Shop Talk

Retailers, consumers and prices

Check Out Line: Discounts, the choice of a new generation


Check out the “Downturn Generation.” 
That’s what data tracking firm Information Resources Inc is calling a “new generation of Americans (that) is adopting practices similar to Depression-era shoppers, implemented both to weather the recession and to keep a close eye on spending long after the recession ends.”
Basically, we want everything on sale.  And that means lots and lots off the original price.  The New York Times today pointed out how retailers are pushing deep discounts of 50 percent or more to attract shoppers.

According to IRI’s study, more than 69 percent of consumers surveyed say they are more likely to look through retailer ads for deals and nearly 82 percent are more likely to look for sale prices once in the store.
Also, it’s not just one store they are looking at.  Fifty-nine percent visit multiple stores for the lowest prices, and 42 percent of those shoppers will continue to do so into the future.
Just under two-thirds (65 percent) say price is becoming more important than convenience in brand purchases.
Oh, and along with this new frugality comes another benefit: sharing is in and for some people it could stay.

Thirty percent are making bulk purchases with others not in their households to secure low unit prices, and 35 percent of those shoppers intend to continue doing so.  At the same time, more than 34 percent are collecting, sharing and trading coupons with others, with 40 percent of those shoppers planning to continue this behavior.
Also in the basket:
Price fixing takes a hit (Wall Street Journal)
Office Depot posts loss
Fortune Brands to cut payout, affirms ’09 outlook
Under Armour posts stronger than expected profit
Coke Enterprises profit, outlook tops view
DineEquity posts higher profit
David Beckham designs (WWD)

(Reuters photo)

Check Out Line: Global downturn – burger division


Check out the slumping global economy for burgers. FOOD BURGERKING
Burger King said it had an unexpected slowdown in traffic in March, which cut into the margins at the company’s restaurants.
The biggest culprits were Germany, the company’s second-largest market, and Mexico, the only market in Latin America where the company owns restaurants.
Burger King is attacking the traffic decline with “value” menus. In Germany, it is offering “King Deals,” which are “value-priced” combo meals. It has also relaunched the 99 euro value menu and is also opening more during breakfast.
In Mexico, the company is promoting its “Come Como Rey” (Eat Like a King) value menu. Apparently in Mexico, kings eat Whopper Jr.’s. (Or is that Whoppers Jr.?)
The company said it is seeing some improvement in April. 
Also in the basket:
Wal-Mart CEO doesn’t see quick end to the recession
Consumers prices fall as energy demand slumps 
Apparel firms partner with Yankee stadium (WWD, subscription required)

(Photo: Reuters)

Picture the economy: L.A.


A picture is worth a thousand words — and some Californians have a lot to say about the worst financial crisis in decades.












greenspan5The economic meltdown was the focus of Crossman Wilkins’ (above) master’s thesis at Otis College of Art and Design in Los Angeles.

Check Out Line: Are consumers spending?


Check out the latest, somewhat confusing, figures on consumer spending.ECONOMY-DOLLAR/PIZZA

The Commerce Department said U.S. consumer spending increased 0.2 percent in February, in line with market expectations, after rising 1 percent in January. That makes two straight months of gains.

However, after adjusting for inflation, consumer spending in February fell 0.2 percent.

Check Out Line: Survey says…. ugghhh!


Check out how it ain’t getting any better any time soon. clouds
The latest evidence is a new survey by America’s Research Group that showed that nearly a third of U.S. households think it will be a year before their families are better off.
That might not seem like so many, until you see that another quarter think that it will take even longer.
“We’re looking at a retail meltdown much worse than anyone could have imagined six months ago,” said Britt Beemer, founder of America’s Research Group.
Half of the consumers said their shopping budgets were significantly lowered from last year. And almost all of the rest said they were only the same.
More than half also said they had stopped using credit cards for purchases. And 47 percent said they would probably or definitely not buy something if it wasn’t on sale.
So, how’s that stimulus going?
Also in the basket:
Bon-Ton Stores swings to Q4 loss on charges
American Eagle meets Street view
Staples posts weak Q4, says will not give ’09 outlook
Tide, Woolite tout their fashion sense (WSJ)
Wal-Mart plans to market digital health records system (N.Y. Times)

(Reuters photo)

Meet Bernie Madoff at the 2009 Toy Fair


Now that we have your attention — it’s a Bernie Madoff action figure.bernie1

Modelworks, a company that makes models of anything from planes to action figures is expected to unveil its version of Madoff, an accused perpetrator of a $50 billion investment scam, at the 2009 Toy Fair in New York’s Jacob Javits Center, the Toy Industry Association said on its website.

Check Out Line: Bottoms Up!


Check out the slowing sales at Diageo. DIAGEO/
The world economy is in a shambles. You would think people would drink more, not less.
But Diageo — the folks who make Smirnoff vodka, Guinness beer and Johnnie Walker whisky — warned today that sales growth was slowing – a lot.
The company slashed its profit growth forecast and said it did not expect any improvement in the second half of the year from slowing sales growth it saw in the first half.
“What we are seeing is sales growth slowing. Consumer demand is soft in certain parts of the world, we are seeing some destocking and we are stopping some orders where we have concerns about credit quality,” Finance Director Nick Rose said in an interview.
The company also said it would cut an unspecified number of jobs as part of a program aimed at reducing costs by $144 million
Hopefully, somebody will by those displaced workers a drink.
Also in the basket:
Coca-Cola profit tops view, shares rise
U.S. retail sales unexpectedly up 1 percent

(Reuters photo)

from Raw Japan:

Colour me hopeful

The world's No.2 economy, mired in what may be its longest and ugliest recession, is not wearing its misfortunes on its sleeve -- at least not literally.

Yutaka Sato, a spokesman for Millennium Retailing, which runs the Seibu and Sogo department chains, said Japanese consumers are going green in more ways than one.

Check Out Line: Cooking up meager profits


COLUMN SHOPPINGCheck out the falling profits at Whirlpool and Hasbro.
Whether the ovens you make cook with gas like Whirlpool’s or with a light bulb like Hasbro’s Easy-Bake, it’s hard to make much money when people don’t want to buy anything.
Whirlpool profit fell 76 percent in the fourth quarter as sales in North America dropped 18 percent. The world’s biggest appliance maker also said it expected industrywide shipments of appliances to fall 10 percent in 2009.
Hasbro, which makes littler appliances, as well as G.I. Joes and Transformers, saw a 30 percent drop in quarterly profit as shoppers bought fewer toys for the holidays.
The company plans to focus on cutting costs this year, as are many, if not most companies in the United States. 
But wait, is that G.I. Joe coming to the rescue? A G.I. Joe movie this year is expected to help lift sales of the action figures and other toys Hasbro sells under those names.
Perhaps they can work some kitchen scenes into the script and help out Whirlpool. C’mon, at least a trash compactor to deal with the bad guys?
Also in the basket:
McDonald’s same-store sales rise
Saks upends luxury market with strategy to slash prices (WSJ)

(Reuters photo from 2002)

Check Out Line: Ding, dong, Avon falling!


Check out Avon’s declining sales.
The world’s largest direct seller of cosmetics just spent however much money you have to spend to get an ad on NBC right before the Super Bowl, trying to recruit people to sell for Avon.
The pitch was that in these tough economic times, being  an Avon rep was a good idea. It’s a good way to earn extra money, and, since it was essentially your own business you couldn’t be fired, the commercial said.  

One question: who are all these new Avon Ladies going to be selling to?
The global economy is in tatters. Avon posted fourth-quarter profit below analysts expectations and sees more difficulty in 2009.
Sales fell 9 percent, though that was due to the stronger dollar. But even a 2 percent sales increase in local currencies was somewhat anemic.
So, who is Avon calling on?
Also in the basket:
Walgreen January sales up 0.4 percent
Liz Claiborne to cut 725 U.S. jobs
A CEO gets a rare second act (WSJ)