Shop Talk
Retailers, consumers and prices
from MediaFile:
Target makes the scene with a magazine
You know how it is when you take a trip to Target: You're going to buy just that ONE THING that you need, and you're going to keep it cheap. As you leave the store, you wonder how you dropped hundreds of dollars on things that you didn't realize you needed until you walked into the store.
Target is hoping to spawn a similar phenomenon on its website, where it has begun offering a magazine newsstand. Rather than starting from scratch, it has signed on Zinio, a digital publishing company that offers magazines and books from more than 350 publishers.
Zinio will sell electronic versions of magazines on a page on Target's website, either as single editions of current and older issues, or as annual subscriptions - usually at a discount. People can read them in a Web browser version or through an application that Zinio offers for download. This is similar to what they've done on other websites, like the one operated by Barnes & Noble.
Yes, you can already look at online versions of magazines, Zinio Chief Executive Richard Maggiotto said in an interview. This is different, however, he said: "It's a high-fidelity, robust magazine." In other words, these titles, ranging from Elle to Woman's Day to Seventeen, are meant to look -- if not feel -- like the print magazines they are replacing. Zinio and Target will share the revenue they get from each sale.
Maggiotto declined to reveal specific goals, but said that he would be happy to see 1,000 or more new subscriptions (a month) come in during the first year of the Target partnership. So far, he said, Zinio sees about 60 percent of its magazine sales coming from archival or current issue sales, and about 40 percent from subscriptions.
This might not be such big news on most other days, but it is coming after some cataclysmic events transpired in the magazine industry. With ad sales suffering, big publishers such as Conde Nast are cutting workers and titles, making some media experts wonder whether the good times are over forever. Digital revenue has failed to make up for print revenue losses, just like in the newspaper world. But every little bit helps, right? Apparently so. Maggiotto would not say who Zinio's next partners are, but said that "there are 10 more in the queue."
(PS: Apologies to Tom Waits for stealing one of his lyrics for the sake of a headline. It's from "Nighthawks at the Diner." The photo is all Reuters)
Starbucks: Decaf Via coming soon
Starbucks says it will start selling a decaf version of its Via instant coffee in the United States on Nov 17.
The coffee chain, which in the middle of a corporate turnaround, hopes that Via will help it grab a big piece the $21 billion instant coffee market from established players like Nestle’s Nescafe and Kraft Foods Inc’s Sanka.
Borrowing from the old Pepsi vs. Coke taste challenges, Starbucks baristas for four days invited customers to do side-by-side comparisons of Via and its regular brew.
Starbucks says early indicators show that Via is exceeding expectations with regard to sales and customer and employee response.
How did Via fare versus your own expectations?
(Photo/Starbucks)
Decaf Via is terrible. Maybe it’s just my city water. I’ll keep trying because I love the concept and the decaf at Starbucks.
Liz picks Penney; Isaac takes TV
JC Penney stores in the United States and Puerto Rico are going exclusive with Liz Claiborne Inc’s namesake brand and celebrity designer Isaac Mizrahi will sell his upscale Liz Claiborne New York line only on QVC, a TV shopping network.
The moves from Liz Claiborne were seen by some as a downward shift to mass-market retail channels and came as department store orders for Liz Claiborne’s products have fallen during what has become the longest recession since the Great Depression.
Analysts said the JC Penney deal is more lucrative for Liz Claiborne and signals the end of a decades-long relationship between Liz’s main brand and the Macy’s department store chain – which didn’t exactly go quietly.
“The Liz Claiborne brand has sold poorly in recent years and has continued to decline. As a result, we could not justify expanding it at Macy’s,” a Macy’s spokesman said.
JC Penney is known in the United States for stressing affordability and discounts while higher-end department stores like Nordstrom or Saks carry more designer merchandise and higher price tags. Macy’s tends to be somewhere in the middle of the two extremes, but lately has been discounting aggressively and focusing on everyday values.
Liz Claiborne, which recently hired a turnaround firm, said its “bold steps” would “further the revitalization” of the Liz Claiborne brand and “significantly alter its earnings trajectory.”
The agreement with JC Penney begins in August 2010. The Liz Claiborne New York line will partner with QVC after this year’s holiday season.
A brighter view doesn’t lead to increased spending
Americans may have become more confident in the economy but they haven’t started spending heavily again — and that could be bad new for retailers this holiday season.
Discover’s U.S. Spending Monitor for September rose for the second straight month, climbing 2 points to 89 (based out of 100). Thirty-three percent of respondents said they felt economic conditions were improving, a Monitor high and a 2-point rise from August.
When asked to rate their own financial fitness, 33 percent rated it as good or excellent, up a point from August and the highest percentage in four months. On the flipside, 48 percent said their finances were getting worse, also up a point from the previous month.
Consumers’ spending intentions remained flat. Many industry watchers have said that the recession has created a “new normal” characterized by a more frugal lifestyle and fewer shopping sprees. Even those people who have remained financially secure, and are not among the 9.8 percent of Americans who are unemployed, have reset spending habits.
To that end, WSL Strategic Retail said that only 17 percent of shoppers plan to go back to shopping the way they used to.
“There appears to be no indication consumers are willing to increase their spending, despite a Monitor-high number of them who feel the economy is getting better,” said Julie Loeger, senior vice president of brand and product management for Discover. That could cause headaches for retailers, who are hoping that consumers will start shopping again heading into the all-important holiday season. For the sixth consecutive month, less than half of consumers said that they expected to have money left over after paying monthly bills. One bright spot, if you could call it that, is that only 43 percent of respondents felt economic conditions are getting worse. Forty-six percent felt that way in August.
(Photo/Reuters)
Check Out Line: A glimmer of holiday optimism
Check Out this slightly more optimistic holiday sales forecast.
The International Council of Shopping Centers (ICSC) said the 2009 U.S. holiday season is likely to be “a lot better” than last year, with sales rising roughly 1 to 2 percent.
The forecast, perhaps the most bullish yet, comes after a dismal 2008 holiday season that by some accounts was the worst in about 40 years.
Forecasts issued so far this year call for holiday sales to be flat to down versus last year, but some of those surveys use different methods for estimating sales.
The ICSC said holiday sales “in its many forms” — same store sales or total sales — could increase by about 1 percent to 2 percent, with sales at stores open at least one year rising 1 percent for the holiday shopping season of November and December.
Also in the basket:
J.C. Penney discounts go mobile
J.C. Penney discounts are going mobile as the department store takes aim at younger, tech-savvy shoppers.
Just in time for the crucial holiday shopping season, the company is testing a discount program from Cellfire that will allow Penney’s Houston-area shoppers to use their cell phones to download coupons that can be presented at checkout for savings.
The move comes as Penney gears up for the holiday shopping season — a crucial sales period for department stores and other retailers.
“It’s another way we’re innovating to enhance the customer’s shopping experience,” Mike Boylson, the company’s chief marketing officer said in a statement.
J.C. Penney’s test currently is limited to the Houston metro area. A promotion on Cellfire’s website reads: “Take $10 off a single purchase of $25 or more in store, jcp.com & catalog when you use your JCPenney card.”
Cellfire’s website also shows coupons for other area stores stores such as Sears and Kroger.
Shoppers who have downloaded Cellfire will have access to the same discounts that Penney sends via snail mail, and new offers will be available nearly every week.
Check Out Line: Crowd at top of Aerospostale
Check out who’s in charge at Aeropostale. No, seriously, who is in charge? The company announced today that Julian Geiger was leaving the teen apparel retailer. (The press release was apparently written under the auspices of the Lawyers Full Employment Act.) But instead of appointing one leader, Aeropostale went with co-CEOs. President and Chief Merchandising Officer Mindy Meads and Chief Operating Officer Thomas Johnson were named to share the top spot. The news release does not detail how Meads and Johnson will divide the CEO duties. What we do know is that the history of corporate America is punctuated with co-CEO arrangements that have gone awry. When Kraft was spun out from Altria in 2001, Roger Deromedi and Betsy Holden were named co-CEOs. The relationship ended with Holden being demoted in late 2003, and eventually leaving the company. Kraft continued to struggle with lackluster innovation and seemingly ever-present restructuring, and Deromedi was out by 2006. John Reed and Sanford Weill ran Citigroup together for a while before falling out. Reed even left the corporate world for a time. A deep executive bench is always a plus, but in the end, one person at the top seems to be the final answer. Also in the basket: Rite Aid cuts view after latest loss; shares skid H&M August sales disappoint as shoppers hunt for bargains Buffett sings praises of a Chinese suit (WSJ)
(Photo/Reuters)
Carl’s Jr CEO sees gold in Lone Star state
Andy Puzder, chief executive of Carl’s Jr and Hardee’s parent CKE Restaurants, is not a man to mince words and on Thursday he shared his views on “socialist type” state governments in California and Oregon. Many of the company’s Carl’s Jr restaurants are located in the Golden State, and Puzder has plans to lessen that exposure over time.
“As such, we’re targeting a large percentage of our growth in Texas. It is deemed to be more business friendly,” Puzder told analysts on a conference call. “Oregon has a higher minimum wage and a similar regulatory structure as California and also has a similar socialist type government at the state level so business there actually can be as bad or worse than California,” he said. “Texas is doing really well,” he added.
(Photo\Reuters)
Thrifty tips from Starbucks
In its battle to end the myth of the $4 Starbucks coffee — the world’s biggest cafe chain is offering tips on how to save money in its cafes, which are lowering prices on some beverages as they battle market newcomer McDonald’s.
Here are some tips from Susan Nodilo, manager of a popular Starbucks in West Hollywood.
1. Bring your own cup and save 10 cents — and the environment.
2. Order a smaller, unadvertised “Short” (8-ounce) espresso drink, which costs less than a “Tall” 12-ounce drinks, but contains the same amount of espresso.
3. Short on cash, but in love with lattes? Substituting brewed coffee for espresso saves an average of 85 cents per drink.
4. Try a French press. Coffee served in a press costs around $3. Each press yields four 8-oz cups and costs less than two 16-ounce “Grande” drip coffees.
5. Finally, she said, Starbucks’ food and beverage prices include California taxes — so those drinks from competitors may be pricier than you think.
It’s amazing how many people don’t know that Starbucks offers coffee presses on their menu!
Is your Starbucks saved from the hit list?
Starbucks Chief Financial Officer Troy Alstead earlier this week had some good news for its fans in places like Baton Rouge, Louisiana, Mobile, Alabama, and El Segundo, California.
Alstead said Starbucks removed 30 stores from its hit list of store closures, saying that each of the saved stores had improved profitability to a point where it made sense to keep them open.
Here’s the full list.
Alstead’s full comments are here. (Reuters photo of Southern California store targeted for closure)
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Resident Shop Talk Expert
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It’s true, I had to clean it up. A little provocative conversation is one thing; it’s the tieing yourself up that the editors would find gratuitous. Oh well… High tonight, low tomorrow — precipitation is expected.