THE 

MONITOR

Keeping Our Finger On The Pulse Of The Retail Industry

Volume VIII,    Issue 9

September 2010

Hart Systems, LLC is the rental solution for inventory scanning.
We Make Self-Inventory Simple!
Contact us to find out how we may help you improve your physical inventory process.

August Reflects Discounters Gains
 
Discount retailers posted solid gains for August due to in part aggressive discounting as consumers continue to seek out bargains, according to a recent Chain Store Age article. Customers were also attracted by Tax-free holidays in nearly 20 states. Analysts also claim that having the warmest August in more than a quarter of a century helped spur sales of late summer clothing inventory.

“It's a glimmer of hope that the numbers are coming in ahead of low expectations," said Ken Perkins, president of research firm RetailMetrics, in an Associated Press report. "But it took retailers being heavily promotional to bring shoppers in.”

Same-store numbers weighing in:

At Costco, same-store sales increased 7% in August, buoyed by higher gas prices and improved international revenue, its results topped the 4.2% rise analysts expected.

At Target Corp., sales of back-to-school items and food helped boost same-store sales 1.8% in August, just short of analysts’ predictions for a 2% increase. Food, health care and beauty items were the strongest sellers..

BJ’s Wholesale Club reported a 2.4% increase in August. Same-store sales rose 2.4%. Analysts, on average, had expected same-store sales to rise 3.3%.

Family Dollar Stores claim comparable-store sales for the fiscal fourth quarter, increased 6.1%, beating analysts estimates.

In other same-store sales results for August:

TJX Cos.’ sales rose 2%,.
Ross Stores reported a 5% rise in sales, better than the 2.9% gain forecast by Reuters analysts. At Fred's, same-store sales rose 3.6%, just ahead of analysts’ estimates.
 

The VAT and It’s Affect On Consumers' Spending


According to the just-released survey that was conducted by BIGresearch for National Retail Federation, nearly two-thirds of respondents (64 percent) believe a federal value added tax (VAT), of any amount would cut into personal spending habits and have a negative affect on the purchase of almost anything, from homes to groceries, even medicine. The purchasing decision of 92 percent of survey respondents would be affected by a 15% VAT.

"These numbers are clear evidence of what common sense would tell even the most casual observer: If you tax spending at a time when the economy is still struggling to recover, consumers are going to spend less," said NRF president and CEO Matthew Shay in prepared remarks. "With consumer spending representing two-thirds of the economy, a consumption tax, by VAT or any other name, is not the path to recovery or a prudent way to address the federal deficit."

These VATs are basically surcharges added to an item at certain steps of its production; when a value is added to it. Take for example, lumber cut to make toys would incur a VAT, when the toys are painted they would receive another VAT and when they are boxed and shipped to the store another VAT would be added.

While these taxes are paid by the actual companies they eventually become a part of the cost of goods sold that is passed on to customers and can be qualified as a consumption tax. Economic recovery efforts would be impaired by the VAT by driving the consumer, who is already spending at record lows, right from the stores.

According to the survey, should the VAT be enacted, 83 percent of consumers would cut back on eating out, 80 percent would reduce clothing and accessories spending; 74 percent would spend less at the grocery store; 72 percent would scale back on entertainment; and 72 percent would reconsider vacation travel.

"Additionally, half said a VAT would influence their spending on a home while two-thirds said it would impact automobile purchases," states a NRF release on the survey. "Big ticket items wouldn't be the only casualties as 59 percent of consumers said they would even cut back on prescription and over-the-counter medicine."

Creating a VAT would help to reduce the federal deficit, according to the lawmakers, but 82 percent of survey respondents believe Congress should reduce spending instead. A mere 10 percent looked favorably on the creation of a VAT or other form of federal sales tax to reduce the deficit, and only 8 percent favored an income tax increase.
 

New Credit Card Rules Now in Effect

According to a recent article in Forbes Magazine, some of the final provisions of the CARD Act have gone into effect the week of August 22. These provisions could prove very beneficial for credit card consumers. The new rules may result in interest rate reductions as well as limitations on some fees.

Interest Rates
If your credit card’s interest rate has been increased since January 1, 2009, the new rules require issuers to evaluate whether the reasons for the increase have changed and, if appropriate, to reduce the rate. Issuers must also perform a review every six months on accounts that receive a rate increase.

Since January 2009, millions of cardholders have seen their interest rates increase. Some issuers raised rates to as high as 29.9% for cardholders with good credit. These higher rates shocked cardholders and they want their APR restored to the original rate. However, the catch in this is two words, ‘if appropriate.’ The final decision will be left with the card issuers. Credit card issuers need revenue which means they may not be eager to review and restore the original rates.

Fees
The new rules also protect card users from unreasonable late payment and other penalty fees. They should now be assessed in a way that is fairer and less costly for consumers. Issuers can only charge one fee for a single event or transaction that violates the cardholder agreement. The late payment fee can’t be more than $25 or more than the cardholder’s minimum payment. However, if one of the last six payments was late, issuers can charge up to $35. The fee may also be higher if the credit card company can prove that the costs it incurred due to the late payments justifies a higher fee.

Gift Cards
The new rules apply to all store and merchant gift cards, as well as cards for general use, such as a Visa gift card. These rules include:
  • Limits on expiration dates. The money on your gift card will be good for at least five years from the date the card is purchased. Money added or loaded on to the card must also be good for at least five years.
     
  • Replacement cards. If your gift card expires and there is unspent money, you can request a replacement card at no charge.
     
  • Fees. The law bans dormancy, inactivity and service fees on gift cards unless there has not been any activity for twelve months and the issuer clearly discloses all fees on the packaging. In those cases, consumers can only be charged one fee per month. Last month, Congress passed legislation to extend the effective date for the disclosure requirement until January 31, 2011, for cards issued prior to April 1, 2010. Some states have stronger state laws for gift cards and these will remain valid. Many states do not allow fees or expiration dates.

Apparel Retailers Wrestle with Rising Costs vs. Consumers’ Price Increases

According to a recent article in the Wall Street Journal, due to rising costs in production, apparel retailers are struggling with their pricing strategies as they head into the crucial holiday selling season with shoppers increasingly resistant to paying full price.

Retailers are facing a plethora of supply-chain cost increases in the areas of wages, cotton prices and freight costs. Due to these increases, some retailers cautioned that they will need to start raising prices on specific items in the second half. But the small size and the selectiveness of the proposed increases underline just how hard it will be for retailers to raise prices.

Children's Place is considering some prices increases. The children's retailer said it plans "very selective price increases" on its spring 2011 merchandise because of the rise in their costs.  Buckle Inc., a teen clothing retailer, also plans to raise prices in certain areas. They hope to rationalize the increases by adding more to the clothing. For example, if the prices of men’s shorts rise, Chief Executive Dennis Nelson said. "We are trying to offset that with maybe belting them or adding other details to create more value in the shorts."

Stage Stores Inc., which includes Bealls, Goody's and Palais Royal expect costs to rise 4% to 6%. How much of these cost increases will be reflected in its retail prices has not been decided yet.

"The market has kind of taken a wait-and-see approach to how much they can pass on, or we can pass on, to the consumer," says Stage Stores CEO Andy Hall, "I am not very optimistic that in today's environment the consumer is going to take a price increase."

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.
 
Wal-Mart Stores:
Dottie Mattison, SVP women's apparel, jewelry, shoes and accessories, and product development of mega-retailer Wal-Mart Stores, has resigned.

Christopher & Banks:
Fashion retailer Christopher & Banks has promoted their VP of finance, Michael Lyftogt, to chief accounting officer and interim CFO. Former CFO Rodney Carter has resigned.

SUPERVALU:
At grocery store operator SUPERVALU, SVP and CFO Pamela Knous has resigned. Their SVP of finance, Sherry Smith, has stepped in as interim CFO.

Great Atlantic & Pacific Tea Company:
Regional grocery store chain The Great Atlantic & Pacific Tea Company (A&P) has named former OfficeMax COO Sam Martin as president and CEO, former CEO Ron Marshall has resigned.

OfficeMax:
At office supply retailer OfficeMax, Chairman and CEO Sam Duncan will handle the COO duties since the departure of former COO Sam Martin. The company will not hire a new COO.

Louis Vuitton North America:
Luxury brand LVMH Moët Hennessy Louis Vuitton unit, Louis Vuitton North America, named Geoffroy van Raemdonck acting CEO after the resignation of Daniel Lalonde.

Men's Wearhouse:
Former Gymboree executive Susan Neal has moved to men's clothing retailer The Men's Wearhouse. She has been hired as SVP, e-business and digital strategies.

Marks and Spencer:
Department store operator Marks and Spencer will have a new CFO by the end of October: Alan Stewart. He will succeed Ian Dyson, who left to run Punch Taverns.

The Finish Line:
Samuel Sato has become president and chief merchandising officer while Steven Schreibman is now VP and chief marketing officer at athletic apparel and footwear retailer The Finish Line.
 
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
Canada’s LP industry’s leading conference is right around the corner:
Retail Council of Canada 2010 Loss Prevention Conference

September 14, 2010, International Centre – Conference Centre, Mississauga, Ontario, Canada
From the RCC Website:
The Retail Loss Prevention Conference serves loss prevention and retail operations professionals across Canada and focuses on all loss prevention aspects within the retail industry. This event brings in a full complement of exhibitors who provide ideas and expertise on a variety of products and services geared toward preventing retail losses. The conference's aim is to provide strategic insight and best practices of the industry, and strengthen relationships between the retail industry, law enforcement, and governments
 
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 and introduce yourself.
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.
 

To view a previous Hart Monitor, click June, July, August
 

Each month, the Hart Monitor is sent out to over 7,500 executives in the retail community.
 

Sign up a friend. Have any friends or colleagues in the retail world that may be interested in receiving this information periodically? We'll be happy to send them our free newsletter! Click here -Send to a Friend- and put the e-mail address in the body of the message.
 

To change your e-mail address, click here -Change My Address- and include your new address in the body of the e-mail.
 

To unsubscribe, send an email to HartMonitor@hartsystems.com with the word "Unsubscribe" in the subject line of the message.

© 2010 Hart Systems, LLC
 

Hart Quote !!!

“Motivation is what gets you started. Habit is what keeps you going”
James Ronald (“Jim”) Ryun (1947 - present) Athlete, Sports Management Executive, Politician

Hart Systems, LLC
60 Plant Ave
Hauppauge, NY 11788