The Touch, the Feel, Cotton the Frabric of our Life

The price of cotton has fallen the most it has in 15 years. Though originally predicted to rise by Texas cotton watchers because of unfavorable weather plaguing the state, the crop remained unaffected and the price fell 4.6%. Furthermore, instead of loosing 50,000-150,000 bales of cotton, the USDA believes that Texas alone will produce 8.9 bales of the fiber. With the US being the world’s largest exporter of cotton, prices rely heavily on how much the US can grow. Even now, there is not enough cotton production as economies is developing countries continue to expand and mature.

As China, the World’s second largest cotton consumers, continues to buy cotton at a rapid rate, the price of cotton becomes more unpredictable and even now the government is having to auction additional bales of cotton. The USDA predicts that at this pace, stockpiles of this commodity in the year 2011 at a 15-year low. Some countries, like India, because this fear of future limited supply of cotton, have slowed down their exporting and have given priority to their own domestic companies who need cotton for their products. These low cotton prices, lower input prices for producers and lower output prices for consumers. Though, once cotton stockpiles are diminished, the price will surely increase. 

Countries with a limited supply of cotton will have increased supply inputs costs, while other countries with high cotton resources will gain a competitive advantage because their input costs will be less in comparison. So, for all you producers, buy cotton and lots of it now if you can. 

Wall Street Journal 

Franchises Going Mobile

Remember the good old days when the ice cream truck would roll down the street and all the children would chase after it? It seems that the ice cream truck concept has actually evolved into a profitable venture for some franchises. According to Robert Stidham, president of Franchise Dynamics, LLC, a number of franchises may be taking to the road next year. Their trucks will be equipped with sinks and ovens -- entire kitchens even -- and they will patrol the streets with their products. Stidham declined to name which national food franchises may be entering this venture, but smaller chains such as Cousins Submarines, Inc. and Toppers Pizza Inc. have already started. Sites like Twitter, Facebook, and FourSquare have easy-access tracking devices so that customers can track where the trucks may be. This will be like a traveling extension of the brick-and-mortar store. Franchisees can come to their customers sometimes, instead of their customers coming to them.

This is revolutionary in a few ways. First of all, it can be good for the franchises in that the truck is like a mobile billboard. It is great advertising, so even if they do not provide services to everyone who happens to be on the street, they are still getting their name out further. Also, these traveling trucks are still very unique, and there is something fun and cool and perhaps nostalgic about getting food out of a truck on the street. The franchisee must still pay the same royalties as they would in their store, but it is a nice addition to the business. It should be interesting to see if the traveling truck concept continues to grow or if only a few franchises will catch on to it.

Catherine Reeves

http://online.wsj.com/article/SB10001424052702303341904575576760919368160.html?mod=WSJ_Retailing_leftHeadlines

Consumer Confidence Barely Rising

With the economy in a gloomy state and the stock market at a slow increase, it is easy to understand why consumer confidence is not through the roof. Most people are still skeptical about the future and their job security. For that reason, they are choosing to save rather than spend. Predictions are showing that this holiday season will hopefully bring consumers out of their shell and spend. However, this will only happen this the retailers promote their products correctly. If retailers this holiday season give discounts, advertise, and have the most wanted products this holiday season, then they are bound to do well.

While the stock market is recovering from the economic crisis in 2008, this does not mean it is booming like it was before. It is growing at a slow steady rate. What is also showing this that Wall Street and Main Street are not connected. Main street, where the consumers are, still have fear for job loss. With the housing market decline, many house prices are still going down in today's economy.

Researchers are also hoping that this holiday season will give some consumers a bit more confidence and realize that the market is on a turn around. The Dow Jones Industrial Average is up 7.1% this year. This means that many people with money invested in the stock market are starting to make some of the money they lose back. Hopefully that is something to be confident about.

So it is really up to the retailers this holiday season if they want to get consumers spending. Good deals and having the best products are going to bring them into the stores so that is one place to begin. And hopefully with the future looking a little more positive, consumers will gain more confidence and begin spending again.

By: Ariel Levin

http://www.washingtonpost.com/wp-dyn/content/article/2010/10/26/AR2010102602234.html

Smaller Stores a Big Concept for Wal-Mart

Wal-Mart has always been known for its gigantic, suburban, 180,000 square foot supercenters. Given certain plans, however, that may not be the case forever. Now, the chain is about to make an about-face and try to set up a base in more urban areas, using much smaller stores. This is because Wal-Mart has essentially exhausted its suburban base, while it has not at all forayed into major cities such as New York, Chicago, or Los Angeles. Obviously, the city is no place for large, warehouse-sized stores. So, Wal-Mart is going to try to implement some changes. Wal-Mart plans to experiment with some smaller stores whose primary products are groceries. This way, they can target the blue-collar workers, because in their movements through the recession, they focused more on middle class workers who were "trading down." Soon, Wal-Mart's "every day low prices" may be found everywhere as well.

Obviously, this is a HUGE step for Wal-Mart. In order to remain successful, they need to extend their reach as far as they can. Right now, sales for Wal-Mart are stalling, and this may be exactly what they need to jump start their profits again.

However, there are still many obstacles as well. Many big cities still oppose Wal-Mart because it has had labor disputes and other ethical troubles in the past. Target and Best Buy have already made moves into the cities with no problems, but Wal-Mart is not approved by everyone. Other outlets like Dollar General or Aldi's are also great competitors that Wal-Mart has to look out for. Moving into the cities may not be the easiest road for Wal-Mart, even though it will have its pay out.

Wal-Mart, just like every retailer, will always have to face problems and obstacles, but if it can overcome these, it will find great success in the cities. Urbanization will be a change, but it will definitely be for the better.

Catherine Reeves

Sources: http://online.wsj.com/article/SB10001424052748703673604575550243762557882.html?mod=WSJ_Retailing_leftHeadlines

Nike: Just Do It

Aaah Fall: changing colors, dried leaves, hot apple cider, pumpkin carving, and one of America’s favorite past times, football. Now in the middle of its highly coveted season, the NFL has decided that beginning April 2012, seven different companies, minus current licensor, Reebok, will share the rights to the league’s apparel licensing. Nike will have the NFL’s on-field apparel rights. Nike will be responsible for game uniforms and base layers, sideline personal apparel and fan gear. And while the deal may not give Nike a huge financial boom, the company’s infamous check logo will be continuously visible to millions of viewers as the camera switches shots from players to coaching staff. Marketing wise, Nike will gain tremendously from their agreement with the NFL. As Nike’s Charlie Denson stated, "Nike's position in our largest market in the world will be stronger then ever. We believe our agreement with the NFL enhances the Nike brand, and provides significant opportunity to drive growth across the business."

In addition to Nike, this agreement will have advantages for the NFL and fans alike. Due to weak ticket sales, the NFL’s decision to split apparel rights will increase revenue. Reebok paid $300 million for its 10-year deal with the league, but some estimate that Nike will pay 1 billion for its on-field rights. Furthermore, fans will have a larger selection of merchandise and from different companies to choose from. Nike is the “just do it” company, what is Reebok? Nike is the gear of champions and the NFL wants its players and fans to feel that way.

http://online.wsj.com/article/SB10001424052748703440004575548144277455632.html?KEYWORDS=retail 

iPad everywhere!

On October 12th the Wall Street Journal reported that Apple’s iPad would soon be sold in Wal-Mart. The giant retailer was slow to negotiate selling rights from Apple, falling behind Best Buy, which began selling the iPad ever since it was launched in April, and Target, which began carrying the iPad last month.
Wal-Mart announced that although it is late to carry the product, it would make up for time lost with sales.

Wal-Mart is expected to sell the iPad in more than 2300 locations by mid November in time for the holiday season, showcasing the iPad in special interactive displays. Despite the company’s reputation to “roll back” prices, the retailer will be selling the iPad with no discounts. The cheapest iPad, a 16-gig wifi model with no 3g capabilities has a hefty MSRP of $499.

Despite the competition and inability to increase profit margins due to Apple’s strict pricing, I recognize Wal-Mart’s interest in the iPad and believe the retailer will generate great profits. The profits won’t necessarily be the low margins of selling the actual iPad but rather the accessories that compliment it.

Furthermore, it is becoming increasingly obvious that the iPad has become the holiday’s hottest product. Analysts now believe that Apple will sell between 11 to 12 million iPads this year, which is double than what Apple expected to sell.
Wal-Mart slow response to consumers demand for the iPad must of resulted in lost profits, but as mentioned above, it’s hard to compete with over 2300 locations.

Finally, I just have to mention that it is very interesting to watch such a craze for a product that costs over $500 during one of the worst economic times this country has ever seen. Could this be another sign of hope?

Written by Michael Milner
Article source: http://online.wsj.com/article/SB10001424052748704518104575546570833654304.html?mod=WSJ_Retailing_leftHeadlines

Say Goodbye To Blockbuster?

It was announced this past week that the movie store Blockbuster may be closing down even more of their locations. After filing for bankruptcy, these movie stores are trying to find a way back into the market to compete with the new competition. Between Netflix, movies on demand through certain cable providers, and Red Box, Blockbuster has taken a hit. What makes Netflix, movies on demand, and Red Box more likable to the consumer is that they are more convenient. Netflix delivers movies right to your mailbox, on demand allows you to select and watch a movie from the comfort of your home, and red box is located at convenient neighborhood retailers, like gas stations or food stores, and it only costs a dollar per night to rent a movie. At Blockbuster, not only do you have to be a member to rent movies, but they cost about $4, and there are late fees.

Right now, there are about 30 blockbusters in Washington Metro area. Blockbuster headquarters are saying that they are going to keep these locations open while working their way out of debt. However, this seems unlikely. Blockbuster spokesperson Patty Sullivan says the company's goal is to "enhance the overall profitability of operations". With having already 148 stores close, this seems to be the best way to increase money.

Blockbuster needs to find a way to reestablish themselves. Going out to a video store and renting a movie is obsolete. They need to find a new way to rent movies to consumers conveniently and inexpensively. Maybe if they took their business online, like netflix, they could compete better. Or what if they created packages where a consumer can have the whole video store on their TV for a low price each month? Either way, there needs to be some sort of change in their sales strategies, and they need to make them fast if they wish to remain in the movie selling business. What other ideas do you guys have for Blockbuster in terms of reinventing themselves.

Written By: Ariel Levin

Article Used: http://www.washingtonpost.com/wp-dyn/content/article/2010/10/10/AR2010101003147.html

ho ho hope?

According to an article published October 7th 2010 in the Los Angeles Times by Andrea Chang:

There is some hope for retailers this coming holiday season. The retail trade group released a report this Wednesday projecting a 2.3% increase of retail sales reaching $447.1 compared to last years holiday season. The increase is considered modest since it falls under the 10 year average of increase of 2.5%. However, although the fore casted increase may be lower than 2.5%, it is still better than last year’s holiday sales increase of 0.4% and the 3.9% decrease experienced in the holiday season 2008.

It’s not surprising that analysts are only projecting a modest increase of sales. Consumers are still concerned about the unknown path of the economy leading to their hesitance to spend money.

In addition, the raise of unemployment in a turbulent economy means that people are forced to adapt to a life of careful spending. These days many consumers will choose between the seasons latest hot item and paying the bills. It’s not easy to completely remove the shopping habits set in American society and retailers are hopeful to gain on that.

I believe that as last year, retailers will do anything they can to seduce the consumer to their stores. Record high competition will prove that the coming holiday season will exceed analysts expectations, and perhaps generate further hope in the troubled retail industry. The competition is rough, but the gains are still high.

Written by Michael Milner

Article source:

http://www.latimes.com/business/la-fi-holiday-forecast-20101007,0,2818101.story

What If?

As the holiday slowly approaches, Neiman Marcus unveiled its 84^th Christmas Book on Tuesday. The luxury retailer displayed some of its extreme items in its downtown Dallas store. Some products available are a $250,000 houseboat for two, a $15,000 edible gingerbread playhouse and a $125,000 private party organized by celebrity event planner Colin Cowie for its wealthier, and quite possibly crazier buyers. However Neiman also “respects” costumers with smaller budgets, as half its products, including scented candles and tweezers incrusted with crystal, are under $250. 

Cleary, the average consumer will not be able to afford many of the products in Neiman’s catalog. The products are over priced and even though it’s the holidays, it’s too outrageous and unnecessary for most people. However, in my opinion, Neiman realizes that its catalog will not meet the demands or needs of many buyers. Instead, the catalog is supposed to trigger people’s what ifs. What if I could buy a special edition Camaro or a personalized glass sculpture by Dale Chihuly? The holiday season is the only time when it’s the norm to fantasize and maybe, even make your dreams into realities.

Furthermore, while Neiman’s catalog won’t be a hit with a large number of buyers, the high cost of its items will way out this fact. It’s not just about the number of buyers, but how much you can sell your products for. Neiman’s catalog is excited and has products in there that not many retailers would offer. Even though not many people will buy, they’ll enjoy looking at crazy gifts and be amazed at how ridiculous some of them are. So even with out buying any of the products inside, Neiman Marcus still leaves its costumers happy.

http://www.msnbc.msn.com/id/39525453/ns/business-retail/ 

Target Begins To Sell Ipads

A popular topic on our blog is following the success of Apple's new product the Ipad. This mini computer device has been making shockwaves since its release onto the market this past April and has sold almost 3.3 million products. Before, if you wished to purchase an Ipad, you would have to go to your nearest Apple store or Best Buy. Now, Target will be selling the Ipad, and they are hoping that by having this new hot product it will bring in sales this holiday season.

While Target has not taken a huge hit during this economic recession, having this product will definitely draw new attention to their stores. Also, having the product sold at more places is good for Apple. Because it will be easier to access, more people will spend $500 for this new product. Not only will sales increase for Apple, but it attracts more people to target's stores in the hopes that they will buy other products while there.

The only person who lose with this new deal is Best Buy Co. Best Buy has been carrying the Ipad since its launch. Because it was the only other place other than the Apple Store to be carrying this product, they were making huge sales off this. Now, they have Target, a store that carries more than just electronics at low prices, competing with them. It is easy to say that Best Buy may be feeling a bit of a sales drop due to this new deal.

All in all, by selling the Ipad this holiday season, Target will have the opportunity to increase their sales on this hit product. And even though Best Buy will have some more competition, by still being one of three carriers of the product means that they will still have plenty of business.

Ariel Levin

Article Used: http://www.washingtonpost.com/wp-dyn/content/article/2010/10/03/AR2010100302269.html

New Competition for Amazon.com

Amazon's consistent success has caused many retailers to band together to try to mimic one of Amazon's greatest strategies. The name of this new endeavor is ShopRunner, and the service will offer many of the same benefits as Amazon's Amazon Prime, except also with free returns. ShopRunner will have its own website but will also be available through all participating retailers' sites as well. Like Amazon Prime, membership costs $79 but includes unlimited two-day shipping. Toys "R" Us, Dick's Sporting Goods, PetSmart, and Barnes and Noble are just a few of the retailers teaming up to join ShopRunner.

This new development could be revolutionary in many different ways. First of all, the new site is likely to cause problems for Amazon. For the longest time, Amazon was the premiere outlet for online shopping, and the deal with Amazon Prime drew in a great numbers of customers. Its increasing support base is likely to drop off now that there is another option that also offers free returns. Additionally, ShopRunner will probably work miracles for some of its participating retailers. Since buyers are paying a 79 dollar membership, they will be much more inclined to visit the site more frequently in order to get the most out of that investment. These "repeat customers" are sure to up the profits for a lot of retailers who might not have even seen those consumers in the first place.

Luckily for some companies, ShopRunner does not operate exclusively, meaning that retailers that already participate with Amazon can still participate with ShopRunner. This should also be helpful to companies such as Barnes and Noble.

Of course, there is also the risk that too many people will sign up for membership all at once. This has actually shown to be harmful in the past. When Amazon Prime first opened, profits dropped significantly, probably because the expense of operating was so high. This could always happen to ShopRunner as well. All in all, though, ShopRunner looks like a pretty good idea that will not only put Amazon to the test, but create better competition in the online-retail outlet and open up more opportunities for shoppers.

Catherine Reeves

Source: http://online.wsj.com/article/SB10001424052748703843804575534062509989530.html?mod=WSJ_Retailing_leftHeadlines

Advertising that's Effective...or Not?

Small businesses like online retailers such as Mountain News Corporation and physical stores such as Birds Barbershop have found a new way to minimize advertising and marketing expenses. By partnering with larger firms in ad campaigns, smaller companies are paying nothing to greatly less than they expected when trying to spread the word about their businesses. Mountain News Corp. manages a site called OnTheSnow.com that “tracks snow conditions for ski mountains...got a burst of national exposure without spending a penny last winter when Apple Inc. chose to feature Mountain News’ mobile-phone app on an iPhone television commercial.” Birds Barbershop “launched an advertising campaign with Lone Star Beer, which is owned by Pabst Brewing Co.” The owner of Birds would not have been able to run one of their ads that cost $900 without a partner. “‘I wouldn’t make that leap alone,’ he says.” More examples of small businesses, including entrepreneurs, taking advantage of nearly free advertising are mentioned in “Marketing Strategy: Buddy Up” by Emily Maltby.

Similar to Emily Maltby’s article on business-to-business based advertising, Jessica Vascellaro’s article focuses on the expanded advertising of businesses through the use of social networking sites. Apparently, news organizations are researching the benefits and trade-offs of investing in campaigns on social networking sites such as facebook and twitter. Is non-traditional advertising such as this really generating revenue or are companies unknowingly soliciting information about their companies that could be used elsewhere to generate profit? Newspapers are already struggling with managing sales in print and with the switch to online, more content is becoming available for free or less than what they would normally have sold for in print. To place more excerpts on different sites might only be diverting attention from the main websites of these companies.

Written by
Leya Abebe

Supporting Articles:
“Marketing Strategy: Buddy Up
Small Companies Ride Coattails of Larger Firms to Reduce Advertising Expenses”
By Emily Maltby
http://online.wsj.com/article/SB10001424052748703743504575493930863118638.html?mod=djemSB_t“News Sites Study Social Media
Publishers Seek Insight on User Behavior; The Best Time to Send Out a Tweet”
By Jessica E. Vascellaro
http://online.wsj.com/article/SB10001424052748704394704575495960178903180.html?mod=loomia&loomia_si=t0:a16:g2:r1:c0.111237:b37368508