Shop Talk

Check Out Line: Shrinkage is shrinking

Check out how shoplifting rates are easing amid economic signs of life.

As severe economic pressures subside, U.S. retailers are noticing a slight decrease in merchandise losses, a.k.a. ”shrinkage,” according to the National Retail Federation.  Preliminary results of the group’s latest survey show that shrinkage decreased to 1.44 percent of retail sales in 2009, down from 1.51 percent in 2008.

According to the survey, retailers lost $33.5 billion through lost merchandise last year, down from $36.5 billion in 2008.

“Retailers lose billions to shoplifting, internal theft and other types of criminal activity every year, so it’s encouraging to see these small successes when it comes to shrink rates,” said NRF senior asset protection advisor Joe La Rocca in a statement.

Employee theft was the biggest culprit last year, accounting for $14.4 billion in losses, or 43 percent of the total. Shoplifting accounted for 35 percent of the losses, or $11.7 billion, while administrative errors accounted for 14.5 percent and vendor fraud 3.8 percent.

But just because there was a little less fraud, don’t think retailers are out of the woods yet –

A new survey by BeemerReport.com found that over half of the American investors in the stock market, who were also pessimistic about the market’s trend following the European credit crisis, expected to cut back on all spending throughout the summer months.  Of those with school age children, many said they may spend 25 percent less for back-to-school apparel if the market does not rebound quickly.

Deals and discounts in vogue this Valentine’s Day

As procrastinators (or those who were too busy shoveling last weekend) head out to find a perfect last-minute gift, they may be happy to hear that less is expected this Valentine’s Day. 

Most consumers in romantic relationships don’t plan to spend much, if anything, on Valentine’s Day gifts, according to a new survey from Accenture. That backs up the findings from a National Retail Federation survey, which found that U.S. couples planned to spend 6 percent less on each other this year.

Most respondents in Accenture’s survey said they only planned to spend up to $50 on gifts. Nearly 13 percent of women and 5.5 percent of men said they planned to spend nothing.  Kiplinger has some ideas for them.

Those who are buying may be more practical, as they fret about home prices, stock portfolios and job security.

“If there were a year that you would get your wife a small appliance with a dozen roses, this might be the year,” said Thomas Jacobson, global leader of Accenture’s pricing strategy practice.

Eighty-one percent of women and 66.9 percent of men said a discount or sale would be the most likely thing to influence them to buy a luxury item as a Valentine’s gift. Most people plan to buy items such as flowers, candy or cards.

Those hoping for a warmer reception from a luxurious item can also splurge less without losing favor.

Check Out Line: Magic 8 ball says better year for retail

Check out a prediction for increased U.S. retail sales this year.

The National Retail Federation said U.S. retail sales should rise 2.5 percent this year, signaling that stores have made it through the worst of the downturn as improvements in the housing and job markets bolster shoppers’ confidence.

The projected increase would be a step up from a 2.5 percent decline last year and 1.3 percent increase in 2008, NRF said.

Don’t get excited, however, as the outlook remains modest.

“I wouldn’t describe this as a very strong year,” NRF Chief Economist Rosalind Wells said in an interview. “We’re not going to have a V-shaped recovery in the economy, and we won’t have a V-shaped recovery in consumer spending or retail sales. It’s a slow return to a more normal level.”

U.S. retailers just completed a better-than-expected holiday season as retail sales rose 1.1 percent instead of the 1 percent drop the NRF had expected for the November-December period. Retail chains improved upon a dismal 2008 (sales down 3.4 percent) by cutting inventories and offering more targeted discounts for frugal shoppers.

In its latest spending and saving tracking survey, American Express found consumers entering 2010 with optimistic yet prudent goals. The poll showed 30 percent of the general population and 42 percent of young professionals will rein in extras such as ”morning lattes and manicures.”

Luxe CEOs bemoan encroachment of social media on privacy

No one wants it broadcast to the world when one is submitting to the indignities of airport security screening.

But that’s just what happened to luxury designer Tory Burch awhile back, when a fan tweeted to thousands that Burch was barefoot at the airport.  The upside, Burch said, was that the tweet and subsequent discussion gave her the idea to create a travel sock for women.

New business ideas notwithstanding, Burch told an audience at the National Retail Federation conference that social media was taking a toll on her.

“You want to maintain a level of mystique in a way, you don’t want to be accessible,” she said.  “Being the face of our brand I want to maintain a level of privacy … but  you have to stay interesting, be quippy and funny and not boring, but at the same time, not too personal.”

Fellow panelist Saks CEO Steve Sadove also finds there are limits to our electronic age. He recently went on Facebook but within a matter of minutes was besieged by friend requests and ran the other way. “No, this isn’t for me,” he thought. And don’t expect him to start tweeting any time soon, he told the audience of about 2,000.

He has reason to be skeptical: not long ago he went on holiday to Mexico with his family, and was none too pleased to see photos of himself at the beach on the web.

Check Out Line: Invasion of the robo-hamsters

Check out the Zhu Zhu Pet airlift of 2009.

Wal-Mart is flying and trucking in hundreds of thousands of the robotic varmints to lure shoppers into the doors during the last days before Christmas.

The fake pets — which have presumably turned 1,00s of children into Zhu Zhu pests to their parents and grandparents — will be sold  starting at 7 a.m. on Dec. 21-Dec. 23, with stores each getting a limited amount.

The move by Wal-Mart comes as consumers continue to wait until the last minute to get the best deals. The National Retail Federation says only 46.7 percent of consumers had completed their holiday shopping by the second week of December, a five-year low.

With Christmas on a Friday this year, some analysts think shoppers may even pass up “Super Saturday” — the Saturday before Christmas and typically one of the busiest shopping days of the year — and shop next week instead.

That is why retailers are saving some promotions until then to try to get anyone they can into their doors.

Robotic hamsters, anyone?

Check Out Line: Shoppers to use more cash, less credit

Check out the expected higher use of cash and debit cards this holiday shopping season by debt-weary American consumers.

Credit cards are losing their appeal as 28.3 percent of U.S. shoppers said they plan to use that method of payment most often this holiday season, down from 31.5 percent last year, according to a survey by the National Retail Federation and BIGresearch.

Meanwhile, those intending to use cash most often rose to 24.9 percent from 22.8 percent last year, while debit card/check card use increased 1 percentage point to 42.5 percent, according to the survey.

“With many holiday shoppers focused on spending within their limits, it’s no surprise that fewer people will be relying on credit cards this year,” NRF CEO Tracy Mullin said in a statement.

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Check Out Line: Holiday doldrums?

Check out the latest retail forecast.

The National Retail Federation expects U.S. holiday sales to fall for the second consecutive year, but this year’s drop should not be as steep as it was last year.

The retail industry trade group expects retail sales in November and December combined to slip 1 percent to $437.6 billion.  Last year, such sales fell 3.4 percent to $441.97 billion.

Last month, the International Council of Shopping Centers took a more bullish tone.  That group said U.S. holiday season sales should rise about 1 percent to 2 percent.

Taking a look back, analysts expect to see that September sales at stores open at least a year fell 1 percent, on average, at the 30 retailers tracked by Thomson Reuters.  Meanwhile, U.S. chain store sales fell 1.9 percent last week, according to data from Redbook Research.

We’ll find out about September sales later this week, but even Santa will have to wait a few more months to see if either trade group was right about holiday spending.

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Check Out Line: Want growth? Buy up.

Check Out retail strategy for growth.

A list of the top 10 companies from a “Hot 100 Retailers list” compiled by Planet Retail for the National Retail Federation showed that while a few companies grew organically, most grew as a result of a merger or acquisition.

Topping the list of companies that grew through a deal was DineEquity,  which bought Applebee’s last year. 

Others in that category include Susser Holdings after its purchase of Town & Country Food Stores and Village Market grocery stores, as well as the combination of fast food chains Wendy’s and Arby’s into Wendy’s/Arby’s.

Of the companies that grew on their own, Los Angeles-based American Apparel was “tops,” with revenue growth of 57.6 percent, the list showed.

Another not-so-surprising name in the top 10 was Apple, known for its iPod, Mac computer and one of the latest favorites in the market — the iPhone. “Still opening new locations, Apple also uses its stores as a way to build brand awareness,” according to the survey.

Some retailers actually managed to maintain growth, averaging a 10.8 percent compound annual growth rate, the list showed.  Those on the growth chart include GameStop, Urban Outfitters, Best Buy and J. Crew to name a few.

Back-to-school spending “not as bad” but job fears weigh – survey

Retail experts don’t expect this back-to-school season to be anything to write home about, as consumers continue to pare back expenses.      But a recent survey cited fewer people cutting back on back-to-school items than last year – 64 percent compared with 71 percent.       “It’s going to be bad but it’s not going to be as bad,” said Stacy Janiak, vice chairman and U.S. retail leader for Deloitte LLP, which conducted the survey, speaking of spending during the season.   She pointed to data showing that 1 in 7 consumers — 14 percent — believe the economy is starting to recover.      “It was only 14 percent but it was 2 percent last year,” she said. “It’s not a lot for anyone to get optimistic about, by any stretch, but it’s a ray (of hope).”      “People have a sense that we’ve been through the worst of it,” Janiak said, noting that people seem to believe another big drop in the economy unlikely.      Still, the gloom this year is driven more by a desire to save, as well as worries over job losses.      “Last year what was driving people’s concern was these things that would eat into their wallet — higher gas and higher food prices, energy costs,” said Janiak. “This year it’s about what’s in the wallet to begin with — the loss of a job, or fear of that, or intensity on savings to keep what’s in your wallet.” 

Some 22 percent of survey respondents cited “loss of job in household” for their frugality, compared with 12 percent last year, and 17 percent cited “fear of loss of job” compared with 9 percent a year earlier.      In June, Deloitte found that the pace of decline in consumer spending appeared to be abating. Its consumer spending index, which tries to track consumer cash flow to point to future consumer spending, rose in June after falling four consecutive months.       The U.S. jobless rate hit 9.5 percent last month, the highest in 26 years, and many economists expect it to hit 10 percent this year.      Last week, the National Retail Federation predicted the average U.S. family with kids in school through 12 grade would spend 7.7 percent less than last year, but college students and their families would spend 3 percent more. Nevertheless, overall college spending is expected to decline 4 percent to $30.08 billion due to fewer people planning on attending college this fall.

One surprising note in the Deloitte survey was consumers’ consistent interest in sustainability, Janiak said. Some 41 percent of respondents said they would likely search for green products this season, with nearly a third saying they’d seek out green retailers. The data points were steady from the year-ago survey.      “The assumption is the consumer isn’t going to pay attention to that in a down economy. It’s clear they’re still paying attention to it,” said Janiak, acknowledging that the survey does not ask shoppers how much they’re willing to spend on green products.

The survey, conducted between July 6 and July 9, polled a sample of 1,044 consumers online. The study has a margin of error of plus or minus three percentage points.

(Photo: Reuters)

Check Out Line: Buying basics buoys big chains

Check out the ten largest U.S. retailers.

The National Retail Federation’s STORES magazine is out with its annual ranking of the top 100 retailers.

The list shows that U.S. consumers have been focused on bargains and basic necessities, such as food and medicine.  Wal-Mart tops the lineup, followed by Kroger and Costco.  Home Depot fell from No. 2 in 2007 to the fourth spot in 2008 as many shoppers decided to cut back on costly home-improvement projects.

Home Depot, Lowe’s and Sears Holdings were the only members of the top 10 to see their revenue fall in 2008.

Some other rankings that may interest you: Amazon.com is the 19th largest retailer, ranking higher than well-known chains such as J.C. Penney, 7-Eleven and Gap.  Apple’s stores and iTunes combined hold the 40th spot, topping chains such as Nordstrom, Whole Foods and Barnes & Noble.

The companies were listed by annual revenue, which may include estimates for private or closely-held companies.  Revenue from major non-retail operations were excluded when possible.

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