Monday November 30, 2009
Twas the night before Cyber Monday and all through the 'net, hardly a new special was posted - did the e-tailers forget?
Five years ago Cyber Monday didn't exist. In 2005 when the National Retail Federation was first credited for dubbing the Monday after Thanksgiving as "Cyber Monday," the day really wasn't a record-breaking online shopping day at all. So, why all the fuss? Well, since the U.S. retail industry had long since taken possession of every major and minor national holiday in America, it needed a fresh way to trigger the buying impulse. What better way to do that than with a fabricated retail event of its own creation? With the appropriate amount of media hype, any day can be turned into a consuming phenonmenon, right?
The theory worked for the first three years of the make-believe online shopping day of deals. Retailers were willing to play along, and created Black Friday-type one-day only online specials to give Cyber Monday some substance and credibility. Why not?
Well, there's at least one big "why not" for Cyber Monday specials this year - the newfound American frugality. The drastic changes in consuming, or the fear of them, have launched an aggressive national game of Retail Stratego, along with the prevailing retail tactic of pre-emptive strikes. Most retailers aren't focusing on big one-day only Cyber Monday sales, because if they did, they would risk losing their share of this year's diminished holiday shopping budgets.
So instead of Cyber Monday, this year we really had "Black Weekend," which started for many major retailers on Thanksgiving Day and will extend through at least Monday, if not beyond. The deals that most online shoppers will see on Cyber Monday 2009 are the same deals that could have been seen running on e-commerce websites all weekend. That's good news for those who have been filling their virtual shoppng carts already. It's not such great news for those who want to have a semi-legitimate excuse for shopping on the job on Cyber Monday.
Even though retailers are not wholeheartedly honoring the sanctity of the day itself, there are still some efforts being made to make the day worth the hype. Retailers who are running specific one-day only Cyber Monday specials include:
- Amazon
(AMZN)
A designated page lists "Cyber Monday" deals, but they were available on Sunday, and some of them will be sold out before Monday begins. For these and other "lightning specials" that Amazon is running this holiday season, there is a nifty little HSN-type timer that shows how long the deal will be available, and how much of the inventory is left. It's a gimmick, but it's fun.
- Dell (DELL)
CyberMonday deals were advertised to go live at 12:01 a.m.
- Kmart
Notice of Cyber Monday only specials was tweeted from their Twitter account, along with a link to a sneak preview page. Like Daddy Sears there was no mention of a start time, which probably means a midnight switchover.
- Overstock.com (OSTK)
There were 89 specials dubbed "Cyber Monday," although they were also available for purchase on Sunday.
- Sears (SHLD)
Cyber Monday specials appeared on their home page at 9:00 p.m. on Sunday night, but weren't live immediately. Presumably, they will start at 12:01 a.m., although no start time was specifically stated.
- Toys 'R Us
There are more than 200 specials designated as "Cyber Monday Only," although they were available for purchase on Sunday.
That's Cyber Monday? Really? This is not the sum total of the deals to be had, but it pretty much sums up the only new deals that will be added to the end of a weekend of deals.
Free shipping was hyped as the universal offer for Cyber Monday. While there are plenty of shipping deals to be had, most of the "free" shipping comes with conditions. There are a few sites, however, that are offering completely free shipping with any purchase on Cyber Monday only:
-
Bealls - free shipping, with no minimum order through Monday with code SHOP
-
Bedford Fair Lifestyles - Free shipping on any order with coupon code 142602
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Books A Million (BAMM) - Free shipping any order with code BKLVFREE
- Cheryl & Co. - A Special Cookies & Baked Goods "Free Shipping Collection"
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Karmaloop - Free Shipping with coupon code GODEEP
- Manhattanite - Free shipping on any order with coupon code FreeShip09
- National Pet Pharmacy - Free shipping on any product in the Flea and Tick department (This is not really a Cyber Monday special, but the fact that it was included on the list made me laugh out loud.)
- Speedo - Free shipping on any order with coupon code NWARL
- Waterford - Free shipping and free gift wrap with coupon code BLACKFRIDAY
That's the whole Cyber Monday free shipping list? Really? It's much shorter than the list of websites with completely free shipping every day.
Undoubtedly there will be more deals and more shipping freebies available on Cyber Monday than are listed here. It's just a matter of finding them, which is never a small task with bojillions of online retailers to choose from. The search is doubly difficult this year because it's hard to tell where one promotion ends and another one begins.
Serious Cyber Monday shoppers will just have to click through their favorite sites to see what pops up. That is about as much fun as sifting through the dressing room reject racks looking for something in your size to try on. To shopping addicts this is recreation. To sane people, the Cyber Monday virtual scavenger hunt this year will be much more exhaustng than fighting the mall mob was on Black Friday. It may even be frustrating enough to make you want to get some work done in your workday.
One last note about Black Weekend... My 2009 Black Friday prediction last week was that the day itself would be ridiculously busy until all the best deals were gone because unemployment is high and consumers are broke. I'm still not sure if that prediction was accurate or not. It's not that there was a lack of data or conclusion-drawing provided after Black Friday, it's just that I was in Orlando, and it was nearly impossible to get any news that didn't contain a reference to Tiger Woods.
The mystery about where the world's most recognizable sports figure was going at 2:30 a.m. on Black Friday, by the way, is not really such a mystery to those of us who spend time in Orlando. There aren't that many late-night destinations in the land of Mickey Mouse, so the answer seems pretty clear.
The Old Navy stores were scheduled to open at 3:00 a.m., so this was an obvious destination for Tiger. It makes sense, if you think about it. Nothing says "I'm sorry for my tabloid love affair Down Under" like Old Navy performance fleece and LEGO RockBand gift-with-purchase software. Unfortunately, though, Tiger didn't make it all the way to the Old Navy Black Friday sale. This is one of those cases when shopping online clearly would have been the better choice.
Tuesday November 24, 2009
In a survey released yesterday, the Conference Board reported that the average U.S. household plans to spend $390 on holiday shopping this year. This is a jaw-dropping 43% lower than the $683 per-person shopping budget that the National Retail Federation (NRF) predicted in its 2009 Holiday Consumer Intentions and Actions Survey. Both predictions represent sales declines from 2008, but the size of those predicted declines is disturbingly disparate when you consider that one prediction is per household and the other is per person.
It's obvious which of these two survey results we all want to believe. It may not be so obvious which survey deserves to be believed.
From a purely historical perspective, neither organization is particularly accurate in its holiday shopping predictions. In 2008 the NRF's holiday intentions survey predicted a 2.2% increase in holiday spending. The Conference Board predicted a 12% decrease. In reality, there was a 3.4% sales drop in the U.S. retail industry overall in the 2008 holiday season. So the NRF was really wrong in predicting a spending increase and the Conference Board was really wrong in predicting the size of the spending decrease.
The truth about holiday spending in 2009 will probably be found somewhere between the $390 household and the $683 individual budget that the each organization's research predicts. That is a scary big gap that nobody wants to believe the retail industry will plummet into this holiday season. Yes, Mr. Bernanke, there is a recession.
One major anomaly is going to skew the 2009 holiday shopping numbers... read more...
Tuesday November 17, 2009
Since recession-related purging has ended for most major chains, the numbers from the U.S. retail industry in the first half of November are now a reflection of retailing itself, not just a byproduct of economic chaos. There are real retail struggles behind store closings, real customers behind store openings, and real strategy behind 2010 expansion plans. Without so much recessionary noise, what November numbers show is a real struggle for U.S. retailers. That is, the struggle for retail relevance.
The latest chain to go the way of the irrelevant is Trans World Entertainment Corp (TWMC), which announced that it would be adding 125 f.y.e (for your entertainment) stores to the 2009 Store Closings list at the end of the holiday shopping season. This is just the latest downsizing move after the retail CD and DVD chain closed 101 stores last year and has operated for 11 consecutive quarters without turning a profit.
After three years of doing basically the same things in the same ways and expecting different results, f.y.e. has come up with an aggressive strategy for this holiday season. In 50 of its stores, all single music CDs will be selling for $9.99, a price which matches Apple's charge for an iTunes download. It's also a price point that will keep this last major music-movie-game retail chain competitive against all the thousands of electronics, discount, department, book stores, and other retail outlets that carry the same disc entertainment inventory.
Certainly f.y.e. needs to find a way to make itself equal to its competitors. But I'm not sure if "becoming the same" is a strong magnetic force that is going to draw people through its doors.
The chain's one definite unique selling proposition is its used inventory. Customers can't buy or sell used music, movies and games at their local Best Buy, Wal-Mart, or Borders. It seems like there would never be a better time to focus a spotlight on the ability to turn old stuff on your shelves into brand new Christmas gifts than in a holiday shopping season with record high unemployment. But f.y.e. would have to be confident that it could unload all that used merchandise, otherwise it will be ending the year having transformed itself into the world's largest garage sale.
Also losing the battle for relevance are bookstore chains B. Dalton (BKS) and Waldenbooks (BGP). Like CD's and DVDs, physical books are also being replaced by electronic and downloadable alternatives. By the time the new decade begins, the last 50 B. Dalton stores will be nothing more than a Wikipedia entry. The question is whether Waldenbooks and f.y.e. will follow B. Dalton into retail obsolescence, or whether they will find their way back to relevance. Hopefully their business models for the new decade include more than just a bet that enough people will stay stuck in the past to keep them alive.
Staying relevant is also a constant challenge in the restaurant sector of the retail industry. One chain that has risen to the challenge during the recession is quick-service chain, Panera Bread (PNRA). It's hard to believe that in the same year that the U.S. retail landscape became littered with shuttered, dark, and vacant spaces that a new Panera restaurant has opened just about every five days. In a year when Americans started buying store brand canned vegetables instead of eating out, Panera added 80 locations to the 2009 Store Openings tally.
Without any drastic menu changes or $5 meal deals, Panera saw its same-store sales grow 3.3%, its guest count rise 1.8%, and its average transaction increase 3.2% in its third quarter. While there is plenty to brag about in those numbers, the thing that CEO Ray Dellarco says he's most proud of is the fact that his chain serves "antibiotic-free, all natural, organic, low fat breads, bagels and pastries baked fresh throughout the day," according to a recent interview in the Cleveland Jewish News.
Dellarco also credits the chain's continued success to a fresh menu, and the new items that it adds to that menu five times a year. As a frequent Panera customer myself, I credit their success to something altogether different.
I have visited Panera in at least six different states and they all had two things in common - extremely friendly employees and extremely busy laptop users. The free WiFi is a definite draw and personally, I am willing to put up with the chain's rising prices, the shrinking portions, and the always dirty silverware in order to have a comfortable place to work which is run by employees who seem to be genuinely appreciative of my presence.
While I'm sure that the menu is a draw for a good number of people (fresh bread can be very addictive), what I noticed in the worst days of the recession was that Panera was filled with business people doing business when other restaurants were wondering where all their business had gone. The chain found a way to keep itself relevant by becoming a destination for people who want to eat, but need to work. In an uncomfortable economy, what could be better than comfort food eaten in a comfortable work space?
One more food-related retail chain that has remained relevant in the past year is Edible Arrangements, the special occasions fruit bouquet delivery chain. While Panera was opening one store every five days, a new Edible Arrangements store was being added to the 2009 Store Openings list about once every three days.
There is no lack of creativity for any special occasion at Edible Arrangements. They figured out at least 100 different ways to sculpt, skewer, and style produce so that it can rightfully take its place as the centerpiece of any gathering. Creative or not, though, it's not obvious how the chain has continued to thrive in the midst of a newfound American frugality.
Sending flowers is not cheap. Sending a "bouquet" of hand-cut chocolate dipped fresh fruit is even less cheap. But if given a choice between fresh-cut flowers that you can look at for less than a week, and a cornucopia of fresh-cut fruit that you can munch on for about that same period of time, the edible choice somehow seems less extravagant.
I have seen Edible Arrangements show up at a baby shower, a funeral luncheon, and a pre-surgery head-shaving party. Each of the senders of the edible bouquet made it known that they had received a gift of fruit themselves. I imagine it happens that way a lot.
Flowers are nice. Flowered shaped pineapples are memorable. Memorable trumps nice. Edible Arrangements keeps growing.
Leveraging its own success, Edible Arrangements has dared to launch a new concept called Frutation, in the hope that a flair for fruit can become relevant for everyday living. The Frutation menu includes FruSalads (greens and fruit), FruSalsas (pita and fruit dip), FruZees (drinkable fruit), fruit sundaes (banana split without the ice cream), and, of course, their famous dipped fruit creations.
It's risky to introduce a new concept into any economy, much less a deeply recessed one. It's even riskier to separate Frutation from its successful and well-established birth brand, but that's exactly what founder and CEO Tariq Farid has decided to do.
The first standalone Frutation opened in Puerto Rico in October, and one month later, Farid is confident that 50 Frutation franchise agreements will be signed before 2010 has barely begun. This is in addition to the new Edible Arrangement locations that Farid hopes will be opening every week in 2010. And since that's hardly enough to keep an innovator like Farid busy, he will be adding a new Isbanbul Edible Arrangements location to the 2010 Global Store Openings list just to keep things interesting.
Other retailers - like Abercrombie & Fitch (ANF) - that seem to be losing their relevance in their home country may be using global expansion as their workaround plan. But there are still plenty of U.S. retail chains that believe that there is more market share to be gained in America.
In fact the 2010 Store Openings list has more than 5,100 plans for expansion on it already. This is a completely different kind of U.S. retail industry list than was being amassed at this same time last year. Admittedly until lights are on, shelves are stocked, and doors are opened, this is still just a list of dreams. But the fact that such a wish list exists at all is completely relevant.
Tuesday November 10, 2009
After same store sales figures were released last week, U.S. retail industry experts got busy trying to figure out how they could predict holiday sales based on October's results. Reuters concluded that holiday sales would be "tepid." Deloitte Research says they'll be "unchanged." Retail Metrics says they will "rise modestly." A little more research would undoubtedly reveal some individual or organization that sees October same store sales as an indicator of an unexpected holiday boom, and another who's certain that the monthly figures are warning us about a startling seasonal bust.
One of the reasons why there are no consistent conclusions about what October's same store sales figures mean for the final two shopping months of 2009 is because using long-term measurements to predict short-term performance is about as scientific as the penicillin experiment growing in the back corner of my refrigerator.
If you want to compare and predict sequential months you need month-over-month sequential measurements, not year-over-year historical measurements. Or, to put it in a more holiday-friendly way, it's not the job of the ghost of Octobers past to reveal the visions of the holiday shopping season future.
So, instead of trying to make October same store sales figures mean something they don't, let's look at what they do tell us instead.
For instance, when looking at a multi-year comparison of October same store sales, it's easy to see that Dillard's (DDS), Stein Mart (SMRT), and Abercrombie & Fitch (ANF) haven't seen positive growth in four year's worth of Octobers. The fact that these three major U.S. retail chains have been consistently getting worse at figuring out what to do to make their Octobers productive is something pretty significant that year-over-year same store sales numbers can validly tell us.
Add to that a multi-year comparison of September same store sales figures, and we find that the same three major chains have declined in their Septembers as well. That is a same store sales revelation that indicates there might be three major retail chains in danger of becoming irrelevant on the U.S. retail landscape. (In fact, Dillard's was identified as being "high risk," and Abercrombie and Fitch was identified as being "medium risk" on one retail bankruptcy risk assessment in 2009.)
Comparing this October's same store sales results with past Octobers can also provide us with some other interesting revelations.
Chains with October, 2009 Sales Levels Higher Than Before the Recession:
- TJ Maxx (TJX)
- Ross (ROST)
Chains with Positive October 2009 Same Store Sales, That Are Still Performing At 2005 Sales Levels:
- Nordstrom (JWN)
- Bon-Ton (BONT)
Chains That Have Experienced Growth Every October Since the Recession Began:
Chains That Have Experienced Declines Every October Since the Recession Began:
Chains That Have Experienced Declines Every October Since Before the Recession Began:
While October trends can't accurately predict November and December results, four-year trends can certainly give some valid insight about a chain's relevance, leadership, innovation, resiliency, and consumer appeal. Based on that, here are my predictions for the 2009 holiday shopping season (because we don't have quite enough opinions expressed about this already).
Ross, TJX Stores, Aeropostale, Buckle, Walgreens, and BJ's Wholesale Club will see year-over-year sales growth. Stage Stores, Abercrombie & Fitch, Dillard's, and Stein Mart will experience declines and will have the chutzpah to try to play the "challenging economic environment" card at least one more time. Every other chain will be somewhere in between.
Overall, while consumers might not be as panicked as they were in the 2008 holiday shopping season, this year there are 10 million more consumers who don't have jobs, unemployment benefits, or medical insurance, who are burning through their savings, chronically unemployed and borderline desperate, and who won't be buying seasonal merchandise even if it's marked down 90% because they just can't.
Black Friday pre-opening crowds will be ridiculous in size, and the first hour of every store's Black Friday sales day will be out of control. Unfortunately I think there will be at least one senseless Black Friday consumer frenzy tragedy, and we will all get the opportunity once again to re-evaluate our unconscious and self-destructive addiction to the acquisition of stuff.
My word to describe this year's holiday results - because everybody else got a word - is "unsettled." I think that is the word that will accurately describe the condition of both retailers and consumers this holiday shopping season - with one foot in a past that no longer exists, and one foot that doesn't know exactly where to plant itself in a new reality that has yet to be clearly defined.
It's not exactly the most ho-ho-hopeful word, but it's not going to be the most jolly retail holiday on record either. Making peace with that in advance, though, takes some of the pressure off and it might even allow everyone in the U.S. retail industry to just relax and enjoy the season a little bit more.
Wouldn't a reduction in year-over-year stress represent a holiday improvement? It would be great if some analyst somewhere would create a way to quantify that. Except then we'd all have to worry about finding ways to beat those expectations too.
