Retail sales in July continued to be a mixture of disappointment and mediocrity.
Retailers catering to teens saw a mixed bag of results as teens decided to spend more money at Aeropostale (same store sales up 6%) and Buckle (same store sales up 2.8%), but both retailers missed analysts projections. American Eagle saw an 11% drop in same store sales, on top of the 7% drop they saw this time last year. Abercrombie & Fitch continued their terminal velocity fall with a 28% drop in same store sales. No good.
Macy’s saw a 10.7% drop in same store sales, JCPenney reported a 12.3% drop in same store sales, while Kohl’s managed to eek out a nearly flat month (0.4% increase in same store sales). I guess shoppers are really going nuts over that new line by Avirl Lavigne.
Besides the general state of the economy and unemployment through the course of the year, some analysts suggest that the, recently enacted and more recently refueled, Cash for Clunkers program is diverting money from the retail industry:
“One of the unintended negative side effects of the cash for clunkers program was that it’s going to remove money that probably would have been spent in retail stores and restaurants and is now going to go toward a car payment,” said Purdue Consumer Sciences Professor Dr. Richard Feinberg.
And not just “spare change.”
Feinberg estimates the nation’s retailers could lose up to $300 million a month as consumers spend their disposable income on loans instead of lunch. By the end of what’s expected to be another tough holiday shopping season, losses could add up to between $1.5 billion and $2.5 billion, Feinberg says.
I just took a look through my statistics for the year and have compiled a list of the most popular posts here on No Turn On Red. Looks like the real-time information provided by retailers via Twitter was the breakout topic that I wrote about this year.
Happy New Year to all my readers. May we all be surprised and see 2009 turn into a brighter year than we are all expecting! Thanks to everyone who visits, reads, and shares information from this blog. I do appreciate the readership!
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CNBC’s got a great run down on Amazon’s holiday strategy. The online retailer saw a 42% sales growth in Q4 2007 and forecasts 12 – 15% growth this year. Remarkable feat considering consumer spending is forecast to be down this season. The retailer looks to siphon sales from other retailers by offering low prices and “ridiculous deals”.
Shop.org has released more data on expected consumer habits through this Holiday season and especially for this weekend. Bottom line, consumers are using the web to enhance their real world shopping experience. Be prepared.
JCPenney has unveiled an intriguing viral marketing campaign called “Beware of the Doghouse”. The concept is simple: Men should get the “right” gifts for their spouses in order to avoid being put in the doghouse. There’s a website and a four minute video out there supporting this campaign.
The campaign is also supported by a Facebook tie-in that some feel is a poorly executed social media strategy. I tend to agree on this one – I’d rather see retailers put their effort into making lasting relationships with their customers, rather than gimicky Facebook apps.
However, I can’t completely fault JCPenney for their social media efforts as the retailer has also unveiled a Twitter account that, so far, seems to be a very effective use of the service. The account (@askJCP) was started last week and there seems to be a real person behind it (rather than a marketing script). Yesterday, there were a lot of Tweets about the Doghouse viral video, which does seem a bit forced and contrived. But there’s also some helpful information about the retailer and I hope they continue to engage people on Twitter and attempt to make solid relationships.
I should also point out that JCPenney uses Youtube to broadcast a weekly run down of the hot items and promotions in-store. Their channel is updated weekly and the commercials are well produced and informative. I believe the retailer started these broadcasts with the Back to School season.
I’m interested to see how the viral video plays out. I personally found it funny and remarkable well produced. So far, it’s getting some reaction on Twitter but people generally see the humor in the video. But frankly, I wonder if JCPenney had any second thoughts about rolling out their campaign so shortly after another major brand has such a nightmare on their hands last week.
I am enthused by JCPenney’s use of social media, social networks, and other available web applications. I hope that marks a long term commitment on behalf of the retailer and all of this doesn’t disappear after Christmas.
Here’s hoping other retailers continue to hop on the social media bandwagon and aim to connect with their customers online.
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Albert R. Boscov and his brother-in-law Edwin A. Lakin are among the group who put in an offer for Boscov’s Inc., in a bankruptcy auction that culminates next week with the selection of a winning bidder, Boscov said in a report published today.
The pair, who helped run the company for decades, received multimillion-dollar buyout packages when they retired in January 2006 and handed the controls to Lakin’s son, chief executive officer Ken Lakin.
Boscov’s, you may remember, filed for bankruptcy protection in August and immediately closed 10 of their 49 stores. The remaining 39 stores are still operating under bankruptcy protection while bids are accepted that will determine the future of the company.
I’d like to see someone buy Boscov’s who will continue to operate it. It’s a respectable mid-size department store chain. While my local Boscov’s has already closed, I hope the other 39 can remain open as long as financially feasible.
With the economy as it stands today, I can’t really imagine someone buying the chain with the intention to shut it down and sell off the real estate. There’s not a huge market for mall anchor real estate right now. Other department store chains, like Kohl’s and JC Penney, have already announced reductions in their short-term growth plans. Who else would be moving in to these locations?
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The stimulus checks have been (presumably) spent, back to school shopping is underway, and the retail sales numbers for July are in and they are, well, pretty ugly. A lot of retailers posting negative same-store-sales numbers for the month, many of them posting numbers that fell below Wall Street’s expectations. Wall Street is responding – as of 12:30, the S&P Retail Index is down around $7.
The negative results are hitting all segments of retailers – from department stores to the mall, teen retailers to mass market merchandisers. Wal-Mart posted a positive sales increase of 3.0%, but that is less than the 3.5% increase that Wall Street was looking for. Target saw same store sales drop 1.2% in the month of July and warn that August isn’t going to be much better. JCPeneny’s sales dropped 6.5% but raised their Q2 guidance “due to better than expected sell-through of promotionally priced merchandise and continued expense management measures.” Kohl’s saw a steep 10.4 drop in same store sales in the month.
Gap saw negative numbers across all brands – Old Navy down 16%, Banana Republic down 8%, and Gap North America down 6%. When are they going to spin off the Old Navy brand, sell it, and let someone else deal with the turnaround?
Teen retailers aren’t seeing the Back to School numbers they hoped for with American Eagle down 7%, PacSun was down 4%, Abercrombie & Fitch (as a company) was down 7% (with only A&F proper posting flat numbers, up 1% for the month. Hollister was down 11% – blowing away the 4.1% decrease expected by analysts), but Aeropostale saw sales jump 13%.
A few of the stories I’m reading and wanted to share today:
John Zogby’s got a very insightful look into the political trends of retail consumers and dives behind the numbers to make sense of it all. He looks at presidential election polling numbers, the retailers the customers shop at, and how this relates to the retailers’ branding.
.. and finally – Starbucks is offering a $2 discount on iced beverages in the afternoon when you buy a drink in the morning. I think this is a smart move that should drive repeat business throughout the day. Besides that, I’m selfish and now look forward to saving a little bit of money on my second trip to Starbucks every day.
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Today, JCPenney has announced the launch of a new activewear line called Xersion. The line, developed, sourced, and designed by the retailer, fits in the “better” pricepoint of Womens activewear. This is one of the six brands JCPenney is launching with this back to school season.
Boscov’s Inc., the 9,500-employee department-store chain founded in 1911 in Reading, Pennsylvania, filed for Chapter 11 bankruptcy protection in Wilmington, Delaware, today, citing decreased consumer spending.
Boscov’s, which said in court papers that it’s the biggest family-owned full-service department store chain in the U.S., will immediately close 10 of its 49 stores. The company said it will borrow as much as $250 million from a group of lenders led by Bank of America Corp. to help it restructure.
MARYLAND
Marley Station Mall, Glen Burnie
Owings Mills Mall, Owings Mills
White Marsh Mall, Baltimore
NEW JERSEY
Monmouth Mall, Eatontown
PENNSYLVANIA
Harrisburg East Mall, Harrisburg
Monroeville Mall, Monroeville
Montgomery Mall, North Wales
Oxford Valley Mall, Langhorne
South Hills Village Mall, Bethel Park
This is a blow to the retailer that touts itself as American’s largest family owned department store. In an age of consolidation and rapid, national, retail expansion, Boscov’s was one of the last regional department store chains that we had here in the Mid-Atlantic.
I wonder how many of these locations are being scouted by JC Penney and Kohl’s.
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A racy advert for JC Penney has been making it’s way around the internet over the past few days. The ad, which won a prize at this weekend’s Cannes Lions Awards, features two teens practicing putting their clothes back on quickly before heading down to the basement for a romp. Problem is, it may not be a legitimate JC Penney ad.
Because the spot is so well made, and because someone had to enter it it at Cannes, JC Penney is blaming its ad agency, Saatchi & Saatchi. The ad agency, in turn, is pointing the finger at production company, Epoch Films of New York, which is indeed the listed entrant. There is speculation “the video may have been filmed after hours by a producer at Epoch who was working on the Penney ads for Saatchi.”
A commercial like this won’t land with the core demographic of JCP’s shoppers. But on the flip side, teens are too smart for a commercial like this. It fails on both fronts. It pisses off their core and doesn’t the brand’s desirability with teens.
This video is spreading quickly through blogs, social networks, and Twitter. The retailer will need to work quickly to counter it’s message. This is a great opportunity for them to use social media effectively and distance themselves from the video. I’d like to see the retailer working with bloggers to get their message out there. Otherwise, the video is going to continue to spread and fewer eyeballs are going to see their retraction.
Of course, this is a moot point if the retailer, in any way, authorized this advertisement. Then it’s even more of a tangled mess and the only way to resolve it is with honesty and transparency.
It will be interesting to watch how this develops over the next few days and how the retailer responds.
The advert in question is below. As a warning, it does show people dressing and undressing, so it might be slightly NSFW:
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