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Archive for April, 2007:

Saturday Quick Links

Things that I came across this week but didn’t get the chance to talk about:

Wal-mart to lay off 3,000 Sam’s Club managers. Consumerist has all the details. Also from Consumerist, Forbe’s has conducted a study into the gross margins of companies who deal, or don’t deal, with Wal-Mart. The results are not very suprising: Wal-Mart is putting the pinch on their suppliers (see: The More You Stuff You Sell Through Walmart, The Lower Your Gross Profit Margin).

Blogging Stocks has the details on the new Best Buy mobile store concept.

Kohl’s is making good with the enviroment: the retailer is converting all of their California stores to solar power.

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Wal-Mart to expand walk-in health clinics

Wal-Mart has launched themselves into the forefront of the national health care debate by announcing that they’re expanding the available locations of walk-in in-store health clinics. On top of the 100 that they currently offer, Wal-Mart plans to open up an additional 400 locations in three years, with up to 2,000 additional locations in seven years (more info via Blogging Stocks).

Currently, the retailer operates walk-in health clinics in stores located in 12 states throughout the South and Mid-West (source). These clinics “offer essential preventative and routine health services for a standard set of common health aliments and screening needs that can be performed without urgent or emergency care” (source).

I support this move and think that it is a good move for the retailer, for several reasons.

The first, is the good will nature of the deal. They’re offering an affordable healthcare alternative for people in areas that may not otherwise be able to afford it. I’ve seen a lot of these walk-in health clinics open up in my area lately and have used them myself in instances where my regular doctor was not available. I like this blog, written by Dr. Bill Crounse, which argues about the positive benefits of these types of walk-in clinics.

This move also brings in money, with little risk to the retailer, since they are renting out the space for the walk-in clinics, and not actually providing the service.

Last, I see this as another way for Wal-Mart to keep people coming back and keep them at Wal-Mart. Dubious as it may be, this is another way the retailer can provide something for everyone. After your get checked out at the clinic, customers will shop for groceries while their prescription is being filled at the Pharmacy.

Typically, I’m not a very pro-Wal-Mart guy, but I do like this announcement.

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Success: Entitled v. Earned

Position opens up at a store and hypothetical person A expresses interest in it.

It is asked, “Why do you think you deserve the position?”

“Because I’ve been here two years.”

Wrong answer.

Time and time again I’ve watched people flounder in their career when they are approached about a possible promotion, and when asked the important question of why they deserve it, they answer with a reason why they are entitled to the promotion - not what they’ve done to earn it.

Instead of answering, “Because I’ve been here two years”, follow that up with what you’ve done in that time to earn it. “Because I’ve been here two years, and in that time I’ve overseen a sales growth of 10% per year, I’ve had two years of inventory numbers that have beat expectations, and I’ve trained every new employee to maintain a high level of excellence in their position.”

Employers don’t care about how long you’ve been there, they want to know what you’ve done in that time to WOW them. Two years doesn’t mean anything if the person who has been there six months has better results than you.

If your only answer as to why you deserve a promotion is “Because I’ve been here two years”, and you can’t solidify your results during that time, then you are going to be giving the same answer as to why you deserve a promotion at three years, four years, and five years.

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Target advertising on San Fransico’s BART

Hadn’t seen this video yet, but it’s from a BART train in San Fransico showing Target’s pretty wild new advertising there:

Pretty awesome effect they’re using there.

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Saturday Quick Links

A (new) weekly rundown of some of the blog posts and other items that I’ve found interesting this week, but didn’t get a chance to share:

Retail Design Diva writes about the new Lord & Taylor Summer window displays (see: Making Waves on Fifth Avenue). With photography from the new Georgia Aquarium, it sounds like a very extravagant window display. I’d love to see it, but with it only being around until 5/4, I don’t know If I will get up there to see it firsthand. Photos, anyone?

Home Depot Canada will continue self-checkout rollout says Home Channel News. Wish more self-service checkouts were in the American stores. Nothing like going to Home Depot on a sunday afternoon and there only being two cashiers. At least self service checkouts would speed things up, somewhat.

Finn over at Lightheavyweight wrote the very simply titled KISS a few weeks back. Didn’t get a chance to share it then, but I’d recommend reading it. A reminder than simple, sometimes is better.

And I have to do some self promotion, again. As a reminder, this week I launched Big Box Watch, which is a web application plotting new retail construction using a Google Map interface. There’s also a blog there, and this week I talked about the expansion of JCPenney and their foray into Manhattan and I also posted some news about Best Buy’s store openings in the next three months.

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Jim Cramer on Kohl’s and JCPenney

From Seeking Alpha:

J.C. Penney (JCP), Polo Ralph Lauren (RL) , Kohl’s (KSS), United Technologies (UTX): Cramer declares JCP a “multiyear story” because of Sephora cosmetics and the private label deal with RL, and would give the retailer the benefit of the doubt in spite of its lackluster quarter. Cramer comments JCP and KSS are stores which make customers feel “they’re richer than they are.” He predicts JCP will be up to $85 from $81.50. He added UTX has the earnings power to go to $70 from $66.

(See: Jim Cramers Stop Trading! Stock Picks and Comments, April 18)

Jim Cramer saying that Kohl’s and JCP makes customers feel “they’re richer than they are” might be the most accurate assessment of those two retailers that I have ever seen.

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What I have been up to: Big Box Watch

I’ve found myself with some free time lately to work on at least one of the ideas that has been bouncing around my head. I have created a web application that uses Google Maps to plot new retail construction of some of the larger retailers. It’s now online at Big Box Watch. Launching with over 100 developments that have been proposed or are now under construction.

Please take a look at it and let me know what you think. Pass the link on if you do enjoy it. I think people may enjoy knowing what is being constructed in their neighborhoods.

Also, I have moved all of my portfolio/resume stuff to robotic tom. I am available for hire!

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Macys.com, and staying on top of tech trends

Federated Department Stores, the parent company of Macy’s and Bloomindales, has announced that they are investing $100 million into their online operations.

Of course, not all of it is going to fancy flash widgets and outsourced Indian php developers:

Most of the $100 million will be spent on a 600,000-square-foot distribution center in Goodyear, Ariz., that will be the main West Coast shipping point for Macys.com. Construction will begin this spring and take a year.

Some will be spent in San Francisco to support technical upgrades and infrastructure improvements. It is on top of $130 million being invested in such improvements in 2006-2007, including a 600,000-square-foot distribution center opening this month in Portland, Tenn.

Over a million square feet of distribution space should help Macys.com very nicely (see: Macy’s to invest $100M to build online store operation). They want to grow their online business to be a billion dollar slice of their overall sales.

I do. I’m expecting huge things from Macy’s online division this year. I think Federated has a chance to lead all retailers into the new social media revolution. Afterall, they did a test run of IconNicholson’s “Social Retailing” concept at Bloomingdale’s in NYC last month (see: Bloomie’s woos young shoppers with social retailing).

Bloomingdale’s may be known as a fashion destination, but that doesn’t mean it can’t reach out more to teens and young adults. So in a recent test at its flagship 59th Street Store in New York, it offered an interactive sales-floor mirror that let shoppers view themselves in outfits as well as comments—and images of alternate garments—sent to the mirror by their online friends.

If the shopper likes the looks of a dress suggested by a friend, she can touch the mirror to make the image of the dress appear life-size, then stand in front of the of it to virtually try it on.

Voila—social retailing. If web-based social networking can work wonders as a marketing and branding tool, online social retailing just might do the same for in-store retailing, says Tom Nicholson, CEO of IconNicholson, the company behind the “Magic Mirror.”

“We see this is a way of bringing the power of the web into stores to support customer sales,” he says.

Back in January, I got to see this concept first hand at the NRF Expo and let me say, I was floored. I think that IconNicholson has developed a very brilliant concept - a way to bridge the physical shopping experience with an online buddy list. It’s a costly project, but I think that a retailer is going to score a home run with it in 2007.

Macys could get their billion dollars in sales if they keep doing what they are doing. Invest in infrastructure, better order fulfillment, and stay on top of trends in technology.

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Success and convtroversy lead to higher national profile for Rutgers

When I graduated from high school and made the decision to go to Rutgers University, I know that it was somewhat looked down upon by some of my classmates and my peers. In the mid-90’s, Rutgers University did not have the kind of prestige within the state of New Jersey that it deserved. In fact, it did not have the kind of prestige within it’s own state that it did nationally. Some people looked down upon Rutgers as being just a state school and did not think that a school 20 or 40 minutes away could offer a great education.

Although I did not complete my education at Rutgers, I still have strong ties to the school and the New Brunswick community. I always thought that it was a fantastic school with a great program. Like many people around here, I have been very excited and proud to watch the sports program do so well in the national spotlight lately.

And, of course, the comments made by Don Imus this week have again thrown Rutgers into the national spotlight.

But how do you measure the success of all of this? How do you quantify “increased national recognition”?

As the Associated Press reports (see: Rutgers Sports Teams Undergo Renaissance), enrollment applications are up, alumni donations are up, and, to tie this in to this blog, sales of Rutgers apparel is up:

Last year, Rutgers received a record number of applications, more than 40,000. This year’s applications are running 7 percent ahead of that.

And through January 2007, donations to the Rutgers Foundation are up a whopping 35 percent over the same period last year, school officials said.

Rutgers is relatively selective for a big state university. It accepts about 60 percent of the students who apply, and more than half of those it admits were in the top 10 percent of their high school classes.

Meanwhile, the university’s “R” logo is popping up in more places as school pride grows throughout the Garden State and elsewhere. Marybeth Schmutz, assistant director of the university’s trademark licensing department, said sales of Rutgers merchandise are up more than 30 percent in the last year.

“You can’t walk into a Kohl’s or a Target or Modell’s without seeing Rutgers stuff,” she said. “We are getting new designs sent to us by people interested in selling Rutgers products every single day. It’s huge for us, and it’s still growing.”

Good news for Rutgers, even in the trying times. With a high quality recruiting class for Rutgers football, I foresee the sports teams only continuing to do well in the near future. Higher profile translates into more money for the school. I see this as only a good thing.

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Early Easter is good to retailers

Same store sales for the month of March are in. Easter fell a week earlier this year and that propelled retailers to a strong month. Across the board, analysts projections were beaten and CEOs are congratulating themselves on a job well done.

Mall based specialty retailers saw a stronger month than they had seen in recent memory: Same store sales were up at Abercrombie and Fitch (up 7.0% vs 1.4% estimate), American Eagle (up 20.0% vs 10.9% est), Aeropostale (up 15.9% vs 9.3% est), Hot Topic (3.4% vs 0.3%), and even Pacific Sunwear (14.1% vs 3.3%).

Gap Inc posted an overall increase of 6%, but look at the brand breakdown: Gap North America was up 4% vs. -13% the same month last year, Banana Republic up 8% vs. -7% last year, Old Navy up 10% vs -15% last year, and Gap International down 5% vs -16% last year. Overall the company showed a strong month, but I am most impressed by the gains at Old Navy. Female shoppers must be responding well to the new line of babydoll dresses (I know my girlfriend has! I’m sure at least 2 of Old Navy’s 10 percentage points increase are due to her March shopping).

Mid-tier department store retailers Kohl’s and JCPenney beat estimates with same store sale increases of 16.8% and 10.6% respectively. Nordstrom’s saw sales rise 15%, while Federated struggled and came in short of estimates (3.8%) with same store sales rising only 2.3%.

Like everyone else in my town, I found myself in my local Target at 9:30 the night before Easter looking for candy and easter baskets for my neices & nephews. With the way that place was cleared out, it’s no wonder Target as a chain posted a same store sales increase of 12%. Wal-Mart came in with a 4% increase. Not good, but not great.

More information from Minyanville and CNBC.

I am traditionally leary of the March or April sales on their own, due to the yearly differences in the date of Easter. I’m interested to see how well these numbers hold up when April’s final numbers come out. It looks like most retailers benefitted from the early Easter, which allowed those sales to get lumped in with March’s overall sales - as opposed to April last year.

Will April be as kind to retailers? Time will tell, but I’m betting that with the cold spell over the Northern part of this country that sales are going to be very, very interesting.

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