Retailers, consumers and prices
Apple is expected to announce a fix for the iPhone 4's reception problems, rather than a recall, at a surprise press conference on the device on Friday. The event, which comes only days before Apple reports its quarterly results, may find the company offering hardware or software tweaks, ranging from a rubber bumper case to something more drastic. Or perhaps no fix at all.
Reuters is live at the event, and we are hosting a live blog with updates as fast as we get them. Stay tuned for more, and please post your comments about Apple's decisions.
Check out a bullish view on McDonald’s June same-store sales.
Janney Montgomery Scott analyst Mark Kalinowski raised his forecast for U.S. same-store sales at the hamburger chain to an increase of 4.6 percent from an increase of 2.4 percent.
His revised forecast is based on his survey of 30 McDonald’s franchisees, representing 215 restaurants.
(Written by our retailer reporter Dhanya Skariachan)
Check Out Toys R Us “Christmas in July”:
For Toys R Us, Christmas comes early this year.
With only 164 shopping days left for Christmas and the back-to-school season almost around the corner, the toy retailer is resurrecting its “Christmas in July” sale, featuring discounts as steep as 50 percent on board games like Monopoly and Scrabble and items like Coby MP3 player.
The operator of Toys R Us, Babies R Us and FAO Schwarz stores held its “Christmas in July” sales event for the first time last year after many U.S. retailers posted 10 straight months of sales declines during the worst of the recession. Even Sears held wintry holiday-themed events last summer ahead of their back-to-school promotions.
Check out the decline in weekly U.S. same-store sales gains.
After two consecutive weeks of strong positive weekly sales gains, retailers saw their sales take a breather with a 1.5 percent decline in the week ending July 10, according to the International Council of Shopping Centers and Goldman Sachs.
Sales in the weeks ending July 3 and June 26 rose 1 percent and 2.1 percent, according to the report.
On a year-over-year basis, sales also slowed to 3.2 percent, but continued to remain positive.
“Sales showed a mixed performance over the past week as the seasonally-adjusted year-over-year pace continued to rise — although the unadjusted pace was much stronger due to the holiday-sales lift from a calendar shift when the Independence Day federal holiday was celebrated in 2010 and 2009,” ICSC chief economist Michael Niemira said in a statement.
The ICSC reaffirmed its outlook for July U.S. same-store sales to increase in the range of 3 percent to 4 percent, compared with a 5 percent decline last year.
However, U.S. retailers relied heavily on promotions to boost June sales, suggesting profit margins may suffer as they head into the key back-to-school shopping season.
The Weekly Chain Store Sales Snapshot is produced by the ICSC and Goldman to measure U.S. same-store sales, excluding restaurant and vehicle demand, and represents about 75 retail chain stores.
Meanwhile, Goldman analyst Michelle Tan said in a separate research note that there are few reasons to buy stocks in the apparel retail sector assuming a slow recovery. It cuts its 2010, 2011 and 2012 profit estimates by an average of 7 percent.
“In a slow recovery with little sequential improvement in employment, sector sales have averaged less than 2 percent with flattish margins; this implies about 9 percent risk to Street forecasts,” Tan wrote. “History suggests downside risk to estimates in a double-dip scenario is roughly two times the upside in a robust recovery.”
Also in the basket:
Check out Avon acquiring Silpada Designs Inc for $650 million plus a potential additional payment.
Avon, the world’s largest direct seller, specializes in makeup and cosmetics, but the acquisition is consistent with it has said in the past: its M&A would be geared to areas that complement its core beauty business.
Check out an American Express survey that shows that quality service matters more than ever, suggesting U.S. retailers may want to start sucking up to recession-wary consumers even more.
Sixty-one percent of Americans polled said quality customer service is more important in today’s tough economy and that they will spend an average of 9 percent more when they think a company is providing that. Important points when some analysts and investors worry the economy may be at risk of dipping back into recession.
In a disconnect, however, many businesses seem to be missing the message as 28 percent of those polled believe that companies are paying less attention to good service and 27 percent have not changed their attitudes, according to the American Express Global Customer Service Barometer (which sounds like a weather vane for customer service).
“Customers want and expect superior service,” AmEx executive vice president Jim Bush said in a statement. “Especially in this tight economic environment, consumers are focused on getting good value for their money. ”
“Many consumers say companies haven’t done enough to improve their approach to service in this economy, and yet it’s clear they’re willing to spend more with those that deliver excellent service – suggesting substantial growth opportunities for businesses that get customer service right,” he added.
Retailers might want to keep all that in mind given the fact that June same-store sales came in slightly below expectations and some analysts see the sector treading water.
The survey was conducted in the United States and 11 other countries.
In the United States, nine in 10 of those surveyed consider the level of service important when deciding to do business with a company, the survey said. However, only 24 percent believe companies value their business and will go the extra mile to keep it.
Contrary to “conventional wisdom,” the survey showed more are inclined to talk about a positive experience (75 percent) than complain about a negative one (59 percent).
And consumers said they are far more likely to give a company offering good service repeat business (81 percent) than they are to never do business with a company again after a poor experience (52 percent), according to the poll.
However, negative feedback online weighs more heavily as almost half of consumers gather others’ opinions about a company’s customer service reputation and they put greater credence in negative reviews (57 percent) versus positive ones (48 percent), according to AmEx.
“Because consumers can broadcast their views so widely online, each and every service interaction a company has with its customers becomes even more crucial,” Bush said. “Developing relationships with customers, listening to them, anticipating their needs, and resolving any issues quickly and courteously can help make the difference.”
In fact, 81 percent of Americans have decided never to do business with a company again because of poor customer service in the past, the poll said. Half of those surveyed said it takes two poor service experiences before they stop doing business with a company.
However, 86 percent will give a company a second chance after a bad experience if they have historically had great service before, according to the poll.
Woe to those who screw the experience up too, as 52 percent of consumers expect something in return after poor service beyond just resolving the problem. Seventy percent want an apology or some form of reimbursement.
So retailers, I expect red carpet treatment and a lot of sucking up this recession or you won’t get any of my limited funds!
The No. 2 U.S. bookstore chain’s electronic bookstore comes nine months after rival Barnes & Noble debuted its Nook e-reader and three months after Apple introduced its popular iPad tablet computer, allowing both companies, and Amazon.com, which sells the Kindle e-reader, to get a head start.
No worries, says Borders, which saw sales at its namesake superstores open at least a year and on its website fall 11.4 percent in the first quarter.
Check out expectations for June sales.
They look pretty good. Analysts expect a 3.3 percent increase in June, according to Thomson Reuters data.
Of course, that excludes Walmart, Best Buy and a slew of other major retailers that do not report monthly sales. It also comes off of a 4.9 percent drop a year earlier.
Check out the latest batch of grim data about the U.S. job market.
U.S. employment fell for the first time this year in June, renewing concerns about the strength of the U.S. economic recovery.
Weaker-than-expected private hiring and the end of thousands of temporary census jobs translated into a decline of 125,000 nonfarm payrolls, their largest fall since last October.