Retail sales for all core outdoor stores combined (chain, internet, specialty)* grew 2% compared to last April, moving from $339M to $347M, according to the most recent edition of The Outdoor Industry Association (OIA) Outdoor Topline Report, produced for OIA by the Leisure Trends Group. Sales for the four months of the year totaled $1.4B, down 5% from the same period in 2008.
Outdoor Chain – Shoppers ReturnAccording to the OIA Outdoor Topline Report, chain stores saw sales surge 20% in units and 18% in dollars. Every major product category (equipment, equipment accessories, apparel and footwear) and most sub-categories gained. Products that appeal to families and car campers fared especially well. Recreation tent sales shot ahead of last April by 78% in units and 64% in dollars. Sun shelters were up 88% in units and three-season recreation tents, retailing for $124, jumped 71%. Synthetic fill rectangular bags, retailing for $32, increased 82% in units whereas the more technical synthetic mummy bags, at $99 retail, grew 31%.
Outdoor Specialty – Declines Slowing But Not Yet ReversingIn specialty stores, April declines were not as severe as in past months, as total sales fell 1% in units and 4% in dollars compared to April 2008. So far this year, all specialty unit sales declined 6% and dollars fell 10%. Each major product category (equipment, equipment accessories, apparel and footwear) saw single-digit declines compared to last April. There were bright spots this month, too, as synthetic sleeping bags, medium-sized packs, climbing gear, multisport shoes, hiking boots and various equipment accessory categories posted gains.
Outdoor Internet – Retail Prices Rise, Units Fall as Online Retailers Reign in Clearance ProductInternet sales totaled $54M this month, falling 20% in units, rising 4% in average retail-selling price and dropping 17% in dollars. All year, Internet sales have been sporadic, up 35% in January on huge carryover sales, down 9% in February, back up 14% in March and now down 17% in April. Higher retail-selling prices across many categories coupled with dramatically smaller carryover sales (defined as old and/or discontinued merchandise) point to either a lack of available merchandise and/or online retailers reigning in the amount of rock-bottom clearance priced product they are offering. If this is the case, total sales may have fallen but profit per turn might go up.
Hands-on Hydration Reaching Plateau?Hands-on hydration, consisting mostly of water bottles, is now an $89M category across all store channels in the current rolling year. However, the category seems to be reaching the height of its growth, after a meteoric rise. While still up 15% and 28% in specialty-store units and dollars so far this year, the hands-on hydration category dropped 10% in units and 2% in dollars in specialty stores compared to April 2008. The category plunged 54% in online units and 57% in dollars from last April, while still seeing growth in chains. Looking at all three store channels together, total units were flat in April and dollars grew 5% on a 5% increase in retail price. Still, with $6.9M in total April sales and $22M YTD, the category is a long way away from the 2006 totals of just $2M in April and $6M in the January – April YTD period.
Paddlesports – Canoes Bright Spot for AprilCore paddlesport stores (specialty, chain, internet) brought in $36M in April and $86M so far in 2009, dropping 1% and 3%, respectively, against the same period last year. While all boats, with $21M this month, dropped 2% in both units and dollars, both recreation kayaks and canoes gained steam compared to last April. Recreation kayaks with an average retail price of $769, up 7% from last April, gained 3% in overall dollars for an April total of $11.2M. Canoes gained 5% in units, 4% in retail price and 9% in total dollars this month.
Showing posts with label locals lifestyle. Show all posts
Showing posts with label locals lifestyle. Show all posts
Wednesday, June 10, 2009
Tuesday, June 9, 2009
SNEWS Special Report: A broken supply chain? The retail perspective
The quest to help facilitate the discussion around finding a solution to a badly flawed outdoor industry supply chain began with an email plea to SNEWS® in March from a number of retailers. The email called out a list of challenges to the way we buy and sell, from a retailer's perspective:
- too many trade shows, both regional and national exist, and yet we keep adding more;
- early preseason and pre-show buying deadlines keep moving forward at an alarming rate;
- rep line previews are taking longer, as is the amount of time required to write an order, sometimes as much as four days, for a single brand;
- minimum order amounts for best terms continue to escalate in price, making them unreasonable for most small specialty retailers;
- reps for larger brands demand time in stores from buyers and store owners often during the busiest selling seasons, right when owners and buyers need to be focused on managing their business, brands and staff;
- and the pressure from too many vendors -- each selling too much me-too product -- to buy multi-categories from each vendor, often leading to retailers taking on inventory they don't want or need to get best terms.
As SNEWS started to peel back the layers of the onion to work on better understanding the issues from all sides, we quickly realized there was going to be no simple answer to what has become a very complicated issue. We spent several months investigating, including visiting factories overseas, interviewing numerous manufacturers (CEOs, production managers and designers), talking with sales reps, trade show organizers and other retailers. Then we chatted with industry consultants to seek opinions, garner background information and decide how best to proceed. One common thread began to appear among the complexly woven tapestry: Everyone shares some responsibility for how we arrived at the current supply chain problem and everyone must act collectively to find a solution.
Somehow, in the headlong race over the last 15 years to chase the almighty sewing dollar, we have managed to create a production and sales cycle that is so complex even executives coming into our industry from far more seemingly complicated markets shake their heads in wonder. Few retailers and even fewer manufacturers from other industries are making buying and selling decisions a year in advance -- decisions that can make or break a season or even a year.
Order lead times have lengthened, necessitated in part because manufacturers insist they need 10 months or more lead time for greige goods (i.e., unbleached and undyed textiles). That means reps are showing up in key stores in November, asking buyers and store owners to make buying decisions for products that won't deliver until the following August, intended to sell during the months of September through December.
The problem with this, retailers told us, is they often have no real idea what will sell through this year in order to make an educated guess as to what colors and styles might sell well next year. Worse, few feel confident enough about their personal crystal balls to place orders when there is no way to gauge the economy, trends or consumer buying moods that far in advance. In the outdoor specialty market, with few exceptions, the strongest selling season for most retailers is November through January (on average, 25 percent to 30 percent of all sales are made during this time). The second most important selling season appears to be May through mid-July. With the current ordering cycle, reps are coming into stores during the busiest selling seasons, and buyers and storeowners, and often key floor sales staff, are having to spend significant off-the-floor time in meetings. Retailers also point out that once the rep has left, their scramble is not done, as most manufacturers now are demanding paper by December for the fall deliveries and paper by late June and early July for the following spring deliveries.
If it were only as simple as viewing product and placing an order, that might be one thing, but retailers also tell us that during those same peak sales times, they have to be in contact with their sales reps by phone or email, national sales managers by phone, and in some cases, even sales VPs or company owners to ensure turns and profits are maximized and the best terms are worked out. Since every retailer is doing much the same thing, and there are only so many reps and sales managers to go around, retailers tell us that this leads to a circus of voicemail messages, phone tag dances, and games of hide-and-seek that are enormous time wasters. Multiply that scenario by 100 brands all demanding essentially the same performance and one begins to wonder how any business is getting done at all, let alone good buying decisions are being made.
Most retailers we spoke with are responding to the shifting economic climate and consumer buying habits by modifying traditional preseason and fill-in strategies to align more closely with inventory need. The majority is now allotting only 55 percent to 60 percent of their dollars for preseasons with the rest kept in pocket for fill-ins and chasing bargains. But manufacturers still seem to want retailers to essentially super-size their orders to gain the most favorable terms, we were told. And that just doesn't seem healthy either.
Retailers further explained to us that manufacturers seem to be on the same path, despite the economy, of trying to push preseasons earlier and earlier. Retailers assert that manufacturers apparently want to tie up more of the retailers' dollars earlier, so they can garner a competitive advantage and, perhaps, ensure earlier production time on the factory floors in Asia.
Not one retailer we spoke with told us manufacturers were lowering thresholds to garner the best terms -- even in this challenged economy. In fact, most manufacturers appear, according to retailers, to be insisting retailers maintain flat to increased business to earn best terms -- often requiring they take on more SKUs and a broader product mix than a retailer might wish to carry from that particular vendor. Retailers told SNEWS that while they suspect manufacturers are doing this to prevent cherry-picking of lines, this kind of business approach is not only short-sighted, it is the kind of strategy that created the overstock scenario many retailers found themselves in when the market collapsed in late 2008. And, it is this approach to force-feeding a retailer that is the primary reason why so many preseason orders were cancelled this spring, leaving manufacturers stuck with spring/summer inventory that had landed, but wasn't selling.
Additional preseason trade shows, regional shows, rep shows and moving the dates on what is currently considered our national show, Outdoor Retailer, are of no help and do nothing, really, to address the overall issue of a broken selling cycle, retailers said. The earlier the shows move, they said, the earlier still the manufacturers continue to push their reps to get in to see key retailers, and round and round the merry-go-round goes.
Retailers acknowledged, somewhat wistfully, that the days of heading to an August or January national trade show for the inaugural "show and tell" of new product, followed by the buying decisions either at the show or a month later, are long gone. There are too many brands with expanding product lines and production spread all over the globe for that to ever work again. In fact, some argued, we have too many brands to begin with now…but that's a topic for another day.
So, from a retailer's perspective, what are the solutions?
1. Stop all the show madness -- pre-shows, manufacturer preview shows, regional show additions and trade show date dancing. Less is more here.
2. Reps are welcome (begged for and wanted a number of retailers told us) in the stores November through December and June through July as long as they are there to drive sales by supporting the sales staff and working the floor, not give a line presentation. If manufacturers are creating a scenario where reps feel they need to be in the stores giving line presentations -- sometimes lasting multiple days -- then the manufacturers need to shift the order and production timelines to eliminate this.
3. Manufacturers need to realize that retailers are going to order less in preseasons, and as a result, require more with fill-ins. For retailers, it is about turns, not about how much has been preseasoned. Core products should never be out of stock.
It is VERY important, however, that everyone reading this, realizes, as SNEWS does, that the above is but one view of a very complex situation -- it is how retailers are looking at the supply chain problems. Next up, SNEWS will take a look at the distribution challenges through the eyes of the rep.
Our goal with this series of editorials is to engage the industry in healthy discussion. Perhaps open a few eyes to seeing things through a new lens, and, hopefully, help us all arrive at a series of ideas and action items that will, in the long term, lead to a healthier and more profitable industry for us all. --Michael Hodgson
Thursday, May 7, 2009
A Supply Chain in Crisis: Finding New Ways to Share Risk
The outdoor industry’s chances of emerging stronger than ever from the economic crisis are good if brands, manufacturers, dealers and their bankers can agree in coming months how to reapportion risk in a much faster moving, but slower growing economy.
Consensus is building among outdoor brands that they need to move production and wholesale deliveries closer to need. That will involve moving toward a fashion merchandising model of smaller, more frequent production runs. The goal is less inventory risk, less work in progress and less reliance on credit.
Retailers are already moving in this direction, according to consultants, retailers and industry suppliers.
“We’ve seen huge increases in the reorder side of the business,” said Peter O’Neil, VP of sales and marketing for CenterStone Technologies, which provides a B2B platform that allows reps and dealers to view brand’s inventories and place orders 24/7. “Retailers are loving the fact that they can chase inventory and order when they have one left on the rack. They no longer have to have ten on the rack and wait for them sell. That's driving our business.”
The onus appears to be on brands, their manufacturers and suppliers, who will need to negotiate new terms to ensure a smooth transition. Specifically, brands will have to negotiate with manufacturers and suppliers, such as fabric mills, to lower their minimum product runs or they will have to start paying and absorbing surcharges. That’s something that is also starting to happen with more frequency, according to sourcing experts.
Currently, brands that can’t meet minimum order requirements are assessed surcharges. Until now, brands dealt with the minimums by pressuring their dealers to place larger and larger preseason orders and then liquidating any unsold product at the end of season. But retailers began trimming back preseason orders in early 2008 and have since been canceling orders at an unprecedented rate. Traditional liquidation channels, meanwhile, are having difficulty moving surplus goods at traditional margins because department and chain stores are already selling so much apparel and footwear at up to 70% off retail.
Outdoor brands that can’t convince suppliers to reduce minimums will need to pay surcharges or find more willing suppliers willing to handle smaller runs. The latter has also begun to occur.
Longer term, some experts foresee a shift to a more regional production platform with smaller run/quick turn sportswear production for the North American market moving closer to home.
Horny Toad CEO Gordon Seabury said Zara, a vertically integrated global fashion brand owned by Spanish apparel giant Inditex, provides a glimpse of the future. On average, Zara can deliver goods to its European stores within 24 hours of receiving an order. Orders from America and Asia are fulfilled within 48 hours. The company’s designers receive input directly from buyers at more than 500 stores. Highly automated logistics centers ship product twice a week and each delivery includes new items so that stores are constantly refreshing their offer, according to Inditex’s annual report. In 2006, the company’s EBITDA rose 20% to 2.2 billion, or 22.8 percent of sales.
Despite the clamor from retailers for more domestic production, the bulk of manufacturing is likely to remain in Asia, and particularly China. Asian factories have simply gotten too good at what they do and provide too much value for the dollar, sourcing experts say. It's no longer just the labor differential but the work ethic and willingness to go the extra mile that is separating them from U.S. mills, contractors say.
After all, if Chinese factories can serve the quick turn-around times demanded by the ready-to-wear and fashion industries, they can surely meet the needs of the outdoor industry, experts say.
Horny Toad’s Lizard Lounge retail store in Portland is already moving toward this model. To keep things fresh, the store takes deliveries six times a year and remerchandizes every two weeks. It now turns inventory every six weeks, said Seabury.
“The whole industry is built on the old equipment model – stack it to the ceiling and sell it and then mark down whatever does not sell,” said Seabury. “There is tons of inventory stashed in the back tying up working capital. We need to increase frequency of replenishment to drive traffic through the stores. You are still developing product for two major seasons, but you are staging production and deliveries – phasing it to reduce duration of the cash float.”
Lizard Lounge has taught Horny Toad that in this economy more than ever, edgier more innovative product, rather than core product, is what drives retail traffic and sales. “Even if people are spending less,” he said, “you have to give them a reason to spend. “
Consensus is building among outdoor brands that they need to move production and wholesale deliveries closer to need. That will involve moving toward a fashion merchandising model of smaller, more frequent production runs. The goal is less inventory risk, less work in progress and less reliance on credit.
Retailers are already moving in this direction, according to consultants, retailers and industry suppliers.
“We’ve seen huge increases in the reorder side of the business,” said Peter O’Neil, VP of sales and marketing for CenterStone Technologies, which provides a B2B platform that allows reps and dealers to view brand’s inventories and place orders 24/7. “Retailers are loving the fact that they can chase inventory and order when they have one left on the rack. They no longer have to have ten on the rack and wait for them sell. That's driving our business.”
The onus appears to be on brands, their manufacturers and suppliers, who will need to negotiate new terms to ensure a smooth transition. Specifically, brands will have to negotiate with manufacturers and suppliers, such as fabric mills, to lower their minimum product runs or they will have to start paying and absorbing surcharges. That’s something that is also starting to happen with more frequency, according to sourcing experts.
Currently, brands that can’t meet minimum order requirements are assessed surcharges. Until now, brands dealt with the minimums by pressuring their dealers to place larger and larger preseason orders and then liquidating any unsold product at the end of season. But retailers began trimming back preseason orders in early 2008 and have since been canceling orders at an unprecedented rate. Traditional liquidation channels, meanwhile, are having difficulty moving surplus goods at traditional margins because department and chain stores are already selling so much apparel and footwear at up to 70% off retail.
Outdoor brands that can’t convince suppliers to reduce minimums will need to pay surcharges or find more willing suppliers willing to handle smaller runs. The latter has also begun to occur.
Longer term, some experts foresee a shift to a more regional production platform with smaller run/quick turn sportswear production for the North American market moving closer to home.
Horny Toad CEO Gordon Seabury said Zara, a vertically integrated global fashion brand owned by Spanish apparel giant Inditex, provides a glimpse of the future. On average, Zara can deliver goods to its European stores within 24 hours of receiving an order. Orders from America and Asia are fulfilled within 48 hours. The company’s designers receive input directly from buyers at more than 500 stores. Highly automated logistics centers ship product twice a week and each delivery includes new items so that stores are constantly refreshing their offer, according to Inditex’s annual report. In 2006, the company’s EBITDA rose 20% to 2.2 billion, or 22.8 percent of sales.
Despite the clamor from retailers for more domestic production, the bulk of manufacturing is likely to remain in Asia, and particularly China. Asian factories have simply gotten too good at what they do and provide too much value for the dollar, sourcing experts say. It's no longer just the labor differential but the work ethic and willingness to go the extra mile that is separating them from U.S. mills, contractors say.
After all, if Chinese factories can serve the quick turn-around times demanded by the ready-to-wear and fashion industries, they can surely meet the needs of the outdoor industry, experts say.
Horny Toad’s Lizard Lounge retail store in Portland is already moving toward this model. To keep things fresh, the store takes deliveries six times a year and remerchandizes every two weeks. It now turns inventory every six weeks, said Seabury.
“The whole industry is built on the old equipment model – stack it to the ceiling and sell it and then mark down whatever does not sell,” said Seabury. “There is tons of inventory stashed in the back tying up working capital. We need to increase frequency of replenishment to drive traffic through the stores. You are still developing product for two major seasons, but you are staging production and deliveries – phasing it to reduce duration of the cash float.”
Lizard Lounge has taught Horny Toad that in this economy more than ever, edgier more innovative product, rather than core product, is what drives retail traffic and sales. “Even if people are spending less,” he said, “you have to give them a reason to spend. “
Credit - A Supply Chain in Crisis: The Broken Two-Season Business Model
A scarcity of credit and shrinking sales is taking its toll on the outdoor industry’s two-season business model with its long lead times and reliance on credit.
Healthy growth rates have enabled the apparel and footwear industry to overlook the well known flaws of its business model for years. In that model – inherited largely from the snow sports industry – product managers would essentially order, manufacture and ship apparel and footwear to their dealers twice each season. The system tended to push inventory risk onto retailers, who were enticed by discounts to place up to 70% of their orders a full year in advance. In exchange, brands financed the inventory and offered preseason discounts of up to 10% plus dating of up to 120 days for some winter goods.
This system allowed brands to amass orders to meet the minimum production runs of Asian mills. It also gave them time to shop sourcing for the best price. The downside was that the extended lead times meant brands would tie up valuable cash in greige goods and working capital for up to ten months. Conversely, many retailers got in the habit of relying on lines of credit to finance their preseason orders and take advantage of discounts.
The model functioned as long as the market grew and credit was cheap, but that ended in September when consumer spending dropped off a cliff and banks tightened credit. Often under the guidance of consultants, retailers quickly shifted the ratio of their business from 70/30 percent preseason to 60/40 to become more liquid and nimble.
With banks cutting back their credit and sales plummeting, dealers wisely shifted toward buying closer to need. Many have since learned the tremendous power of placing more, but smaller orders. Some are even reporting their best margins in years on significantly less sales.
Outdoor brands, however, could not respond as quickly, since they order goods a year in advance. They are now scrambling to liquidate spring/summer merchandise landed since January, which has further rewarded retailers who have kept their open-to-buy money ready. Reps report the amount of merchandise available at close-out appears to have grown by 25% this year.
“We’ve been managing it by giving up discounts,” said Lisa Hollenbeck, VP and merchandise manager for the Alpine Shop Ltd. in St. Louis, MO. “With cost of money so low, it’s not really worth it.”
This year Alpine Shop has shifted from ordering $2,500 to $3,000 in sportswear every two to three months to bringing in $500 orders every four to six weeks. This lessens the chance of sitting on dozens of tank tops when there is still snow on the ground and also lowers the need for cash. “We are intentionally buying smaller amounts more frequently to keep the stores fresh,” said Hollenbeck.
Last fall, Alpine Shop still bought core product on a preseason basis, but staged deliveries of new colors for late November and early December. Like many outdoor retailers, Hollenbeck said she disregarded warnings that the colors might not be available, figuring she could always find product elsewhere. Besides, she said, there was no guarantee the brand would ship the items on time anyway.
Retailers who have not cut back significantly on preseason orders, meanwhile, are now struggling to pay their bills. At one rapidly growing brand, the number of wholesale accounts 60 days or more past due has tripled from a year ago. Banks typically will not lend against such aged A/Rs.
One brand executive said bank due diligence is now much more thorough. They are scrutinizing the quality of A/R, future orders and inventory more thoroughly. They are analyzing the health of retailers the brand sells to and are also examining retailers’ trade credits to identify what brands might be vulnerable in case of a retail bankruptcy. In some instances, bankers are calling retailers to confirm future orders. That has prompted some executives to tell their reps to stop faking orders. “We are cleaning up that file right now,” said one executive.
Even the most successful retailers, meanwhile, are bracing for higher credit costs. One said he is hearing that while his bank will likely renew his line of credit, it will raise the interest rate by 200 points. He may have to raise prices to preserve margin – a dicey proposition in the middle of the biggest downturn in consumer spending in decades.
Healthy growth rates have enabled the apparel and footwear industry to overlook the well known flaws of its business model for years. In that model – inherited largely from the snow sports industry – product managers would essentially order, manufacture and ship apparel and footwear to their dealers twice each season. The system tended to push inventory risk onto retailers, who were enticed by discounts to place up to 70% of their orders a full year in advance. In exchange, brands financed the inventory and offered preseason discounts of up to 10% plus dating of up to 120 days for some winter goods.
This system allowed brands to amass orders to meet the minimum production runs of Asian mills. It also gave them time to shop sourcing for the best price. The downside was that the extended lead times meant brands would tie up valuable cash in greige goods and working capital for up to ten months. Conversely, many retailers got in the habit of relying on lines of credit to finance their preseason orders and take advantage of discounts.
The model functioned as long as the market grew and credit was cheap, but that ended in September when consumer spending dropped off a cliff and banks tightened credit. Often under the guidance of consultants, retailers quickly shifted the ratio of their business from 70/30 percent preseason to 60/40 to become more liquid and nimble.
With banks cutting back their credit and sales plummeting, dealers wisely shifted toward buying closer to need. Many have since learned the tremendous power of placing more, but smaller orders. Some are even reporting their best margins in years on significantly less sales.
Outdoor brands, however, could not respond as quickly, since they order goods a year in advance. They are now scrambling to liquidate spring/summer merchandise landed since January, which has further rewarded retailers who have kept their open-to-buy money ready. Reps report the amount of merchandise available at close-out appears to have grown by 25% this year.
“We’ve been managing it by giving up discounts,” said Lisa Hollenbeck, VP and merchandise manager for the Alpine Shop Ltd. in St. Louis, MO. “With cost of money so low, it’s not really worth it.”
This year Alpine Shop has shifted from ordering $2,500 to $3,000 in sportswear every two to three months to bringing in $500 orders every four to six weeks. This lessens the chance of sitting on dozens of tank tops when there is still snow on the ground and also lowers the need for cash. “We are intentionally buying smaller amounts more frequently to keep the stores fresh,” said Hollenbeck.
Last fall, Alpine Shop still bought core product on a preseason basis, but staged deliveries of new colors for late November and early December. Like many outdoor retailers, Hollenbeck said she disregarded warnings that the colors might not be available, figuring she could always find product elsewhere. Besides, she said, there was no guarantee the brand would ship the items on time anyway.
Retailers who have not cut back significantly on preseason orders, meanwhile, are now struggling to pay their bills. At one rapidly growing brand, the number of wholesale accounts 60 days or more past due has tripled from a year ago. Banks typically will not lend against such aged A/Rs.
One brand executive said bank due diligence is now much more thorough. They are scrutinizing the quality of A/R, future orders and inventory more thoroughly. They are analyzing the health of retailers the brand sells to and are also examining retailers’ trade credits to identify what brands might be vulnerable in case of a retail bankruptcy. In some instances, bankers are calling retailers to confirm future orders. That has prompted some executives to tell their reps to stop faking orders. “We are cleaning up that file right now,” said one executive.
Even the most successful retailers, meanwhile, are bracing for higher credit costs. One said he is hearing that while his bank will likely renew his line of credit, it will raise the interest rate by 200 points. He may have to raise prices to preserve margin – a dicey proposition in the middle of the biggest downturn in consumer spending in decades.
Tuesday, April 21, 2009
Retail - Retail Import Volume Hits Lowest Level in Seven Years As Number of Cargo Containers Drops Below 1 Million Mark
WASHINGTON, April 15, 2009 – Import cargo volume at the nation’s major retail container ports hit its lowest level in seven years in February as the number of containers dropped below the 1 million mark for the first time in half a decade, according to the monthly Port Tracker report released today by the National Retail Federation and IHS Global Insight. Numbers began climbing again in March and April, but the 1 million mark won’t be seen again before May, and imports will continue to see significant declines compared with last year at least through the summer.
“These numbers come during the slowest part of the annual shipping cycle, so they’re expected to be low, but they nonetheless show the severity of the current recession and its impact on the retail industry,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “The good news is that we’ve already seen the bottom for the year, and month-to-month numbers are already starting to climb. We’re still going to see double-digit declines compared with last year, but the size of the gap is starting to narrow.”
U.S. ports surveyed handled only 847,832 Twenty-Foot Equivalent Units in February, the most recent month for which actual numbers are available. That was down 20.6 percent from January’s 1.07 million TEU and 31.3 percent from February 2008’s 1.23 million TEU. One TEU is one 20-foot container or its equivalent.
The number for February, traditionally the slowest month of the year, was the lowest since 818,342 TEU in March 2002. It was also the first time the total has fallen below the 1 million mark since February 2004, when ports in the survey handled 901,497 TEU, and marked the 20th month in a row to see a year-over-year decline. The last year-over-year increase was in July 2007, when the 1.44 million TEU handled was up 3.4 percent from July 2006.
Volume for March was estimated at 930,142 TEU, down 19.7 percent from a year earlier, and April is forecast at 987,371 TEU, down 22 percent. The numbers are expected to rise above the 1 million mark again in May, but will nonetheless remain well below last year’s levels. May is forecast at 1.02 million TEU, down 21.5 percent from last year; June at 1.06 million TEU, down 18.3 percent; July at 1.11 million TEU, down 15.6 percent; and August at 1.15 million TEU, down 16 percent.
The first half of 2009 is now forecast at 5.9 million TEU, down 21 percent from the 7.5 million TEU seen in the first half of 2008. Total volume for 2008 was 15.2 million TEU, down 7.9 percent from 2007’s 16.5 million TEU and the lowest level since 2004’s 14 million TEU.
“The weak port cargo volumes have left port trucking with excess capacity, and cargo is moving without congestion either at the ports or through the inland system,” IHS Global Insight Economist Paul Bingham said. “Rail operations were affected by flooding in the northern states in March and April but disruptions were not sustained enough to cause significant delays.”
All U.S. ports covered by Port Tracker – Los Angeles/Long Beach, Oakland, Seattle and Tacoma on the West Coast; New York/New Jersey, Hampton Roads, Charleston and Savannah on the East Coast, and Houston on the Gulf Coast – are rated “low” for congestion, the same as last month.
Port Tracker, which is produced by the economic research, forecasting and analysis firm IHS Global Insight for NRF, looks at inbound container volume, the availability of trucks and railroad cars to move cargo out of the ports, labor conditions and other factors that affect cargo movement and congestion. The report is free to NRF retail members. Subscription information is available at www.nrf.com/PortTracker or by calling (202) 783-7971.
Non-NRF members can contact IHS Global Insight Director of Business Development Diana Wyman at (202) 481-9265.The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.6 million U.S. retail establishments, more than 24 million employees - about one in five American workers - and 2008 sales of $4.6 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. www.nrf.com.
IHS Global Insight (www.globalinsight.com) provides the most comprehensive economic and financial information available on countries, regions and industries, using a unique combination of expertise, models, data and software within a common analytical framework to support planning and decision-making. Through the world's first same-day analysis and risk assessment service, IHS Global Insight provides immediate insightful analysis of market conditions and key events around the world, covering economic, political, and operational factors. IHS (NYSE: IHS, www.ihs.com) is a leading global source of critical information and insight that enables innovative and successful decision-making for customers ranging from governments and multinational companies to smaller companies and technical professionals. IHS employs approximately 3,800 people in 20 countries.
“These numbers come during the slowest part of the annual shipping cycle, so they’re expected to be low, but they nonetheless show the severity of the current recession and its impact on the retail industry,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “The good news is that we’ve already seen the bottom for the year, and month-to-month numbers are already starting to climb. We’re still going to see double-digit declines compared with last year, but the size of the gap is starting to narrow.”
U.S. ports surveyed handled only 847,832 Twenty-Foot Equivalent Units in February, the most recent month for which actual numbers are available. That was down 20.6 percent from January’s 1.07 million TEU and 31.3 percent from February 2008’s 1.23 million TEU. One TEU is one 20-foot container or its equivalent.
The number for February, traditionally the slowest month of the year, was the lowest since 818,342 TEU in March 2002. It was also the first time the total has fallen below the 1 million mark since February 2004, when ports in the survey handled 901,497 TEU, and marked the 20th month in a row to see a year-over-year decline. The last year-over-year increase was in July 2007, when the 1.44 million TEU handled was up 3.4 percent from July 2006.
Volume for March was estimated at 930,142 TEU, down 19.7 percent from a year earlier, and April is forecast at 987,371 TEU, down 22 percent. The numbers are expected to rise above the 1 million mark again in May, but will nonetheless remain well below last year’s levels. May is forecast at 1.02 million TEU, down 21.5 percent from last year; June at 1.06 million TEU, down 18.3 percent; July at 1.11 million TEU, down 15.6 percent; and August at 1.15 million TEU, down 16 percent.
The first half of 2009 is now forecast at 5.9 million TEU, down 21 percent from the 7.5 million TEU seen in the first half of 2008. Total volume for 2008 was 15.2 million TEU, down 7.9 percent from 2007’s 16.5 million TEU and the lowest level since 2004’s 14 million TEU.
“The weak port cargo volumes have left port trucking with excess capacity, and cargo is moving without congestion either at the ports or through the inland system,” IHS Global Insight Economist Paul Bingham said. “Rail operations were affected by flooding in the northern states in March and April but disruptions were not sustained enough to cause significant delays.”
All U.S. ports covered by Port Tracker – Los Angeles/Long Beach, Oakland, Seattle and Tacoma on the West Coast; New York/New Jersey, Hampton Roads, Charleston and Savannah on the East Coast, and Houston on the Gulf Coast – are rated “low” for congestion, the same as last month.
Port Tracker, which is produced by the economic research, forecasting and analysis firm IHS Global Insight for NRF, looks at inbound container volume, the availability of trucks and railroad cars to move cargo out of the ports, labor conditions and other factors that affect cargo movement and congestion. The report is free to NRF retail members. Subscription information is available at www.nrf.com/PortTracker or by calling (202) 783-7971.
Non-NRF members can contact IHS Global Insight Director of Business Development Diana Wyman at (202) 481-9265.The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.6 million U.S. retail establishments, more than 24 million employees - about one in five American workers - and 2008 sales of $4.6 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. www.nrf.com.
IHS Global Insight (www.globalinsight.com) provides the most comprehensive economic and financial information available on countries, regions and industries, using a unique combination of expertise, models, data and software within a common analytical framework to support planning and decision-making. Through the world's first same-day analysis and risk assessment service, IHS Global Insight provides immediate insightful analysis of market conditions and key events around the world, covering economic, political, and operational factors. IHS (NYSE: IHS, www.ihs.com) is a leading global source of critical information and insight that enables innovative and successful decision-making for customers ranging from governments and multinational companies to smaller companies and technical professionals. IHS employs approximately 3,800 people in 20 countries.
Retail - March Retail Sales Disappoint as Retailers Wrap up First Quarter, According to NRF
Washington – Several months of stronger-than-expected retail sales provided hope that the industry was poised to bounce back, but March retail sales demonstrate that the industry is continuing to struggle. According to the National Retail Federation, retail industry sales for March (which exclude automobiles, gas stations, and restaurants) decreased 0.6 percent seasonally adjusted from February and dropped 3.7 percent unadjusted over last year.
March retail sales released today by the U.S. Commerce Department show total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) decreased 1.1 percent seasonally adjusted over February and decreased 10.6 percent unadjusted year-over-year. Retail industry sales for February were revised upward, increasing 0.3% instead of dipping 0.1% as originally reported.
“A chilly start to spring and a late Easter combined for dreary March sales,” said Rosalind Wells, Chief Economist for NRF. “To compensate for the Easter shift, retailers typically look at March and April together to get a better look at how their stores performed. Easter should give a much-needed boost to April sales.”
One of the only bright spots in March came from health and personal care stores, whose sales increased 0.4 percent seasonally adjusted over last month and 3.5 percent unadjusted over last year. Food and beverage stores sales also increased 0.5 percent seasonally adjusted month-to-month but decreased 1.8 percent unadjusted year-over-year.
The shift in Easter sales also played a role in consumer purchases of clothing and clothing accessories. Sales at those stores decreased 1.8 percent seasonally adjusted from February and decreased 8.7 percent unadjusted over March 2008. Electronics and appliance stores sales decreased 5.9 percent seasonally adjusted month-to-month and decreased 10.0 percent unadjusted year-over-year. Sales at sporting goods, hobby, book and music stores also decreased 0.9 percent seasonally adjusted over last month and decreased 3.0 percent unadjusted over last year.
The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.6 million U.S. retail establishments, more than 24 million employees - about one in five American workers - and 2008 sales of $4.6 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. www.nrf.com.
March retail sales released today by the U.S. Commerce Department show total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) decreased 1.1 percent seasonally adjusted over February and decreased 10.6 percent unadjusted year-over-year. Retail industry sales for February were revised upward, increasing 0.3% instead of dipping 0.1% as originally reported.
“A chilly start to spring and a late Easter combined for dreary March sales,” said Rosalind Wells, Chief Economist for NRF. “To compensate for the Easter shift, retailers typically look at March and April together to get a better look at how their stores performed. Easter should give a much-needed boost to April sales.”
One of the only bright spots in March came from health and personal care stores, whose sales increased 0.4 percent seasonally adjusted over last month and 3.5 percent unadjusted over last year. Food and beverage stores sales also increased 0.5 percent seasonally adjusted month-to-month but decreased 1.8 percent unadjusted year-over-year.
The shift in Easter sales also played a role in consumer purchases of clothing and clothing accessories. Sales at those stores decreased 1.8 percent seasonally adjusted from February and decreased 8.7 percent unadjusted over March 2008. Electronics and appliance stores sales decreased 5.9 percent seasonally adjusted month-to-month and decreased 10.0 percent unadjusted year-over-year. Sales at sporting goods, hobby, book and music stores also decreased 0.9 percent seasonally adjusted over last month and decreased 3.0 percent unadjusted over last year.
The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.6 million U.S. retail establishments, more than 24 million employees - about one in five American workers - and 2008 sales of $4.6 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. www.nrf.com.
Consumer - Confused about the economic forecast? Yeah, so are the forecasters
One day it's all doom and gloom, and the next seems to forecast the worst may be over. Only to be followed by more "oh no, the sky is falling" news.
Confused? Yup. Who isn't. Since the news of late seems to feel a bit schizophrenic, we thought we'd take a quick look at recent forecasts and reports so we can see in one place what the gurus are saying and seeing.
SNEWS® knows the current economic state is important for your business. This is one look at different ways it's affecting our industries and your business in a periodic and ongoing series of stories in SNEWS. This time around we take a look at forecasts about the future of the economy, sizing up statistics and surveys from research groups. Stay tuned for more in-depth reporting on the current situation as it develops and changes, from interviews with experts, closer looks at small businesses and how they are coping, to economic statistics, breaking news and how it affects consumers.
Usually April is all about the 15th, the day taxes are due for most Americans but this year that seemed to blow right past us. Instead, on April 15, more reports about the economy took the headlines, especially the monthly release from the Federal Reserve Board summarizing the state of the economy overall and in 12 U.S. districts.
Overall, the report noted a continued downturn with the forecast for more bad news in manufacturing, employment and commercial real estate in particular. Look between the lines, however, and you'll find even the Feds reported that five of the 12 districts were seeing some kind of moderation in the pace of the decline or, even better, actually a stabilization.
Geographically disparate
On the bad news front, the districts of Boston, Philadelphia, Cleveland, Richmond, Atlanta, St. Louis, and Minneapolis were still slowing in economic activity that covers retail, manufacturing, business services, commercial and residential real estate.
But others saw a glimmer of light: New York was moving at a "subdued pace;" Chicago was declining more slowly; Kansas City showed "tentative signs of stabilization;" Dallas demonstrated "signs of stabilization at low levels;" and San Francisco had a "slower rate of decline in some sectors." (To see a large map of the districts similar to the one to the right, click here; to see the full report from the Federal Reserve, click here.)
In addition, that and the mixed bag of reports offered on the same day by the Treasury Department in its monthly survey of lending by the 21 biggest recipients of bank bailout money caused Wall Street to nearly party in the streets. On April 15, the Dow Jones Industrial Average closed up at 8029.62, and on April 17 continued the trend, closing at 8131.33; the S&P 500 closed up at 852.06 and on April 17 logged another small jump to 869.60; and the Nasdaq closed up at 1626.80, also ticking upward at the close of the week to 1673.07.
But wait, not so fast… In the same mid-month flood of reports, we saw unemployment go up, consumer prices dropping another 0.1 percent, unexpected drops in retail sales (Click here to see that April 15, 2009, SNEWS News Release), import levels hitting their lowest level in seven years (Click here to see that April 15, 2009, SNEWS News Release) and home prices and construction still declining. Those add to evidence we are still locked tightly in a recession.
Business leaders don't agree
So how positive are people? A week earlier the Conference Board, which regularly measures "CEO Confidence," noted the top bosses in the country were still dragging their chins. Indeed, the level of confidence was up to 30 from a lowly 24 last quarter (a reading of more than 50 means more positive than negative results), but that's still a long way from being in the black when it comes to confidence.
But despite lagging confidence, more of the CEOs surveyed, when asked to look six months ahead, were reporting they expected improved business conditions: 7 percent said they expected things to get better compared to only 11 percent last quarter; and when asked about expected improvements in their own sectors, 26 percent said things would look up in six months, which is way up from only 12 percent last quarter. Of course, this was the same bunch that in February 2008 reported that a recession was unlikely.
In another recent survey of business leaders released on April 7, the Business Roundtable index -- which tracks the outlook of CEOs of some of the country's biggest companies -- dropped to its lowest level since the survey began in 2002. This group was basically glum, glum about today, glum about yesterday, and glum about tomorrow, noting they expected their companies' sales and spending to drop in the next six months.
A month earlier in early March, advisors polled for Charles Schwab's Independent Advisor Outlook Study were split on whether the economy would pick up by year's end or not. Just over half (53 percent) who were polled in late January said they thought the S&P 500 would rise in the next six months. (We'll have to wait and see if the rise this week is going to stick.) When asked in January to predict how long the recession would last, 44 percent said they estimated it would be wrapping up by December 2009, while 41 percent gave it another year -- to December 2010.
In a February 2009 statement, the government said the economic contraction for the fourth quarter of 2008, which had been estimated at 3.8 percent, was actually 6.2 percent. That was the economy's worse showing in a quarter-century. But others have along the way warned the public as well as the economists to not freak out since a recession is a lot different than a depression. Speaking in January, economist Chris Thornberg, reportedly one of the first to predict the recession, said Americans are wont to overreact and although he has been known to predict doom and gloom, he said this has gotten out of hand.
"Whoa, time out…deep, deep breath," he told a group of appraisers gathered in the Sacramento, Calif., area, as reported in the Sacramento Bee. "We're in the midst of what I would call a nasty recession. Like a bad cold, you'll get over it."
At that time, he said he expected this recession to end up like the last large downturn in the early 1980s, which drove national unemployment to 10.8 percent. When he spoke in January, the rate was 7.2 percent. The Bureau of Labor Statistics just reported this week unemployment as of March 2009 had risen to 8.5 percent -- the highest level in more than a quarter of a century but still off the 1980s figure.
Consumers more depressed
But what about consumers? BIGresearch reported in January that consumers weren't so glum as they had been: Nearly a quarter (24.7 percent) reported they were confident or very confident in the chances for a strong economy reappearing, rising from the one in five rating (20 percent) at the end of 2008. January's 24.7 percent figure was the highest reading since September 2008 when it was 28.3 percent.
Times change, though, and sometimes quickly. Only two months later, in its March report, BIG found the confidence in chances for a strong economy had again plummeted -- to 19.5 percent, down more than five points from a year ago and trailing a reading from two years ago by more than half (down from 46.9 percent).
No, the worst isn't over although hints of some dim light are there. Yes, forecasters don't agree. And the statistics and forecasts are at best unpredictable. Wish SNEWS had a crystal ball. --Therese Iknoian
Confused? Yup. Who isn't. Since the news of late seems to feel a bit schizophrenic, we thought we'd take a quick look at recent forecasts and reports so we can see in one place what the gurus are saying and seeing.
SNEWS® knows the current economic state is important for your business. This is one look at different ways it's affecting our industries and your business in a periodic and ongoing series of stories in SNEWS. This time around we take a look at forecasts about the future of the economy, sizing up statistics and surveys from research groups. Stay tuned for more in-depth reporting on the current situation as it develops and changes, from interviews with experts, closer looks at small businesses and how they are coping, to economic statistics, breaking news and how it affects consumers.
Usually April is all about the 15th, the day taxes are due for most Americans but this year that seemed to blow right past us. Instead, on April 15, more reports about the economy took the headlines, especially the monthly release from the Federal Reserve Board summarizing the state of the economy overall and in 12 U.S. districts.
Overall, the report noted a continued downturn with the forecast for more bad news in manufacturing, employment and commercial real estate in particular. Look between the lines, however, and you'll find even the Feds reported that five of the 12 districts were seeing some kind of moderation in the pace of the decline or, even better, actually a stabilization.
Geographically disparate
On the bad news front, the districts of Boston, Philadelphia, Cleveland, Richmond, Atlanta, St. Louis, and Minneapolis were still slowing in economic activity that covers retail, manufacturing, business services, commercial and residential real estate.
But others saw a glimmer of light: New York was moving at a "subdued pace;" Chicago was declining more slowly; Kansas City showed "tentative signs of stabilization;" Dallas demonstrated "signs of stabilization at low levels;" and San Francisco had a "slower rate of decline in some sectors." (To see a large map of the districts similar to the one to the right, click here; to see the full report from the Federal Reserve, click here.)
In addition, that and the mixed bag of reports offered on the same day by the Treasury Department in its monthly survey of lending by the 21 biggest recipients of bank bailout money caused Wall Street to nearly party in the streets. On April 15, the Dow Jones Industrial Average closed up at 8029.62, and on April 17 continued the trend, closing at 8131.33; the S&P 500 closed up at 852.06 and on April 17 logged another small jump to 869.60; and the Nasdaq closed up at 1626.80, also ticking upward at the close of the week to 1673.07.
But wait, not so fast… In the same mid-month flood of reports, we saw unemployment go up, consumer prices dropping another 0.1 percent, unexpected drops in retail sales (Click here to see that April 15, 2009, SNEWS News Release), import levels hitting their lowest level in seven years (Click here to see that April 15, 2009, SNEWS News Release) and home prices and construction still declining. Those add to evidence we are still locked tightly in a recession.
Business leaders don't agree
So how positive are people? A week earlier the Conference Board, which regularly measures "CEO Confidence," noted the top bosses in the country were still dragging their chins. Indeed, the level of confidence was up to 30 from a lowly 24 last quarter (a reading of more than 50 means more positive than negative results), but that's still a long way from being in the black when it comes to confidence.
But despite lagging confidence, more of the CEOs surveyed, when asked to look six months ahead, were reporting they expected improved business conditions: 7 percent said they expected things to get better compared to only 11 percent last quarter; and when asked about expected improvements in their own sectors, 26 percent said things would look up in six months, which is way up from only 12 percent last quarter. Of course, this was the same bunch that in February 2008 reported that a recession was unlikely.
In another recent survey of business leaders released on April 7, the Business Roundtable index -- which tracks the outlook of CEOs of some of the country's biggest companies -- dropped to its lowest level since the survey began in 2002. This group was basically glum, glum about today, glum about yesterday, and glum about tomorrow, noting they expected their companies' sales and spending to drop in the next six months.
A month earlier in early March, advisors polled for Charles Schwab's Independent Advisor Outlook Study were split on whether the economy would pick up by year's end or not. Just over half (53 percent) who were polled in late January said they thought the S&P 500 would rise in the next six months. (We'll have to wait and see if the rise this week is going to stick.) When asked in January to predict how long the recession would last, 44 percent said they estimated it would be wrapping up by December 2009, while 41 percent gave it another year -- to December 2010.
In a February 2009 statement, the government said the economic contraction for the fourth quarter of 2008, which had been estimated at 3.8 percent, was actually 6.2 percent. That was the economy's worse showing in a quarter-century. But others have along the way warned the public as well as the economists to not freak out since a recession is a lot different than a depression. Speaking in January, economist Chris Thornberg, reportedly one of the first to predict the recession, said Americans are wont to overreact and although he has been known to predict doom and gloom, he said this has gotten out of hand.
"Whoa, time out…deep, deep breath," he told a group of appraisers gathered in the Sacramento, Calif., area, as reported in the Sacramento Bee. "We're in the midst of what I would call a nasty recession. Like a bad cold, you'll get over it."
At that time, he said he expected this recession to end up like the last large downturn in the early 1980s, which drove national unemployment to 10.8 percent. When he spoke in January, the rate was 7.2 percent. The Bureau of Labor Statistics just reported this week unemployment as of March 2009 had risen to 8.5 percent -- the highest level in more than a quarter of a century but still off the 1980s figure.
Consumers more depressed
But what about consumers? BIGresearch reported in January that consumers weren't so glum as they had been: Nearly a quarter (24.7 percent) reported they were confident or very confident in the chances for a strong economy reappearing, rising from the one in five rating (20 percent) at the end of 2008. January's 24.7 percent figure was the highest reading since September 2008 when it was 28.3 percent.
Times change, though, and sometimes quickly. Only two months later, in its March report, BIG found the confidence in chances for a strong economy had again plummeted -- to 19.5 percent, down more than five points from a year ago and trailing a reading from two years ago by more than half (down from 46.9 percent).
No, the worst isn't over although hints of some dim light are there. Yes, forecasters don't agree. And the statistics and forecasts are at best unpredictable. Wish SNEWS had a crystal ball. --Therese Iknoian
Social Media - SNEWS Mini-Survey provides look at how industry folk are utilizing social media
The SNEWS® Mini Survey that ended April 20, 2009, asked, "Have you found social networking sites to be beneficial to your business?" A reflection of the times, a whopping 65 percent answered yes, with 35 percent indicating it had no benefit to them.
In our follow-up question to those who answered yes, we asked respondents to select all of the social networking sites they used. Not surprisingly, Facebook led the pack with 50 percent of the responses, followed closely by Twitter with 45 percent. We would surmise, given the recent explosion of Twitter, that if we asked this same question in another six months, those that tweet and twitter among peers and associates for business would be significantly higher, perhaps even surpassing Facebook.
LinkedIn and Plaxo garnered 40 percent and 25 percent, respectively, with the "other" selection earning a 30 percent response. MySpace garnered a paltry 5 percent nod, equal to those who selected "Your own social networking site" as a response.
Our new survey question, "Where do you get most of your business or industry news?" is now live and awaiting your feedback.
To make your vote count, simply go to the SNEWS Reader Poll section in the right navigation bar of every web page in SNEWS or click here. --SNEWS® Editors
In our follow-up question to those who answered yes, we asked respondents to select all of the social networking sites they used. Not surprisingly, Facebook led the pack with 50 percent of the responses, followed closely by Twitter with 45 percent. We would surmise, given the recent explosion of Twitter, that if we asked this same question in another six months, those that tweet and twitter among peers and associates for business would be significantly higher, perhaps even surpassing Facebook.
LinkedIn and Plaxo garnered 40 percent and 25 percent, respectively, with the "other" selection earning a 30 percent response. MySpace garnered a paltry 5 percent nod, equal to those who selected "Your own social networking site" as a response.
Our new survey question, "Where do you get most of your business or industry news?" is now live and awaiting your feedback.
To make your vote count, simply go to the SNEWS Reader Poll section in the right navigation bar of every web page in SNEWS or click here. --SNEWS® Editors
Tuesday, April 7, 2009
Sourcing - Eager to Limit Inventory Risk, Brands Push Lead Times Lower
Eager to Limit Inventory Risk,Brands Push Lead Times Lower
Some outdoor brands are pushing back their orders for final orders and greige goods for Fall 2009 and Spring 2010 and pressuring suppliers to shorten lead times and give up margin as a contraction in retail sales works its way up the supply chain, according to textile and contracting sources. “People are trying to trim the lead times,” noted Chris Parkes, national sales manager for Concept III International, which develops sources and produces apparel for a variety of outdoor brands. “No one wants to get stuck with product.”
Parkes cited one example where a client who normally commits to ordering 70% of the prior year’s goods by December had only committed to 40%. Still, he noted that Concept III recently got an unanticipated order for 9,000 square yards of technical fabric. “There still seems to be orders out there for fall/winter,” he said.
Some brands and retailers want to wait until after spring retail sales data comes in to adjust their final orders for Spring 2010, said one textile executive. “Brands are holding on as long as they can,” he said. “There is a trend for greige goods to be forecast later. That makes it more difficult for us to deliver on time.”
This in turn has shortened lead times for textile mills, according to Roger Berrier, EVP for sales, marketing and Asian operations at Unifi, which makes recycled polyester Repreve yarns used by outdoor apparel brands. “Today, mills will not give us a soft order until they have an order themselves,” said Berrier. “Instead of giving us six weeks notice, we are getting an order within two weeks of delivery.”
Unifi is shortening production runs, which raises its machine change over costs. That’s better, though, than being stuck with inventory “because some of these programs just get canceled with no warning.”
Sources also report that brands have pushed back plans to introduce new product figuring that neither retailers nor consumers would gamble on it in Fall 2009 and Spring 2010. Many, however, are pushing for innovations for Fall 2010 on the assumption the economy will improve by then.
Brands are also pushing for price cuts of 3 to 15%. But with Asian mills earning operating margins of 12 to 18 points compared to 40 to 60 once enjoyed by U.S. mills, such concession are hard to come by, said Parkes. The environment has incentivized apparel mills to cut costs. This has lead more intense quality control by U.S. brands, which have rejected fabric they would have accepted a year ago.
For retailers, all this could result in later deliveries on top of already light pre-season orders. That raises the likelihood that they will run out of stock on some items. That’s a risk many retailers favor over being stuck with inventory.
“Everyone is walking on egg shells,” said Parkes. “The Asian mills don't understand what's happening. They've never seen this before.”
Still, Parkes urged brands to push their suppliers to continue innovating and be flexible. “As you are closing down Fall 2010 and things change at retail, don't be afraid to go back to your suppliers and tell them this or that change has to be made,” he said. “Don't accept 10 weeks to develop. You will have to find suppliers who will work with you and turn things in four to six. In the past, brands could say ‘we will do that next season,’ but you can’t do that in this market. If you miss it, the consumer will buy it from someone else.”
Some outdoor brands are pushing back their orders for final orders and greige goods for Fall 2009 and Spring 2010 and pressuring suppliers to shorten lead times and give up margin as a contraction in retail sales works its way up the supply chain, according to textile and contracting sources. “People are trying to trim the lead times,” noted Chris Parkes, national sales manager for Concept III International, which develops sources and produces apparel for a variety of outdoor brands. “No one wants to get stuck with product.”
Parkes cited one example where a client who normally commits to ordering 70% of the prior year’s goods by December had only committed to 40%. Still, he noted that Concept III recently got an unanticipated order for 9,000 square yards of technical fabric. “There still seems to be orders out there for fall/winter,” he said.
Some brands and retailers want to wait until after spring retail sales data comes in to adjust their final orders for Spring 2010, said one textile executive. “Brands are holding on as long as they can,” he said. “There is a trend for greige goods to be forecast later. That makes it more difficult for us to deliver on time.”
This in turn has shortened lead times for textile mills, according to Roger Berrier, EVP for sales, marketing and Asian operations at Unifi, which makes recycled polyester Repreve yarns used by outdoor apparel brands. “Today, mills will not give us a soft order until they have an order themselves,” said Berrier. “Instead of giving us six weeks notice, we are getting an order within two weeks of delivery.”
Unifi is shortening production runs, which raises its machine change over costs. That’s better, though, than being stuck with inventory “because some of these programs just get canceled with no warning.”
Sources also report that brands have pushed back plans to introduce new product figuring that neither retailers nor consumers would gamble on it in Fall 2009 and Spring 2010. Many, however, are pushing for innovations for Fall 2010 on the assumption the economy will improve by then.
Brands are also pushing for price cuts of 3 to 15%. But with Asian mills earning operating margins of 12 to 18 points compared to 40 to 60 once enjoyed by U.S. mills, such concession are hard to come by, said Parkes. The environment has incentivized apparel mills to cut costs. This has lead more intense quality control by U.S. brands, which have rejected fabric they would have accepted a year ago.
For retailers, all this could result in later deliveries on top of already light pre-season orders. That raises the likelihood that they will run out of stock on some items. That’s a risk many retailers favor over being stuck with inventory.
“Everyone is walking on egg shells,” said Parkes. “The Asian mills don't understand what's happening. They've never seen this before.”
Still, Parkes urged brands to push their suppliers to continue innovating and be flexible. “As you are closing down Fall 2010 and things change at retail, don't be afraid to go back to your suppliers and tell them this or that change has to be made,” he said. “Don't accept 10 weeks to develop. You will have to find suppliers who will work with you and turn things in four to six. In the past, brands could say ‘we will do that next season,’ but you can’t do that in this market. If you miss it, the consumer will buy it from someone else.”
Monday, April 6, 2009
Surge in Campground Reservations Creates Opportunities for Outdoor Businesses
More evidence is emerging that Americans are turning to the outdoors for a respite from tough economic times, or perhaps because of them. Advance reservations for nearly 89,000 campgrounds on federal lands were up 26.1% for the period of January 1 to March 22 compared to the same period last year, according to data from the National Recreation Reservation Service. The overwhelming majority of the reservations came in online via reserveamerica.com.
The spike in reservations prompted a report by CNN, entitled “In a Slump, Camping Comes Into Vogue.” The article reports that reservations to state parks in California are also trending up. Of course it’s still too early to say whether media reports will translate into stronger sales of camping gear this spring.
Regardless, marketing gurus are urging outdoor retailers to start promoting close-to-home adventures now to both core outdoor enthusiasts and their more casual shoppers while both groups are planning their summer vacations.
A survey of Leisure Trends Group’s Most Active American Panel conducted between February 15 and March 10 found that 78% plan their summer vacation one or more months ahead of time. More than 50% plan three to five months out, in large part because they are hunting for deals. Among this group, 11 percent said they are considering doing more camping. Skiers, by contrast, often booked their trips this winter only one or two weeks out in hopes of getting the best airline and resort promotions as the economy weakened.
“If I was a specialty retailer, I would institute a program that would show people what they could do within 50 miles,” said Leisure Trend Group’s Julia Day Clark. “People are thinking about this. They are planning and what if retailers could show them something really cool?”
With that in mind, here are some ideas for luring folks into your store:
Blog: If you don’t already have one, you could start by publishing the top 25 local adventures for the spring and summer on your web site. If you have time, post directions, advisories, photos, maps, suggested provisions, GPS coordinates, etc. For an example, check out Dave Baker’s blog for Tucson’s Summit Hut.
Build community: Offer to post customers’ own photos and observations of their experiences on the blog. Contributors can become eligible for a $150 gift card drawing.
Point of sale: Print your top 25 list with a link to your website on fliers for your store. Laminate a few for your sales staff, who can use them on the floor to show customers just how easy it is to hike, climb, cycle, paddle and camp nearby.
Map room: Set up a trip planning area in your store where customers can browse maps, books and maybe even cruise the Internet. Blow up a map of the area and stick push pins into the sites on your list.
Newsletter: E-mail your top 25 list out to your customers as soon as possible with a link to your site. Or break up the list for a series of newsletters.
Events: Feel free to fold your store events into the list. Outside Hilton Head will celebrate “30 Weekends of Adventure” as part of its 30-year anniversary starting this summer. The events will include demo days, speakers and other community events. It’s all part of the outfitter and retailer’s expanded marketing this year despite a double-digit drop in sales. “I think you’ve got to really work harder for customers, but I also think there is a real opportunity for when things get better to get more market share,” said owner Mike Overton
The spike in reservations prompted a report by CNN, entitled “In a Slump, Camping Comes Into Vogue.” The article reports that reservations to state parks in California are also trending up. Of course it’s still too early to say whether media reports will translate into stronger sales of camping gear this spring.
Regardless, marketing gurus are urging outdoor retailers to start promoting close-to-home adventures now to both core outdoor enthusiasts and their more casual shoppers while both groups are planning their summer vacations.
A survey of Leisure Trends Group’s Most Active American Panel conducted between February 15 and March 10 found that 78% plan their summer vacation one or more months ahead of time. More than 50% plan three to five months out, in large part because they are hunting for deals. Among this group, 11 percent said they are considering doing more camping. Skiers, by contrast, often booked their trips this winter only one or two weeks out in hopes of getting the best airline and resort promotions as the economy weakened.
“If I was a specialty retailer, I would institute a program that would show people what they could do within 50 miles,” said Leisure Trend Group’s Julia Day Clark. “People are thinking about this. They are planning and what if retailers could show them something really cool?”
With that in mind, here are some ideas for luring folks into your store:
Blog: If you don’t already have one, you could start by publishing the top 25 local adventures for the spring and summer on your web site. If you have time, post directions, advisories, photos, maps, suggested provisions, GPS coordinates, etc. For an example, check out Dave Baker’s blog for Tucson’s Summit Hut.
Build community: Offer to post customers’ own photos and observations of their experiences on the blog. Contributors can become eligible for a $150 gift card drawing.
Point of sale: Print your top 25 list with a link to your website on fliers for your store. Laminate a few for your sales staff, who can use them on the floor to show customers just how easy it is to hike, climb, cycle, paddle and camp nearby.
Map room: Set up a trip planning area in your store where customers can browse maps, books and maybe even cruise the Internet. Blow up a map of the area and stick push pins into the sites on your list.
Newsletter: E-mail your top 25 list out to your customers as soon as possible with a link to your site. Or break up the list for a series of newsletters.
Events: Feel free to fold your store events into the list. Outside Hilton Head will celebrate “30 Weekends of Adventure” as part of its 30-year anniversary starting this summer. The events will include demo days, speakers and other community events. It’s all part of the outfitter and retailer’s expanded marketing this year despite a double-digit drop in sales. “I think you’ve got to really work harder for customers, but I also think there is a real opportunity for when things get better to get more market share,” said owner Mike Overton
Tuesday, March 31, 2009
RETAIL - HOW TO COUNTER THE EFFECTS OF THE ECONOMY: DELIVER REAL
I pick up my pro form BD Havoc's and Revelation backpack - a sweet setup for next season, but I still need a pair of DynaFit bindings - light and fast. Next season??!! This season is unbelievable - late March/Early April and it is dumping!!!!
Picking up my gear, I meet with Kurli, a rep for BD and we talk about the current state of the economy - his optimisim, love for life, passion for the industry, his company is uplifting.
He mentions, REAL. I am awed as I read this article this morning - Marty Weening from Gramicci, talking about "delivering real"
Must be the snow!
Be environmentally Cool,
Head Local and Local Artist
Monday, March 30, 2009
Retail - SNEWS Mini-Survey provides look at how retailers are adjusting to the new economic climate
The SNEWS® Mini-Survey that ended March 26, 2009 asked, “What are you doing differently to help your retail business survive the current economy?” It was refreshing to read that more than seven of 10 (71 percent) of our respondents indicated they were emphasizing more customer service and follow-up. Not surprisingly, more than two-thirds or 68 percent responded that they were “keeping their inventories leaner” while 53 percent indicated they were carrying fewer SKUs in their stores.
As a bit of a wake-up call to suppliers and manufacturers, nearly half of respondents or 47 percent stated they were cutting out “marginal suppliers.” It was also interesting to note that 44 percent were relying on holding special in-store events with the goal of attracting new customers.
What did surprise us a bit in the results is that only 29 percent of our retail respondents indicated they were seeking to negotiate rent decreases or moving to cheaper space. Several reports in our ongoing economic series, which can be found by clicking here, point out that renegotiating leases is a valuable retail survival tool during this economic downturn, and we do know from conversations with some retailers who have done this that savings have been substantial.
And as for seeking to match prices with competitors, including big box, we were pleasantly surprised to see only 17 percent of our survey respondents indicated this was one of their strategies. Indeed price competition is a course of action that retail experts have also noted is not the way to win the war.
Our new survey question, “Have you found social networking sites to be beneficial to your business?” is now live and awaiting your feedback. We look forward to hearing if you use these sites as a part of your business and, if so, which ones.
To make your vote count, simply go to the SNEWS Reader Poll section in the right navigation bar of every web page in SNEWS or, click here.
--SNEWS® Editors
New digital eFitBiz by SNEWS now out: Don’t miss annual state-of-retail report, ’08 top retailer lists
Always a frontrunner when it comes to delivery of news and information, with this issue of eFitBiz, SNEWS® will start to deliver news to you in a dynamic, interactive fashion like no other industry publication has -- in a virtual magazine format where you live the content.
Debuting in this sixth-annual eFitBiz by SNEWS – our annual look at the state of the previous year’s retail and
While our much-awaited report on the state of retail and our top retailer lists are all still here, they are presented with many enhancements in this virtual magazine: When you “flip” the pages with a click, you’ll find links directly in the stories and charts that will take you to SNEWS stories so you can read up on things you missed or have forgotten – mouse over and around the pages to discover embedded links and features. You’ll experience product videos in ads that demonstrate and show you the equipment, with the video also allowing you to play and replay as needed, stopping where you want to take a closer look.
This is of course only the beginning: The SNEWS fitness magazine, out as usual in mid-summer, will also be virtual and you’ll see all of the above features – and much more as we incorporate more experiences into our mutual adventure into the future of information delivery.
Certainly the virtual content isn’t all there is to talk about, though. The state-of-retail report isn’t unfortunately a rosy picture but when you take a look at the information about past recessions and who’s doing what, you’ll see some optimism still exists. The list of “top retailers” – again using black-and-white store numbers since we know they are factual and not fudged – has changed quite a bit. You may be surprised to realize what did happen between January and December 2008, uttering, “Gosh, that was only a year ago?”
You’ll also be a bit surprised to see how many more changes have taken place since 2009 – businesses are listed where they wouldn’t be now -- since we don’t represent 2009 news on the list. For ongoing information you’ll need to turn to SNEWS online (www.snewsnet.com).
Meanwhile, you won't want to miss this newest release. This 2009 edition of eFitBiz by SNEWS is brought to you by SNEWS (of course!), Afterburner Fitness, BodyCraft, Fitness Master, Health & Fitness Business Expo, Lifecore Fitness and the American College of Sports Medicine.
Our SNEWS subscribers are also first in line to see eFitBiz when it's released. You can also view past editions by clicking here and scrolling down to the eFitBiz editions you choose. Of course, you must be a subscriber to see magazines and magazine archives, but we do offer a Freebie SNEWS subscription that’ll do the trick. Just click here to get one of those if you don’t already have one.
Missed the link to eFitBiz? Click here to get to your copy of the latest edition. Enjoy the new virtual format; pass it around, and please tell us what you think. You can reach us either by emailing snewsbox@snewsnet.com or giving a ring, 530-268-8295.
Note: Retailers, the annual SNEWS® Retailer Survey is kicking into gear soon. Let your vote and voice count. Our 7th-annual survey will open in April. If you have not been surveyed in the past or want to make sure you are included this year, send an email to survey@snewsnet.com with your store name and contact information (including email, phone and fax), as well as the name of the best single person to be in charge of responding to the survey for your business, if it’s not yourself. Don't let you or your suppliers be left out.
Thursday, March 26, 2009
HUGE LANDS PACKAGE CLEARS CONGRESS, AWAITS OBAMA’S SIGNATURE
Bend, Ore., – the House of Representatives voted today to pass the Omnibus Public Land Management Act. The final vote in the House was 285-140. The bill passed the Senate 77-21 last week. The lands package now goes to President Obama for his signature, possibly as early as next Monday.
The legislation protects two million acres of Wilderness and 1000 miles of rivers, and prohibits new oil and gas development on 1.2 million acres in Wyoming. It also legislatively affirms the 26-million-acre National Landscape Conservation System.
“This is a major conservation victory that preserves wild places throughout the US forever,” said John Sterling, Executive Director of The Conservation Alliance.
Every conservation provision included in the legislation started at the local level where grassroots organizations led the charge to build public support to protect a special landscape or waterway. The Conservation Alliance supported the local organizations that led the efforts behind 12 of the 16 Wilderness provisions included in the package. The Alliance also funded the groups leading the efforts behind protecting the Snake River Headwaters, and closing the Wyoming Range to new oil and gas development.
In total, The Conservation Alliance contributed more than $700,000 to ten different organizations whose good work eventually wound up in the package. The Alliance also worked in close partnership with Outdoor Industry Association to demonstrate that the outdoor industry stood uniformly behind the provisions in this package.
“This is a big victory, and we did everything within the limits of our lean staff capacity and financial resources to ensure it crossed the finish line,” said Sterling.
Click here http://conservationalliance.com/UserFiles/File/OPLMA08.pdf to view a summary of the conservation provisions in the bill.
About the Conservation Alliance:
The Conservation Alliance is an organization of outdoor businesses whose collective contributions support grassroots environmental organizations and their efforts to protect wild places where outdoor enthusiasts recreate. Alliance funds have played a key role in protecting rivers, trails, wildlands and climbing areas.
Membership in the Alliance is open to companies representing all aspects of the outdoor industry, including manufacturers, retailers, publishers, mills and sales representatives. The result is a diverse group of businesses whose livelihood depends on protecting our natural environment.
Since its inception in 1989, the Alliance has contributed more than $7.4 million to grassroots environmental groups. Alliance funding has helped save over 40 million acres of wildlands; 26 dams have either been stopped or removed; and the group helped preserve access to more than 17,000 miles of waterways and several climbing areas. For complete information on the Conservation Alliance, see www.conservationalliance.com
The legislation protects two million acres of Wilderness and 1000 miles of rivers, and prohibits new oil and gas development on 1.2 million acres in Wyoming. It also legislatively affirms the 26-million-acre National Landscape Conservation System.
“This is a major conservation victory that preserves wild places throughout the US forever,” said John Sterling, Executive Director of The Conservation Alliance.
Every conservation provision included in the legislation started at the local level where grassroots organizations led the charge to build public support to protect a special landscape or waterway. The Conservation Alliance supported the local organizations that led the efforts behind 12 of the 16 Wilderness provisions included in the package. The Alliance also funded the groups leading the efforts behind protecting the Snake River Headwaters, and closing the Wyoming Range to new oil and gas development.
In total, The Conservation Alliance contributed more than $700,000 to ten different organizations whose good work eventually wound up in the package. The Alliance also worked in close partnership with Outdoor Industry Association to demonstrate that the outdoor industry stood uniformly behind the provisions in this package.
“This is a big victory, and we did everything within the limits of our lean staff capacity and financial resources to ensure it crossed the finish line,” said Sterling.
Click here http://conservationalliance.com/UserFiles/File/OPLMA08.pdf to view a summary of the conservation provisions in the bill.
About the Conservation Alliance:
The Conservation Alliance is an organization of outdoor businesses whose collective contributions support grassroots environmental organizations and their efforts to protect wild places where outdoor enthusiasts recreate. Alliance funds have played a key role in protecting rivers, trails, wildlands and climbing areas.
Membership in the Alliance is open to companies representing all aspects of the outdoor industry, including manufacturers, retailers, publishers, mills and sales representatives. The result is a diverse group of businesses whose livelihood depends on protecting our natural environment.
Since its inception in 1989, the Alliance has contributed more than $7.4 million to grassroots environmental groups. Alliance funding has helped save over 40 million acres of wildlands; 26 dams have either been stopped or removed; and the group helped preserve access to more than 17,000 miles of waterways and several climbing areas. For complete information on the Conservation Alliance, see www.conservationalliance.com
Wednesday, March 25, 2009
Retail - Trading Down Phenomena has Outdoor Retailers Shopping Lower Price Points
Some outdoor specialty retailers are beginning to follow their customers down market. “I think people are scaling back on the number of $400 shells they are bringing in and buying more $100 shells,” said Dave Matz, president of Grassroots Outdoor Alliance. “There is a movement to bring in a lower price point.”
While fashion and luxury brands are much more vulnerable to the trend, average retail prices have declined in specialty outdoor channels thanks to a surge in sales of carry over product and a rise in sales of accessories, according to retail sales data for January released last week by Outdoor Industry Association (OIA) and Snowsports Industries America (SIA). SIA reported that while consumers snapped up accessories like hats, gloves, goggles, wax, parkas, fleece tops, sweaters and winter boots, they backed away from buying skis, boots, boards, and bindings.
In outdoor channels, the share of product sold in the fourth quarter that was priced under $25 grew to 17.5% in 2008 from 16.7% in 2007 and 16.0% in 2006, according to data compiled by Leisure Trends Group for the OIA Outdoor Topline Report. The share of product priced over $100, meanwhile, fell to 38.0% from 40.0% and 39.1% respectively. The trend became more pronounced in January, when sales of sub-$25 product grew to 22.7% of total outdoor sales from 18.7% in the same month a year earlier. Sales of $100-plus product fell to 33.0% of total sales from 38.0% a year earlier. The share of footwear sales priced under $25 nearly doubled to the 10% range.
While analysts warn against reading too much into January sales figures, consumer surveys are detecting the shift down market, particularly in apparel. In one survey published last month, 90.7% of Americans designated specialty shopping for apparel as expendable.
Even specialty retailers catering to a more affluent clientele are introducing lower price points. Their thinking is a shift in consumer buying habits toward value and will continue long after the recession ends. In Charlotte, NC, Jesse Brown’s Outdoors is bringing Columbia Sportswear apparel back into their shop for the first time in years. Owner Bill Bartee stopped buying Columbia years ago after deciding his future lay with brands not carried by big-box retailers. With consumer anxiety over the economy rising, Bartee will add product from Columbia’s PFG and Titanium lines to complement his assortment of Arc’teryx, Ex Officio, Patagonia, Mountain Hardwear and The North Face.
“We will still sell $500 Gore-Tex shells,” said Bartee, “But we will sell less of them. Columbia will bring a price-point to Jesse Brown’s that to a large extent is not available right now. We anticipate a backlash against luxury.”
Some retailers see the recession accelerating a long-term trend away from brand loyalty that was already being driven by the millennial generation (born 1978 - 2001). That generation is much less inclined to define themselves by conspicuous consumption of specific brands, said Ted Manning, VP of merchandising for Eastern Mountain Sports (EMS).
“The customer is coming back to the concept of minimalism and core functionality and not excess,” said Manning, “There will be less brand loyalty.”
Still, national brands will continue to play a major role at EMS, which continues to grow its own brand of apparel. “We have not headed into recession by throwing out national brands,” Manning said.
Below are examples of how retailers are adapting to consumers’ new frugality:
Loading up on basics and accessories that are priced below $25.
Shifting down within a brand. Rather than cut premium brands, buyers are bringing in more of their entry-level product. The good-better-best mix is shifting more toward better.
Bundling product on the equipment side to lower the cost of entry for your core sports. For instance, bundle a boat, PFD and paddle to show entry-level paddlers how inexpensively they can getting into paddle sports.
Bringing in new brands. Specialty retailers are giving more widely distributed value brands another look.
Expanding and/or promoting private label offerings.
Buying overstock and close-out deals. Many retailers who cut back their pre-season orders are aggressively buying overstock and closeouts to ensure a steady flow of deals.
While fashion and luxury brands are much more vulnerable to the trend, average retail prices have declined in specialty outdoor channels thanks to a surge in sales of carry over product and a rise in sales of accessories, according to retail sales data for January released last week by Outdoor Industry Association (OIA) and Snowsports Industries America (SIA). SIA reported that while consumers snapped up accessories like hats, gloves, goggles, wax, parkas, fleece tops, sweaters and winter boots, they backed away from buying skis, boots, boards, and bindings.
In outdoor channels, the share of product sold in the fourth quarter that was priced under $25 grew to 17.5% in 2008 from 16.7% in 2007 and 16.0% in 2006, according to data compiled by Leisure Trends Group for the OIA Outdoor Topline Report. The share of product priced over $100, meanwhile, fell to 38.0% from 40.0% and 39.1% respectively. The trend became more pronounced in January, when sales of sub-$25 product grew to 22.7% of total outdoor sales from 18.7% in the same month a year earlier. Sales of $100-plus product fell to 33.0% of total sales from 38.0% a year earlier. The share of footwear sales priced under $25 nearly doubled to the 10% range.
While analysts warn against reading too much into January sales figures, consumer surveys are detecting the shift down market, particularly in apparel. In one survey published last month, 90.7% of Americans designated specialty shopping for apparel as expendable.
Even specialty retailers catering to a more affluent clientele are introducing lower price points. Their thinking is a shift in consumer buying habits toward value and will continue long after the recession ends. In Charlotte, NC, Jesse Brown’s Outdoors is bringing Columbia Sportswear apparel back into their shop for the first time in years. Owner Bill Bartee stopped buying Columbia years ago after deciding his future lay with brands not carried by big-box retailers. With consumer anxiety over the economy rising, Bartee will add product from Columbia’s PFG and Titanium lines to complement his assortment of Arc’teryx, Ex Officio, Patagonia, Mountain Hardwear and The North Face.
“We will still sell $500 Gore-Tex shells,” said Bartee, “But we will sell less of them. Columbia will bring a price-point to Jesse Brown’s that to a large extent is not available right now. We anticipate a backlash against luxury.”
Some retailers see the recession accelerating a long-term trend away from brand loyalty that was already being driven by the millennial generation (born 1978 - 2001). That generation is much less inclined to define themselves by conspicuous consumption of specific brands, said Ted Manning, VP of merchandising for Eastern Mountain Sports (EMS).
“The customer is coming back to the concept of minimalism and core functionality and not excess,” said Manning, “There will be less brand loyalty.”
Still, national brands will continue to play a major role at EMS, which continues to grow its own brand of apparel. “We have not headed into recession by throwing out national brands,” Manning said.
Below are examples of how retailers are adapting to consumers’ new frugality:
Loading up on basics and accessories that are priced below $25.
Shifting down within a brand. Rather than cut premium brands, buyers are bringing in more of their entry-level product. The good-better-best mix is shifting more toward better.
Bundling product on the equipment side to lower the cost of entry for your core sports. For instance, bundle a boat, PFD and paddle to show entry-level paddlers how inexpensively they can getting into paddle sports.
Bringing in new brands. Specialty retailers are giving more widely distributed value brands another look.
Expanding and/or promoting private label offerings.
Buying overstock and close-out deals. Many retailers who cut back their pre-season orders are aggressively buying overstock and closeouts to ensure a steady flow of deals.
Tuesday, March 24, 2009
Monday, March 23, 2009
Rethinking Retail: Sunshine Fitness offers a smorgasbord of all things active
Think of Sunshine Fitness as a smorgasbord for those hooked on all things active, indoor or out. Customers who walk through the doors of the Anchorage, Alaska, store can buy scuba gear, mountain bikes, swim suits and all matter of fitness equipment from treadmills to rowers to barbells, all under a single roof.
As retailers across the country seek creative ways to reel in shoppers, Sunshine (www.sunshinefitness.com) is leaning on its wide variety of offerings to try to ride out the recession's rough waters.
"It's been a good way to diversify," said John Bice, owner of the 6,000-square-foot store. Sales "are up modestly," he said, which in this economy is no small feat.
SNEWS® knows the current economic state is having a huge impact on the specialty retail business. This is one look at different ways retailers are rethinking their retail strategy to become better at serving customers and keeping their bottom line intact. We will take a look at different retail concepts we find in a periodic and ongoing series of stories in SNEWS. This time around we focused on a new fitness retail store with an emphasis on fitness that includes equipment but speaks to the well-rounded needs of a fit and healthy lifestyle. Stay tuned for more in-depth reporting on the current situation both economically and at retail as it develops and changes.
Non-traditional mates
While it's true that what flies in Alaska might not fly in other parts of the United States, Sunshine's experience provides insight into the ups and downs of pairing non-traditional offerings.
"It's a nice mix if you think about it," said Brad Lally, global product development manager for San Diego-based Scubapro diving gear, which Sunshine Fitness has carried for years. "They're going after people in the active lifestyle. If you're outside biking in Alaska, you're definitely into nature and staying fit."
Lally noted that in Florida or California, it's not unusual for a store to combine scuba, snorkeling and swimwear.
"But in other regions of the country with weather extremes, you need to have something else in the store to complement you and sustain sales through the different seasons," he said.
That's pretty much the model that has worked for Sunshine Fitness. Bikes and fitness machines are good seasonal offsets, Bice said, and the state's competitive swimming events help keep sales of suits, caps and goggles strong throughout the year.
Scuba, which Bice called the "odd duck," actually is the bedrock of the store's many offerings. Sunshine Fitness opened 36 years ago in the southeastern Alaska city of Sitka as a scuba shop. The store relocated to Anchorage in 1980.
"Selling scuba in Alaska is probably like selling (snow) skis in Florida," he said. "It's a small, but profitable business."
Diversification to survive
Bice said the decision to diversify came as much from business necessity as it did from a desire to reach new customers. (He said he'd sell the scuba business in a heartbeat if someone offered a fair deal!)
Sunshine began selling fitness equipment five years ago because Bice was eager to unload the ski/snowboard business, which had become so competitive that margins were slim. Sales also were more closely tied to weather than other departments, and the bulky equipment took up valuable floor space. Sunshine officially closed out its line of skis and snowboards last winter.
"It was just a race to the bottom," Bice said of the fragmented ski/snowboard industry. "There was a huge amount of manufactured product, more than the market could handle. It was like selling potatoes."
Bice said he entered the fitness business at the top of the market. And while it remains a profitable and growing part of the business, Sunshine's home and commercial fitness sales have been "off tremendously" this year, Bice said, which is in keeping with most others in the 48 contiguous states. Scuba and bikes make up about 10 percent of sales, and swim a bit less than that, he said.
Tim Porth, co-founder of Octane Fitness, said Sunshine Fitness has stretched farther outside the box than most retailers who carry his company's ellipticals. Porth said it's more common to see fitness retailers branching out into supplements and offering enhanced service packages to try to keep customers coming back to the stores.
But with fitness industry sales plunging some 20 percent in the fourth quarter of 2008, Porth said retailers must get creative, yet remain wary of overreaching.
"You don't want to dilute your offerings too much," said Porth. "You gotta be an expert in fitness categories and you gotta believe in your equipment. If people are paying you that much money for a piece of equipment, you need to gain the respect of your customers."
Octane regional sales manager Dan Rahmann, who works directly with Sunshine Fitness as part of his 18-state coverage area, said Sunshine's location outside the continental United States means it faces some unique challenges.
"Shipping from Minneapolis to Anchorage incurs quite a bit more costs for the product than someone in, say, Denver," Rahmann said. "Dealers can save money through a container program by bringing in great quantities of a product and not paying freight on it. But you're not going to place big orders if you think it could take you a year to sell through it. The manufacturer wants to get paid in 30 to 45 days."
Planning for downturn
Bice said he saw the downturn coming and started making plans to cut inventory and shift his showroom floor in early July 2008. Getting rid of skis and snowboards allowed him to reduce some of his retail space, while also freeing the business of a high-risk category.
The diversity of offerings, he said, is helping him weather the slumping economy better than some of his competitors, though his outlook is far from sunny.
"We're not selling as much as we'd like," he said, "but every department is profitable."
--Jackie CrosbySNEWS® View: Even in the sporting goods category, some areas may sell better than others so for Sunshine offering a number of seemingly odd companions has served a purpose. Perhaps rather than thinking of Sunshine as a specialty dealer who is doing a number of categories, he should be thought of as a sporting goods dealer who is specializing. The broader but still selective offerings allow him to have more things for more people while still being a specialty retailer in dealing with customers. Not a bad model in today's times. --SNEWS® Editors
As retailers across the country seek creative ways to reel in shoppers, Sunshine (www.sunshinefitness.com) is leaning on its wide variety of offerings to try to ride out the recession's rough waters.
"It's been a good way to diversify," said John Bice, owner of the 6,000-square-foot store. Sales "are up modestly," he said, which in this economy is no small feat.
SNEWS® knows the current economic state is having a huge impact on the specialty retail business. This is one look at different ways retailers are rethinking their retail strategy to become better at serving customers and keeping their bottom line intact. We will take a look at different retail concepts we find in a periodic and ongoing series of stories in SNEWS. This time around we focused on a new fitness retail store with an emphasis on fitness that includes equipment but speaks to the well-rounded needs of a fit and healthy lifestyle. Stay tuned for more in-depth reporting on the current situation both economically and at retail as it develops and changes.
Non-traditional mates
While it's true that what flies in Alaska might not fly in other parts of the United States, Sunshine's experience provides insight into the ups and downs of pairing non-traditional offerings.
"It's a nice mix if you think about it," said Brad Lally, global product development manager for San Diego-based Scubapro diving gear, which Sunshine Fitness has carried for years. "They're going after people in the active lifestyle. If you're outside biking in Alaska, you're definitely into nature and staying fit."
Lally noted that in Florida or California, it's not unusual for a store to combine scuba, snorkeling and swimwear.
"But in other regions of the country with weather extremes, you need to have something else in the store to complement you and sustain sales through the different seasons," he said.
That's pretty much the model that has worked for Sunshine Fitness. Bikes and fitness machines are good seasonal offsets, Bice said, and the state's competitive swimming events help keep sales of suits, caps and goggles strong throughout the year.
Scuba, which Bice called the "odd duck," actually is the bedrock of the store's many offerings. Sunshine Fitness opened 36 years ago in the southeastern Alaska city of Sitka as a scuba shop. The store relocated to Anchorage in 1980.
"Selling scuba in Alaska is probably like selling (snow) skis in Florida," he said. "It's a small, but profitable business."
Diversification to survive
Bice said the decision to diversify came as much from business necessity as it did from a desire to reach new customers. (He said he'd sell the scuba business in a heartbeat if someone offered a fair deal!)
Sunshine began selling fitness equipment five years ago because Bice was eager to unload the ski/snowboard business, which had become so competitive that margins were slim. Sales also were more closely tied to weather than other departments, and the bulky equipment took up valuable floor space. Sunshine officially closed out its line of skis and snowboards last winter.
"It was just a race to the bottom," Bice said of the fragmented ski/snowboard industry. "There was a huge amount of manufactured product, more than the market could handle. It was like selling potatoes."
Bice said he entered the fitness business at the top of the market. And while it remains a profitable and growing part of the business, Sunshine's home and commercial fitness sales have been "off tremendously" this year, Bice said, which is in keeping with most others in the 48 contiguous states. Scuba and bikes make up about 10 percent of sales, and swim a bit less than that, he said.
Tim Porth, co-founder of Octane Fitness, said Sunshine Fitness has stretched farther outside the box than most retailers who carry his company's ellipticals. Porth said it's more common to see fitness retailers branching out into supplements and offering enhanced service packages to try to keep customers coming back to the stores.
But with fitness industry sales plunging some 20 percent in the fourth quarter of 2008, Porth said retailers must get creative, yet remain wary of overreaching.
"You don't want to dilute your offerings too much," said Porth. "You gotta be an expert in fitness categories and you gotta believe in your equipment. If people are paying you that much money for a piece of equipment, you need to gain the respect of your customers."
Octane regional sales manager Dan Rahmann, who works directly with Sunshine Fitness as part of his 18-state coverage area, said Sunshine's location outside the continental United States means it faces some unique challenges.
"Shipping from Minneapolis to Anchorage incurs quite a bit more costs for the product than someone in, say, Denver," Rahmann said. "Dealers can save money through a container program by bringing in great quantities of a product and not paying freight on it. But you're not going to place big orders if you think it could take you a year to sell through it. The manufacturer wants to get paid in 30 to 45 days."
Planning for downturn
Bice said he saw the downturn coming and started making plans to cut inventory and shift his showroom floor in early July 2008. Getting rid of skis and snowboards allowed him to reduce some of his retail space, while also freeing the business of a high-risk category.
The diversity of offerings, he said, is helping him weather the slumping economy better than some of his competitors, though his outlook is far from sunny.
"We're not selling as much as we'd like," he said, "but every department is profitable."
--Jackie CrosbySNEWS® View: Even in the sporting goods category, some areas may sell better than others so for Sunshine offering a number of seemingly odd companions has served a purpose. Perhaps rather than thinking of Sunshine as a specialty dealer who is doing a number of categories, he should be thought of as a sporting goods dealer who is specializing. The broader but still selective offerings allow him to have more things for more people while still being a specialty retailer in dealing with customers. Not a bad model in today's times. --SNEWS® Editors
ForecastIQ™ : Outlook Moves from Thunderstorms to Scattered Showers for Most Retailers
COLUMBUS, OH – 3/20/2009 – The forecast for same store sales growth is looking better for several retailers this month, according to the latest ForecastIQ™ analysis (a service from Prosper Technologies, LLC). In addition to Aeropostale, Buckle and Hot Topic (retailers who have maintained a positive outlook), there are more retailers to add to the list of those expected to see growth over the next two months.
Fred’s and Sam’s Club improved from retailers likely to see an increase to almost certain to see an increase in same store sales over the next 60 days. Cato and Ross are also expected to see significant improvement. Both are likely to see an increase, whereas last month’s forecast predicted a likely decline in same store sales growth for each.
"There is improvement on the horizon," says Prof. Greg Allenby, Fisher College of Business at Ohio State University. "A number of discount-oriented retailers, including BJs, Freds and Ross are expected to see an increase in same store sales relative to earlier predictions. While prospects for department stores still look generally bleak, there does seem to be a break in the clouds for stores offering good deals."
For a complimentary 30 day trial of ForecastIQ: www.forecastiq.com
Although there is a silver lining for some retailers this month, Abercrombie & Fitch, American Eagle, Gap, among others are almost certain to see declines.
A partial list of retailers covered in the ForecastIQ and expectations for same store sales growth/decline for the next 75 days follows:
Almost certain to see increase:
Aeropostale
Buckle
Family Dollar
Fred’s Hot Topic
Sam’s Club
Walmart
Likely to see increase:
BJ’s
Cato
Costco
Ross
Almost certain to see decline:
Abercrombie & Fitch
American Eagle
Banana Republic
Bonton
Chico’s
Dillard’s
Gap
Neiman Marcus
Nordstrom
Pacific Sun
Saks
Likely to see decline:
TJX
Wet Seal
Flat:Children’s Place
ForecastIQ was developed by Prosper Technologies and Greg Allenby by analyzing over 7 years of data from BIGresearch’s monthly Consumer Intentions & Actions (CIA) surveys. Allenby analyzed same store sales of over 37 publicly held retailers and applied Bayesian quantile analysis to the data including whether or not consumers said they plan to spend more, same or less. The results are accurate and for the first time, provide a forecast of consumer spending 75 days in advance. Same store sales forecasts are provided by percent growth over the next 45 and 75 day period. Short term forecasts are also available via enhanced consensus estimates.
About Prosper Technologies: Prosper Technologies develops consumer centric analytics such as ForecastIQ from consumer responses to help businesses forecast consumer demand and expenditures, budget marketing and merchandising allocations and provide retailer specific cross consumption behaviors.
ForecastIQ is a forecast of same store sales for 37 retailers based upon future spending plans of consumers derived from BIGresearch’s monthly Consumer Intentions and Action survey (CIA). Forecasts are 45 and 75 days forward and also include an enhancement to the consensus currently provided in the marketplace.
Fred’s and Sam’s Club improved from retailers likely to see an increase to almost certain to see an increase in same store sales over the next 60 days. Cato and Ross are also expected to see significant improvement. Both are likely to see an increase, whereas last month’s forecast predicted a likely decline in same store sales growth for each.
"There is improvement on the horizon," says Prof. Greg Allenby, Fisher College of Business at Ohio State University. "A number of discount-oriented retailers, including BJs, Freds and Ross are expected to see an increase in same store sales relative to earlier predictions. While prospects for department stores still look generally bleak, there does seem to be a break in the clouds for stores offering good deals."
For a complimentary 30 day trial of ForecastIQ: www.forecastiq.com
Although there is a silver lining for some retailers this month, Abercrombie & Fitch, American Eagle, Gap, among others are almost certain to see declines.
A partial list of retailers covered in the ForecastIQ and expectations for same store sales growth/decline for the next 75 days follows:
Almost certain to see increase:
Aeropostale
Buckle
Family Dollar
Fred’s Hot Topic
Sam’s Club
Walmart
Likely to see increase:
BJ’s
Cato
Costco
Ross
Almost certain to see decline:
Abercrombie & Fitch
American Eagle
Banana Republic
Bonton
Chico’s
Dillard’s
Gap
Neiman Marcus
Nordstrom
Pacific Sun
Saks
Likely to see decline:
TJX
Wet Seal
Flat:Children’s Place
ForecastIQ was developed by Prosper Technologies and Greg Allenby by analyzing over 7 years of data from BIGresearch’s monthly Consumer Intentions & Actions (CIA) surveys. Allenby analyzed same store sales of over 37 publicly held retailers and applied Bayesian quantile analysis to the data including whether or not consumers said they plan to spend more, same or less. The results are accurate and for the first time, provide a forecast of consumer spending 75 days in advance. Same store sales forecasts are provided by percent growth over the next 45 and 75 day period. Short term forecasts are also available via enhanced consensus estimates.
About Prosper Technologies: Prosper Technologies develops consumer centric analytics such as ForecastIQ from consumer responses to help businesses forecast consumer demand and expenditures, budget marketing and merchandising allocations and provide retailer specific cross consumption behaviors.
ForecastIQ is a forecast of same store sales for 37 retailers based upon future spending plans of consumers derived from BIGresearch’s monthly Consumer Intentions and Action survey (CIA). Forecasts are 45 and 75 days forward and also include an enhancement to the consensus currently provided in the marketplace.
Subscribe to:
Posts (Atom)
