R3: GPS, EBAY, FO, CROX

R3: REQUIRED RETAIL READING

January 7, 2010

 

 

 

RESEARCH ANECDOTES

  • Keep an eye on the next evolution of internet exclusivity mixed with fashion.  Enter Moda Operandi, an ecommerce site slated to launch in February which will bring the “trunk show” to the masses.  Sounds interesting, but the real question will be how many people outside of big cities or luxury area codes actually know what a “trunk show” is.  Perhaps “pre-order” is the better term.
  • Expect the Jersey Shore product parade to continue unabated, this time with a flurry of licensed goods bearing Snooki’s name.  The star of the hit show has signed a deal to license her name on fuzzy slippers, jewelry, and sunglasses.  Future products are expected to include denim, sportswear, lingerie, handbags, beauty products, fragrance, swimwear, bedding, and home goods.  In other words, every product conceivable may have a Snooki logo on it by year end.
  • With Gap sales struggling to materialize, we wonder if the company’s return to  the 70’s will offer any help for the Spring season.  Gap will roll out its 70’s inspired, high waist denim and bell bottoms over the course of this month in hopes of catching the next trend.  Whether this translates into positive same store sales still remains to be seen, although the sharp contrast in silhouette vs. the past couple year’s skinny jean trend is notable.

OUR TAKE ON OVERNIGHT NEWS

 

New Ebay App Allows Consumers to Try on Product at Home  - In what may be a first, eBay has added augmented reality to its fashion app. The new version of the app made its debut Thursday. Now anyone with an iPhone 4 can virtually try on a pair of sunglasses by superimposing an image of the glasses over an image of their face. For now, though, try-on is limited to a few select styles. EBay plans to expand the virtual try-on to other designs and categories later. It is also exploring using augmented reality in other ways, said eBay executives. “Our ‘See It On’ augmented reality feature is truly an innovative way to shop — it allows consumers the option of making their style and spending decisions in a snap, on the go,” said eBay Inc. general manager for fashion Miriam Lahage. “I was questioning how I would look in Wayfarers so I tried a pair on [virtually] and I liked what I saw, they were…placed on my face. Then I could just click and buy.”Although owners of other iPhones won’t be able to try the augmented reality feature because their cameras don’t face the right direction, they can still download the new version of the app, which includes the additional categories of watches, jewelry and bridal.<WWD>

Hedgeye Retail’s Take:  Long in the works, it looks like Ebay is the first major platform to utilize augmented reality as way to influence purchasing decisions.  Expect this technology to permeate many more fashion sites in the coming year, as the barrier to trying product on when purchasing online is the key factor in e-commerce’s significant return rates.

 

Fortune Brands Hires Morgan Stanley - Fortune Brands (has hired Morgan Stanley to auction its golf division, a sale that may fetch as much as $1.5 billion, Bloomberg reported. The news agency cited four people with knowledge of the matter. The company's golf segment includes the Titleist and Footjoy brands. Morgan Stanley may approach and Adidas, which owns Taylormade, and Nike as well as private equity firms and Asian companies like Sumitomo Rubber, the owner of the Srixon golf-ball brand, Bloomberg said. Fortune Brands and Morgan Stanley were not available for comment.<SportsOneSource>

Hedgeye Retail’s Take:  This is one to watch as the low (no) growth profile of the golf industry will likely limit the pool of potential buyers. 

 

LivingSocial hires former Walmart.com exec as CFO - John Bax Daily deal company LivingSocial has hired a former executive of Walmart.com as chief financial officer.  John Bax held a similar job for the e-commerce operation of the world’s largest retailer. LivingSocial, one of the main rivals to Groupon Inc., which also sells online discounts and coupons for local and some national retailers, last month received a boost from the world’s largest Internet retailer, Amazon.com. Amazon, No. 1 in the Internet Retailer Top 500 Guide, invested $175 million in LivingSocial while the e-commerce world waited for confirmation that Google would spend up to $6 billion for Groupon. That deal never materialized. Most recently, Bax worked as chief financial officer for RecycleBank, a New York-based company that operates a merchant-funded rewards program; consumers can earn rewards points by recycling household goods. Before that, Bax was chief financial officer of Sentient, a private travel firm. His experience as Wal-Mart, No. 6 in the Internet Retailer Top 500 Guide, came prior to Sentient. Besides the e-commerce job, he also had worked as vice president of planning and analysis for Wal-Mart Stores.<InternetRetailer>

Hedgeye Retail’s Take: Following Groupon’s recent hire of an AMZN financial executive last week, the discount deal companies are actively adding to the bench strength of their financial teams given heightened investor interest. Our sense is that experience bringing companies public, or at least working for one, is also at play here.   

 

Justin Beiber Nail Polish Sells Out on Christmas - Tween heartthrob Justin Bieber created a holiday sales mania at Wal-Mart, which created a dedicated display of Bieber-themed goods for the Christmas season. Bieber’s nail polish collection with Nicole by OPI — with song-inspired shade names, including One Less Lonely Girl (lavender) and Give Me the First Dance (silver) — completely sold out in the 3,000 doors where it was sold. “The call center in Bentonville was flooded and flooded with calls with people wanting to know where they could get the nail polish. We just couldn’t keep up,” said Carmen Bauza, Wal-Mart Stores Inc.’s vice president and divisional merchandise manager of beauty and personal care. She added, “We thought it would be a stretch since he doesn’t wear nail polish.” Bauza said Bieber’s unisex scented wristbands and dog tags by Etoile Nation also were brisk sellers. <WWD>

Hedgeye Retail’s Take:   This may be the first exclusive product to sell out of WMT in years!  Unfortunately the unit volume would have to be in the billions to move the comp the needle. 

 

Crocs Hires Senior Creative Director -Crocs Inc. named Becky Gebhardt senior creative director. In the newly created position, Gebhardt will be responsible for concept creation in sales and brand strategy, as well as driving the online and in-store Crocs customer experience. She previously worked as VP of creative, PR and online experience at Avelle Inc., formerly known as Bagborroworsteal.com, and at Land’s End as VP of creative. "Gebhardt has an extraordinary talent for conceptualizing compelling consumer brand marketing solutions that will broaden Crocs awareness, increase sales and enhance customer loyalty,” said John McCarvel, president and CEO for the Niwot, Colo.-based brand. “Her understanding of the brand’s new positioning and expanding product line will help us continue to elevate and evolve the Crocs brand globally.”<WWD>

Hedgeye Retail’s Take:  Over a year removed from the AVP partnership stranglehold, it appears that the brand building effort underway continues to gain steam (and investment).  For Crocs to continue its recovery, it has to build the brand beyond its “clog” image.

 

Red Wing Plans Store Roll-Out - Red Wing Shoe Co. is on a retail roll. The company plans to grow its network of retail stores by 20 percent over the next five years. It currently has more than 425 Red Wing stores in the U.S., with close to 70 percent of those independently owned. According to the firm, based in Red Wing, Minn., the 1,200- to 1,500-sq.-ft. stores are generally located in larger metropolitan areas with populations of about 100,000 or more, providing a strong customer base for independent storeowners. Additionally, because the stores are not franchised, no fees are paid to Red Wing.<WWD>

Hedgeye Retail’s Take:  Is this a sign of a pick up in industrial production or perhaps validation that the company’s iconic and fashionable Americana boots have reaccelerated growth prospects for the 100 year old brand?

 

Illinois moves to tax online purchases - Illinois would levy taxes on Internet purchases under a plan that won final General Assembly approval today with an 88-29-0 vote in the state House. The law would make Illinois the latest state to try to squeeze revenue from online retail purchases, though other states have faced court challenges and the threat of lawsuits after trying to collect taxes from web sales. And some online retailers have simply cut off affiliates in states that have passed similar laws. The Illinois law still needs approval from Gov. Pat Quinn, a Democrat. Lawmakers have 30 days to send it to him, and he then has 60 days to act. The tax would start on July 1. The tax is part of an amendment to Illinois House Bill 3659. The tax would subject certain online purchases to the state’s 6.25% use tax. Those taxes resemble sales taxes, but, technically, apply to the right to use products purchased from Internet and catalog merchants that don’t collect sales tax on behalf of that state. <InternetRetailer>

Hedgeye Retail’s Take:  Another step towards the inevitable closure of the gap between those collecting tax and those that do not?  As a reminder this past summer the same issues were brought to Capitol Hill in an effort to even the playing field between online only players and traditional retailers as well as generate additional state revenues.  We continue to believe the tax loophole status will be closed soon.