Author: Helen Thomas

US labor costs rose a seasonally adjusted 0.2% in the spring, the slowest pace in three decades. It is the slowest quarterly gain since record keeping began in 1982. Economists were expecting a 0.6% increase. The slow wage growth could affect the Fed’s decision to raise short-term interest rates. Fed officials anticipated an acceleration in wages to signal the labor market is healthy after the recession and could withstand an increase in borrowing costs.

The figures suggest that slack remains in the labor market despite signs that workers’ wages were picking up and a sharp drop in unemployment.

“At this stage of the business cycle, with significant improvement in the labor market, wage growth should be accelerating,” PNC economists Stuart Hoffman and Gus Faucher said in a note to clients. “Weak wage growth is also somewhat puzzling given recent announcements from big companies, such as Wal-Mart and Target, that they are raising workers’ pay.”

Source: The Wall Street Journal

US economic growth in second quarter 2015 saw a 2.3% increase in gross domestic product over first quarter. This gain was boosted by 2.9% growth in consumer spending.  Also, consumer personal savings rate went down to 4/8% from 5.2%, showing that consumers are starting to open their wallets and start spending again. 

Business investment for the period contracted and inventories remained flat. However, consumers and transportation companies are benefitting from lower oil prices. A growth in consumer spending in the third quarter will get more product flowing through supply chains.

Source: Wall Street Journal

Lowe’s Canada is expanding, announcing that in addition to completing the acquisition of 12 former Target stores, they will also open 2 new locations in Ontario. This expansion will increase Lowe’s Canada total store count from 40 to 54.

Lowe’s acquisition of Target’s former stores was for a total purchase price of $113 million. Lowe’s construction plans will be an investment of approximately $38 million. Over 2,000 new jobs will be created. It will have 37 stores in Ontario, 3 in Saskatchewan, 9 in Alberta and 5 in British Columbia. Many of these areas were currently unsaturated by Lowe’s.

“These 14 new locations are a tremendous win for us in Canada, accelerating our growth across the country and bringing our total store count to 54 locations,” said Sylvain Prud’homme, president of Lowe’s Canada. “We continue to receive a positive reaction from our customers on our store experience and this helps us reach additional communities more quickly.”

Source: Chain Store Age

CVS has announced it will be expanding its beauty offerings with three new exclusive collections. CVS will introduce 13 products from Jouviance, a Canadian biotechnology skin care brand, which range from $22 to $69. It will also unveil blemish control and eye treatment products from European-inspired brand Wilma Schumann. Wilma Schumann products range from $18 to $64. Its third new brand will be Promise Organic, featuring skin care, body care and multi-use oil for skin and hair products.

Health and beauty sales grew 25% faster over the past 3 years than the pharmacy’s general merchandise and consumables. CVS plans to bring in 1,200 new products over the next few years, and see its exclusive brands portfolio double by the end of this year.

CVS is shifting its focus to the beauty aisle, planning to update displays to educate customers on skin care products and provide easy navigation through the department. CVS will also offer services from in-store beauty consultants. CVS has partnered with a psychologist to study the role of beauty on overall health.

Source: Retailing Today

Jacksonville, Florida based Interline Brands, Inc. is being purchased by The Home Depot for $1.6 billion. Interline is a distributor and direct marketer of broad-line maintenance, repair and operations products (MRO) for professional customers. The acquisition is expected to be completed in The Home Depot’s fiscal third quarter this year.

Interline’s assets include an outside sales force, fulfillment capabilities in the MRO market and a distribution network in more than 90 locations in the US, Canada and Puerto Rico.

“Addressing the needs of our Pro customers is a top priority for The Home Depot,” said Craig Menear, chairman, CEO and president of The Home Depot. “Interline is a well-run company that has achieved impressive financial results over the last few years. With their seasoned leadership team, we will enhance our ability to serve the Pro – both in the store and at any desired location outside of the store – driving significant value for our customers and shareholders.”

Bill Lennie, president, The Home Depot Canada, has been selected as VP Outside Sales and Service and will be charged with leading The Home Depot’s Pro, MRO and installation services business.

Source: Chain Store Age

Personal accessories are set to decrease by 1% in 2015 to $527 billion. Fashion trends are driving stronger growth for jewelry, but other personal accessories categories are seeing a slow growth rate in 2015. Factors in this slow growth are a decline in consumer spending, heavy reliance on European markets and unfavorable US dollar exchange rates.

International companies are hoping to cast a wider net in their channel strategies and reach more consumers with their omni-channel presence. Currently the Asia-Pacific market is 53% of the world’s personal accessories market.

By 2020, the global personal accessories industry is forecast to reach $645 billion, which would be a 4.1% annual growth rate.

Source: Business Wire

The US Consumer Spending Index increased 0.4 points in June. The percentage of consumers who rate the economy as excellent or good has continued to increase each month, at 30.9%, though is much lower than the 68% who felt the economy is fair or poor. When asked if personal finances were getting better or worse, 30.7% answered better, 33.1% answered worse and 35.2% answered the same.

The Retail Spending Index decreased 0.5 points in June. Expected spending for July slightly decreased in every category except discretionary personal entertainment expenses, which increased to 14.9% in June versus 13.7% in May. The category with the largest percentage of expected spending was household improvements at 22.9%. Expectations are that spending next month will remain about the same as 51.3% expect to spend the same. However, 28.2% say they will spend more in July, the majority being adults with children.

Source: Chain Store Guide

A Consumer Pulse survey of parents of K-12 and college students found that 56% of respondents plan to spend more money per child this year on back-to-school supplies.

K-12 parents plan to spend an average of $873 per student, while parents of college students plan to spend more than $1,100 per student. 38% of parents intend to purchase technology products, on average spending $400 compared to $278 on apparel. Technology products are needed as student use of technology in the classroom increases, requiring parents to buy laptops, tablets and mobile phones.

61% of those surveyed said store sales and promotions will be the main determinant of when and where they will do their back-to-school shopping.  74% of parents said they prefer to shop at big box retailers or chains to get a better deal.

Online shopping and mobile shopping are increasing with parents. 50% of the parents had clicked on an online ad in the past 7 days and 48% had clicked on a mobile ad. Over 40% of parents stated they made a purchase within the past week based on a mobile or online ad.

Source: Retailing Today

With an improvement in housing and overall economic activity in Southeastern states, Lowe’s is expected to witness accelerating sales and potentially narrow its comp store sales with Home Depot in the region. A report this week forecasts a 4% growth at Lowe’s following disappointing Q1 2015 sales of $14.1 billion versus $14.26 billion. However, Lowe’s Companies’ revenue was up 5.4% compared to Q1 2014.

Several equities research analysts issued positive reports for Lowe’s stock, setting buy ratings over $80 per share. Experts expect Lowe’s to complete the year with $3.94 EPS. 

Source: The Legacy

Amazon successfully launched its Mexican Kindle store in 2013. Now, the online retailer has launched a Spanish-language Mexican website and mobile app with millions of unique items.

“Our mission at Amazon is to be Earth’s most customer centric company, and we strive to be the destination where people can find anything they want to buy online,” said Alexandre Gagnon, director, international expansion, Amazon. “With Amazon.com.mx, customers in Mexico will find more of what they want – the largest selection in the country, low prices, fast and reliable delivery, all with a trusted and convenient experience.”

Customers in Mexico can pick up their purchases from hundreds of locations across the country, as well as paid shipping options. There is free shipping available for certain purchase amounts. Amazon plans to offer more payment options, such as monthly payments.

Source: Chain Store Age