Author: Helen Thomas

January 30, 2014

Walmart Supercenters in California benefit communities by supporting additional job creation, small business growth and more robust sales tax revenues, according to a new economic impact report.

The study was conducted by economist Lon Hatamiya of the Hatamiya Group and the results were announced by Walmart.  Key findings of the study show the following:

• On average, California communities with Walmart Supercenters fared far better on taxable retail sales than those communities without Walmart Supercenters.
• Total taxable retail sales in California communities with Walmart supercenters increased by an average of 20.3% after the opening of those stores.
• Total taxable retail sales in California communities without Walmart Supercenters decreased by an average of 11.7% over the same time period.
• On average, California communities with Walmart Supercenters experienced even stronger gains in the number of retail business permits issued than those communities without supercenters.
• Total retail business permits in California communities with Walmart Supercenters increased by an average of 48.5% arfter the opening of those stores.
• Total retail business permits in California communities without Walmart Supercenters also increased, but only by an average of 20.3% over the same time period.

“I first launched this study in 2008 and found similar results,” study author Hatamiya said in a press release distributed by Walmart.  “I added an element to the current version by looking at communities without Walmart Supercenters and comparing the results.  It’s clear that communities with a Walmart Supercenter experience overall positive economic benefits to a local economy when compared to a community without a Walmart Supercenter.”

 Source: Retailing Today

February 3, 2014

New Orders, Production and Employment Growing; Inventories Contracting; Supplier Deliveries Slowing

Economic activity in the manufacturing sector expanded in January for the eighth consecutive month, and the overall economy grew for the 56th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business.  The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management Manufacturing Business Survey Committee.

Manufacturing expanded in January as the PMI registered 51.3 percent, a decrease of 5.2 percentage points when compared to December’s seasonally adjusted reading of 56.5 percent.  A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting. 

A PMI in excess of 43.2 percent, over a period of time, generally indicates an expansion of the overall economy.  Therefore, the January PMI indicates growth for the 56th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the eighth consecutive month.  Holcomb stated, “The past relationship between the PMI and the overall economy indicates that the PMI for January (51.3 percent) corresponds to a 2.7 percent increase in real gross domestic product (GDP) on an annualized basis.”

A number of comments from the panel cite adverse weather conditions as a factor negatively impacting their businesses in January, while others reflect optimism and increasing volumes in the early stages of 2014.

Of the 18 manufacturing industries, 11 are reporting growth in January.

Source:  Institute For Supply Management

February 3, 2014

Builder confidence in the 55+ housing market for the fourth quarter of 2013 is up sharply, according to the National Association of Home Builders’ (NAHB) latest 55+ Housing Market Index (HMI) released today.  All segments of the market – single-family homes, condominiums and multifamily rental – registered strong increases compared to the same quarter a year ago.  The single-family index increased 20 points to a level of 48, which is the highest fourth-quarter reading since the inception of the index in 2008 and the ninth consecutive quarter of year over year improvements.

“We are seeing continued improvement in the 55+ housing market because consumers have gained confidence in the economy and are able to sell their current homes and move into a new home or an apartment that fits the lifestyle they desire,” said Robert Karen, chairman of NAHB’s 50+ Housing Council and managing member of the Symphony Development Group.  “We expect this optimism from builders and developers to carry on into 2014.”

There are separate 55+ HMIs for two segments of the 55+ housing market: single-family homes and multifamily condominiums.  Each 55+ HMI measures builder sentiment based on a survey that asks if current sales, prospective buyer traffic and anticipated six-month sales for that market are good, fair or poor (high, average or low for traffic).  An index number below 50 indicates that more builders view conditions as poor than good.

All of the components of the 55+ single-family HMI showed significant growth from a year ago: present sales climbed 26 points to 53, expected sales for the next six months rose 24 points to 62 and traffic of prospective buyers increased 9 points to 33.

The 55+ multifamily condo HMI posted a gain of 16 points to 35, which is the highest fourth-quarter reading since the inception of the index.  All 55+ multifamily condo HMI components increased compared to a year ago.  Present sales increased 20 points to 37, expected sales for the next six months increased 15 points to 40 and traffic of prospective buyers increased 9 points to 30.

The 55+ multifamily rental indices also showed strong gains in the third quarter.  Present production increased 12 points to 43, expected future production rose 12 points to 46, current demand for existing units increased 16 points to 54 and future demend increased 16 points to 55.

“The 55+ segment of the housing market contains more discretionary purchases so as expected it has taken longer for that segment to join the housing recovery,” said NAHB Chief Economist David Crowe.  “The 20 point year-over-year increase in 55+ HMI for single-family homes matches earlier gains in the NAHB/Wells Fargo HMI for the overall single-family market and surpasses the more recent gains in other housing segments.”

Source: National Association of Home Builders

January 30, 2014

Two of Staples’ senior most executives were given new responsibilities to bolster the company’s re-invention efforts and competitive posture in a market that has become more challenging with the addition of a newly merged Office Depot and Office Max.

Staples elevated Joe Doody to the role of vice chairman from his prior position as president of the company’s North American commercial division.  Filling Doody’s role is Staples executive Shira Goodman who previously served as EVP of global growth.  Both will continue to report to long time Staples chairman and CEO Ron Sargent.

“Joe (Doody) has done a tremendous job leading our commercial businesses through a time of enormous change and growth.  His proven success and deep experience will be crucial to our reinvention as we continue to expand into new categories and build on our e-commerce and delivery capabilities to provide every product businesses need to succeed,” Sargent said.  “Shira (Goodman) is an outstanding leader with unmatched experience across our company.  Her experience with our reinvention will be a huge asset as we continue to drive growth in our North American Commercial business by expanding into new categories, such as facilities and breakroom, technology, print, furniture and promotional products.”

In his new role, Doody will lead Staples’ strategic reinvention with responsibility for strategic planning and business development as well as the company’s operations in Australia, New Zealand and high-growth markets.  Doody joined Staples in 1998 as president of what was known at the time as Staples Contract and Commercial.  He held that role until 2002 when he was named president of Staples North American Delivery.  He was named president of North American Commercial in 2013.

Goodman joined Staples in 1992 and prior to her recent role as EVP of global growth she served as EVP of human resources and EVP of marketing from 2001 to 2009.  Prior to 2001, Goodman served as SVP of StaplesDirect.com, the company’s e-commerce and catalog operation.

The appointment of Doody and Goodman to new roles follows several other significant developments at Staples which are part of the company’s reinvention efforts.  In early January, Staples unveiled a new branding campaign with the tagline, “make more happen,” which replaced its long-running, “that was easy,” tagline.  The company also made a subtle change to its logo.

The new campaign is designed to showcase Staples’ expanded assortment, thus the “make more happen,” positioning, whereas with “that was easy,” the emphasisi tended to be on how Staples simplified customers lives.

“We’re adding thousands of new products every day.  Our expanded product assortment appeals to businesses across a wide range of industries, from medical and restaurants to professional services and retail,” Goodman said when the campaign launched.

Other recent reinvention moves are focused on the company’s intellectual capacity.  For example, last fall Staples named Tom Conophy as its Chief information officer to oversee all aspects of the company’s global IT organization.

“Tom (Conophy) is a creative and innovative leader, and his skills complement the talents of our IT leadership team as we build the systems and processes to support our strategic reinvention,” CEO Sargent said at the time.

One of the biggest commitments the company made to stay on the leading edge of technology related to the creation last September of a new e-commerce development center in Seattle.  The move was designed to help the company attract top talent in the areas of engineering, product management, usability, analytics and online merchandising.

Staples is changing the way customers shop online,” said Faisal Masud, Staples EVP of global e-commerce.  “Seattle is an innovation hub rivaling Silicon Valley and features some of the world’s biggest technology companies.  Staples new Development Center will allow us to tap into the wide range of talented engineering and e-commerce professionals on the West Coast.”

Source: Retailing Today

January 27, 2014

Sales of newly built, single-family homes fell 7 percent to a seasonally adjusted annual rate of 414,000 units in December, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.  Despite the monthly drop, home sales in 2013 were up 16.4 percent over the previous year.

“December’s decline in new-home sales follows elevated levels in the previous two months and means the fourth quarter was still much stronger than the third,” said Rick Judson, chairman of the National Association of Home Builders and a home builder from Charlotte, N.C.  “While we expect sales to gain strength in 2014, builders still face considerable constraints, including tight credit conditions for home buyers, and a limited supply of labor and buildable lots.”

“Consumers are getting used to more realistic mortgage rates, which still remain favorable on a historical basis, said NAHB Chief Economist David Crowe.  “As household formations and pent-up demand continue to emerge, we anticipate that 2014 will be a strong year for housing.”

Regionally, new-home sales activity fell 36.4 percent in the weather-battered Northeast, 7.3 percent in the South and 8.8 percent in the West.  The Midwest posted a gain of 17.6 percent.

The inventory of new homes fell to 171,000 units in February, which is a five-month supply at the current sales pace.  Although this is an increase over the previous month, it is due to the slower pace in December.

Source: National Association of Home Builders

January 27, 2014

Revelations of job cuts at leading retailers, the latest involving Sam’s Club, are a reminder that pro-active expense control remains retailers’ best friend when it comes to ensuring profitability when faced with a murky outlook for consumer spending.

Sam’s Club on Friday became the latest retailer to disclose plans to eliminate 2,300 hourly and middle management positions.  The move was characterized as a rebalancing of resources, according to Sam’s Club spokesman Bill Durling.  Other retailers such as Macy’s and Target also recently announced job cuts.

“In order to position ourselves for future growth, Sam’s Club has made the difficult decision to implement a job reduction in our field organization impacting approximately 2,300 associates, or approximately 2% of associate population,” Durling said.  We’re doing this to rebalance our resources more effectively across our clubs to align our structure more closely to the current and future revenue of each club.  We are eliminating certain hourly positions, in some cases reducing the number of assistant managers, and in some cases creating new, more senior level positions.”

Sam’s operates roughly 630 clubs throughout the U.S., so the cuts equate to about four people per club.  However, in all likelihood few people will be left without work or a paycheck.  Sam’s is giving affected employees their regular salary for two months and the opportunity to apply for other positions at Sam’s or Walmart.  Those unable to secure a new position will be given an undisclosed severance package.

The net effect on Sam’s overall workforce is likely to be minimal as well since the warehouse club operator has fairly ambitious growth plans in place for 2014 that will result in new hires.  The day before the job cut announcement, Sam’s opened two new clubs in Warwick, R.I. and Moorsesville, N.C., which resulted in the hiring of roughly 300 employees.  During the new fiscal year which begins February 1, Sam’s plans to open between 17 to 22 new clubs, inclusive of relocations and expansions, which could result in the hiring of between 2,000 and 3,000 employees based of similar staffing levels.

The job cut announcement by Sam’s Club and other retailers tended to garner some sensational headlines, but in reality retailers tend to focus on right-sizing their field and store level operating structures early in the year based on sales expectations and customer service priorities for the coming year.  In fact, it is somewhat surprising given the emphasis on efficiency that prevails in the warehouse club environment that Sam’s had not already taken action to more closely align labor with sales.

As for Macy’s, the 2,500 job cuts it announced several weeks earlier also will have a minimal impact since many of those affected will be able to secure positions elsewhere in the company.  Overall, Macy’s doesn’t expect the cuts to reduce its total workforce because of gains elsewhere.

A similar situation exists at Target where plans to cut 475 jobs at its home office and leave another 700 positions unfilled are likely to prove temporary.  Putting aside the nightmare the company is facing regarding its data breadh, Target continues to have ambitious growth plans that it will eventually require adequate staffing levels to execute.

Source: Retailing Today

January 28, 2014

The Conference Board Consumer Confidence Index, which had rebounded in December, increased again in January.  The Index now stands at 80.7, up from 77.5 in December.  The Present Situation Index increased to 79.1 from 75.3.  The Expectations Index increased to 81.8 from 79.0 last month.

“Consumer confidence advanced in January for the second consecutive month,” said Lynn Franco, Director of Economic Indicators at The Conference Board.  “Consumers’ assessment of the present situation continues to improve, with both business conditions and the job market rated more favorably.  Looking ahead six months, consumers expect the economy and their earnings to improve, but were somewhat mixed regarding the outlook for jobs.  All in all, confidence appears to be back on track and rising expectations suggest the economy may pick up some momentum in the months ahead.”

Consumers’ assessment of overall present-day conditions continues to improve.  Those claiming business conditions are “good” increased to 21.5 percent from 20.2 percent, while those claiming business conditions are “bad” edged down to 22.8 percent from 23.2 percent.  Consumers’ appraisal of the labor market was also more positive.  Those saying jobs are “plentiful” ticked up to 12.7 percent from 11.9 percent, while those saying jobs are “hard to get” decreased slightly to 32.6 percent from 32.9 percent.

Consumers’ expectations, which had improved sharply in December, increased again in January.  Those expecting business conditions to improve over the next six months remained unchanged at 17.4 percent, while those anticipating business conditions to worsen decreased to 12.1 percent from 13.9 percent.  Consumers’ outlook for the labor market was mixed.  Those expecting more jobs in the months ahead declined to 15.4 percent from 17.1 percent.  However, those anticipating fewer jobs decreased to 18.3 percent from 19.4 percent.  The proportion of consumers expecting their incomes to increase rose to 15.8 percent from 13.9 percent, while those anticipating a decrease in their incomes declined to 13.6 percent from 14.3 percent.

Source: The Conference Board

January 23, 2014

U.S. retailers are getting 2014 off to a heavily promotional start, building on last year’s deep-discounting trends, according to Morgan Stanley Analyst Kimberly Greenberger.  The 26 retailers she covers are about 40% more promotional than they were during the same month last year, she wrote in a research note.  “Our data indicates not only are promotions more widespread this year, but also discounts are deeper.”

The pain retailers felt at the end of 2013 isn’t showing signs of relief in the new year.  Following the worst holiday season since 2008 – one that was underscored by dramatically reduced prices and lower margins – the heavily promotional environment has persisted into January.

“The ‘Polar Vortex’ likely hindered week one, but our mall visit indicated week two was only marginally better, despite temperatures essentially in-line with last year.”

Of the 26 retailers that Greenberer tracks, only Urban Outfitters’ Anthropologie was “unequivocally less promotional” than last January.  Abercrombie & Fitch and Gap’s Banana Republic were among stores that had a higher percentage of inventory on promotion, as did Macy’s, which outperformed most of the sector in the November to December period.

Management at Lululemon and Express made statements earlier this month that traffic in January has continued to be weak, with Express saying it expects to remain promotional during the month.  On Thursday, the women’s clothing retailer offered shoppers 40 percent off every item, a deal that was prevalent in its pre-holiday rush.

Although January tends to be big on discounts, as retailers make room for spring products, news of heavier-than-typical promotions does not bode well for the sector, which saw its margins crushed by widespread, deep price cuts at the end of 2013.  Experts had warned that retailers needed to wean consumers off of these discounts in the new year to protect their profits. 

Mainly as a result of these discounts, Thomson Reuters said Tuesday that 74 retailers so far have trimmed earnings per share estimates for the fourth quarter, compared with only 15 who had positive things to say about the quarter.

Retail Metrics’ Ken Perkins sent out his preliminary same-store sales estimates for January, saying he predicts comparable sales for the month will increase a tepid 2.7 percent, versus last January’s 5.1 percent gain.

Among those expected to report on February 6, Perkins predicts Gap – which posted a relatively strong 1 percent comp in the November to December period – will post its first monthly decline since September.  Perennially strong L Brands – parent of Victoria’s Secret – is also expected to follow up its disappointing holiday sales with a slight 0.8 percent gain in January.

“The coal looks to keep coming in January,” Perkins said.

Source: SmartBrief, CNBC

January 24, 2014

The Home Depot has acquired Blinds.com, the Houston-based online window coverings retailer.  In explaining the appeal of the partnership, Home Depot cited Blinds.com’s integrated user experience, on-demand staff and knowledge base.

“We’re delighted to welcome the Blinds.com team into The Home Depot family,” said Home Depot chairman and CEO Frank Blake.  “The acquisition of Blinds.com positions us well for expansion in the quickly growing online window coverings market.  In addition, their unique sales and service model is one we hope to learn from as we continue to create even better interconnected retail experiences for our customers.”

“We’re joining forces with The Home Depot because there is a huge opportunity to utilize each other’s strengths, take additional share in this category and move even faster toward our vision of making the design, purchase and installation of quality window coverings as easy and affordable as possible,” said Blinds.com founder and CEO Jay Stanfield.

The Blinds.com management structure and staff will remain in place at its Houston headquarters.  Specific terms of the deal were not disclosed.

Source: Retailing Today

January 21, 2014

Nordstrom plans to open its third fulfillment center at Conewago Industrial Park in Elizabethtown, PA, in summer 2015.  The approximately 672,000 sq. ft. building, with an additional 470,000 sq. ft. mezzanine, will enable faster delivery for Nordstrom.com, Nordstrom mobile app and Nordstrom catalog orders.

In its first three years, the new fulfillment center will offer nearly 400 full-time positions and additional opportunities for part-time and seasonal roles.  In the future, Nordstrom expects to increase hiring – up to 700 full-time roles or more – as business continues to grow.

The new facility joins the company’s existing fulfillment centers in Cedar Rapids, IA and San Bernadino, CA.  Nordstrom.com currently serves customers in 98 countries and offers everyday free shipping and free returns within the U.S.  Since 2009, Nordstrom has operated with an integrated inventory platform between its stores and online, as well as the ability to fulfill online orders from any of its 117 full-line stores across the country.

“Speed of delivery is simply just part of our customers’ expectations of what good service means today,” said Jamie Nordstrom, president of Nordstrom Direct.  “This is an ideal location to add to our fulfillment capabilities and improve the delivery experience for our customers.  E-commerce is the fastest growing area of our business and this is another example of how we’re investing in people and capabilities to help us support this growth and responding to our customers’ changing definition of service.”

“Today’s announcement continues Pennsylvania’s steady economic progress with another company expanding and more jobs for our citizens,” said Governor Tom Corbett.  “It’s a testament to why Pennsylvania is built to advance – our keystone location, our talented and hardworking people – all contributed to Nordstrom bringing hundreds of new jobs to Lancaster County.”

The fulfillment center is located at Conewago Industrial Park, which is owned by Martin and William Murray, and will be built by H&M company.  Jones Lang LaSalle served as the broker for Nordstrom.  Construction on the project began early this week.

Source: Retailing Today