Tuesday, July 24, 2012

E-tail to Retail


In the earlier days of this publication there was a section called E-commerce Corner, a separate portion of the news dedicated to reporting – apart from “real” retail news - the latest trends in the growing world of internet sales.

In the first issue I ever worked on, July of 2001, we reported that “according to data published by Forrester Research, consumers spent $3.9 billion online in May”.  Online retail sales for that entire year would run to about $34 billion, according to Forrester, which back then sounded like real money. However, online retail sales for 2012 will likely come in closer to $210-220 billion: “online shopping has shown no signs of slowing down. Last year, it generated $200 billion in revenue…According to InternetRetailer.com, US e-retail sales alone will grow to $240 billion by 2013, and worldwide e-retail will approach $1 trillion by 2013”.1

Other tidbits from the July 2001 E-Commerce Corner: “53 internet companies closed in June, bringing the total number of dot-com sector companies to shutter over the past year and a half to 555 or more”. Remember those heady times? Also: “Amazon.com has halted free shipping on multiple orders of books, compact discs, videos, and digital video discs after a two-week promotion that…was a test run”. It’s almost quaint, isn’t it?

I don’t recall exactly when, but in one of several KeyPoints redesigns over the next decade-plus, I eliminated the separate e-commerce section. It’s all just retail industry news now, whether it’s about building a flagship store or building a Facebook following. It goes without saying that online retailing has evolved from a developing but still somewhat separate phenomenon, warily observed and tentatively sampled by what are still sometimes referred to as “bricks-and-mortar” retailers, to simply one of several ways in which virtually all of those retailers do business, with varying degrees of dedication, innovation, and success. In a world of Twitter feeds, tablet wars, showrooming, and QR codes, we herein present a few tidbits from the recent news that I’ll call E-Commerce Corner 2012:

What The Customer Wants:
“Shoppers worldwide expect a seamless integration across online, social media, mobile and physical stores, according to "Digital Shopper Relevancy," a report by Capgemini which surveyed 16,000 digital shoppers More than half of those surveyed (56%) are likely to spend more money at a physical store if they had used digital channels to research the product prior to purchase; however, 73% of respondents also expect online prices to be lower than those in physical stores…The study did highlight that 55% of women shoppers are more engaged when using digital channels, compared with 44% of men…”2

Retailers Lead the Way:
“When comparing social media investment to other emerging technology areas, retailers more than any other industry are making strong investments…successful retailers are integrating their mobile, analytic, and social media strategies into one cohesive business approach. Social media touch points such as Facebook, Twitter, and Groupon are enabling companies to analyze customer behavior and in turn deliver personalized offers direct to a consumer's mobile device.”3

Phone Yes, Mobile Shopping No:
“Mobile phones — once viewed as the best growth vehicle for online shopping — have proved a dud with many consumers because of their small screens and keypads.” 4

Tablets Take Over:
“Consumers are likely to spend more time shopping from a tablet than from other types of devices…According to the 2012 Shop.org/Forrester Research Inc. State of Retailing Online survey, 49 percent of merchants reported their average order value from tablets now exceeds Web sales from laptop and desktop computers and smartphones”.5

At Long Last Sales Tax:
“A wave of states have passed laws that will require consumers to pay sales tax on all Internet purchases as soon as next year…For states struggling in the troubled economy, this could mean $23 billion in new revenue each year. Had online retailers collected sales tax this year, Virginia would have added nearly $423 million to its coffers, while Maryland would have seen $376 million…The movement in state capitals is driving newfound support for a proposed bill in Congress that could make collection of sales tax a standard practice on the Web, no matter where a consumer logs in to shop… Amazon.com appears to have waved the white flag and supports the sales tax measures… Rather than threatening to shut down distribution centers or cut ties with online affiliates, the retail giant started cutting deals with state governments, analysts said. Amazon will begin charging sales taxes for customers in eight states, including Virginia, over the next four years. It currently collects sales taxes in six others.”6

Same Day Some Day?:
Speaking of Amazon, as one must when speaking of online retail sales, an item from a few days ago: “Amazon’s move to start collecting sales tax allows it to build distribution centers in major markets. Already the retailer is offering next day delivery, working to make it standard for Amazon prime user members. Same day delivery is reportedly not far behind”.7

Not far at all; an even more recent story, right here in our home state: “Amazon’s ability to undercut prices is a tough break. But imagine how much worse it could be for retailers if the...site turns the market upside down by delivering products at all hours of the day, on the date of purchase… as part of a plan to open warehouses near populous areas and provide same-day delivery. The Retailers Association of Massachusetts estimates that doing so would add $25 million to $45 million per year to Bay State coffers from Amazon alone…same-day delivery service by Amazon will put the squeeze on big box stores such as Target and Best Buy — not mom-and-pop stores that carry unique items…the immediacy gives them a huge advantage over competitors.”8

Chris Cardoni, Marketing Manager
CCardoni@KeyPointPartners.com

SOURCES: 1.Internetretailer.com; 2. Global report underscores need for seamless shopping across all channels, DrugStoreNews.com; 3. IDC Study Reveals Emerging Social Media Trends Across Vertical Markets - Retailers lead all verticals with social media investments, IDC; 4. Shoppers using tablets spend more online, Boston.com; 5. Shoppers using tablets spend more online, Boston.com; 6. States, Congress rallying for an e-sales tax, WashingtonPost.com; 7. Home Improvement Retailers Better Watch Out, Amazon Is Coming, Forbes.com; 8. Amazon eyes same-day delivery, BostonHerald.com

Company News

New Business: Vice President of Leasing Don Mace will handle leasing for Buttonwoods Plaza, a 98,000 s/f shopping center in Warwick, Rhode Island. Tenant Representation: Associate Michael Branton is working with Kiddie Academy child care learning centers to find sites in Massachusetts. Congratulations to our Leasing Team for completing transactions in June totaling 28,000 SF in Massachusetts and New Hampshire, and transactions totaling nearly 123,000 s/f throughout the region in the second quarter of 2012.

Industry News: National


US chain store comp retail sales for June rose by just 0.2% year-over-year as measured by the ICSC's tally of 23 major retail chains. June sales were “below expectations generally, but largely followed May’s above-plan gain.” Among merchandise categories, Luxury Stores led with a 7.6% gain, followed by Discount Stores with a rise of 3.3% and Apparel with a rise of 3.5%. Wholesale Clubs were up 3.0%, Department Stores gained 0.8%, and Drug Stores dropped a dismal 7.8%. Among individual retailers, Gap was flat, but Limited rose 7.0%; Costco was up 3.0%. Nordstrom was up a healthy 8.1% and Saks gained 6.0%; Target grew by 2.1% and TJX by 7.0%. Macy’s gained 1.2%, but Kohl’s fell by 4.2%; Rite Aid was down 1.0%, and Walgreens fell 10.0%. See retail sales results on Page 4...Target Corp. will collaborate with luxury retailer Neiman Marcus. This December, the two companies will jointly sell a limited edition assortment of exclusive clothing, home goods, and electronics accessories created by 24 high-profile designers, including Marc Jacobs and Oscar de la Renta. Prices range from $7.99 to $499.99, with most items selling for less than $60.

Industry News: Accelerating

Target will  remodel 230 stores to its PFresh format this year, and has opened its first 3 City Target urban format stores. Target plans to open 20 to 25 Target stores this year…7-Eleven has has acquired 23 Quix c-stores in Texas, which brings 7-Eleven’s Texas store count to 570. 7-Eleven met its goal of opening more than 600 stores in the US and Canada last year, and is on target to open 630 in 2012… Nordstrom will open 15 new Nordstrom Rack stores a year, as opposed to 8 more full-line stores...Microsoft has opened its first two retail stores in the Northeast, both in New Jersey, raising the chain store count to 18…Edible Arrangements announced a partnership with private equity firm Catterton Partners. In 2011, the company opened 86 new stores, and expects to open more than 100  units in 2012…PVH Corp. will open 600 Izod shops inside JCPenney stores in September. The in-store-shops will range from 600 1,000 s/f…Camping World is set to open its 100th RV superstore next month…Walgreen Co. will pay $6.7 billion for a 45% stake in European health and beauty retailer Alliance Boots, the first international venture and biggest deal ever for the chain. The deal will create one of the world’s largest drugstore and pharmacy retailers with more than 11,000 stores in 12 countries. The acquisition will also allow Walgreens to expand into overseas markets, and give Boots a US presence. Walgreens has also entered into an agreement to acquire Stephen L. LaFrance Holdings Inc., the owner and operator of the USA Drug chain, for about $438 million. The transaction gives Walgreens 144 stores under several banners, including USA Drug, Super D Drug, May’s Drug, Med-X and Drug Warehouse in 7 states...Family Dollar will open 450 to 500 new stores this fiscal year and close 60-80 stores…Virgin Mobile opened 10 retail stores in Chicago. The stores may lead to a national rollout of the Virgin Mobile brand…Nordstrom Inc will open its first department store in New York City in 2018, a 285,000 s/f seven story store at the base of what will become Manhattan's tallest residential building, on 57th Street, near 7th Avenue...Del Frisco’s Restaurant Group opened a Del Frisco’s Grille in Phoenix, and will open Del Frisco’s Grilles in Washington, DC and Atlanta. The first two Grilles opened last year in Dallas and in Manhattan. By the end of the year, there will be 5...The Dannon Co. made its first entry into the restaurant business with the opening of The Yogurt Culture Co., in Manhattan this month...Darden Restaurants Inc. has agreed to buy the 39-unit, high-volume, casual-dining chain Yard House, and add the chain to its Specialty Restaurant Group, which includes The Capital Grille, Bahama Breeze, Seasons 52 and Eddie V’s. Darden also operates the Olive Garden, Red Lobster and LongHorn Steakhouse brands...Ace Hardware has launched an “Express” format for both current Ace retailers and other business owners seeking to integrate the Ace brand into existing offerings. The stores average 5,000 s/f or less, and include customized displays and stock more than 11,000 of the most popular products. Currently, there are “Express” format Ace Hardware locations in 6 states across the United States, including, Massachusetts

Industry News: Decelerating

Ritz Camera & Image filed for Chapter 11 bankruptcy protection Friday, less than three years after emerging from its first bankruptcy. As a part of the restructuring, the company, with 265 stores in 34 states, plans to close 128 locations and cut its staff of 2,000 in half...J.C. Penney Co. is eliminating approximately 350 positions at its headquarters in Plano, Texas, completing a reorganization of its corporate office designed to create a leaner and more simplified operating structure.The follow the company’s move in April to eliminate 600 workers at its headquarters.

Industry News: New England

Australian skin care company Aesop will open a Newbury Street boutique in August, its third US location. Aesop has stores in New York Australia, Paris, London, Zurich and Asia…Saks Fifth Avenue OFF 5TH will opened a store in the Merrimack (NH) Premium Outlets. The retailer has 62 stores…The Harvard Square theater , now known as AMC Loews Harvard Square 5, will permanently close its doors in July. The theater opened in 1926 with 1,700 seats and a huge 40-foot screen. AMC Theatres said the theater will be sold as part of an effort to improve the quality of the AMC theater chain...Furniture and accessories retailer Room & Board has signed a lease for an entire 39,000 s/f building at 407 Newbury St. in Boston, the chain’s first New England shop…Clarke’s, the bar at South Station, will be replaced with a 25,000 s/f two-level CVS…Celebrity chef Bobby Flay will open a 72-seat Bobby’s Burger Palace at the Burlington (MA) Mall in Burlington, Flay’s first Massachusetts restaurant…Pottery Barn, Swedish children’s apparel retailer Polarn O. Pyret, and Treat Cupcake Bar, will open at the Chestnut Hill (Newton, MA) Shopping Center, in spring 2013 in a new building at the site of the former Macy’s...A Connecticut franchiser who has bought the rights to open Smashburger restaurants for all of Middlesex County, plans to open 12 restaurants over the next 7 years...The T.J. Maxx in Avon CT will close this month. TJX plans to close about 10 stores this year while adding about 50…Lululemon Athletica has purchased the building at 337 Newbury Street where it opened its second Hub store in March...Guitar Center will open its second Boston store this fall in the space vacated by Daddy’s Junky Music at 165 Massachusetts Ave. The company has a store behind Fenway Park on Boylston Street...iParty will open new stores in Waltham, MA and Plaistow, NH. When these stores open, iParty will have 54 stores in New England and Florida. The company is headquartered in Dedham, MA...Stone River Properties LLC has purchased the 16,791 s/f Marrett Square retail shopping center on Route 2A in Lexington, MA for $2.52 million. Marrett Square is occupied by Anton’s Cleaners, Boston Nail & Spa, Blue Vintage Salon and Royal Pastry...After months of questioning whether IKEA will finally build in Somerville's Assembly Square, the company has formally backed out of the development. IKEA owns a 12-acre parcel and holds permits to build a 340,000 s/f store at the retail and residential development – but the site remains bare. Now, the Swedish discount retail giant has sent a letter to Somerville Mayor Joseph Curtatone, backing out of the project for good.

June Retail Sales Report

Notes: figures gathered from individual company websites, press releases, and Federal filings.  Not all companies report all figures; results not reported will be marked “n/r”. Quarterly results will be updated when available; quarterly figures are shown in italics. Figures from companies not calculated to one decimal point automatically received an ending digit of 0. 

Commerce Department Monthly Sales


Retail sales fell 0.5 percent in June from May, the Commerce Department said Monday. Consumers spent less on autos, furniture, appliances, on building and garden supplies and at department stores.

Source: U.S. Department of Commerce - commerce.gov

Treasury Yields


Consumer Confidence Index

The Conference Board Consumer Confidence Index®, which had declined in May, fell further in June. The Index now stands at 62.0 (1985=100), down from 64.4 in May. The Expectations Index declined to 72.3 from 77.3. The Present Situation Index, however, increased to 46.6 from 44.9 last month.

Source: The Conference Board - www.conference-board.org

Purchasing Managers Index

Manufacturing contracted in June as the PMI registered 49.7 percent, a decrease of 3.8 percentage points when compared to May's reading of 53.5 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

Source: Institute for Supply Management - Manufacturing Report on Business - www.ism.ws