Author: Helen Thomas

Inventory shrink, or the loss of product due to shoplifting, employee and vendor theft and administrative errors, costs retailers billions of dollars. The NRF and the University of Florida provided survey results this week stating that in 2014 inventory shrink averaged 1.38% of retail sales, or $44 billion.

Shoplifting accounted for 38% of the loss, followed by 34.5% in employee theft. The rest consisted of 16.5% administrative errors, 6.8% vendor fraud or error and 6.1% unknown loss.

While grocery chains have the highest shrink rate, home center/hardware/lumber/garden reported average shrinkage of 1.09%.

Tracking inventory effectively is key to managing shrink. Actual and accurate inventory counts eliminates the over/under counting in the results. Verifying product delivered is what was ordered and is accurately described in systems is also paramount – if an expected-sized item was not available, and the vendor ships a different size, but that difference is not noted, a retailer can end up with a surplus of one size, a shortage of another, and a dent in their inventory valuation. Inventory measurements should be looked at in both units and dollars. A retailer could be 99.5% accurate in dollars but only 94% accurate in units.

Shrink-related data is stored in different applications such as POS/point of sale, inventory, receiving and store applications. Having the ability to obtain reports that combine point of sale and inventory data in a timely fashion is imperative to take action quickly before the data becomes outdated.

Accelerated Analytics is a comprehensive service for collecting, analyzing and reporting on POS point of sale and inventory data, to increase sales, optimize inventory, recognize inventory shrink and respond faster to this information.

Source: Chain Store Age, ProSales

CVS Health and Target announced a $1.9 billion sale of Target’s pharmacy business to CVS. CVH will rebrand Target’s 1,700 prescriptions departments as CVS and CVS will acquire Target’s 80 clinic locations and rebrand them as MinuteClinic. Both companies also announced plans to develop 5-10 small format stores in the next 2 years that will be branded Target Express and contain a CVS Health pharmacy.

Both companies have stated goals of core business investments to drive growth, and focus on wellness as a signature category, focusing on consumers eating well, being active and finding natural and clean label products. The rollout will take place over a period of several months to ensure the smoothest possible transition for their pharmacy and clinic patients.

“This strategic relationship with Target supports the highly complementary customer base, brand and culture we share,” said Larry Merlo, CVS Health president and CEO. “This relationship with Target will provide consumers with expanded options and access to our unique healthcare services that lead to better health outcomes and lower overall healthcare costs.”

“At Target, we’ve talked a lot about the evolving preferences of our guests and this partnership demonstrates that we’re committed to putting them at the forefront of everything we do,” said Brian Cornell, Target chairman and CEO. “By partnering with CVS Health, we will offer our guests industry leading healthcare services, and at the same time, sharpen our focus on elevating the way we deliver wellness products and experiences to our guests.”

Source: Chain Store Age

The Home Depot discussed this week its IT investment and strategy that focuses on the customer buying experience. The company’s Common Order Management system, or COM, is the largest IT project in the history of The Home Depot.

COM is an inventory visibility platform that looks at millions of deliveries through small and large delivery trucks, direct fulfillment to DCs and in-store pick up transactions. COM will help identify the best fulfillment option for a customer, while allowing Home Depot to leverage its omni-channel options.

The focus on this area is based on the fact that 1) the retailer’s fastest growing ecommerce channel is buy-online, pick up in sore, 2) the average ticket for ecommerce transactions are considerably higher than physical in store transactions and 3) ecommerce chat and email are growing  in product information exchange.

“The IT investments we are making are really to optimize the whole supply chain offering,” said Home Depot Senior VP and President-online, Kevin Hofmann.

Source: Chain Store Age

Within the designer luxury brands market, some brands have seen increased sales while others showed decreases. While the overall market for luxury goods has grown steadily since the end of the recession, the trend for wealthy shoppers is to purchase their products in a subtle way, steering away from flashy logos.  Gucci sales were down 1.1% in 2014, Prada saw sales decrease 1.5%. Louis Vuitton/LVMH also saw sales slow in their fashion and leather goods division.

The current trend for luxury goods shoppers is to continue to purchase these goods, but show sophistication by not flaunting their wealth. Social media is also affecting the luxury brands market, as new items are becoming exposed quickly, desensitizing luxury goods shoppers to things that used to feel special to own. Smaller luxury brands like Yves Saint Laurent and Miu Miu saw 2014 gains of 27% and 4%, respectively. A professor at New York University, who teaches luxury marketing, stated, “These are brands that really control the supply, and therefore they manipulate the market and the desire for their products.”

Experts also say that high-end consumers are increasingly diverting their dollars to experiences, such as lavish vacations or extravagant dinners. To adjust to this, Louis Vuitton added a rooftop champagne bar to their Rodeo Drive store. Gucci and Prada have similar locations in Los Angeles and Las Vegas.

Source: Washington Post

May 2015 showed a drop in retail sales by 7.6% versus May 2014. Driving the sales decline was a 9.8% decrease in store traffic and an 8.3% decrease in number of transactions.

Some metrics did show year-over-year improvement. Average transaction value rose 0.8% and sales per shopper increased 2.5%.

The highest day of selling in May was May 9, the Saturday before Mother’s Day. This day is consistently highest in sales, traffic and transaction figures. The lowest traffic and sales were at the end of the month, after the Memorial Day weekend, which was earlier on the calendar this year.

Source: Chain Store Age

Vera Bradley, Inc., has hired Theresa Palermo from Fossil to be its new Chief Marketing Officer. Ms. Palermo will start at Vera Bradley on June 22.

“Theresa comes to Vera Bradley with an accomplished retail marketing background,” said Vera Bradley CEO Robert Wallstrom. “She has a terrific blend of creative and analytical skills and a solid track record of building brands, engaging consumers, and driving sales through designing and executing comprehensive marketing programs. Marketing is a key focus for Vera Bradley as we work to create excitement around our brand and introduce consumers to our myriad of new products. We are anxious for Theresa to get started.” 

As CMO, Palermo will be responsible for marketing strategies and initiatives that build brand awareness and revenue growth across all of Vera Bradley’s product channels.

Palermo was VP, Global Marketing and PR for Fossil Group. Prior to Fossil, she held key marketing roles with Collective Brands, The Timberland Company and the J.Jill Group.

Vera Bradley, Inc. designs women’s handbags and accessories, luggage and travel items, eyewear, stationery, gifts and baby products.

Both Fossil Group and Vera Bradley, Inc. are customers of Accelerated Analytics, using their POS and Inventory analytics and reporting tools to manage stock levels, store performance, sell thru and sales activity.

Source: Retailing Today 

The US Consumer Spending Index decreased by .4 points in June. Confidence in the economy was mixed, as 10.6% of males reported the economy as excellent, versus only 2.9% of females reporting the same. 33.5% of respondents viewed the economy as excellent or good, but 65.2% reporting it fair or poor. When asked about personal finances, 46.8% of those identified as white rated it excellent or good. Those identified as black felt their personal finances were getting better at 37.5% versus 30.2% in May. Republicans in June increased in number who believe the economy is getting better, up 22.7% versus 18.9% in May.

Source: Chain Store Guide           

In the first quarter, Home Depot Inc. increased net earnings to $1.58 billion, up 14% from $1.38 billion a year ago. Home Depot reported sales of $20.9 billion for the first quarter of fiscal 2015, up 6.1% from prior year. Same store sales rose 6.1% and comp-sales for US stores were up 7.1%.

Home Depot adjusted its earnings estimates, expecting sales to grow 4.2% to 4.8% this year. Earnings per share are expected to grow 11-12% from fiscal 2014.

“We had a stronger-than-expected start to the year as we experienced a more normal spring across much of the country and continued recovery of the U.S. housing market,” said Craig Menear, chairman, CEO and president of the Atlanta-based retailer.

The rebounding housing market also helped results at Lowe’s, who reported net earnings of $673 million for the quarter, a 7.8% increase over prior year. Sales increased 5.4% to $14.1 billion. Same store sales increased 5.2%. However, this did not beat Wall Street projections.

Lowe’s is expecting to open a total of 15 to 20 home improvement and hardware stores this year.

“I am pleased that we executed well and delivered another strong quarter,” said Robert A. Niblock, Lowe’s chairman, president and CEO. “We generated comparable sales growth in all regions of the country and across all product categories, driving strong earnings per share growth.”

Source: Retailing Today

US housing rose 20.2% in April from March and home building grew to the highest level since 2007, before the housing recession began. This is the biggest percentage increase since February 1991. New applications for building permits, foretelling construction in the coming months, increased 10.1%.

The increased activity was broad: starts on single-family units climbed 16.7%, the most since January 2008, and multi-family units rose 27.2%. Economists surveyed by The Wall Street Journal expected April housing starts to reach a rate of 1.01 million, but it reached 1.135 million in April.

“The stronger starts and permits data suggests that some real gauges of economic activity may finally be starting to accelerate during the spring,” TD Securities strategist Gennadiy Goldberg said in a note to clients.

US home builders are still less optimistic. The National Association of Home Builders’ confidence index fell for the fourth time in five months in May, to a reading of 54. However, a reading above 50 means most builders generally hold favorable views of the market for newly built, single-family homes.

Source: The Wall Street Journal

The Walt Disney World resort is expanding its current Downtown Disney complex, rebranding the shopping, dining and entertainment area as Disney Springs. Downtown Disney will be transformed into Disney Springs, including four distinct outdoor neighborhoods, by 2016. The four distinct areas will have the air of Florida’s waterfront towns and will open in four phases: The Landing, Town Center, Marketplace and West Side. When completed, this will more than double the number of shopping, dining and entertainment venues from the current 70 to 150.

Fashion retailers Zara, Tommy Bahama, Lilly Pulitzer, Pandora and more are on board to join the area’s more than 1 million square feet, including 350,000 square feet of new leasable space. Sophisticated restaurants will provide experiences for families along with premium, affordable and fast fashion retailing options. Disney Springs will be a one of a kind Disney experience with beautiful open-air promenades, flowing springs and waterfront charm in Lake Buena Vista.

“Over the past few months we have opened several new dining and retail locations, which have quickly become the top producers in their chains,” said George A. Kalogridis, president of Walt Disney World Resort. “This type of momentum builds on the historical strength of the Downtown Disney area and its popularity with our guests from around the world as it evolves into Disney Springs,” he said.

Source: Retailing Today