Monday, November 28, 2005
That's what the Chicago Tribune reports about Office Max. The article is interesting, but I think the telling point for Office Max is that they are a poor #3 in their category, with both Staples and Office Depot 50% or more ahead of them (both are around $14b-15b in sales, with Max at $9b). I've been coming to the conclusion that there's no room for a #3 anymore, except maybe if you can define a niche for yourself. Each category will soon have two players, and possibly just one plus Wal-Mart.
But makers of store brands say that they are every bit as good. In June, the Private Label Manufacturers Association, which represents about 3,000 generic goods makers, commissioned Meyers Research to examine how store brands stacked up.
In a blind taste test, 300 people - who, according to Meyers's president, Arthur Zimbalist, represented a cross section of the population - sampled 1,788 products in 10 locations. Store brands, they found, edged their national counterparts, 51 percent to 49 percent.
Treat commissioned research with appropriate skepticism. However, assuming that it's true, I would still question whether the important point is that private labels are improving, or that lack of innovation by branded products is allowing the store brands to catch up.
It's my contention that increasing concentration of retail, and therefore of manufacturers, is leading to less innovation, which provides an opening for store brands.
Research has shown a strong correlation between levels of retail concentration (by country) and private label market share.
They also report that the average person has completed 35.6% of their shopping, which I find incredible, since that's 35.6% ahead of where I'll be in two weeks.
Sunday, November 27, 2005
The response rate from some campaigns has fallen to just 1.4%, according to America's Direct Marketing Association (DMA). In previous years it was well above 2%. When it comes to responding to “direct-order” mail shots (signing up to an offer, as opposed to merely expressing an interest), the rate has fallen even more dramatically, to 0.7% from 3.5% in 2004.(Note: link may require subscription).
The report says (quoting AdAge) that the drop may be due to mailbox clutter, "leading many consumers to discard the blizzard of solicitations they receive." While I can certainly testify to having a cluttered mailbox, I wonder if the clutter is that much worse than the recent past.
Friday, November 25, 2005
As they point out, Black Friday typically ranks about fifth, behind the last two weekends before Christmas, in terms of sales.
The top shopping days of the year in the recent past:
* 2004: Saturday, Dec. 18We hope you had a great Thanksgiving.
* 2003: Saturday, Dec. 20
* 2002: Saturday, Dec. 21
* 2001: Saturday, Dec. 22
* 2000: Saturday, Dec. 23
* 1999: Saturday, Dec. 18
* 1998: Saturday, Dec. 19
* 1997: Saturday, Dec. 20
* 1996: Saturday, Dec. 21
* 1995: Saturday, Dec. 23
* 1994: Friday, Dec. 23
* 1993: Thursday, Dec. 23
Wednesday, November 23, 2005
The hurricanes failed to blow the US economy off course, according to Carl Tannenbaum, NABE vice president and chief economist. The NABE economists predict strong GDP growth next year, which should be enough to push the Federal Reserve to continue to increase interest rates.In related good news, the National Retail Federation just raised their estimate for the Holiday season from a 5% increase over 2004 to 6%.
The economists say they expect the Federal Reserve to keep lifting interest rates to 4.75 percent by the end of 2006 from the current 4.0 percent.
Tuesday, November 22, 2005
A kid in the UK decided to raise money for school, so he created a page where he's selling ad space at $1 per pixel (in batches of 100). Thus far, since August 26, he has made $623,800. The page looks pretty interesting.
Why didn't I think of that?
Prestige markets such products as Spic & Span, Prell, and Cutex.
Prestige notified investors last week that it would soon be restating earnings back through 2003 because of questions over "recognition of revenue, the classification of certain trade promotion allowances, and computation of earnings per share."
Prestige said it found accounting errors during an internal audit required by Sarbanes-Oxley rules. The company said the mistakes were related to timing and would not affect its fundamental trends.
In a news release, the company reported earnings of $7.4 million for the three-month period ended Sept. 30, down about 26 percent from the year earlier period. But the company has delayed filing its 10Q financial statement, citing the accounting issues.
Britain's top retailer, Tesco Plc, declined to comment on Tuesday on press reports it was poised to take a 49 percent stake in U.S. foodseller Meijer, but said it had never ruled out a North American deal.A month or so ago, the rumor was that Tesco might buy Albertsons, but they denied that quite firmly. These statements sound like they're leaving things open.
Trade journal The Grocer said Tesco, due to report its third-quarter trading figures on Friday, would pay 2.5 billion pounds ($4.3 billion) for the stake in the family-owned, Michigan-based grocery and general merchandise operation.
The deal would be announced in two weeks, The Grocer said, without disclosing the nature of its sources.
A spokeswoman for Tesco said only that the company did not comment on market rumours, but emphasised that Chief Executive Terry Leahy had never ruled out a push into the United States -- traditionally something of a graveyard for British retailers.
Update 11/23: Meijer is denying the rumor, and says they plan to keep the company private.
"It is important for our entire team to know that these rumors are false and that we are not negotiating with any company for the sale of any part of our company."
We have several items below discussing the decline of newspapers. Now we're hearing that the biggest stockholder in the Knight-Ridder chain had told management to put the company up for sale (coupled with the threat that, if they didn’t, there would be a takeover of the board). The company promptly engaged Goldman Sachs to look for potential buyers.
There’s also a fascinating article in Retail Traffic, giving lots of statistics on the development of Chinese retail. For example a listing of the top retailers (only one of the top ten – Carrefours – is a foreigner. Wal-Mart is nineteenth), as well as the news that a mall is being developed in Dongguan that will be twice as big as Mall of America. However, as the article notes, street vendors “remain the dominant retailers.”
I noted in my newsletter (TPM Update)
Saks' deduction problems refuse to go away – according to an article in the New York Post (11/16/05), “Saks said it received an ‘additional subpoena’ on Oct. 11 from the Securities and Exchange Commission related to a probe into markdown payments and other financial controls from 1999 through 2003.”
Thursday, November 10, 2005
"Working in print, pure and simple, is the early 21st century equivalent of running a record company specialising in vinyl."Of course, he made the comment in a newspaper column he wrote -- so there's a certain amount of irony.
Mr. Poltrack based his figure on an estimate of 50 million homes with VOD access and CBS research that shows an average household would pay $100 a year to watch network programming on their own schedules.Which means, on the positive side, that they'll be collecting a lot of money. On the negative side, to collect that much money, they'll have to divert a lot of people away from the network broadcasts, which will cause advertisers to question the money they pay for reaching viewers who aren't there anymore because they're watching on VOD.
Wednesday, November 09, 2005
THE Ministry of Commerce is collecting suggestions for two new regulations that will place strict and clear requirements on market promotions and terms of payment among both suppliers and retailers.Increasing competition and declining profit margins are given as reasons for retailers making demand on their suppliers.
Retailers will be banned from several poor practices including charging suppliers sponsorship fees for opening new stores. They will also be banned from forcing suppliers to take part in promotional activities by threatening to halt purchases.
A general manager, surnamed Liu, of a home appliance joint venture said the company is charged fees by retailers.It will be interesting to see if China has any more success in enforcing these rules than the FTC has had with Robinson-Patman.
"We were charged 3,000 yuan (US$369) for each store by one chain," Liu said.
A little later in the article they get more realistic:
Clifton explained that glossy Sunday magazines have lost advertising support as opportunities for color printing opened in other sections of the paper.Okay, that excuse we'll buy. Of course maybe the 4.5% circulation decline the PD announced on Monday had something to do with it, too.
Tuesday, November 08, 2005
CBS's deal includes the ads (though they can be zipped through). NBC and ABC are serving up their shows ad-free.
Question: Doesn't this undercut the advertisers who pay big bucks to support the networks? The advertisers are already fretting (justifiably) about fragmentation, and then the networks fragment their own audience.
To say they're abysmal is to be kind.
The SF Chronicle dropped 80,000. The LA Times dropped another 3.8% (on top of previous catastrophic falls). To be fair, the newspaper industry is saying that the horrible results are the result of cleaning up some of their past practices -- three of the top twenty papers didn't report this period because they're in the middle of investigations into past circulation frauds -- and that some of the circulation loss is just readers moving from the print editions to the newspapers' own websites.
Some truth in this, no doubt.
My main point in the newsletter was about newspapers becoming a targeted rather than mass medium. A Miami Herald editor supported that argument in Editor & Publisher: "Newspapers will become supplemental reading for a very elite audience," he added, and the online edition "will be where the popular press lives."
Monday, November 07, 2005
I'm skeptical. Certainly, it might have some effect at first, as shoppers react to something new. But I wonder how many more ads shoppers can handle. There's also this point:
“It’s not going to work. You have issues related to American Disabilities Act, people with wheelchairs are going to have a hard time getting over it,” she said. “I think it is a terrific idea, but it’s only going to work if it is paper-thin.”The article describes the item only as "less than an inch thick." Given the usual state of shopping-cart wheels, it better be a lot less than an inch.
Sunday, November 06, 2005
He said based on P&G's top 100 stock keeping units data, when consumers face an out-of-stock product situation, 48 percent switch stores, 10 percent do not buy the product, 31 percent purchase at another retailer, 14 percent delay the product purchase, 19 percent substitute another brand, 18 percent substitute another size.Wal-Mart recently stated that tests show that use of RFID technology can cut OOS by 16%. I think that integrating trade promotion planning data with RFIDs could make the impact even greater, since many (probably most) OOS situations are caused by promotions.
Chinese officials are working on an anti-monopoly law that would require companies seeking mergers or acquisitions to notify Chinese authorities if one or more of the parties involved has 1.5 billion yuan ($184 million) of business in China.
Authorities would then review the deals for their impact on competition in the domestic market, just as the United States and European Union do.
In the future, mergers like Adidas/Reebok and P&G/Gillette could have three hoops to jump through instead of two -- slowing and perhaps stopping a lot of mergers.
Friday, November 04, 2005
These results were supported by statistical analysis which found that the expansion of Wal-Mart over the 1985 to 2004 period can be associated with a cumulative decline of 9.1% in food-at-home prices, a 4.2% decline in commodities (goods) prices, and a 3.1% decline in overall consumer prices as measured by the Consumer Price Index-All Items, which includes both goods and services.So it reads like Wal-Mart forced down wages, but forced down prices slightly more. Which doesn't sound like a ringing endorsement (though it's definitely better than the reverse).
The main driver of this impact was a 0.75% improvement in the overall efficiency of the economy. Increased capital intensity and lower import prices were secondary drivers. The 3.1% decline in the price level was partially offset by a 2.2% decline in nominal wages, so that the net effect was to increase real disposable income by 0.9% by 2004.
More studies will be coming out shortly.
Wednesday, November 02, 2005
Seven people were charged by the U.S. Attorney in New York with criminal conspiracy to falsify the books and records of Ahold's U.S. Foodservice subsidiary, the U.S. Securities and Exchange Commission said on Wednesday.This includes, apparently, both employees of Ahold and of suppliers.
It's also interesting that there was a confirmation of something mentioned below in the post about the purchase of Saks' northern department stores by Bon-Ton. Deloitte says that in 1985 department stores were the main shopping venue for 67% of consumers -- today that's down to 13%. Even for me (and I've been a department store basher ever since I worked in the channel 30+ years ago), it was shocking to see how total their collapse has been.
Gannett, Knight Ridder and the Tribune Company are now selling PaperBoy placements on their approximately 200 local news sites, which reach about 80 of Nielsen's designated market areas. USAToday.com and Yahoo! will also offer it, targeting the offers based on user registration data.
The format will appear live in the next two weeks. PointRoll is calling the ads online circulars because "from a retailer perspective it's something they can relate to," according to Andy Ellenthal, the company's EVP of sales. "If you look at the ways circulars are bought and leveraged, it's to drive foot traffic that particular week. It's less of a brand exercise."
A Gannett spokesperson is quoted as being surprised at the size of retailer budgets for circulars ($200-500mil). If that surprises them, I wonder what they'd say about the amounts the retailers collect from their vendors for those circulars?
Tuesday, November 01, 2005
It's tough to work up a lot of sympathy for Wal-Mart, and most companies would be glad to have their problems, as long as they could also have their profits. But still, I'm beginning to wonder if there might be a point of critical mass at which Wal-Mart begins to suffer at the cash register.
This is clearly a dying (if not dead) channel. I suppose there may be a little cash still to be squeezed out of this old cow, but how long will it take Bon-Ton to generate a billion in incremental profits to offset this purchase? They'd do better to put the money in a savings account. Heck, they'd probably do better stuffing it in a mattress.
By the way, I want it on the record that I had similar comments on May's purchase of Marshall Fields a couple years ago. All that buy did was put them out of business.