Where do they want to go?

Switching gears from analyzing moves made by companies to garner profits now to the perspectives of their future employees themselves. I was surprised by an article posted on BusinessWeek called “Google Tops Grad Pick for Top Employers.” The ranking is based on "the responses of more than 130,000 business and engineering students in 12 major global markets who told Universum where they dream of working." Of the businesses they could work for, 120 were named and they could pencil in any company which was not on the list. Google leads the Universum ranking for  the second time in a row followed by four accounting firms: KPMG, Ernst & Young, PricewaterhouseCoopers, and Deloitte, and five other companies which rounded out the top ten: Procter & Gamble, Microsoft, Coca-Cola, J.P. Morgan, and Goldman Sachs.

While recovering from a recession, I could not believe that Goldman Sachs would come out so high on this list. Sachs played a dramatic role in the housing crisis, but to those questioned for the purpose of this survey, is still an attractive place to work. Considering that there are barely any companies on the list who are less than a decade old, I conjecture that holding a position in these companies contributes to growth in that field.

Google considerably and the rest of these companies on this list have a "unique corporate culture." Google specifically gives "free food and haircuts and lets employees bring their dogs to work" among other things. We all seek a feeling of leisure from doing the work we do. Companies are winning over college graduates and slowly everyone by providing that feeling directly to us.

Written by

Leya Abebe

Article:

http://www.businessweek.com/bschools/content/sep2010/bs20100928_433243.htm

Toys R Jobs!

According to a recent article published in CNNMoney.com by Aaron Smith and Ben Rooney:

Toys R Us and Best Buy announced Tuesday; that they are about to hire tens of thousands of new employees for the upcoming 2010 holiday season. Toys R Us announced it would hire 45,000 seasonal employees; Best Buy will hire 29,000 seasonal employees.

Toys R Us will divide its 45,000 new recruits between its 587 current locations and the 600 temporary locations about to open across America in various shopping centers. During the non-holiday season Toys R Us employs 45,000 and so the company is seeking to double its workforce ahead of the holiday season.

The United States is a huge retail market due to the size of the population. However the shopping habits of American consumers make the retail industry in the United States even more valuable. Americans love to shop, and what better time to shop than Christmas and Hanukkah: two major holidays with the retail enhancing traditions of giving gifts. The holiday season in the United States isn’t matched in any other country on Earth.

Furthermore, most retail companies in the United States rely on the holiday season, as it’s by far the greatest source of income. The month of December can generate as much as six months during the non-holiday periods. The significance of the holiday season is clearly seen in Toys R Us and Best Buy’s hiring announcements. Toys R Us will double it’s entire workforce as well as the company’s locations, all in the effort to sell as much toys as they can while the demand is at it’s highest point.

Moreover, Toys R Us will give many of its employees an opportunity to work extended hours and during the weekend. Therefore, many of the company’s employees will be able to save furthermore enabling them to spend money on gifts and so stimulating the economy even more.

If Toys R Us are lucky enough, a new toy may become the holiday must have leading to an even higher demand for toys.

Although I am no longer a child, this recent publication did in fact find it’s way to my heart. The combination of new job opportunities at a time where unemployment in America is nearly 10% and toys was just too irresistible.  

 Written by Michael Milner

Article source: http://money.cnn.com/2010/09/28/news/companies/toys_r_us_jobs/index.htm

CNNMoney.com 

Producing Domestically, Expanding Internationally

Inditex, a Spanish based retailer, has experienced a 68% increase in profit this year as in plans to expand its business to five more countries and tap into the e-commerce market. Growing its store base anywhere between 8-10% annually, Inditex Chief Executive Pablo Isla expects to “see big potential” fulfilled as the company expands. Inditex’s rapid growth can be attributed to its cheap supply inputs and its ability to respond quickly to consumer demands. Nearly half of all Inditex’s products are made in Spain, thus cutting down on transportation costs and production time while also allowing the company to adapt to new fashion trends. Furthermore, Inditex is in a prime location to receive information on trends occurring in the fashion world.

Early in the blog, we mentioned that many American based stores were suffering from slow growth do to the recession and therefore frugal consumers. However, Spain’s economy as a whole has experienced a slower growth rate than the United States. Spain lacks the capital and technology that the US has, so why is it that Inditex is citing greater profits than American companies? First, I attribute Inditex success to, unlike many US companies that use offshore production, Inditex manufactures half of all its goods in is base country of Spain. Thus not only does Inditex save time and money, but is also facilitating its country’s economy. Secondly, Inditex utilizes a fast-fashion model where it, constantly updates its stores to sell the lasted fashion trends where as US retailers wait to see if that fashion has any longevity. Therefore, I conclude, that while offshore production may seem cheaper, producing goods domestically is not only beneficial to one’s company, but also its country’s economy. Secondly, adapting to rapidly changing consumer demands is a necessity for any company to survive in today’s ultra competitive markets.

Wall Street Journal, Print Issue, 23 September 2010, Coporate News Section, pg b3 

Missing the Holidays Never a Good Thing

One of Nintendo's most recently anticipated products will not be sitting under the Christmas tree this year. The release date for the Nintendo 3DS, a revolutionary handheld gaming device that uses 3-dimensional graphics, has been changed to sometime in March 2011. This means that the device will not be available during the holiday season, the prime consumer buying time. According to the Wall Street Journal, Nintendo's expected profits for the fiscal year ending in March will fall severely. The projected profit is now around 90 billion yen, down from nearly 200 billion yen. This is of course partially due to the weakness of the yen, but also mainly due to the fact that their key item will not be placed into a hot market. It wouldn't be practical for Nintendo to try to speed up the release though - there would not be enough items in stock for them to pull off such a stunt for the holidays. This is certainly a case of bad timing for Nintendo.

This case of bad timing will most definitely transfer to electronics retailers such as Best Buy. Any retailer who would have been able to carry the Nintendo 3DS is going to lose out on a significant profit. There is no doubt that retailers depend upon the holiday season, new hot products, and willing buyers to get through the year with a substantial profit. The 3DS's original release projection meant that a hot new product would be arriving during the holiday season - the time when everyone is buying. Consumers will still be enthusiastic about the product in March, but not nearly as much as they would have been during the holiday season. This could end up being detrimental to some retailers.

As the 3DS misses out on the holiday, Nintendo and many retailers will miss out on the profits.

Catherine Reeves

Source: http://online.wsj.com/article/SB10001424052748704116004575521143661439792.html?mod=WSJ_hps_MIDDLETopStories

Cuteness All The Way

For retailers, this holiday season is crucial for their survival in this economy. With consumers buying minimum amounts of toys, the toy industry has taken a hit with the recession. Many companies, who already make most of their profits off the holiday season, are trying to find the right balance of toys for children of all ages. However, there is one thing that is definite this holiday season, and that is that the cute toys are most likely going to "rule the holiday toy roost".

Toys R Us, a huge toy store, came out with their 2010 Hot Toy List a few weeks back, and most of the toys on the list were under $25. Because parents are on tight budgets, toy makers are producing cheaper toys that way they sell more products. From pillows that turn into pet stuffed animals to Mattel Inc producing singing dolls, these toys are under $25 and will make children very happy.

The predicted popular toy of the season is the Zhu Zhu Pets. Cute and adorable, Zhu Zhu pets are, "toy hamsters that squeak, zoom around on wheels and sell for just $10". Their cheap prices and cuteness make them popular with the parents, and every kid wants one. Because every kid wants their very own Zhu Zhu Pet, retailers are all carrying them. So where are the parents going to shop this year. Simple: the will shop with the store who has the product in stock. This holiday season, "the difference between being in stock or out of the year's must-have playthings" will make or break the toy stores.

So remember when buying toys this holiday season, go cute!

By: Ariel Levin

Article Used: http://www.washingtonpost.com/wp-dyn/content/article/2010/09/21/AR2010092100995.html

Social Impacts

The Green Earth Market is an online retailer of environmentally friendly goods which entered the retail industry officially in 2006. This retailer sells products for babies/toddlers, books, candles, fragrances, diffusers, clothing, bags and accessories, home and office supplies, jewelry, and gifts and seasonal goods that are “high quality and better for the environment.” Those products must meet a criteria established by the company stating that those products be: produced in North America, of natural, organic or recycled materials, from Fair Trade sources, or benefiting disadvantaged groups, are energy efficient, encourage re-use and/or discourage use of disposables that create waste, and/or are closest to these criteria of the products available to the company.   

The Green Earth Market has not been highly publicized in the news, but it should. What this company offers touches on so many social issues that it may impact the industry with its growth.

As a society we are becoming more responsive to environmental issues and with the recession we are recovering from, issues of social responsibility and ethics within the business world. More and more, companies are revising or even creating policies that address the responsibilities a company must incur to manage or correct for externalities not only facing the consumer but the physical environment as well. For the Green Earth Market to emerge when it did, as possibly more have, represents a push from this social movement in order to influence more change in the lifestyles of the public.

I admire a few things about how the Green Earth Market runs its business. It provides lists of environmentally-friendly products but also the manufacturers that produce them on the website. Market is spreading the word that there are many companies in the business of improving the health of our environment. How this company deals with being socially responsible is also mentioned in its mission statement, but implicitly. Green Earth Market runs as a Christian based business. Just following the principles of the religion promotes honest service, a point it explicitly states. To expand upon this point, the owner is also reaching out to a specific community creating a closer relationship of the issue at hand, improving the environment, with already set ideals, another way to enhance the impact of the social movement.

To address how the competitive landscape of the retail industry has changed, marketing with making a social impact in mind has become a competitive advantage for most companies. To distinguish itself from others by offering a “higher” level of quality, quality that gives back, is in effect a tool to manipulate market demand now. This may mean going against the economic decision rule, making the decision that garners the most benefit, but this investment may in turn increase future profits, send the right message, while improve the quality of our lives so much more.

Written by

Leya Abebe

Contributing info found on:
www.greenearthmarket.com

Woot: Offering Something New, One Random Sale at a Time

One of the up-and-coming aspects of the industry of retail is the aspect of "social shopping." A new internet retailer called Woot.com is a one-deal-a-day website that sells excess inventory products for very discounted prices. The products can vary from kids' toys to digital cameras, to HDMI cables or t-shirts. Founded by Matt Rutledge, the company was recently bought by Amazon.com. Though the two are going to continue working independently, Woot may gain some more influence due to the connections it is forming with such a high-profile site.

Since the creation of the main site, Woot has also created a few subsites/spinoffs, such as Woot Shirt, Wine Woot, Sellout Woot, Kids Woot, Deals Woot, and Moofi Woot. These sites have gathered quite a cult following, as they offer a variety of very random products daily, at very good prices. Of course, the site follows its tagline, "One day, one deal," meaning that there is only one item per subsite per day. Products are never announced beforehand either, so it is up to faithful checkers of the site to take the initiative to buy the item.

This way of selling a product may not necessarily revolutionize the way that consumers shop, because of the fact that it is impossible to know what the product being sold is until it is posted on the site. Therefore, the site will likely not cause competition or interference with main online retailers. Still, it has the potential to compete with other similar deal sites, such as overstock.com and others.

As of right now, the site has no customer support service, and does not post sales figures until the item has sold out. It also limits purchases to 3 of the item per customer. It should be very interesting to see how these habits change as the site gains more recognition. The site is unique in its single deal per day sales model, and in its witty blog posts and close community following. Will Woot continue to grow and prosper? Will Woot cause other online retailers to implement a one-deal-a-day special to their sites? I think that Woot is still fairly obscure, but as long as it keeps gaining a tight group of followers, it will be able to continue to add a unique spin to the competition within the retail industry.

Sources: http://online.wsj.com/article/SB10001424052748703426004575339320497483414.html
and Time's Coolest Websites 2005: Shopping

Catherine Reeves

When Retail Makes You Real Money

       

According to an article released by the news agency Reuters September 20^th 2010 by Anna Ringstrom and John Acher:

Danish jewelry maker and retailer Pandora has recently offered $2.16 billion dollars in public offerings. Pandora announced that shares would begin trading October 5^th 2010 at the Danish Copenhagen bourse. The move towards becoming a public company will enable the company to continue its expansion while “also give a partial exit to its private equity and family owners” (Reuters, Ringstorm/ Archer).

In addition,

According to an article published Bloomberg Businessweek August 31st 2010 by By Zijing Wu and Nikolaj Gammeltoft:

PANDORA made a profit of $171 million and was considering the public offering in order to expand into the Eastern European and Brazilian markets.

In 2006 Pandora shifted from a jewelry manufacturer to an international jewelry retail chain, while maintaining its own jewelry-manufacturing factory in Thailand. According to the company’s website, the company sells it’s jewelry in 47 countries, offering over 1,800 unique jewelry designs. The company’s business model is consisted of selling the jewelry through its 260 concept stores as well as through other jewelry stores. Currently the company is most known for its silver and gold charm bracelets, which have become extremely popular in the US market.

The concept of letting the consumers choose and make their own product has now become a popular trend within many jewelry retailers in the United States and the entire world. These days most jewelry stores offer some sort of customizable jewelry product. Those who were quick to recognize Pandora’s success either chose to carry Pandora products or began marketing their own beaded customizable jewelry. Those who failed to recognize the new trend truly “opened Pandora’s box” and lost a great amount of customers and revenue resulting in many cases in the inability to compete, and at times bankruptcy.

I admire Pandora’s transition from a jewelry manufacturer to a jewelry retailer. Pandora was able to transform an entire industry in less than five years while greatly increasing the company overall profits and quickly became one of the most famous jewelry retailers in the world.

Written by Michael Milner

Sources:

http://www.reuters.com/article/idUSTRE68J0Y320100920

http://www.businessweek.com/news/2010-08-31/axcel-said-to-retain-jpmorgan-nordea-for-jeweler-pandora-s-ipo.html

http://www.pandora.net/en-US/pandora-company/about-pandora

E-Commerce= The Way to Go

Imagine being able to shop at an online Wal-Mart. Low prices and various goods, discount shopping without the coupon clipping, life couldn’t get any simpler. This is precisely what Wal-Mart wants to do with the help of FedEx. Wal-Mart hopes to set up a partnership with FedEx so that consumers can shop at Wal-Mart even when there is no physical location in their area. Buyers would then go to any of FedEx’s multiple and secure sites and pick up their order.

Wal-Mart’s move into e-commerce is not surprising. E-commerce retail has grown exponentially over the past years. Furthermore, this will allow Wal-Mart to expand its operation with minimal protest from labor unions and without spending millions on physical capital. More people will now have access to Wal-Mart, and FedEx as a result will gain a more diverse consumer base. Unlike other online retailers, Wal-Mart’s plan insures that consumers’ purchases will be secured, giving the company competitive edge over their competition. Perhaps now more discount stores, like BJ’s or Sam’s Club, will follow in Wal-Mart’s footsteps.

http://online.wsj.com/article/SB10001424052748704416904575501790739176042.html?mod=relevancy

Coupon Companies On The Rise

With the economy in recession, people are always looking for a deal. A new website called Deals For Deeds offers coupons for products, stores, and activities in the District of Columbia. If it was not for the fact that consumers are always looking to save money, this new company would not have emerged. There are other companies similar to Deals For Deeds such as Groupon, a Chicago based coupon company, or LivingSocial, Deals for Deeds biggest competitor because they are based in the District of Columbia.

What makes Deals For Deeds different from other similar companies is they are trying to attract consumers who are charity conscious and wish to buy products that help others. Joshua Hoffman, one of the founders of this company, says, "We knew if we try to offer the same services to the same businesses and same people, we'll never be able to compete with the LivingSocials." Hoffman believes that by focusing on charitable causes they will be able to compete with LivingSocial and "attract a different kind of user."

Deals For Deeds shows that you can still participate and be charitable in this recession while getting deals on great products and activities. If it was not for the fact that people have less money and are being thrifty that these coupon companies would have not taken off. Also, the internet makes this new retail industry possible. Whether it be saving money on bike tours or half priced dining deals, these coupons make it possible for consumers to live the way they used to.

Ariel Levin

Article Used: http://www.washingtonpost.com/wp-dyn/content/article/2010/09/17/AR2010091706232.html

True Moo?

A recent publication in Bloomberg Businessweek reported that giant retail companies Wal-Mart, Costco, and Target are facing lawsuits for mislabeling organic milk.

Both companies are suspected of buying milk from the Aurora Dairy Corporation and selling the milk under the retailers store brand labels. The consumers are seeking unspecified compensatory damages for allegedly buying the organic milk, even though it wasn’t truly organic. The fact that the producers of the milk misrepresented the manner in which the dairy cows were raised and fed violated various state regulations concerning organic products. Wal-Mart and Target haven’t made clear statements about the case, refused to comment or denied the allegations.

The fact that both retailers are facing lawsuits shows the true difficulty of maintaining business ethics in a large corporation. It is unknown if the retailers knew about the producer’s actions, but as the final ends of the supply chains they are held responsible for the misconduct.

As science and taste prove over and over again, organic product are healthier, have better nutritional values and taste better… The retailers have been able to take advantage of those who seek organic products and are willing to pay at times double the price for an organic product. Thus increasing their profits in an unethical way.

What shows greatest ethical misconduct was the way the companies have been handling the case. Denying or refusing to comment when their good name is on the line will end up hurting the companies by far more than accepting the allegations and pulling out the non organic supposedly organic milk.

Written by Michael Milner

Article source:

http://www.businessweek.com/news/2010-09-15/wal-mart-target-must-face-organic-milk-label-suit.html

The Ethics of Immigration--in New Territory

We’re all familiar with the ongoing debate on illegal immigration in the U.S. Opponents of current immigration standards argue that illegal immigrants are stealing jobs from citizens and as their profits go untaxed, the economy loses capital. Many solutions have been offered to remedy the situation, but in them, ethical concerns have arisen. One being that those who come up with these sometimes fail to recognize immigrants and illegal immigrants as a collection of individuals each facing different issues and that not all indulge in law-abusing behavior. 

Apparently, Italy is facing somewhat of the same issue on a much smaller scale. As reported in a recent article in the New York Times, “Chinese Remake the ‘Made in Italy’ Fashion Label” by Rachel Donadio, Chinese immigrants have been changing the structure of the economy in Prato a town outside of Florence, Italy. Italy took it upon itself to provide quality fashion since “it could no longer compete with China on price” when producing garments. Chinese laborers began immigrating to Prato in the late 1980s and since then “transformed the textile hub into a low-end garment.” This transformation has caused an uproar in Prato with arguments such as they’re suppressing the “classic Italian feel” and that they’re beating them at their own game by committing crimes like tax evasion as well as the rest of them.

Protests are being made to the Italian government in order to crack down on the illegal finance operations that is being claimed to be occurring in Prato by the Chinese. One suggestion is that the Italian government work with China to form an agreement on a deportation process.
 
Really, the only companies and consumers who have responded to this issue are those directly affected by the protests. I find that the Chinese immigrants and Chinese-Italians in the area have capitalized on an opportunity that the natives missed. If production of high quality garments is what Italian business owners want to push in the markets, they need to come up with more effective ways to market it and make a larger profit. What I see are two competing entities in a free market that are competing to match each other’s prices. China is winning.

 

Written by 

Leya Abebe

Article:
http://www.nytimes.com/2010/09/13/world/europe/13prato.html?_r=1

Retail Toy Industry Rampant with Recalls

It seems as though every day, we see news of another recall of some sort, especially in the area of toys. Whether it is because of lead paint, or easy breakability/choking hazards, for whatever reason, something is always being pulled off of the shelf. There is no specific company or retailer who is responsible for all of this - instead, it is happening to almost everyone across the board. This causes us to raise a number of questions about the situation.

First of all, why do so many recall stories get so much attention from the media? Is part of the reason why they seem so prominent because the media instills a fear in us, simply because of one blown up issue? Often, we see many retailers in a bad light, just because they carried the recalled product. But, is this really what we should do? Honestly, this judgement could go either way. On one hand, we could praise retailers for being responsible and concerned enough about the situation to forgo the opportunity to make a product in order to actually do something about the problem. On the other hand, we could blame them for allowing a certain process to occur, for example, permitting lead paint or shoddy designs to be used and sold in the first place. However, it seems as though the consumer always antagonizes the retailer, even if it is not always the fault of the retailer. This is mostly due to the fact that the media causes us to distrust everyone.

Another thing we must wonder about is whether or not consumer choice contributes to this matter. A child swallows a battery or a piece of a toy while his mother isn't looking, and suddenly, the toy must be recalled. Was this the company's fault, or the child/mother's? Was the toy recalled because it was dangerous, or because someone else made it appear to be so?

Companies and retailers must face situations like these all the time, even when they do not break any kind of ethical rule. Consumers will almost always react with fear and anger when faced with a faulty product, even if it is not always a threat to life. The best way for retailers to handle situations like these is to act responsibly, and show the consumer that they care - this usually means recalling the product and being more conscious of how the product is produced. The retailer must always fight to keep the consumer feeling safe and happy, even if it means that people involved in the production process will lose their jobs.

Catherine Reeves

The Fox and the Apple

 We love our iPods, iPhones, iPads, iTunes and pretty much anything else that begins with us saying I first.  IMacs, MacBooks and MacBook Pro’s have become the standard for personal computers. Having the latest Apple gadget is a necessity in today’s society and culture.  In the hallways of schools, children line the walls and share their white, plastic, blasting headphones with one another while film editors tediously work on piecing together strips of footage with Final Cut Pro on their 27 inch LCD displays. Apple has changed the way we live our daily lives, but would we still support this phenomenal transformation if we knew how Apple’s products were made?

Foxconn, Apple’s Chinese producer, was hit earlier this year with a public relations nightmare. A company that some analysts describe as an “industrial monster,” and has the reputation of treating its employees like pegs in a machine, faced eleven worker suicides.  Nerve racked, over worked and mostly young workers in their early twenties from rural areas, would leap off the ledges of their high-rise, crowded, ill conditioned dormitories to their death. Workers generally worked 24-35 hours a day, completing the same mundane task over and over again for an unsatisfactory wage. Although Foxconn had broken many of Apple’s Supplier Code of Conduct regulations, Steve Jobs has yet to cut ties with the company even after extensive auditing in early 2006 or after this recent incident made its way to news articles. However, this is not surprising considering Apple’s mission statement.

Apple’s mission statement reads:

 “Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple reinvented the mobile phone with its revolutionary iPhone and App Store, and has recently introduced its magical iPad which is defining the future of mobile media and computing devices.”

Not once in Apple’s mission statement does it mention any social or environmental responsibility. Apple’s only desire is to produce and sell the best, leading, and cheapest products to hungry, technology enthralled consumers. So it now makes sense as to why Foxconn would be an integral part of Apple’s make up and why Jobs wouldn’t want to severe ties with the company.  Foxconn’s use of cheap labor allows Apple to sell its trendy gadgets at lower prices, keeping buyers happy and naïve Chinese workers exhausting their energy on products they couldn’t even afford themselves. So I ask this question, if you knew how Apple made their products, would you still buy them? As much as I would like to think that our moral compasses would sway us away from such tainted goods, our distant relationship with the manufacturer and obvious benefits from owning Apple’s products would have us act other wise.

http://phx.corporate-ir.net/phoenix.zhtml?c=107357&p=irol-faq#corpinfo2

http://www.msnbc.msn.com/id/39099077

Wal-Mart's Seeking Ethics

In the year 2006, Wal-Mart decided to get ahead of other stores by hiring a Director for Global Ethics. With an $11 billion lawsuit against discrimination and ethically issues and a big media scandal about not paying employees overtime, it seems like a smart idea for Wal-Mart to boost their public image with this new position.

With states like Maryland passing laws requiring big companies to give their employees benefits, Wal-Mart has some work to do. Wal-Mart's image of cheap products has moved over into the employees category. They employees have not been treated fairly which is why there is a law suit from employees who are unhappy with how the company treats them. Also, the employees find it unethical to not be paid for working overtime. It has been all over the news that Wal-Mart has not been paying their employees overtime benefits, which has made consumers frown upon the company and their values. Because of both of these issues, it only make sense that Wal-Mart would want to improve their image.

That is why they are creating this new position. Wal-Mart wants to get ahead of other companies, and to show the media that they are taking care of their issues. Whoever holds this position will have "frequent and informal" meetings with senior corporate members. By listening to other members of the company, they will be able to see what is going on in the company, here employee issues, and hopefully fix them.

Therefore, adding this new position was not only strategic, but it puts on a good front for the company. Also, they are one of the first companies to have an ethics position, which makes them forward thinking. In my opinion, I think it was very smart for them to create this position for the reasons that the article states. By also taking on this new position, it shows that Wal-Mart cares about what people think of its reputation and wants to improve on their moral standards.

Ariel Levin

Article: http://money.cnn.com/2006/03/07/news/pluggedin_fortune/index.htm

When Health & Beauty don’t sell

The Associated Press reported that last Tuesday that the New York City based Rite Aid Corporation will add discount groceries to some of it’s South Carolina locations.

The decision was based on the company’s recent partnership with Supervalu Inc.

Supervalu’s unit, Save-A-Lot, has over 1200 locations in 31 states selling grocery products and household goods. Rite Aid will remodel and rebrand 10 of its locations under the Save-A-Lot name while removing many of its health and beauty products.

Rite Aid’s decision to rebrand some of its locations, by adding more grocery products in South Carolina is obviously a pilot program. Since the rebranding will only take place in a specific retail market, South Carolina. South Carolina, which has quite a low socioeconomic, standing in the United States. This is a great location for Rite Aid to attempt increasing it’s sales by switching from costly health and beauty products, which have a low mark-up value to cheap grocery products.

Despite mentioning the hardships of the recession I can’t help but mentioning that such a move by Rite Aid is clearly the company’s attempt to overcome the struggles of increasing sales at times where the consumer is on a bargain hunt.

I truly believe that this pilot will prove to be successful, and is a good example of a corporation’s ability and necessity to evolve along with the evolving retail industry.

By Michael Milner

Article source: http://online.wsj.com/article/SB10001424052748704358904575477832907868388.html?mg=com-wsj

Online Retailing Reaches the Best of Them

Industria de Diseno Textil S.A., or more commonly referred to as Inditex, is the second largest fashion retailer, who, just this past Thursday, launched an online store outlet for fans of its first store ZARA in six European markets: Spain, Portugal, France, the United Kingdom, Italy, and Germany. Another retailer late to make use of the web for sales, the focus of the company was to establish as much interest in the store as they could--which they did with their large following on social networking sites and with a website that featured outfits minus the prices--and ultimately created enough demand to make spending time on an online store worth the time of managing. So far, there are currently 4,700 physical stores throughout the world.

My opinion on this matter? Well, as a former ZARA employee. It’s about time! ZARA has definitely established the demand for its products, but, keeping this to the U.S., it doesn’t seem to have a plentiful enough supply of products in stores. I am not saying that you are going to walk in to an empty store or one missing sections. However, relying on a customer to be patient enough to wait for the next shipment, to me, is a pretty risky move--a move that should be avoided. With the added ability of being able to order items online that may not be in stores can keep customer confidence in the company. As any retailer would plug an online outlet for their store, it ideally eliminates inconvenience.

As a lover of great fashion, I want trendy stores like ZARA to stay in the “game” and increase the competition because in the end, competing companies produce even better quality items.

Written by Leya Abebe

Contributing articles: 

http://online.wsj.com/article/SB10001424052748703632304575451282067480988.html?KEYWORDS=Zara+wakes+up+to+the+web

http://online.wsj.com/article/SB10001424052748703946504575469692028463552.html?KEYWORDS=Europe%27s+online+fashion+revolution

Apple's Duck Decoys

            As fall approaches, Duck hunting season begins. Every year, between early October and late January, willing hunters travel to the marshlands of Maryland with their guns in one hand and decoys in the other. They strategically place their decoys in the mucky water and then wait for that unassuming duck to come near. And I think we all know what happens next. Like so, Apple uses price and product decoys to trick consumers into buying goods that are not necessarily the best deal for them.

            Apple’s founder, Steve Jobs is not only successful  because he creates some of the most popular gadgets in today’s society, but also because he can convince buyers into purchasing his products at a higher price even once they’ve become obsolete.  For instance, an Iphone, that can do everything an Ipod Touch does plus make phone calls and has a camera, costs less. How is that possible? Apple uses pricing series. So instead of buying the Ipod Touch with slightly better features at almost four hundred dollars, customers will spend three hundred on the media player with less capacity thinking it’s a great deal. However, Consumers neglect to realize that  buying an Iphone in not only cheaper, but also has better technology because they’re too distracted by finding a “good” price for their Ipod Touch. Furthermore, the four hundred dollar Ipod Touch is really just a decoy set in place to shade your senses and judgment. Apple wants you to buy the three hundred dollar Ipod touch, but still wins even if  you decide to go with the more expensive one. In addition, Apple artificially inflates its starting prices on new products so that than when prices do decrease, customers believe they are getting a bargain. Apple also uses less desirable products like the 7-inch Ipad, due before Christmas, as reference items to trick customers’ into buying more expensive products. 

            Apple is the hunter and we’re the naïve duck floating closer and closer to that decoy. Steve Jobs has mastered the art of blurring consumers’ judgment and creating obscure pricing mirages. Like the duck, we’re fooled into not making the best decision for ourselves, but rather we simply walk into the hands of  the eager and sometimes greedy huntsman. Once again, Apple has proved my theory that if consumers perceive something to be true then it is.

http://www.msnbc.msn.com/id/38980367/ns/business-bloomberg_businessweek/

The New Fall Fashion Trend--Jeggings

This fall, the most popular product purchased at the back to school sales were something called Jeggings. Jeggings are leggings that look like jeans. It is popular to wear a pair of jeggings with an over-sized sweater or a loose fitting shirt. This new style has made stores like Gap popular again, whose share price could use some help after dropping 16% year to date. Gap has been pushing tight jeans and jeggings at reasonable prices. This is making consumers flock to Gap, and it has been reported that they are now lines at the check-out counter.

I really like jeggings because they are a comfortable option as they are the leggings material. I read this article last night, and I did not think much of it until I walked into math class today. As I was sitting in my chair waiting for the rest of the class to arrive, a girl walks in wearing jeggings. Jeggings on this girl made her legs look extremely fat, and did not flatter her figure. Then, as I was walking back to my dorm room after class today, I saw a group tour of American University. A girl on the tour was also wearing jeggings and a tight fitted shirt. While this girl was quite skinny, I thought it was extremely inappropriate to wear that while visiting a college since she was trying to make a good impression.

So I am making the rules on this new fashion hot item. Jeggings should be worn for casual events like hanging out with friends or going to a class. Also, jeggings should only be worn if they flatter your figure. Think of it this way: if you would not wear leggings with your outfit, then you probably should not wear jeggings. Finally, jeggings should only be worn with loose fitting clothing on top. If girls follow this advice then they will make sure they look our best while wearing this new fashion trend.

By: Ariel Levin

http://online.wsj.com/article/SB10001424052748703720004575477962274879340.html?mod=WSJ_Retailing_leftHeadlines

Campbell's Is Stuck in the Boiling Pot, Salewise

The phrase "man does not live on soup alone" seems to be coming true for Campbell's, who, even after reporting an increase in profit, is suffering a steady decrease in sales. It is true that Campbell's fourth quarter profit was up 64%, but this was mostly caused by cost cuts in production. The soup company's sales woes probably have something to do with the fact that in this recession period, people are seeking cheap, do-it-yourself meals. The truth is that Campbell's IS a cheap, do-it-yourself meal, but many macaroni and cheese products have taken away Campbell's sales because they are cheaper. Campbell's Chief Executive, Doug Conant, says "There is a palpable change in consumer-buying behavior that is unlike anything we have experienced certainly for a few decades. They are being more surgical with their shopping." In fact, research has shown that consumers are spending less on groceries overall. This decline in soup sales has inspired Campbell's to initiate a campaign called "It's Amazing What Soup Can Do" in order to remind consumers of the benefits of buying soup, which, while more expensive, is much healthier than macaroni and cheese.

I think that the soup industry, Campbell's in particular, needs to step it up in order to remain a part of the market. Too many consumers are jumping ship on the "m'mm m'mm good" soup, and if this keeps up, the company is going to suffer huge losses. "Soup is just weak," says Heinz Chief Executive Bill Johnson. In my opinion, Campbell's needs to take a stand and make soup strong again. Its "It's Amazing What Soup Can Do" campaign is a good start - the company needs to spread awareness that soup is still a very healthy, easy, and cheap meal that is worth the few extra pennies. The company also needs to consider expanding its options - perhaps opening a mac n' cheese line, or strengthening its broth line, since consumers are cooking at home more often in this recession. Regardless of what Campbell's does, it needs to do something that will make it a prominent retailer once again.

It should be interesting to see what Campbell's decides to do in the near future. Will it expand its horizons, or will it continue to flail and struggle in a market where no one is buying?

Catherine Reeves
Source:http://online.wsj.com/article/SB10001424052748703946504575469703981260436.html?KEYWORDS=campbell's

A major bookstore possibly back on the rise?

In part of a wide-scale effort to improve sales, Borders Group Inc. has revamped its rewards program for customers. Borders rewards now offers an increased discount rates on books, free shipping with the payments of an annual fee, and a small price reduction on the stores two electronic-book readers. This expansion comes in response to the over $200 million debt that Borders Group Inc. has incurred during the recession.


Shifting the focus back to the customer is key for the company. Many predictions have been made that bookstores are in a dying business since sales went online. As in store sales for Borders decreased, online sales did go up 56% over the last year. 

However, stores haven’t emptied out yet. No matter what medium a company chooses to sell its products, the more appealing it comes off to the customer keeps that customer coming back. Travelling to any store is not only made out of necessity but also partially out of the want for the experience. Why Borders Group Inc. is not only a leader in sales of books and other accessory items is because it not only offers an array of merchandise but an enjoyable shopping experience as well. 

To add to the program, under new management and with the investment of the financier Mr. LeBow, Vector Group Ltd.’s chairman and tobacco magnate, providing excellent customer service has even been renewed in stores too. President Mike Edwards also noted that the “availability of items in stock at stores is the best it has ever been, and efforts to manage its supply chain and inventory should yield fourth-quarter working capital improvements.” This could make the bookstore a more reliable outlet during the upcoming holiday season--another reason for why Borders rewards members or the skeptical customer may want to stick with the company. 

We should not expect the fall of our leading bookstores any time soon. Instead, we should expect across the board to see more projects aimed at revamping the quality of the products and services businesses provide. 

Written by Leya Abebe
Referenced article from http://online.wsj.com/article_email/SB10001424052748703882304575465372801258254-lMyQjAxMTAwMDAwMTEwNDEyWj.html

Survival of the fittest

Producer and retailer American Apparel Inc. has announced it may lose to the outcomes of the recession and shut down. Such news did not come as a surprise since the company has been facing devastating losses. American Apparel was warned of improper financial reporting by Deloitte, which served as the company’s auditors, resulting in the auditors’ resignation and a subpoena from the U.S. Attorney’s Office this past July. American Apparel reported that current sales trends projected for the rest of the year, and it’s mammoth $120.3 million debt will most likely lead to the company’s failure to meet credit terms by the end of September.

American Apparel Inc.’s shut down serves as another devastating outcome of the cruel recession and the retail industries blow. The company was known for producing and selling U.S made T-shirts, an ever-increasing rarity at a time where people choose to buy foreign clothing due to lower prices. I believe that the company’s inability to cope with the dramatically changing and competitive retail industry, its chief executive’s unwillingness to receive help, and of course the increased foreign and domestic competition will all serve as the final termination of the company.

Reading this was especially painful for me, as I recognize that a corporation’s shut down is not just a printed story. Many people will be losing their jobs at the very near future, forcing factory employees as well as executives to join the great number of unemployed Americans.

Written by Michael Milner
Article: http://online.wsj.com/article/SB10001424052748703824304575435282703897308.html?mod=relevancy

Tobacco Companies Are Successfully Skirting Steep Taxes... For Now

In 2009, tobacco companies took a great hit when Congress sharply raised the federal excise tax on rolling tobacco, in order to expand the children's health insurance program. Rolling tobacco is the essential element in any cigarette, which accounts for most of the sales within the tobacco industry. The tax, at $24.78 per pound is incredibly high - especially compared to the tax on pipe tobacco, which is only $2.83 per pound. To combat this tax, the companies have managed to find a very substantial loophole. As many as 150 independent tobacco outlets in about 20 states have implemented a "roll-your-own" cigarette machine, which produces a carton of cigarettes in as little as 8 minutes, and reduces the cost by more than half of a carton of Marlboro cigarettes. So how do they avoid the tax? Where does the price cut come from? Well, customers simply have to insert rolling tobacco, but label it as pipe tobacco. "Other companies created new brands they call pipe tobacco but essentially contain the same tobacco as in their roll-your-own products," said Kevin Altman, an industry consultant.

The FDA and the Treasury's tobacco tax bureau are hoping to rewrite the regulation to close the loophole and crack down on rule breakers. For instance, some retailers are labeling their roll-your-own cigarettes a "light," which is not supposed to be used, according to FDA regulations. The FDA and the Treasury's tobacco-tax bureau will need some time to determine what action they need to take against these companies.

If the loophole is not closed, this could affect the way that the entire tobacco industry works. Successfully avoiding taxes could help the tobacco industry get back on its feet, especially since the recession has discouraged smokers from buying cigarettes at such expensive prices. This could be the way for them to reel in customers again. In a way, this could also be seen as an act of desperation though, because there are some risks involved for some of the individual retailers. This is because many are accusing them of breaking some state and even U.S. laws that determine what can and cannot be done with cigarette manufacturing. They could be hit hard with having to pay certain manufacturing fees that they have not had to pay before. So far, they are helping themselves, but how long until the law catches up with them?

I think it will be interesting to see how this pans out for the companies and for the economy itself. Pipe tobacco sales have tripled, but rolling tobacco sales have fallen by 60%, and this stunt has cost the U.S. government more than 345 million dollars, estimates Daniel Morris. What could this mean for the industry and for the U.S. as a whole?

Catherine Reeves
Source: http://online.wsj.com/article/SB10001424052748704913704575453584132202718.html?KEYWORDS=Roll+your+own+cigarettes

Perception is Reality: Retail's Greatest Tool

In the past months, clothing retailers like Gap and Aeropostle have been combating both high production costs and consumers’ weak spending habits. To confront customers’ prudent spending, retailers have tried to discount items. However, a disappointing second quarter has caused many clothing stores to suggest the likelihood of price increases. Most of these retailers propose that they will raise prices on more embroidered and detailed goods. However, this plan neglects to factor in the exact wants of the customer. For instance, what happens if customers would still rather buy cheaper, less luxuries products? Retailers’ poor sales would continue while also wasting their scarce resources. Instead, I suggest a different approach to this dilemma.

Perception is reality. Rather than raise prices on a few select items, I would first cutback prices for all old or undesirable merchandise. Once new items are available, I would dramatically increase the prices of those products. While this may discourage some buyers right away, once the holiday season rolls through, I would advertise a huge sale. This way, customers believe they are saving money when in fact, they are actually spending more money at my establishment than if I had originally kept many items discounted with a few more expensive and lavished goods.  Hopefully though, with consistent growth and recovery in the economy, product inputs like cotton and wages with decrease in price so that retailers can resume selling cheap, durable goods to less stingy consumers.  


Article used: http://online.wsj.com/article/SB10001424052748704476104575439112892856830.html?KEYWORDS=retail


Mia Rosen

Were Back to School Sales a Bust?

As I was reading the Washington Post, I came across an article evaluating whether or not the back to school sales that retail stores have to prepare children for the return to school were successful. According to this article, the sales were a lot better than last year. According to the International Council of Shopping Centers, sales were down 2% in August 2009. In August 2010, they were up 3.2%, which was .2% better than what they predicted.

While the sales were up, they were not as great as the companies would have liked. The big chain stores are saying that consumers are only buying when the price fits their budget. While they are spending more than last year, the only way theses stores will keep people buying is through discounting their products. Unfortunately with the job market and housing markets unstable, people are afraid to go out and spend lots of money. The fact, however, that certain stores like Costco and Victoria Secret beat the Wall Street forecasts are proof that we are not entering a double dip recession.

I think that it will be interesting to watch the trends of people shopping over the course of the semester, especially around the holidays. I am curious to see where they are shopping: are they buying high end designer clothing such as Dior or clothes from Target and Wal-Mart? And finally, it will be fascinating to watch the market hopefully recover and see how that will affect retail.

To answers the question in my title, I think the back to school sales were not a bust. Not only did the sales beat the prediction, but they alleviated the stress that we may be in a double dip recession. What do you guys think?

Article Used: http://www.washingtonpost.com/wp-dyn/content/article/2010/09/02/AR2010090201460.html