Retailers, consumers and prices
Manhattan is flush with corner stores or bodegas that are all too eager to meet the city dweller’s desire for a convenient place to grab a gallon of milk, a stick of gum or a pack of cigarettes.
But Target will temporarily open four Bullseye Bodega in Manhattan from Sept 11 until 14 — coinciding with Fashion Week, which is September 5 until 12th. Instead of being stocked with food or toilet paper, the Target bodegas will sell clothes, accessories, home goods and beauty items by 22 designers it features in its stores, like Mossimo Giannulli, Liz Lange and Jemma Kidd.
Those visiting the bodegas can be sure to get those designer duds at discount prices. Target said the stores will sell items that have an average price of $25.
The Commerce Department said on Tuesday that total sales at U.S. retailers rose a less-than-expected 0.1 percent in June. Economists polled by Reuters had forecast total retail sales to rise 0.4 percent in June, following a 0.8 percent gain in May.
Check out the other discounter.
The wisdom in the struggling U.S. economy is that discounters are doing well as consumers trade down to try to save some money. It has worked for Wal-Mart, which saw first quarter profit rise 7 percent, while same-store sales rose 2.9 percent.
Not so much for Target, though.
That discount retailer today posted a 7.5 percent decline in net income for the quarter and its same-store sales dipped 0.7 percent and were weaker than the company had expected.
For a time, Target attracted customers with an approach that became known as “cheap chic,” with designers like Isaac Mizrahi developing exclusive clothing lines for it. At the same time, Wal-Mart has stumbled with its own attempts to upgrade its apparel offerings.
But even before the economy went south, Wal-Mart refocused on offering lower-priced value, a move that has helped the company in an economy that many say is in a recession.
Meanwhile, sales are falling short of Target’s target. And Mizrahi has left to become creative director at Liz Claiborne.
Right now, it looks like the dog days for Target, while Wal-Mart sports a smiley face.
Also in the basket:
Home Depot posts quarterly loss
Saks Inc posts higher quarterly profit
Check out the warning signs sprinkled amid the April sales results.
A lot of retailers reported better-than-expected sales in April as improved weather in parts of the country helped convince consumers to buy new clothes.
In fact, 61 percent of retailers that have reported so far beat estimates, according to Thomson Reuters research. Discounters, department stores and teen apparel retailers were among those posting the biggest upside surprises.
But amid those results were some comments that could be cause for worry going forward.
For example, J.C. Penney reported a less-than-expected decline in April same-store sales, but said it sees a steeper drop in May. It also said those rebate checks consumers are getting will provide, at best, only a modest benefit for sales and that any boost will be short-lived.
Wal-Mart had a better-than-expected same-store sales increase in April, but gave a tepid outlook for May. The discount retailer said consumers are trying to stretch their dollars by purchasing cheaper types of meats or trading down to pasta.
Adding to worries, Wal-Mart said the “paycheck cycle” is getting more obvious, meaning it is seeing a drop in sales at the end of the month, just before consumers get paid.
Elsewhere, Target reported weakness in areas hard hit by the mortgage meltdown, including Florida, Arizona and Nevada.
Gap same-store sales actually fell more than expected in April and the company said the economic environment remains “volatile.”
The market seems to have picked up on the negativity, as the Standard & Poor’s retail index is down almost 2 percent.
Also in the basket:
Best Buy enters Europe with Carphone retail deal
Search said to be on for new Kellwood CEO (WWD)
Sally Beauty profit tops view; shares jump
Late Monday, Target said it would sell a 47 percent interest in its credit card business to JPMorgan Chase for an initial investment of $3.6 billion.
The news came almost 8 months after the discount retailer, under pressure from activist investor Bill Ackman, said it was exploring options for its credit card business — a move it had long resisted.
Fred Katayama visits a Wal-mart just outside New York City to see how consumers socked with high gas prices and a sputtering economy are changing the way they shop. His full report hits the reuters.com website on Friday. It’s part of a Reuters multimedia presentation in text, video and pictures.
Not very surprisingly, it found that consumers are becoming more value conscious and will likely favor retailers with sharp pricing.