THE 

MONITOR

Keeping Our Finger On The Pulse Of The Retail Industry

Volume VIII,    Issue 4

April  2010

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Retailers Post Strong Gains in March

Sales up 9.1%

Retail sales posted the biggest single monthly gain on record in March. This is the 7th straight month of increases and a signal of rebounding consumer spending.

Sales tracker Thomson Reuters, which looks at monthly same-store sales for 28 chains, said Thursday that March sales increased 9.1% over last year, the biggest monthly gain since it began keeping records in 2000. Thomson had expected only a 6.3% increase.

"This is obviously a very strong showing," said Scott Hoyt, senior director of consumer economics at Moody's Economy.com, "but it's very much driven by special factors."

Warmer weather, an improving job picture and an earlier Easter helped retailers post strong gains in same-store sales in March. Of 11 retailers that reported results early on Thursday, 10 beat analyst expectations, according to a tally by Thomson Reuters.

“The consumer is really coming out of hibernation and feeling better about their situation," said Ken Perkins, president of RetailMetrics, a research firm, in an Associated Press report. “We saw all month larger crowds in stores, in both mall and off-mall stores."

Many chains sales were boosted since Easter came eight days earlier in 2010 than in 2009. Warmer weather also helped boost sales of spring goods. Target Corp., Macy's, clothier Gap, and Limited Brands posted double-digit increases that beat Wall Street analysts' expectations. Target Corp. said its March same-store sales rose 10.3%, helped by strength in its clothing business, which has been a weak spot for the chain during the recession for the company. Gap reported an 11% gain, above the 3.7% analysts polled by Thomson Reuters predicted.

At Costco Wholesale Corp., same-store sales rose 10% in March, buoyed by strong growth overseas. At Limited Brands, same-stores sales rose 15% in March.

In the luxury sector, department store chain Nordstrom posted a 16.8% same-store sales increase, versus expectations for a 10.6% gain.

Easter Was a Warm Welcome for Shoppers and Retailers
Easter couldn’t have come at a better time this year for Americans eager to say goodbye to winter. According to NRF’s 2010 Easter Consumer Intentions and Actions Survey, conducted by BIGresearch, the holiday celebrants anticipated spending slightly more this year with the average person shelling out $118.60, up from $116.59 last year. Total spending was expected to reach $13.03 billion.

Children received more jelly beans, flavored marshmallows and even gifts in their Easter baskets this year. The average person spent $17.29 on candy, compared to $16.55 last year, and $18.16 on gifts, up from $17.30 last Easter. Other holiday purchases include clothing ($19.03), food ($37.45), flowers ($7.84), decorations ($6.34) and greeting cards ($6.30).

“With signs of spring popping up everywhere, shoppers are eager to get their hands on bright, colorful Easter merchandise,” said Tracy Mullin, President and CEO, NRF. “Warmer weather and special holiday promotions are the perfect mix to get people out of their homes and into stores as spring approaches.”
Where did consumers shop?
Discount retailers 64.8%
Department stores 33.2%
Specialty store 22.0%
Online 13.1%
Specialty clothing store   7.0%
Catalogs   3.7%

While 25-34 year-olds expected to spend the most this Easter at $136.79, more 18-24 year olds buy gifts. Nearly three-quarters (71.3%) of young adults ages 18-24 bought gifts this year, compared to 65.8% of 25-34 year olds and 65.5% of 35-44 year olds. Young adults spent an average of $125.85 on Easter merchandise, followed by 35-44 year olds ($124.66), 45-54 year olds ($117.54), 55-64 year olds ($106.82) and 65+ ($98.72).

“Often living in another state because of college or a career, young adults feel compelled to bring candy for the little ones and even greeting cards for others when visiting for Easter,” said Phil Rist, Executive Vice President, Strategic Initiatives, BIGresearch. “After spending the last few months indoors and out of the snow, many Americans are looking forward to celebrating a great day with family and friends.”

What Kids Need to be Taught Regarding Money
As parents, you have the obligation to teach your children about money so that they grow into adults who are at home in the financial world and who have a healthy relationship with money. Parents are the first and most crucial link in that learning process. Life as an adult clearly requires knowledge of personal finance. Kids obviously need information to effectively manage their own financial resources one day.

In teaching your children the following 15 Money Rules Kids Should Learn About Money you may find that they will prove to be a far greater legacy than any inheritance you might one day leave behind.

15 Rules Kids Should Learn About Money
1 Spending money happens only after you earn it.

2 When kids start asking parents to drive to the toy store to buy some plastic whatnot, it’s time to consider an allowance.

3 The size of an allowance shouldn’t be so meager that your child is a pauper among peers, nor so generous that your child can easily afford all wants with little financial planning.

4 Good grades are expected and help around the house is simply the price of family life.

5 While 16 is generally the legal age of employment, encourage kids starting around 13 to think of ways they can earn an income.

6 Guide and advise your kids about money, but don’t dictate.

7 Failure to balance the debit-card bank account monthly means losing access to the debit card for a week or more, failure to repay an entire month’s credit-card balance means the loss of the card until the balance is fully paid off, plus one additional month.

8 Only 50% of the money put into a piggybank can be taken out to buy something. At least half must remain inside the pig.		   9 Children should have the right to screw up financially so that they can learn from their mistakes.

10 When it comes to investing in stocks, kids should understand a company at such a basic level that they can draw a picture of the business model with a crayon.

11 You don’t need to be wealthy to begin teaching your children about the stock market.

12 If a child’s charitable interests lie outside your special interests, so be it.

13 Parents don’t have to save every last dime a child will need for college expenses. You only have to save up to your ability or desire to pay.

14 One of the greatest gifts you can give your child is your own financial self-sufficiency when you’re old.

15 At some point, you have to tell your kids that the Bank o f Mom & Dad is officially closed.
 

Outlets Start Acting Like Full-Price Stores
In 2009, discount stores saw their shelves packed with all the great stuff full-price retailers couldn't sell. But with the economy improving, discounters must find new ways to grow, as an article by Stacey Vanek-Smith for Marketplace reports.

2009 wasn't much fun for most companies in the retail business. But for those of us on the other side of the transaction, it was pretty good. If you knew where to look, there were some deals to be had. Discount retailers like T.J. Maxx and Nordstrom Rack had shelves that were packed with all the great stuff that full-price stores couldn't get rid of. But the economy's a little bit better now. Retailers are a little bit smarter. So, discounters have to get more creative.

Last year, nobody paid full-price for anything. Why would they? You could find Coach bags at Ross Dresses for Less and Juicy Couture hoodies at Marshall's.

T.J.Maxx Advertisement: “Oh sure, you could pay that crazy boutique price, or get the same bag right now at T.J. Maxx for up to half off. How? Simple...Really simple.“

Department stores and boutiques were loaded down with stuff they couldn't sell. They slashed prices and slashed them again. Still no sales, so retailers cut their losses and unloaded their merchandise. Discounters bought top-shelf brands by the truckload, and frugal shoppers picked up Prada at J.C. Penney prices.

“2009 was the best year in recorded retail history for most of the discount and off-price players” says Burt Flickinger, a retail analyst with Strategic Resource Group. “But discounters and outlets won't be able to count on runoff from the big retail chains this year”.

Matthew Katz, a retail consultant with AlixPartners, says “Big department stores and other brand-name retailers have cut inventory way back. The mainstream retailers very quickly shut the spigot off and stopped ordering product. What all the full-price stores are trying to do is minimize the excess”. Katz says, “Since the recession, $25 billion worth of merchandise has vanished from store shelves, just as the number of off-price stores has shot up. Nordstrom and Saks opened dozens of outlets last year. Bloomingdale's is launching its first outlets this summer.”

Lots of outlets are now operating more like full-price stores -- bringing in merchandise tailored to their customers, and recognizing that they're brands of their own now.

Designers are creating looks especially for discounters. After all, that's where a lot of their customers are now. A survey from Strategic Resource Group found 80% of shoppers who had crossed over to discounters during the recession, say they plan to stay there.

Fed Enforces August Deadline for New Gift Card Rules
According the NRF, the Federal Reserve is refusing to give retailers extra time to comply with new restrictions on gift card expiration dates, fees and disclosures, stating the rules will go into effect this summer as planned.

The Fed issued the final version of rules implementing restrictions mandated under the Credit CARD Act which was signed into law by President Obama last year. It states the following – “Beginning August 22, gift cards will not be allowed to expire any sooner than five years after they are issued and dormancy fees will not be able to take effect less than a year after a card is issued. Any expiration dates or dormancy fees must be disclosed to customers before purchase.”

The NRF asked the Fed for a six-month delay in a requirement that expiration dates and dormancy fees be printed on the cards. They found that retailers could honor the restrictions on dates and fees by August but needed more time to get old cards without the proper disclosures on them off the shelves; but the Fed declined. “People will be scrambling to make sure every single card is off of every single shelf,” NRF Vice President and Government Relations Counsel Elizabeth Oesterle said. “A lot of retailers don’t have expiration dates or dormancy fees, but for those that do they will have to go back and check carefully to make sure on August 22 those cards are off shelves.”

If Senator Charles Schumer, D-N.Y., gets his way, the deadline could become even tighter. Schumer told Women’s Wear Daily he plans to work with the Fed “to speed up the effective date rather than keep consumers at risk of being ripped off until next summer.” No specific date was given by Schumer.

“The Fed did acknowledge NRF’s concern that there may not be sufficient room to print disclosures on the cards, and revise the regulations to allow variations in type size and placement of disclosures - so long as the disclosures are clear and conspicuous.”

Many major national retailers have already eliminated expiration dates and dormancy fees, both to abide by a wide range of restrictions customary to more than 40 states and for customer service reasons. Due to this, the new rules will impact mostly bank-issued gift cards. These are normally sold under credit card brand names or as “mall” cards and typically carry quick expiration dates and high fees that led to the calls for legislation. Some small, mid-sized and regional retailers, however, still set fees and expiration dates, and will be affected.

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.
 
Big Lots:
At closeout retailer Big Lots, Lisa Bachmann was promoted to EVP supply chain management and chief information officer, Joe Cooper to EVP and CFO, Charles Haubiel to EVP legal and real estate, and Steven Smart to SVP and general merchandise manager. Also, EVP human resources, loss prevention, and risk management Brad Waite retired.
 
Acme Markets:
Former EVP retail operations Pete Van Helden was promoted to interim president at SUPERVALU-owned Acme Markets; Judith Spires resigned from the grocery and drug retailer.
 
Barnes & Noble:
Book retailer Barnes & Noble gave president of Barnes & Noble.com William Lynch a new title: CEO. Steve Riggio remained vice chairman. Also, Mitchell Klipper was named CEO of retail.
 
A.C. Moore Arts & Crafts:
A.C. Moore Arts & Crafts is searching for a new CEO since Rick Lepley retired from the position on March 31. EVP and COO Joe Jeffries will be acting CEO until the art supplies retailer finds a permanent successor. Jeffries remains COO.
 
Stage Stores:
Department store operator, Stage Stores has named retail industry veteran Cheryl N. Turpin to its board of directors. Turpin served as president and CEO of Limited Stores from 1994 to 1997 as well as president and CEO of both Lane Bryant and department store Weinstocks.

Sports Authority:
The nation's premier full-line sporting goods retailer promoted David Campisi to Chief Executive Officer and President. Campisi has served as Sports Authority’s President with responsibilities for merchandising and marketing since 2005. He joined Sports Authority as President of Merchandising in 2004.
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

Retail Industry Leaders Association (RILA) Loss Prevention Auditing & Safety Conference in Grapevine, TX – May 2 through May 5, 2010.


From the RILA website:
 

Loss prevention, auditing and safety executives continue to increase their influence on strategic insight and leadership within retail organizations.  To understand emerging trends, improve performance and meet the demands of the loss prevention, auditing and safety fields, join retail industry peers and solution provider partners at the Loss Prevention, Auditing & Safety (LPAS) Conference,  May 2-5, 2010 in Dallas. 

Gain the knowledge you need to maximize shrink reduction, increase productivity, streamline operations, and control expenses.
 
Grow your industry peer network at interactive forums attended by top retail loss prevention, auditing & safety executives.
 
Find solutions in the exhibit hall, featuring strategic vendors across all three functions.


http://www.rila.org/events/Pages/default.aspx
 
As usual, Hart Systems will be participating in this 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.
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