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November 6th, 2009

Check Out Line: The dreaded 10 percent

Posted by: Dhanya Skariachan

unemployment1Check out the grim unemployment numbers from the U.S. Labor Department on Friday, a day after dozens of retail chains reported lackluster October sales.

U.S. employers cut a deeper-than-expected 190,000 jobs in October, driving the jobless rate to 10.2 percent, the highest in more than 26 years.

Analysts polled by Reuters had expected the monthly unemployment rate to edge up to 9.9 percent from 9.8 percent in September.

While job losses have been mounting for months, some analysts and economists say 10 percent unemployment could deal a new psychological blow to U.S. consumers who might previously have felt that the economy was beginning to stabilize.   

Just last week, news that the U.S. economy had returned to growth instilled hope for a rebound in consumer spending. But the latest reports on retail sales and joblessness suggest that such a result may be further down the road.

So, no matter what gimmicks retailers resort to – be it $10 DVDs or upscale wines – the customer, spooked by an almost daily dose of gloomy economic data, may still be unwilling to open their wallets.

Also in the basket:

Target fights Wal-Mart with $10 offers on DVDs

Hermes outshines rivals, optimistic about Christmas

Kraft in waiting game as Cadbury deadline nears

(Photo/Reuters)

November 5th, 2009

Check Out Line: Frugal fatigue?

Posted by: Lisa Baertlein

bootsplaid1Check out what women buy when they get tired of being a frugalista: boots, plaid and outerwear. 

Those were some of the products that helped October U.S. retail sales improve from a year ago, when the unfolding financial meltdown had shoppers fearing a second Great Depression.

“Frugal fatigue is setting in,” said NPD Group analyst Marshal Cohen. After a year of scrimping, he added, the numbers suggest that some women are going in for a little retail fix.

“Women (not only moms) are shopping their closets, discovering new and fresh looks and filling in with some key updates,” he said.

But selective shopping is not enough to ease worries about the all-important holiday sales.

Thomson Reuters research shows that while October sales rebounded, results from individual retailers were mixed.

Also in the basket:

Warnaco beats estimates; Liz Claiborne misses

Children’s Place October same-store sales beat estimates

CVS says won’t meet pharmacy benefits view in 2010

US commercial real estate to bottom in 2010-survey

Productivity at 6-year high, jobless claims fall

November 4th, 2009

Restaurants fight recession with wine

Posted by: Lisa Baertlein

wineWine sales at restaurants and bars are falling as diners trade down to less expensive options or skip wine altogether to save a buck.  But some restaurants are cooking up contrarian strategies to squeeze sales from the vine.

California Pizza Kitchen took its wine list more upscale and wine sales followed.

The pizza chain launched the new wine list on Oct. 5. It includes Cakebread Cellars Chardonnay, La Crema Pinot Noir and Stags’ Leap Merlot for around $10 a glass.

“This is us going back to our roots. When we first opened CPK, (in 1985) part of the concept was we that we would have familiar wines at unfamiliar prices,” said Rick Rosenfield, CPK’s co-chief executive officer.

Morton’s steakhouse, on the other hand, is working the downturn in fine wine prices to its advantage.

It is hitting auctions as luxury restaurants clear cellars and striking exclusive relationships with wineries like Charles Krug, Gundlach Bundschu and Liverano when they have unsold premium wine.

Its limited-time Krug 1881,  which sells for around $13 a glass, is the restaurant’s top-selling Cabernet, said Tylor Field, Morton’s vice president of wine and spirits.

While wine sales at retail continue to outpace those in restaurants, Charles Krug’s Peter Mondavi Jr said the winery recently has made inroads at restaurants like  Smith & Wollensky, Roy’s and Landry’s.

(Photo/Reuters)

November 4th, 2009

Survey: Most consumers plan to spend less this holiday season

Posted by: Jessica Wohl

shopping-bagRetailers, listen up. A survey from Discover shows that more consumers believe economic conditions are still getting worse.
 
Discover’s U.S. Spending Monitor for October fell 3.2 points to 85.8 (that’s out of 100, which is where the index started in May 2007).
 
Forty-six percent felt economic conditions were getting worse. That’s up 3 points from September and the first time the survey has seen an increase since July.

Slightly more women (58 percent) than men (53 percent) rated the economy as poor. Overall, 56 percent called the economy poor, up from 52 percent in September.
 
“The Monitor has always shown that women tend to be less optimistic than men about the economy and their finances,” said Julie Loeger, senior vice president of brand and product management for Discover.  “But the record jump in the number of women rating the economy as poor and the pessimism over the current state of their finances may indicate a weak holiday shopping season ahead.”

The Discover U.S. Spending Monitor is based on interviews with 8,200 U.S. adults conducted thoughout October.

Nearly 63 percent of 5,000 consumers surveyed toward the end October plan to spend less on holiday gifts this year. That’s in line with last year’s projections, and we all know how the winter of 2008 turned out.

For the seventh month in a row less than half of consumers said they expected to have money left over after paying their monthly bills. Just 44 percent said they expected to have money left over, down 3 points from September.

Meanwhile, the U.S. Agriculture Department said more Americans than ever are receiving food stamp assistance, while personal spending fell 0.5 percent in September.
 
“Consumers simply don’t seem to have the economic or financial confidence right now to reverse course, which is not good news for retailers,” said Loeger.

(Photo/Reuters)

November 4th, 2009

Need an inside source? Here’s eBay

Posted by: Alexandria Sage

insidesourceEBay, the online marketplace where shoppers can find anything from toys to cars to designer handbags, has launched a digital magazine. 
    
The magazine, www.theinsidesource.com, is geared to “inspired shoppers” and features stories based on what eBay’s millions of users are looking for, according to the publication.

It will feature articles, analysis and opinions from eBay shoppers and journalists. The site will also point to eBay’s most-watched and most-searched items.
 
“The Inside Source content will reflect what inspires us on eBay, from a profile of an art dealer discovering museum-quality pieces to a breakdown of the hottest trends in handbags,” said Managing Editor Meredith Barnett.
    
Perusal of the site revealed postings on a variety of topics, from Kim Kardashian’s style and cocktail rings for under $30 to Jane Birkin’s kitchen and items made of hemp.     
    
The magazine is part of the company’s recent marketing efforts to reenergize its marketplaces business, which competes with a host of e-commerce rivals, including Amazon.com.

(Photo: Screenshot of www.theinsidesource.com)

November 4th, 2009

Check Out Line: Kraft’s cash cache

Posted by: Brad Dorfman

Check out Kraft’s cash hoard. USA/

Kraft had almost $3 billion of cash on its books at the end of the third quarter, roughly four times what it had a year ago.

The world’s second-largest food maker might have disappointed
analysts with its third quarter sales and a profit outlook that implied a weaker-than-expected fourth quarter.  But when it comes to its battle to win Cadbury, at least the company is generating cash – expenses cuts helped Kraft generate $2.7 billion in cash in the first 9 months of 2009.

Also, Reuters Loan Pricing Corp reported on Tuesday that Kraft has arranged $9 billion in financing for a bid.

Sources have told Reuters that Kraft is not likely to raise its initial bid for Cadbury if it makes a formal offer by the Nov. 9 deadline. But analysts do think that shifting the offer to more cash and less Kraft stock — which is down 3 percent on Wednesday after the company posted lackluster third-quarter sales — could be a step in the right direction.

Also in the basket:

Warnaco beats estimates; Liz Claiborne misses

Molson Coors higher profit tops view, shares rise

M&S sees no repeat of blanket pre-Christmas promotions

Talking shop with Isaac Mizrahi (WWD)

(Reuters photo)

November 3rd, 2009

This holiday’s shiny new toy: social media

Posted by: Nicole Maestri

iphoneCompanies that cater to consumers are always chasing after the latest consumer technology trend (anyone remember Second Life?), and this holiday season that means following them into the world of social media.

Companies ranging from Wal-Mart and Panda Express to J.C. Penney and Target are experimenting with Facebook, TwitterYouTube or Flickr. Some are tweeting special coupons or limited-time deals, while others are doling out fashion advice or providing play-by-plays from product launch parties on Facebook. M.A.C. said it is using its Facebook page to feature artists, color collections, and what is happening backstage at fashion shows. 

While figuring out if all this tweeting, posting and friending is increasing sales is difficult, companies said one thing is certain: Social media is giving them a direct, unfiltered link to consumers.

For instance, when Target asked its Facebook fans what they thought of its mens clothing line, they got suggestions like: “MORE MLB, NFL, NBA merchandise…” and “Could use a better selection of mens jeans, and tall mens shirts (not just dress shirts) too.”

Target is now using the responses to tweak its merchandise selection.

When Panda Express wanted to celebrate its new SweetFire chicken breast, it allowed Facebook fans to print a coupon so they coud visit a restaurant on Sept. 25 and try it for free. Chief Marketing Officer Glenn Lunde said 25,000 coupons were redeemed and traffic in its restaurants rose that day. 

Larry Weintraub, the chief executive of marketing agency Fanscape, said that unlike traditional media, social media can give companies tangible results.

“If I run a TV ad or I do a billboard … I don’t always know the direct effect,” he said. “If I do Facebook and there’s a coupon or a direct link to buy it, I actually see the results.”

Coach said it is luring shoppers to its stores and its website by using Facebook, Twitter and establishing relationships with influential blogs. For this holiday, it is developing an iPhone gifting application. Users can type in who they are shopping for, what that person’s favorite color is, and their price range. The application will respond with a bundle of possible gift ideas.

But Zain Raj of Euro RSCG Discovery said companies need to keep social media’s potential in perspective for this holiday. He pointed to Dell, which has said it raked in more than $3 million from Twitter followers who clicked through its posts to its Websites to make purchases. 

However, Raj said that is “not even a drop in the ocean” for a company that posted $12.3 billion of revenue in the first quarter of this year, alone.

(Photo/Reuters)

November 3rd, 2009

Check Out Line: Holiday tips to take hit

Posted by: Ben Klayman

haircut1Check out the probable lower level of tips for service providers during the holidays.

Chalk up tips for cleaning people, school teachers, barbers, mail carriers and others as another probable victim of the weak U.S. economy, according to a new poll conducted by Consumer Reports magazine.  

The magazine polled Americans about their tipping habits during the 2008 holidays and again in October and found 26 percent of Americans who usually tip or give a gift to a service provider said they would spend less this holiday season. Just 6 percent planed to spend more.

“Families are looking for ways to balance their financial concerns with the need to thank people who have helped them during the year,” Tobie Stanger, senior editor at Consumer Reports, said in a statement. “This year, tipping is more of a challenge than ever, but CR’s survey shows that people are still trying to do it, for the most part.”

The average value of tips (i.e. some were gifts instead of cash or gift cards) varied by occupation, with a cleaning person at $50, a child’s teacher and a hairdresser at $20, and a manicurist at $10, according to Consumer Reports.

Some readers told the magazine they plan to still say thanks with a card or homemade gift.

Also in the basket:

Food the focus as Wal-Mart starts holiday giving

Kraft quarterly results could make a case to Cadbury

ADM profit soars past Wall Street estimates

Polo 2nd-qtr profit tops Street view

Walgreen October sales up a bit more than expected

Energizer quarterly profit falls

(Reuters photo)

November 2nd, 2009

Check Out Line: Warning! Murky outlook ahead for retailers

Posted by: Dhanya Skariachan

shop11Check out the latest outlook on October sales at U.S. retailers.

While most industry experts expect a 1.2 percent rise thanks to the weather gods and easy comparisons, the forecast doesn’t really say it all.

For instance, while sales trends have improved from a disastrous October 2008, data on the economy and consumer spending gives mixed signals and indicates shoppers remain cautious.

News of the U.S. economy returning to growth may have renewed some hopes of a revival in spending late last week, but the Commerce Department talked about consumer spending falling 0.5 percent in September.

It may be too early to raise hopes based on expectations for October.  One thing is certain — the future is unclear.

Also in the basket:

NBA average ticket price falls for 1st time in 8 years

Wal-Mart announces second round of toy price cuts

Flu fears boost Clorox profit; tops Street view

Dean Foods profit up; sees uptrend in dairy prices

(Reuters photo)

October 30th, 2009

Who likes to stop at the duty free shop?

Posted by: Jessica Wohl

dutyfreeApparently, travelers looking for some new cosmetics.
 
Sales at duty free stores — those airport emporiums for everything from perfume to cigarettes and extra-large Toblerone bars – boosted results at both Elizabeth Arden and Estee Lauder.
 
Elizabeth Arden posted stronger sales than anticipated and an unexpected quarterly profit on Thursday.  A day later, Estee Lauder said that travel retail accounted for about 9 percent of sales in its latest quarter, up from the usual range of about 7 percent.  Its higher profit came in well ahead of expectations.

There may be fewer passengers traveling these days, but those that are seem to be willing to buy.  Still, the market is a volatile one, Estee Lauder CEO Fabrizio Freda told Reuters.

Sales at duty free shops boost the bottom line since they are more profitable than typical sales.  That’s partly because companies spend little, if anything, to advertise.  Shoppers already know the brands from traditional outlets and marketing.

And now, for a little duty free comedy …