THE 

MONITOR

Keeping Our Finger On The Pulse Of The Retail Industry

Volume VII,    Issue 11

November  2009

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HAPPY THANKSGIVING!

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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!

October Retail Sales Up
More than half of U.S. retail chains posted October sales that fell short of Wall Street's heightened expectations, raising concern about the strength of the recovery for the holiday season. Total October same-store sales rose 1.8%, below an estimate for a 2% gain, according to Thomson Reuters data. Still, it marked the strongest showing since June 2008, when sales rose 1.9%.
 
"It looks like we're on track for kind of a mediocre season right now based upon October,” said Brean Murray, Carret & Co. analyst Eric Beder, in a Reuters report.

52% of retailers came in below expectations, while 44% beat forecasts. Despite failing to meet expectations, however, some chains, including Kohl’s, raised their third-quarter guidance.

The results varied across the board. Value chains such as Dollar Tree, and off-pricers such as Ross Stores continued to draw shoppers. Luxury retailers such as Saks Fifth Avenue and Nordstrom also posted gains after several months of steep declines. Department store chains and teen apparel retailers generally let down investor expectations.

"The improvement in the stock market has had a significant impact on the affluent shopper's willingness to spend -- as the luxury market has shown its first positive reading since May 2008," Michael P. Niemira, chief economist at the International Council of Shopping Centers, said in a statement.

In one of the most optimistic predictions, the International Council of Shopping Centers has forecast holiday sales to rise about 1% to 2% this year.

"ICSC Research thinks the holiday spending performance will be better than these pre-season consumer expectations, which is often the case following business cycle turning points in the economy," said Michael Niemira, ICSC's director of research and chief economist, in a statement.

Two-Thirds of Families will be Impacted by the Economy this Holiday Season
According to NRF’s 2009 Holiday Consumer Intentions and Actions Survey, conducted by BIGresearch, U.S. consumers will be spending 3.2 percent less than last year. The estimate is that an average of $682.74 will be spent, as compared to $705.01 last year.

The economy was an overriding subject throughout this year’s survey. Two-thirds of Americans say the economy will affect their holiday plans this year, with the majority saying they’re adjusting by spending less. People will be shopping for sales more (55.0%), using more coupons (41.7%) and displaying last year’s decorations (34.0%). Many will also make changes in their gift giving, as well as traveling less or not at all for the holidays. Spending on other non-gift categories like decoration, greeting cards and postage and flowers is expected to drop.

NRF President and CEO Tracy Mullin says, “This holiday season will be a bit of a dance between retailer and shoppers, with each group feeling the other out to understand how things have changed and how they must adapt.”

Retailers are compensating for soft sales this holiday season by cutting back on inventory. The traffic to the nation’s ports has scaled back to levels not seen since 2003. With retailers dropping the level of inventory, once the more popular items are gone there will be nowhere to get them, so this is the holiday season to buy early.

As in previous years, three-fourths of Americans’ holiday budget will be spent on gifts. Candy and food spending may be one bright spot this year, with the average person planning on spending $10 more in that category than last year.

NRF continues to expect holiday sales to decline 1.0 percent to $437.6 billion.

Best Buy CEO: What Consumers Really Want This Holiday Season

Brian Dunn, CEO of Best Buy Co., Inc. recently appeared as a “guest blogger” on CNBC. He provided some valuable insight for the upcoming Holiday Season.

“People are understandably cautious about the economy – and their own wallets – as we head into this year’s holiday season, but “value” does not equate only to “lowest price” for most customers.”

“I believe (and a recent survey by The American Consumer Institute backs me up) that a knowledgeable staff, quality and choice are just as important as price for most customers, and even more important for many of them. People want to know that they have access to the lowest price, but that’s just a starting point for them.”

“Consumer electronics is a major force in the US economy.”

“The American Consumer Institute study provides an interesting glimpse into the mindset of these shoppers. Fully 85% said that product quality was the most important factor when shopping for electronics products. Having access to knowledgeable staff (77%) and being able to find someone to help (74%) came next. Trailing this list was lower prices, at 70%.”

“But let me clear: price might not be the number one consideration for consumer electronics customers, but it still matters—A lot.”

“The definition of value is evolving for people shopping for technology. Competitive prices will continue to be important table stakes, especially in this economy, but people value retailers who will work with them to make technology work for them.”

“You should be happy with what you purchase. This means that the product works the way you expect it to before you walk out of the store, or when you get home. If not, you’ve overpaid at any price.”

In summary Mr. Dunn stresses while price is always important, it’s not always tied to the “value” of the shopping experience. Electronic Retailers need to be price competitive, but having a knowledgeable staff with high quality products can be more important to the customer.
Online Retailers Emphasize Free Shipping, Social Media this Holiday Season,
Entice Shoppers with Earlier Promotions

According to results of Shop.org’s eHoliday Study, conducted by BIGresearch, the economy is not only impacting shoppers, it’s affecting online retailers, too. Shoppers will see changes in retail marketing and promotions this holiday season in response to economic uncertainty.

With many of today’s shoppers using Facebook and Twitter regularly, and because these tools are more cost-effective than traditional advertising, 47.1 percent of retailers surveyed will be increasing their use of social media this holiday season. More than half of retailers said they have added or improved their Facebook page (60.3%) and Twitter pages (58.7%) this year, while two-thirds (65.6%) have added or enhanced blogs and RSS feeds. In addition, to provide consumers with an extra incentive to start shopping, one-third of retailers (34.3%) say they will offer holiday deals earlier this year.

As another sign of the times, free shipping offers will abound this holiday season. Four out of five online retailers (79.4%) will offer free shipping with conditions at times during the holiday season, while more than half (57.4%) plan to offer free shipping without conditions. More than one-third (35.7%) said their budgets for free shipping are higher than last year, and nearly as many (30.0%) said free shipping offers will start earlier than a year ago.

“Retailers know that times are tough so they have created promotions and incentives to help Americans save money this holiday season,” said Scott Silverman, Executive Director of Shop.org. “From free shipping to Facebook, online retailers are combining new initiatives with tried-and-true tactics to make their companies stand out.”

Online retailers are also compensating for the economy by making operational changes to help them protect their profits. According to the survey, 41.4 percent of retailers have scaled back on inventory levels and 22.9 percent have hired fewer people in their stores.

While online growth is expected to slow this holiday season, it remains a bright spot in retail. According to the survey, 45.8 percent of online retailers expect their holiday sales to increase at least 15 percent over last year, while one-third (33.9%) expect sales to grow up to 14 percent. As a testament to the economy and the maturity of online retail, just one in five online retailers (20.3%) expects sales to be flat or decline.

In addition to a strong focus on sales and free shipping, many online retailers have revamped their websites this holiday season to make it easier for people to shop.


Due to the convenience of the web, more than one-fourth of online shoppers (26.7%) said they plan to spend a larger portion of their holiday budget online this year. Reasons people will spend more online range from the ability to shop at all hours of the day (41.9%) to shoppers feeling it is easier to compare prices (34.0%) to Americans’ insatiable appetite for free shipping (33.1%). Others will spend more online because it’s simply more convenient (32.4%), they don’t want to fight crowds in stores (24.9%) or because it’s easier to find items (16.7%).

With online retailers diversifying payment options, customers have more ways than ever to pay for holiday gifts. According to the survey, two-thirds of shoppers (67.3%) will use a credit card for some online purchases this holiday season, though one-third will also use a debit card (35.6%) and PayPal (33.9%) for purchases.

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.

Lowe's:
In January 2010, John Kasberger, SVP and general merchandising manager of kitchen and bath, will retire from home improvement retailer Lowe's Companies. Clinton Davis, currently SVP and general merchandising manager of hardlines will take on Kasberger’s position. Meanwhile, Brent Kirby has been promoted to SVP operations-North Central division and Tom Lamb to SVP marketing and advertising.

V.F.:
Susan Kellogg has become the president, contemporary brands for jeans and other apparel and gear maker V.F.
 
Sports Authority:
At sporting goods retailer The Sports Authority, Doug Morton has retired as CEO, but has remained chairman.

Converse:
Michael Spillane, who is currently president of North American footwear and global apparel, of NIKE-owned shoe maker Converse will become CEO when Jack Boys retires December 31.
 
Great Atlantic & Pacific Tea:
Chairman Christian Haub is named interim CEO when CEO Eric Claus resigned from grocery chain company The Great Atlantic & Pacific Tea Company (A&P). Meanwhile, former senior director of pharmacy Carol DiNicolantonio has been promoted to vice president of pharmacy. DiNicolantonio oversaw the company's pharmacy operations and is credited for developing the Live Better! Wellness.

Kroger:
Former General Motors executive Kathleen Barclay is now at grocer Kroger as the SVP of human resources.
 
Warnaco:
Apparel manufacturer and retailer The Warnaco Group, Inc. has announced the appointment of Michael Prendergast as President of its Chaps® division. Prendergast joins Warnaco from ROC Apparel, LLC, where he served as Group President for Rocawear.

Supervalu:
Duncan Mac Naughton resigned as grocery store operator SUPERVALU’s Executive Vice President of Merchandising and Marketing.
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

    

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…
Tips for a Delicious Turkey:
  • 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.
     
  • Another good idea, use a “Cooking Bag”. Not only is this an easier method and makes for a more savory meal, but the cooking time is faster.
     
  • 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.
     
  • For the garlic lovers out there, insert whole cloves of garlic under the skin of the turkey before cooking.
     
  • Stuffing Tip - add one large crumbled corn muffin to your stuffing for added flavor and texture...yum!

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