Author: Helen Thomas

Atlanta-based United Parcel Service announced rate increases to take effect on November 2, in time for holiday shopping. UPS will increase its fuel surcharges and will double its rates to deliver oversize items. Both UPS and FedEx are increasing rates and other charges about 5%. Separately, the US Postal Service is also asking regulators to raise prices by an average of 9.5%.

New fees are also being established for retailers using third party shipments. This new fee will affect retailers that allow vendors to ship directly to consumers, or who direct goods to their own shelves for restocking.

Any price increases as likely to be passed along to consumers in higher shipping costs and/or higher prices at checkout.

Source: Wall St. Journal

The US Spending Monitor decreased 3.8 points in September, reaching its lowest point in 2015 and the lowest point since August 2014. Retail spending index decreased to 3 points under the 12-month average. The decrease comes with increased negative views on the economy, spending and personal finances. Over 60% of respondents rated their personal finances as fair or poor while 35.8% stated finances were getting worse. 62.7% of respondents have 3 months or less of emergency savings, while

23.7% have none.

Retail spending continues its 4-month continuous decline. 38.2% of adults are spending less on household expenses, 37% spending less on household improvements and 33.3% spending less on clothing, footwear and accessories. The household improvements category has the highest percentage planning to spend in this category, but with only 18.9% expecting to spend more in the next month.

A majority of retail purchases are expected to be made at a retail store next month. It is expected that purchases made using mobile devices or personal computers will increase as the holiday season approaches and pre-Cyber Monday deals start.

Source: Chain Store Guide

Vera Bradley enjoyed its best quarterly results in nearly five years, beating analysts’ expectations in Q2 2015.  Analysts predicted an 11-cent share profit, which Vera Bradley exceeded with a 15-cent share profit, and saw its sales increase 1.5 percent to $120.7 million.

The company expects profits this year to land between 72 and 78 cents per share, well beyond expectations of 66 cents.

The retailer’s strategy is focused on luring more shoppers into its brick-and-mortar mall storefronts and increasing consumer attention on its brand.

Vera Bradley has been a customer of Accelerated Analytics since 2013, utilizing our POS and 852 sales and inventory reporting to drive sales and optimize inventory levels at many of its department store retailers.

The Home Depot is officially opening a third facility to support its online business. The new 1.6 million facility in Ohio will employ 500 employees and will support its online operations that currently account for 5% of its business and continues to grow.

Home Depot also announced plans in October to open its Marietta Technology Center, a 200,000 square foot office complex that will employ 1,000 IT jobs. The Home Depot has enhanced its IT capabilities in conjunction with its supply chain and merchandising operations.

“These investments are advancing our interconnected retail strategy, which allows our customers to engage with Home Depot however they choose,” said Craig Menear, chairman, CEO and president of The Home Depot. “We’re also pleased to contribute to the economic growth of these communities.”

The Home Depot is not the only major retailer ramping up fulfillment support for omnichannel retail. WalMart is spending $200 million to build a new distribution center in Polk County, Florida dedicated to fulfilling e-commerce orders.

Source: Retailing Today

The latest Consumer Fuels Survey results show that lower gas prices are not changing consumer buying behavior. Gas prices fell $.25 per gallon in September and $.60 since July. However, only 15% of consumers surveyed say they will spend more on non-fuel items in the coming month.

Declining gas prices are not increasing consumer optimism about the economy, as the recent stock decline is a concern for them. 89% of consumers say low gas prices are good for the economy, but 41% say the recent stock market decline has had an impact on their finances.

One segment of consumers are more optimistic. Among consumers aged 18 to 34, 23% say they will spend more money shopping this month.

Source: Retailing Today

Staffing agencies for logistics companies and retailers are reporting having trouble hiring warehouse workers to stock holiday inventory. The need for warehouse workers has grown as online shopping sales have increased. Increased online ordering raises the difficulty of warehouse jobs requiring more picking, packing and higher volume work in the warehouses.

Companies have had to raise starting pay to attract workers. Most logistics warehouses are located in similar geographic clusters, and retailers are competing for the same workers. UPS plans to hire 90,000-95,000 seasonal workers for the holidays. Retailers are commenting that rising e-commerce sales means less need for traditional store clerks and more need for people to handle shipments.

Source: Wall St. Journal

A new survey by HRC Advisory indicates that 80% of retailers are not prepared to transform their supply chains for a customer-centric, omnichannel model. 95% of retailers said their biggest issue is mitigating online returns, which can run as high as 30% and are very costly for a retailer.

The high cost of online returns come from returns of online purchases to a store that does not carry that particular item. Also, when returned to a fulfillment center there are costs for freight, damage and a lost opportunity for a replacement sale in the store.

All of the retailers surveyed felt that fully integrating inventory and fulfillment between the online and physical store channels would achieve the most effective customer outcome and the lowest margin risk.  But 52% of them stated they do not have the systems in place to provide the required visibility to inventory in each store.  Only 35% had capabilities for vendor drop-ship and order in store and deliver to the customer. 60% of those retailers have plans to further invest in their e-commerce systems to provide an improved customer experience.

Currently, only half of the retailers were currently able to present customers with accurate inventory information and to fulfill the entire order at the time of the online purchase, and only half could ensure fulfillment from the closest location when an item is available in multiple locations and distribution centers.

Only 25% of retailers are starting initiatives to combine fulfillment from stores and warehouses to manage both channels more cost-effectively.

Vendors who use POS data analytics tools, such as Accelerated Analytics, to help track and manage inventory levels in stores and fulfillment centers can work with their retailer buyers to optimize their working capital investments in inventory and partner with them to create a better customer experience and reduce their lost sales opportunities.

Source: Chain Store Age

The Consumer Spending Report US Spending Index increased 1.7 points in September. 28.7% of adults surveyed rated the US economy as excellent and 30.3% said it is getting better. There was a divide between Democrats and Republicans: 56% of Republicans felt the economy is getting worse, while Democrats had a much higher percentage believing the economy is excellent or getting better. While in most months adults aged 40-64 rate the economy and personal finances low, this month this age group had the highest percentage of respondents believing their finances are excellent.

The Retail Spending Index decreased 0.9 points. The percentage of adults that expected to spend on household expenses declined, with only 10% saying they expect to spend more. 51.2% responded they spent the same as the previous month. The outlook for next month appears to also remain flat.

Source: Chain Store Guide

Belk’s board of directors unanimously approved a merger with Sycamore Partners, expected to be completed in the fourth quarter of 2015. Belk agreed to be 100% acquired in a transaction with an estimated value of approximately $3 billion.

Founded in 1888 by William Henry Belk, Belk is the largest family-owned and operated department store in the US. Chairman and CEO Tim Belk will remain chief executive and the company will continue to be headquartered in Charlotte, NC. Belk operates 300 stores in 16 southern states.

“We are delighted to have found a financial partner that sees what we see in Belk: a 127-year-old brand that remains relevant today with exceptional customer loyalty in small, medium and large cities throughout the South,” said Belk. “We plan to grow Belk by executing our current strategic initiatives and undertaking new growth initiatives together with Sycamore. This transaction is an across-the-board win for our stakeholders.”

Source: Chain Store Age

Ten questions to get you started on a severe weather continuity plan.

Tropical Storm Erika has caused at least 4 deaths and widespread flooding as she moves past Dominica and Puerto Rico.  The current forecast model cone suggests a path right over Florida with Miami impacted early Monday morning (31 Aug).  The model is uncertain because traveling through the Caribbean could strengthen Erika into a hurricane, steer her toward the Carolinas, or just create mild to moderate flooding and wind.   

Florida is a huge retail market for Home Depot, Lowes, CVS, Walgreens, Walmart and many other retailers.  The east coast of the U.S. has millions of people in several large cities.  With a possible impact from Tropical Storm Erika less than three days away, now is the time to evaluate the risk Hurricane Erika poses to your business. This is a great exercise for not only this storm but also so that you can quickly and proactively act when the next storm is on the horizon.  

Ten Questions to Start Your Severe Weather Planning

1. Are my products impacted by the severe weather?  
2. What products are impacted?
3. Is the impact from the severe weather before, during, after, all the above?
4. What are my retail customer’s policies for store operations before, during, and after severe weather?
5. How will I be kept up to date on actions my retail customers are taking as a result of severe weather?
6. Can I create and save reports with the SKUs and stores I expect would be impacted by a severe weather event?
7. Can I purchase weather alerts or data to more quickly initiate our planning process?  

Developing a detailed understanding of how severe weather could impact your business and then using that to create a comprehensive process map, with actionable steps, is critical to business success when a severe weather event occurs.   After you have created your plan review it in detail with your retail buyer and replenishment managers.  They are likely to have input which will strengthen the plan further, and it’s also very possible they will be willing to share resources which are part of their severe weather plan like advanced weather forecasts, and emergency store operations communications you might not otherwise have been able to access.  Is there model for Tropical Storm Erika more detailed than generally available information right now?

I would also recommend adding Twitter into your communication monitoring process.  During a storm news travels very fast on Twitter.  If you have taken the steps above to identify specific stores you can monitor Tweets by simple saved searches and hashtags.  You can also send Tweets using hashtags if you want to get a message out quickly which is related to the weather and your product. 

Retail can be severely impacted by weather, but with proper planning allowing your business to act prior to a storm or react very rapidly to a storm, your business doesn’t have to be negatively impacted. In fact, a severe weather event could be a tailwind for your business.