Mullin said in the release. "Budget-friendly gift ideas will abound this Mother's Day: discounted digital cameras, books and apparel still show mom how much she is appreciated."

Where will people shop?

Discount Stores	30.2%
Department Stores	27.2%
Specialty Stores (florists, gift stores, electronics stores)	33.0%
Specialty Clothing Stores	5.5%
Online	18.2%

House Clears Bill Restricting Credit Card Practices to Protect US Consumers

The House approved a bill to restrict credit card practices and eliminate sudden increases in interest rates and late fees that have entangled millions of American consumers.

The legislation passed by a bipartisan vote of 357-70 following lobbying by President Barack Obama and members of his administration.

The Associated Press reported that the measure would prohibit so-called double-cycle billing and retroactive rate hikes and would prevent companies from giving credit cards to anyone under 18.

If they become law, the new measures won't take effect for a year, except for a requirement that customers get 45 days' notice before their interest rates are increased. That would take effect in 90 days.

Similar legislation is before the Senate. Consumer advocates and some Democrats have unsuccessfully sought for years to bring new rules to the industry. Supporters want to get a final congressional package to Obama's desk by the Memorial Day (May 25) holiday.

Before approving the bill, dubbed the Credit Card Holders' Bill of Rights, the House adopted a series of amendments -- that stressed the restrictions on industry practices.

The House measure incorporates Federal Reserve regulations due to take effect in July 2010 but goes further by adding restrictions for credit cards for college students.

Sixth Annual NRF Think Big

Some of the most important retail and business partners of the NRF that support retailing meet once a year for extensive discussions concerning the future of our industry. “These wide-ranging conversations between and among a broad and diverse array of experts generally elicit some interesting observations and predictions,” according to Tracy Mullin of the NRF in STORES magazine.

Ms. Mullin states, “This year, the sixth annual “Big Think” examined the industry through the prism of the economic crisis. Not surprisingly, comments were mixed with caution, some anger and not a little nervousness about the future. While everyone in the room brought their own biases and thinking to the table, there was remarkable consensus around some major themes.”

The changing consumer. There is a fundamental change in the consumer due to the economic crisis. Gone is the interest in showing off luxury brands and labels; consumers are going back to basic values. Many have been living a lifestyle of prosperity; now they are facing aspects of scarcity. “They are grieving over what has been lost and retrenching, and that is likely to continue until there is greater clarity about the future.”

Customer experience. Retailers are aware of the need to be connected and true to their customers in order to improve customer service. Emphasis is gearing towards a better-trained workforce, greater efficiencies, as well as better customer communication to improve the customers’ experience

Investment in new technology. Some companies, such as mid-tier types, are concerned about not keeping up with change and investing in new technologies. They are now trying to buy time or move more quickly in decision-making. Although they have more capital to invest, larger companies and their investments must still have a demonstrable ROI within 12 months. “Those that can reduce costs and invest smartly during this decline will have a strong jump on the competition when the economy improves.”

Digital commerce. There is a 6 percent growth of first-time e-commerce shoppers, while there is a decline in the “bricks-and-mortar channel”. Many companies are increasing their investments in the digital domain because e-commerce channel is more efficient and measurable. “There is a lot of re-platforming of e-commerce sites to allow for interpretation of multi-channel, social media and mobile technology.”

The economy. Although the present economic decline is negatively affecting the retail industry, the outcome may be very positive. “It will clear out underperforming stores and create a better environment for consumers. But living through this velocity of change is challenging even for the best-run business.”

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.

Stop & Shop Supermarket:

Paula Price, former CVS Caremark SVP and controller has joined supermarket chain Stop & Shop (and sister company Giant Food) as CFO. Meanwhile, former Whole Foods Market executive Paula Labian was hired as EVP human resources for both Royal Ahold subsidiaries. Price succeeds the resigned Jim Rojas, and Labian replaced interim human resources executive John Bussenger.

SAM'S CLUB:

Effective May 15, former Wal-Mart Stores' EVP and general manager of the home division, Linda Hefner has joined Wal-Mart Stores' warehouse retailer SAM'S CLUB as EVP merchandising and replenishment

Talbots:

Benedetta Casamento, former Liz Claiborne executive has come onboard with Talbots as the EVP finance, a new position for the women's apparel retailer.

Advance Auto Parts:
Former Best Buy exec Tami Kozikowski will move during May to auto parts retailer Advance Auto Parts as chief development officer.

Charming Shoppes:

Women's apparel retailer Charming Shoppes has acquired former Alvarez & Marsal managing director Jim Fogarty. He was named president and CEO; interim CEO Alan Rosskamm remains as chairman.

Movie Gallery:
Former VP Wes Sand has become EVP and chief merchandising officer of video and game rental company Movie Gallery

Helzberg Diamonds:

Former J. C. Penney jewelry merchandise manager Beryl Raff has become chairman and CEO at Berkshire Hathaway-owned jewelry chain Helzberg Diamonds. Marvin Beasley has resigned.

John Lewis Partnership:

Department store and supermarket operator John Lewis Partnership has eliminated its John Lewis marketing director position (which had been filled by Gill Barr). These duties now go to Jill Little, who is merchandise director of John Lewis. Also, commercial director Phil Hullah and direct marketing head Miranda Goodenough have resigned. Gareth Thomas was promoted to retail director.

Cato Corporation:

EVP and chief merchandise officer, Allen Weinstein has retired from women's apparel retailer Cato while Sally Almason moved in as EVP and general merchandise manager, Cato division.

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

Attend Upcoming Loss Prevention Conferences

Another of the LP industry’s leading conference is right around the corner:

NRF Loss Prevention Conference & EXPO

June 15–17, 2009, Los Angeles Convention Center, 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!

As usual, Hart Systems will be participating in this exciting event, and we'll be discussing loss prevention through inventory control, and displaying our rental system for self-scanned inventories - the most accurate physical inventory system available today.

Please stop by our booth, introduce yourself, and enter our free raffle to win one of two 42” LCD Digital Televisions.

We're also planning some fun and interesting networking events. To find out more about these events, or to make arrangements for a private demonstration at the conference, or to simply learn more about our 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/.

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Hart Quote !!!

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