Shop Talk
Retailers, consumers and prices
Check Out Line: Consumers beware! Rising prices even at Wal-Mart
Check out rising prices even at Wal-Mart.
Pressures created by rising costs have caused even the world’s largest retailer, known for its ”rollback” discounts, to boost the prices that consumers pay for groceries. Wal-Mart Stores raised average prices on supermarket items by about 6 percent in a month, according to a recent J.P. Morgan study in Virginia that compared the prices of 31-item goods sold at its supercenters, and at supermarket rivals Kroger, Safeway, Harris Teeter and Whole Foods. Specifically, the study found that prices at a supercenter in Virginia rose 5.8 percent, the most significant sequential increase since JP Morgan started price comparisons in January 2009. While the world’s largest retailer remains the cheapest among supermarkets, rivals such as Kroger and Safeway are gaining ground, according to J.P. Morgan. Rising costs of raw materials and oil are pressuring companies to pass on costs to consumers with higher prices.
Indeed, clothes makers such as Nike, VF Corp and Hanesbrands are facing the same conundrum. And British baker Greggs said soaring wheat prices were set to push up costs, emphasizing a theme that may be repeated for such food makers as General Mills, Kellogg, Kraft and Sara Lee.
However, the timing is not good as the state of the U.S. economy is still uncertain and unemployment remains stubbornly high, leading many consumers to still be wary about spending. U.S. retailers in July posted weaker-than-expected sales despite increased discounting. Also in the basket:
Wendy’s/Arby’s to expand into Russia
from Adam Pasick:
Nike, the albatross, and sustainable design
A dead baby albatross is a tough act to follow.
Nike's Lorrie Vogel took the stage at Poptech this week to talk about the company's sustainable product design efforts.
Immediately preceding her was an devastating presentation from photographer Chris Jordan, who shared a series of photographs from Midway Atoll of baby albatrosses who had died from ingesting plastic from the massive Pacific Garbage Patch.
Conference organizer Andrew Zolli, visibly moved, asked for a moment of silence and then Vogel took the stage to talk about her efforts as general manager of Nike's Considered team.
She was frank about the challenges that Nike and other manufacturers face, especially the company's reliance on petroleum-based polyester and resource-heavy cotton. It takes about 700 gallons of water and 1,100 square feet of land to produce the cotton for one Nike T-shirt.
Interviewed two days later, she said the albatross moment spurred her biggest takeaway from the conference:
Check Out Line: Taxes up, cigarette shipments down
Check out the falling shipments of cigarettes with expectations of further declines in 2009.
Reynolds American posted a higher-than-expected quarterly profit as its Camel and Pall Mall cigarettes increased market share. But the company said it shipped 21.6 billion cigarettes in the fourth quarter — down 6.3 percent from a year earlier.
Reynolds, like other cigarette manufacturers, could face a difficult 2009. Not only has the recession crimped consumers’ ability to spend, but smokers will feel even more price pressure now that a 61-cent increase in the federal tax on a pack of cigarettes has been passed.
Reynolds CEO Susan Ivey told analysts that the increase in the federal tax will hurt industry volume and she also said some state tax increases will likely be passed, even though Reynolds will fight them.
Also in the basket:
smoking may included to daily expenses to those who are really a chain smoker…but in this time of recession… smokers need to base first in their ability to spend..
Check Out Line: Nike’s U.S. hurdle
Check out Nike just not doing it in the U.S. The athletic shoe and apparel maker apparently is not immune to the sluggish U.S. economy. The company said Wednesday that U.S. orders for goods through November were flat. It also said sales in the fourth quarter rose 4 percent in the U.S., compared with a 16 percent increase for the entire company. U.S. apparel sales rose only 2 percent. Nike said it will focus on more premium merchandise that is better distributed and can stand out. It also stressed that U.S. profit margins are not eroding. For Nike, getting through the tough U.S. economy might just be an invigorating workout. “Strong companies who are able to navigate through those tough times can come out even stronger,” Nike CEO Mark Parker said in a conference call. Ooh, feel the burn! Also in the basket: Anheuser-Busch to reject $46.3 billion InBev offer The road runs out: Streetwear adapts as market implodes (WWD)
Steve & Barry’s Hits Trouble: Hyped clothing retailer hires turnaround help (WSJ)
Check Out Line: More for the Man’s Wardrobe
Check out new offerings for men from DKNY.
Fashion House Donna Karan International reached a licensing deal with Liz Claiborne to create a new line of men’s sportswear for the United States and Canada.
The collection, to include knits, trousers, blazers and coats, will be targeted to the “better” segment, with articles priced from $59.50 to $595. It will be available in department stores in fall of this year.
The move will help the fashion house named for Karan (pictured) reach a wider audience as other designers such as Vera Wang have partnered with retailers on clothing lines.
Also in the basket:
-
Resident Shop Talk Expert
-
