Shop Talk

Retailers, consumers and prices

Starbucks eyes breakfast bargains, dumps the jet


STARBUCKS/Once upon a time, Starbucks had nowhere to go but up.

My, how times have changed.

Chief Executive Howard Schultz in July said the upscale coffee chain would not combine menu items and sell them at a discount, a move made popular by fast-food chains like McDonald’s.

“We’re not going to go down the fast-food lane,” Schultz told investors back then — when the company’s business was hitting the skids in a housing-led slowdown.

On the heels of news that McDonald’s will finish adding McCafes to U.S. stores by the middle of the year, Shultz is now touting a plan to offer several “breakfast pairings” at “attractive price points” beginning in March.

“The question of value often gets tied to the competition. How are we competing with (quick-service restaurants)? How can a premium brand be competitive when customers are trading down on everything from houses and travel to clothing and lunches out?” said Schultz. “We will combine our breakfast strengths with a value proposition that challenges misperceptions about our every day affordability.”

Double Cheeseburger or McDouble?


LEISURE MCDONALDSHungry for some cheap eats?

McDonald’s CEO Jim Skinner says 40 percent of the burger giant’s “value burger” sales are now coming from its new McDouble — a burger with two patties and one slice of cheese.
That burger replaced the popular Double Cheeseburger on McDonald’s Dollar Menu on Dec. 1, when McDonald’s raised the price on the Double Cheeseburger — which has two patties and two slices of cheese — to $1.19.
Nevertheless, Skinner said the Double Cheeseburger still reigns with 60 percent of McDonald’s value burger sales.
Have you made the switch? 


Check Out Line: There’s a new guy in town (at Walgreen)


walgreenCheck out the new chief executive at Walgreen.

The drugstore chain confounded some investor expectations by staying in house and naming President Greg Wasson as its next CEO.

After looking for months at external candidates, it said Wasson will take over Feb. 1. The news was somewhat unexpected as Walgreen had hired a search firm and looked at several outside candidates. Some analysts had suggested Walgreen needed to bring in an outsider to shake things up.

Hasbro joins 2009 race to snag shoppers


USA/Want cheap entertainment? No problem.

Hasbro, the second-largest toymaker, thinks it has what cash-strapped shoppers need in 2009: A lineup of new card games priced at around $7.

They include Scrabble Slam and Monopoly Deal, which play off the original board games and aim to entertain stay-at-home consumers in a recession-mired economy.

Check Out Line: Job cuts on Aisle 4!


USA-ECONOMY/Check out the retail belt tightening.

Not belt tightening by retail customers (if there are any left), but the latest round of cost cuts by retailers themselves.

Williams-Sonoma is cutting 18 percent of its workforce and also paired back capital spending.

Check Out Line: The retail contraction continues


ITALY-FASHION/Check out job cuts in retail spreading across the globe.

Last week, Neiman Marcus and Saks outlined plans to cut jobs. On Monday, it was Europe’s turn to join the fray.

Metro AG,  Germany’s top listed retailer, plans to cut 15,000 jobs or about 5 percent of its global workforce by 2012 amid a broader restructuring program, a source close to the company told Reuters on Tuesday. The company, which owns supermarkets and department stores, employs about 300,000 people in 2,200 stores across 32 countries.

Neiman asks, did the media steal Christmas?


neimanNeiman Marcus chief Burt Tansky had some choice words for retail reporters last night, saying they had unfairly influenced the outcome of the 2008 holiday shopping season well before it even started. He was referring to stories that came out as early as September, like this one, predicting that holiday sales could be the worst in up to two decades because of the bad economy.

“I think the media have done us a terrible disservice,” Tansky said at an evening event sponsored by Financo Inc during the annual National Retail Federation conference in New York, attended by our own Karen Jacobs. “The media, I think, should start thinking about the impact they are having on retail.”
Many of these media stories were based on predictions from leading research groups, such as Deloitte, who gave gloomy forecasts due to the global financial crisis, the U.S. housing slump and credit crunch. 
And when retail chains finally began to take down the tinsel after the holidays, their performance proved even worse than that, with sales dropping for the first time in the nearly 40 years they have been tracked.
We didn’t know it last night, but Tansky may have had other reasons to be piqued than our role in bringing the bad news. Neiman today said it would start making interest payments on some of its senior notes by issuing more debt, rather than using cash, and planned to fire 3 percent of its workforce.
The news comes barely a week after Neiman posted a 31.2 percent drop in same-store sales at its unit that is home to the Neiman Marcus and Bergdorf Goodman stores.

Check Out Line: Shopping stays in a slump


FINANCIAL/TIMESCheck Out the continued pain in the retail industry.
Wal-Mart’s outgoing CEO, Lee Scott, said Monday that he expects the U.S. economy to remain extraordinarily challenging in the first half of the year and does not see anything that would turn it around quickly.
Scott likely wanted to deliver some brighter news in his swan song. He turns over the CEO post to Mike Duke on Feb. 1. However, the tone at the National Retail Federation’s annual conference in New York this week is likely to be bleak.

ShopperTrak predicted that U.S. retail foot traffic will fall 16.4 percent during the first quarter. The group, which monitors customer traffic, expects retail sales to fall 4 percent during the quarter.

Constellation’s holiday drink sales less than stellar – CEO


FOSTERS/With so many forecasters talking about the 2008 holiday season in extremes (the weakest since 1970, one of the worst in modern times), it’s refreshing to hear an executive suggest that, ok, things were not great, but they weren’t horrible either.

That assessment came on Wednesday from Rob Sands, chief executive of Constellation Brands, when the world’s largest wine producer and maker of Robert Mondavi, Vendage and Ravenswood wines reported third-quarter earnings.  

Food stamp ramp-up


STORM-IKE/Family Dollar is seeing more consumers buy food at its stores.  It is also seeing more consumers use food stamps amid the recession. 

It would seem like a winning opportunity for Family Dollar to attract more shoppers with its low prices.  There’s just one hitch - less than half of the company’s stores currently accept food stamps.