No Turn On Red

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%.

More coverage from CNN/Money, Forbes, and Marketwatch.

Reminder, all of July’s numbers are available to analyze over at our partner site, Retail Numbers.

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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.

J.Crew’s website has had their share of mistakes and downtime lately. Church of the Customer is talking about the apology e-mail that the retailer sent out to their customers and what this means for the company.

Matt at A New Marketing presents a clean, easily digestable definition of what social media is.

.. 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.

More details are available in their own press release.

Timing of this launch is interesting as Kohl’s readies to launch their exclusive licensing agreement for activewear with Fila. Makes sense that JCPenney would want to ramp up their private label activewear offerings.

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It’s official:

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.

The Associated Press has the full list of stores that are closing:

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

VIRGINIA
Piedmont Mall, Danville

More coverage from the Associated Press, Wall Street Journal, and Reuters.

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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As always, I’m looking at a ton of e-commerce sites lately. Decided to run through some of the landing pages that I am seeing around the web right now to show off the variety of promotions and marketing going on. Though it’s not as denim-centric as it was two years ago, it’s obvious denim is still the #1 push in the back to school season.

Continue reading this entry

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Another mixed month for retail sales.  While some retailers rebounded and look to go into Back to School on a positive note, it was another dark month for some mall and teen retailers.

Wal-Mart beat expectations with a 5.8% increase in June (showing 6.1% increase at their US name-brand stores and a 4.6% increase at their Sam’s Club locations). Target ended up in positive territory with a 0.4% uptick in same store sales. Costco showed a 9% increase, Kohl’s beat estimates with a 2.3% increase, and even mall retailer Aeropostale showed gains with a 12% increase in June.

The month was not as kind to mall and teel retailers such as Gap (company down 7%), Abercrombie (down 3%), and American Eagle (down 11%).

June’s numbers have been posted to Retail Numbers, which allows you to chart and track the retail industry monthly same-store sales.

More coverage from Fox Business and the Associated Press.

Photo above from Flickr user James@mannequindisplay. com, used under Creative Commons.

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The Channel Checkers are reporting that Kohl’s has started selling Vera Wang merchandise earlier than the advertised street date of September 9:

We have been surprised so far in our survey. 12 of the 25 (48%) stores we have called this week have told us that they already have the Vera Wang line and are selling it. We were told there is a Vera Wang perfume on sale at Kohl’s now too. Many of the stores that have the line appear to be in the Pacific Northwest and the Southeast. Stores in Washington and Oregon and South Carolina and Georgia provided the bulk of our positive responses. We called one store in New York City and they claim to be stocking the line already as well.

Read more at their site under: Vera Wang Line Sneaking Into Kohl’s Early.

In the past, Kohl’s generally rolls out their national branch launches in highly coordinated affairs, unveiling the new line in all of the markets on the same day. We saw this in 2005 with the launch of Candies, as an exclusive Kohl’s brand, and we’ve seen it through the past few years of growth in the Chaps brand. These launches, from new fixturing to promotions to actual merchandise are all tied in to hit the stores on the same day, with major national ad campaigns behind them.

There are exceptions to this: Casa Cristina rolled out in the Southwest in Q4 2006 prior to a national launch in early 2007. More contemporary lines, such as Elle and Stamp 10, have seen staggered growth after successful launches. The retailer has also tested new products and concepts on smaller levels before rolling out nationally - case in point is the recent addition of a private-label tuxedo line to the menswear departments of their stores in a slow rollout.

It does surprise me to hear that Kohl’s may have let this merchandise out early. It seems to be against their past behavior. Is Kohl’s really selling Vera Wang merchandise early in an attempt to reach out to some test markets? This is the largest brand launch in the retailer’s history - so perhaps it is time to do things differently than they have in the past.

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To update last week’s story about the sweatshop allegations levied against a factory that produces Daisy Fuentes clothing for Kohl’s, it appears that things are straight now and they have agreed to update their policies and follow proper labor laws:

A Guatemalan factory that makes some of Daisy Fuentes’ clothing for Kohl’s Corp. has agreed to make changes following allegations it was a sweatshop, a workers’ rights group said Thursday.

The National Labor Committee issued a report on the Fribo factory last month, saying workers told a related group they are humiliated and forced to work unpaid overtime.

[...]

The NLC said the factory owner, a South Korean national, has agreed to weekly inspections by CEADEL, the Center for Studies and Support of Labor Development in Guatemala, which told NLC of workers’ complaints.

More on this from Forbes.

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Imagine it is Friday at 5:00PM and someone just posted, on their blog, about a horrible shopping experience they had at your store. Maybe a cashier was rude or maybe a store was disgusting - but whatever their frustration, they just posted their thoughts online and now it’s gotten linked to from two dozen websites and now people are talking about it across the country.

In this day, do you really want to wait until corporate PR gets into the office at 9:00AM on Monday morning before someone even thinks about reacting to this story? Monday is too late when there’s the potential that someone, reading the blog post, has decided not to shop at your store on Sunday.

Think it is far-fetched? I talked about this earlier in the year, when one consumer posted about their bad experience at a Kohl’s.

Think something like this can’t happen to your business? I can tell you that no matter how well you think you are training your employees, something somewhere is going to happen and someone is going to talk about it online. The next big story could be affecting your retail chain.

Today I read, over at Consumerist, about an unpleasant experience a person had returning items at Victoria’s Secret. Look through the comments and you will see a range of responses - some agree with the poster and complain about Victoria’s Secret customer service, while some stick up for Victoria’s Secret, while others debate the quality of merchandise Victoria’s Secret carries.

You know what I would love to see? Someone from Limited Brands posting a comment in that thread. Maybe they say that they are sorry for the experience, that they will look into it, and get in touch with the original poster privately. They could talk about how they are going to look into the policy and figure out if the sales person was poorly trained, rude, or even correct in what they do. A personal face of the corporation, being honest and engaging conversation, could stop an already bad experience from spiraling out of control. A personal face who could prevent the same situation from happening again.

This is the role of an online Community Manager: someone who represents a brand, online, and engages in honest communication with managers. It’s not hard to go through blogs, social networks, and community websites to find out what is being said about your brand. It’s not that hard to engage and welcome conversation and criticism. It’s not that hard to admit that, hey maybe someone made a mistake at the store level but it was due to poor training and we are going to correct that.

People make mistakes and they want to see big businesses admit that they do, as well. But a retailing remaining silent and ignoring the conversation around them is going to hurt their business and drive away customers.

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Looks like Kohl’s is on the receiving end of some sweatshop allegations:

Kohl’s Corp. removed some lines of its Daisy Fuentes clothing brand following allegations that the Guatemalan factory where the clothes are made is a sweatshop, where workers are humiliated and forced to work unpaid overtime.

The National Labor Committee, a New York-based workers rights group, issued a report after learning of complaints by workers at the Fribo factory in rural Santa Maria Cauque de Sacatepequez, Guatemala.

Kohl’s (nyse: KSS - news - people ), based in Menomonee Falls, Wis., has pulled only a few styles of Daisy merchandise, from its stores and online, spokeswoman Vicki Shamion said. Kohl’s buys Fuentes merchandise from P.A. Group LLC and does not oversee production, she said.

Workers at the Guatemalan factories say they were forced to work overtime, much of it unpaid, and forced to endure harsh conditions in hot factories with little access to bathrooms or clean water.

More coverage from Forbes.

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