No Turn On Red

Gap has brought in an Aussie to head up Old Navy. I’m trying to think of a way to work “down under” into a joke involving Old Navy, but it’s just not coming to me. Perhaps this new blood will be the spark that they need to get that arm of the business turned around.

Finn over at Lightheavyweight takes a look at American Eagle’s new brand, aerie, from a design perspective (see: A+ for Aerie). He’s got a good look at the design and how it is building the brand effectively.

Target’s put out a list of their 2007 store openings. Apparently, the store in South Brunswick, NJ, is opening in both March and July.

Finally, the Associated Press had an article over the weekend detailing the transitions that the music store business has undergone in spite of piracy and rising sales of digital music (see: Music hasn’t ended for record stores). Most independent music retailers have not been able to compete with the big boxes (Best Buy, Target, and Wal-Mart) for new releases, and this article details how the industry has changed in that time.

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Couple of notes for this week:

As Nintendo gets ready to launch their new console, Wii, in November, Engadget has a first look at some of the retail information for the unit, including CompUSA’s cost v. price information and photos of the new endcap displays in production for Target (see: Wii retail details: markup and endcaps).

Retailwire (subscription required) carried a story and discussion about Lord and Taylor last week (see: New Owner Buys, Looks to Build Lord & Taylor). With the sale of Lord & Taylor fully complete now, NRDC Equity Partners has started announcing some of their plans for the chain. They’ve announced that they will be downsizing the Fifth Avenue flagship store and closing their Water Tower Place store in Chicago. However, they say they are commited to growing the brand and looking for opportunity to expand, including looking into more freestanding, lifestyle center options.

Finally, one more video game note: I love reading blogs with an interesting perspective on retail, and A Day In The Life Of Video Games is no different. This is a blog written by employees of a video game store, sharing their experiences with customers and customer service. Very funny insight into this segment of retail.

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This is the At Sea Edition of Retail Notes. Today I am coming to you from a cruise ship in the middle of the Atlantic - right now approximately 100 miles from the island of Bermuda. A world away from work and the worries of every day life, but with the power of modern technology, I stay connected.

With that, one quick note about the ship. Although I am on one of the smaller ships in the Royal Carribean line, I am really amazed at how entirely self sufficient the ship is. In addition to the mounds of food that they must have stored in a back room, they have so much crap that they are hawking. Generally, it is either low quality crap or really overpriced crap. I’m amazed at how much stuff I see people buying, but when you’re at sea, who doesn’t need a new bolero or Royal Carribean golf shirt?

Appears that we will now have the first look at the JC Penney/Sephora marriage as JCP has opened their first Sephora location in their store (see: Penney unveils first Sephora). This is just the first of many and I’d expect shoppers to react pretty positively, iniatially, to this new partnership.

I finally got down to the Pier at Caesar’s in Atlantic City last week and will post photos next week. From a retail perspective, it is really beautiful. Harrah’s is pumping a lot of money into all of their developments in Atlantic City, with expansion and rennovation going on all over the place. Although not directly retail related, it is pretty impressive that there is a rumored buyout of Harrah’s in the works (see: Harrah’s Shares Rise; WSJ Says Company May Be Bought).

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Yes, it’s been a few weeks since I have had the opportunity to update the retail notes column, but it’s back! Only change is that due to a different schedule that I’m not on, it will be coming out Monday’s instead of Sundays, as I had been publishing it.

A couple of things for this week that have caught my eye:

At least one analyst is happy with Gap’s winter offerings for all three of it’s brands. As we enter into the final week of September and anticipate same store sales being released next week, I’m not sure what to expect from Gap. I’ve been in a lot of malls lately and foot traffic seems to be up to the adult Gap store, but are people buying? I was in two Old Navy’s on Friday and both of them had moderately high clearance levels with high foot traffic, buoyed by the “50% Off All Clearance” sale that had quietely gone up in this area on Friday afternoon. Great for the consumer, not great for the bottom line. Judging by the amount of clearance that was sitting around, it didn’t appear that consumers in this area reacted very positively to Old Navy’s fall offerings.

Estee Lauder’s Beautybank division has signed an agreement with Coach to produce a new, exclusive fragrance for the handbag maker. Beautybank currently produces four exclusive cosmetic lines for Kohl’s and this is the first non-Kohl’s deal that they’ve announced. It is also the first major move they’ve announced since Julie Howard took over as SVP Brand Development & Global Marketing. She had previously been with Estee Lauder’s Clinique division.

Electronics is a very cut-throat, bottom line driven market. Just as quickly as retailers have scaled back their electronic offerings, in face of competition from retailers like Best Buy and Circuit City, it appears that more than a few non-traditional electronic retailers are ramping up their flat screen plasama and lcd television offerings (see: Unlikely retailers selling big screen TVs).

And finally, a really great article hit the wire this past week about the makeover of Saks (see: Upscale Makeover). After years of unsuccessfully chasing the younger crowd, Saks is reevaluating their business plan and going back to their core, “well-heeled” consumer. The article has a lot of detail over the business moves that got them to where they are right now and what they are doing to get back on top.

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Just a few quickies this weekend:

In case you missed in, Andrew Young resigned from his position with Wal-Mart after putting his foot in his mouth.

EnVision Marketing Group has partnered with Kroger Food Stores to offer advertising on the conveyor belt at the supermarket checkout. Interesting concept. Whenever I go to my local supermarkets, I notice how much advertising they cram in there. Any marketable space seems to be taken up by an ad for a local contractor or lawyer. One food store has a model train that goes around the front end, with the track suspended by wire from the ceiling. The train pulls a number of cars with advertisments for said local companies. But my question is, who’s looking at it? Will these conveyor advertisments actually work or will they just be another outlet for an unnoticed advertisment for the local computer repair place, although this time covered in meat juice?

Over at Starbucks Gossip, one story has ignited a debate over the cost of two ounces of coffee. Read the story and read the comments, some very interesting points are brought up from both customers and employees alike.

I like throwing in some local retail notes, so here goes: looks like White Castle has an application for construction on Route 36 in Hazlet, NJ. That’s the last thing I need nearby! Also, lots of development at the Monmouth Mall as Jessica McClintock and Yankee Candle are opening new stores while The Limited is opening up a new location.

Until next week.

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July sales came out and they were mixed, with a positive lean towards department stores. Second quarter results starting coming out, with very positive results from JC Penney and Kohl’s and strong results from Target. The bulk of the retail industry will be reporting their results this week. The Street has a great rundown on this week’s expected results (see: Coming Week: Attention Shoppers).

I am looking forward to seeing what the Second Quarter results look like this week. The numbers will be the tale of the tape in the battle of A&F vs. AE. Will there be anything positive in Gap’s results on Thursday? Did Limited Brands have a good quarter, July withstanding? Will Sears Holdings increase their bottom-line performance even though it appears that there sales haven’t? What is Home Depot doing to get them through the year? We’ll know everything this week.

Walking around the mall this week, I am very suprised at how well most retailers look. Everyone seems to be putting on a good face for the BTS season, plans are well underway, and now we’re all just hoping that the consumers will respond.

Denim, denim, denim.

PacSun’s got a big display of Levi’s 514 and 511 jeans for men. Hadn’t seen this before, so I’m assuming it is a fairly new relationship - but I think it’s a win. PacSun’s got a great brand and they’re riding the wave of the current trend with one of the harder to find styles of Levis. Credit goes to PacSun for getting it out there while Sears and JC Penney still have the 514 jean buried in the back of the department. Although it is a risky merchandising move, I think there will be a pay off for retailers like PacSun who are being so fashion-forward with this particular trend.

Came across a good story by Reuter’s today about denim marketing and BTS sales for retailers (see: Retailers step up marketing to hawk denim).

The Unlawyer talks about the effect this week’s terrorism threat has on duty-free sales and the retail enviroment in airports (see: No Liquids, No Duty-Free Sales).

Very detailed article in this month’s Apparel Magazine about Boscov’s Department store (see: Boscov’s: In a League of Its Own). This Pennsylvania-based, regional department store is making strides to better compete against the national chains in an increasingly consolidated marketplace.

And finally, kudos to The Writing on the Wal for their coverage of the Wal-Mart wage cap announcement and the effect on & reaction from Wal-Mart employees. I talked about the initial announcement here, but as I pointed out here and here, The Writing on the Wal was one of the sites I was going to for coverage.

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This week we saw record heat on the East Coast and a mixed bag of retail results for July. Some retailers are already enjoying the BTS season while some mall retailers can’t catch a break.

Are Wal-Mart employees in for a shock tomorrow? Rumors are that various levels of management, including store, district, and regionals, were tied up in meetings last week discussing new HR policies. Details are few, due to strict measures meant to clog up leaks, but one of the rumors is that Wal-Mart will be announcing new policies regarding the maximum pay employees can make within various pay scales. Is a possible severage package for long term employees also in the works? Rumors are rampant, but expect more to be known tomorrow.

The Lord & Taylor sale has been approved by the Federal Trade Commission. With that, Macy’s has re-opened the former Lord & Taylor in Center City Phildelphia as a new flagship store. The Philadelphia Daily News offers some insight into ways that Macy’s, and other retailers, can look towards the future of retail and customer satisfaction (see: Macy’s: Want to Know The Real Way to Shop?).

In case you blinked, as of the end of July, Hollister now has 355 stores nationally, compared to the 351 that Abercrombie & Fitch has. The younger brother now has more stores than the (much) older sibling.

Finn over at Lightheavyweight took a good look at Gap and some other retailers this week (see: Retail Sightings, July 30, 2006). He comes from a design background, similar to me, and approaches the retail industry looking for good design and ways to increase customer satisfaction. I really enjoyed this post and look for more like it in the future.

In local (to me) retail news, there’s something interesting brewing along Route 36 at the site of a former Bradlees and Food Town, in Hazlet, NJ, that has been vacant since the early part of this century. It appears that the local planning board has heard an application from Stop & Shop Supermarkets to rennovate the building. For years, Wal-Mart has been rumored to be interested in the property, but due to enviromental concerns, the property is not large enough for what they require.

This application is interesting for a few reasons - one, because Stop & Shop owned the Bradlees chain at one point, so they are reaquiring property they divested 15 years ago. Second, Stop & Shop already has a location less than a mile away from this property. I’m interested to know what they plan on doing with this vacant parcel and the existing store. Could they really be moving locations, down the highway?

Also locally, PetSmart is building their sixth location in this part of the Jersey Shore, due to open next year.

This week will see the start of Q2 earnings results, with the balance of the results due in after next weekend. We’ll see how the BTS season is shaping up for retailers across the country and start to get some indications where retailers are planning on going as we head into the Fall.

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Back to school is in full swing and Marketwatch (see: Back to school shopping … already?) and Reuters (see: Back-to-school styles hit mall amid spending fears) have it covered.

The Marketwatch article touches on a few good points:

Staples is promising students that they can stock up on supplies for less than the cost of a gallon of gas.

“We have never advertised this early in the season,” said Petter Knutrud, vice president of merchandising at Staples. “Last year our competition was out there as early as the second week of July. We felt forced into going out early this year.

“We have felt the creep of the season earlier and earlier,” he said.

The BTS season seems to get longer and longer each year. But if you’re not already pushing BTS at the beginning of your July, your competitor probably is.

But with the longer season, comes this:

Traditionally, retailers would pull out all the heavy fall gear with back-to-school merchandise. But now that most consumers shop with a buy-now, wear-now mentality, retailers adjust by selling seasonal transitional clothing in lighter weights in the summer months before bringing out the cable-knit sweaters and wool pants in September.

“If it’s 92 degrees out, you’re going to have a problem when people want lighter colors,” Davidowitz said. “There are darker colors for the fall, but the fabrication is lighter.”

What’s more, an earlier start to the back-to-school season allows retailers to test fashions and styles before the season gets in full swing. If, say, skinny jeans and tunics fail to fly out the door at the speed and price many retailers expect want, there’s still time in the season to change the mix, adjust the pricing and cut back on the inventory.

Walk around your mall tomorrow. You’ll see that some retailers are embracing the longer season by offering a better assortment, targeted to the wear-now crowd. Think transitional knits and updated Fall capris and shorts, while others are stocked full of hoodies and pants. I don’t remember seeing the assortment of shorts and capris, at this time of year, that I’ve seen recently.

Fact of the matter is that come September 1, kids may be going back to school, but that doesn’t meant the weather is going to be at a point where everyone is completely bundled up. Capris, more so than shorts, have an extended life span now due to evolving trends. There are some retailers who reacted to that this year but some, obviously, just don’t get it.

Maybe it’s just a way for retailers to benefit from global warming.

But seriously - I think that there are going to a few suprises with next week’s July comp sales numbers. My sources tell me that there is one mall retailer that is having a very good month so far. Although one month can be a blip on the radar, expect Wall Street to pay closer attention to one forgotten stock.

In other things -

Looks like progress may be moving in one local development that is set to fill it’s vacant spaces with a Cold Stone Creamery, LA Fitness, Jos A Banks, Fatburger, and the New Jersey debut of a Salsarita’s. If you know me, you know that I like tacos - so you can guess which store I am most interested in. Fatburger announced the lease signing on March 28, 2005. Was this really held up for over a year and a half because of sidewalk installations?

From Monday’s New York Times - Macy’s, Unwrapped - a story about the new reality series about the behind-the-scenes life of Macy’s. Yes, you read it right. The world’s most famous retailer is going to be featured on the WE Network this Fall. Looks like my Tivo just got a new season pass.

Also from Monday’s New York Times, Football Calls, and Reebok Responds. Can a new marketing campaign increase Reebok’s marketshare in performance/active categories?

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Gas prices, conflict in the Middle East, sales tax, rising interest rates, wildfires, foods with too much trans-fat, and hurricanes: we’re almost to the end of the second quarter in retail - anyone want to place bets on which of the preceeding things retailers will be blaming poor results on the most?

This week, it was revealed that Wal-Mart has loosened it’s policy on shoplifting (see: Wal-Mart relaxes no-tolerance shoplifting rules -NYT). This wasn’t a story that was not exactly meant to go public. The New York Times published a story with source documents given to them from the website WakeUpWalmart.com, with some interesting twists (see: CNN Ignores Labor Union Source of Wal-Mart Shoplifting Story). Wal-Mart themselves have publically responded to their public outing by saying “Don’t test it“. The National Association for Shoplifting Prevention and the National Crime Prevention Council have also issued a statement against the change in Wal-Mart policy.

Unfortunately for some, the exemption only applies to first time offenses under $25. You are still out of luck if you’re an off-duty police officer, shoplifting $258 worth of merchandise: not only will you get procescuted, but you will also probably lose your job.

Wal-Mart has brought themselves into a unique position by being the largest retailer in the world. Any- and everything that they do will be scrutinized in the media, even though a move like this simply brings Wal-Mart in line with most/many other retailers.

More coverage from bloggingstocks.com.

Great article in today’s Courier-Post, out of Cherry Hill, NJ, about the lessons that can be learned from the boardwalk in Seaside Heights, NJ: More the merrier in Seaside Heights. In a small area, competition for the same consumer will dictate prices, ideas, and customer service. Truth be told, I think Seaside (like most boardwalks in New Jersey), do a very good job at pleasing the customer and creating an affordable family athmosphere. There are lessons to be learned from the New Jersey boardwalk industry.

I never thought I’d say that there are business lessons to be learned from the same boardwalk that once hosted the MTV Beach House, with Carson Daly and Civ performing tracks off their ill-fated Thirteen Day Getaway.

Took a trip to Old Navy today and saw the start of the new Fall turnaround. I’ll post more about it tomorrow morning, but so far I am very impressed at the new merchandise I got to see today.

Finally, a trip through some blog posts that I enjoyed this week:

First, my new favorite blog is Finn at Lightheavyweight. He’s got great ideas about design, marketing, and business. He also points out some ways that retailers/businesses can learn from punk rock in his post Punk Rock Branding Lessons II. As an avid music fan myself, I think that there is a lot that businesses at large can learn from DIY/punk ethos without co-opting the identity of punk rock. Be honest, put the customer (fan) first, and work hard. Good points by Finn.

Katherine at Chain Store Age blog talks about recent trips to Ace Hardware and Home Depot. Guess which retailer provided the better customer service? Whenever I need something from a hardware store, I consistently get the better value and customer service from the local, independent or smaller chain stores than I do at Home Depot or Lowes. Although I’ve gotten better assistance at Lowes than Home Depot, nothing beats the level of service from the local True Value Hardware Stores.

Finally, as we go into the Back to School season, Ken at Retail Crier offers some advice for retailers looking to better market to younger crowds. Although some retailers are utilizing some of the points that he touches on, retail is still an industry that doesn’t seem to understand how to use technology to their marketing advantage. Forget podcasts - larger retailers haven’t even figured out how to use blogs to reach their core customer. With retail consolidation ruining customer relationships with retail brands, the technology we have at hand is perfect for allowing retailers to connect, one-on-one, with the people they want in their stores. Too bad they just don’t get it.

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I know I skipped last week, but it was a holiday so I hope I’m forgiven!

Interesting week this week with the June results being posted. Retailers have posted soft numbers for a few months now - is this the beginning of a trend or is it just a blip on the radar? June of 2005 was the strongest month of the year for retailers, so this year had some tough numbers to beat.

Is there a weird trend developing within Abercrombie & Fitch related to the shrinking physical sizes of their customers and the slightly larger cuts of some of their clothing? Seems that more than a few people I know are shopping at abercrombie kids (which posted a 9% comp in June) because they fit their clothes better than at the namesake Abercrombie & Fitch stores (which posted a 10% decrease in same store sales in June). Some message boards and blogs are slightly abuzz with what seems to be larger cuts in the 2006 BTS offerings from A&F. Is this an actual trend developing or is this just the work of hyperactive Myspace teens overthinking things?

Gap has announced some of their plans for the Fall season, including showing some of their new lines to analysts who has been impressed (see: Gap’s back-to-classics new fall line wows analysts). The new approach is a simple retreat back to offering the classics that Gap is known for and getting away from attempting to be overly fashionable. The new marketing campaign has Jeremy Piven and Mia Farrow in television spots.

Also under the same umbrella is the new offerings by Old Navy, which is attempting to get away from basics and get more towards higher end, yet affordable fashion (see: Old Navy aims for a little less Target and a little more Abercrombie). I guess Gap Inc. is going to use Old Navy as a leverage into/against the teen speciality retailers. Going forward with higher pricepoints and a quicker turnaround from concept to finished product in stores, Old Navy is looking to be much more aggressive in the coming seasons.

Will these two re-concepts work out for Gap Inc.? Time will tell, but as analysts point out, this turnaround process will be a little longer than just one season.

Look for Gap and Old Navy to start rolling out their new merchandise and offerings in the next two weeks.

Lastly I’d like to point out that there is a kid in the local Dunkin Donuts who is remarkably consistent in his up-sell. I’ve never seen someone try to up-sell so much at a Dunkin Donuts, but this kid is good. Ask for a small coffee and he’ll ask you if you want a medium for just thirty cents more. Ask for one donut and he asks if you want a second for just fourty cents more. He’s good with the prices, great with the customer service, and very personable. I wonder how successful he is with this.

It goes to show you that whether you are selling a high-end television or a cup of coffee, there’s always another sale to be made and a relationship to be created.

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