R3: REQUIRED RETAIL READING
April 13, 2011
RESEARCH ANECDOTES
- Levi will be coming to America of sorts with the introduction of its Denizen brand slated to sell in Target this summer. Originally launched last year specifically for the Chinese market, the brand will be priced at the lower end of its signature Levi line at $20-$30 adding more competition to the low-end denim market. VFC’s Wrangler line is currently the price leader at Target with opening price points at $12.99. This is unlikely to be entirely Levi-induced. Target is sitting down with its vendors and is finding creative ways to keep price points down – especially with Wal-Mart’s more aggressive pricing strategies.
- J Crew is catching flack this morning (enough to be highlighted on the Today Show) because one of its execs is in a promo photo painting her 5-year old son’s toenails hot pink. Yes, this is a bit unusual by most standards – it really looked to us like a happy mom goofing off with her even happier son. Apparently, the media found a way to tee this up in a way that ruffled feathers with some consumers. As for JCG, we’d argue that there’s no such thing as bad PR.
- After stating back in February that it would close its fulfillment facility in Texas by April 12 in response to a $269mm bill for uncollected sales taxes, it appears that Amazon didn’t carry through on its claim. The online tax issue has certainly heated up over the last two months, however with Hawaii recently joining the growing swell at the state level, we suspect a resolution may be reached even sooner than anticipated.
- In a move that rivals Ralph Lauren’s innovative 4D flagship event in NYC in November, Burberry is celebrating the grand opening of its Beijing flagship store with a live streaming event this morning. In the process of showcasing its latest line, the brand is sure to create a buzz by incorporating virtual image technology that will combine live models with animated footage and life-like holograms.
OUR TAKE ON OVERNIGHT NEWS
Coach Sues Jo-Ann Fabrics - Coach Inc. hit Jo-Ann Fabrics, its subsidiary brand Craft Stores and The Feldman Co. Inc. with a trademark infringement suit Monday, alleging that the companies sold merchandise bearing a logo confusingly similar to its Signature C logo. Filed in the Northern District of Illinois, the lawsuit claims that the pattern of elongated Os found on the Blizzard Fleece fabric sold by Hudson, Ohio-based Jo-Ann in stores and on its Web site has likely caused “consumer confusion” as it resembles Coach’s C trademark. The luxury handbag and accessories maker said it became aware of the alleged infringement in February, and it promptly contacted Jo-Ann and Feldman, a New York-based textile company responsible for designing the fabric. <WWD>
Hedgeye Retail’s Take: We’ll never give anyone flack for protecting their brand. But it’s kinda funny to think of Jo-Ann as a source for product that could confuse the consumer.
H&M plans store in Niketown Denver’s Old Location - The long-anticipated announcement that H&M, a "cheap chic" clothing store, will open in the Denver Pavilions on the 16th Street Mall will be made today. The Denver Post has confirmed from sources close to the deal that the Swedish chain, which has been scouting out space in metro Denver for several months, has chosen the Niketown spot at the Pavilions for its first Colorado outlet. Niketown said last week that it will close its Pavilions location in mid-May. Pavilions owner Gart Properties will participate in an announcement naming a new "anchor tenant" at noon today. Gart officials would not comment further. Tami Door, president and chief executive of the Downtown Denver Partnership, also declined to name the new tenant but said H&M's entry would carry significant clout when it comes to attracting other major retailers new to the market. <DenverPost>
Hedgeye Retail’s Take: That didn’t take long. Just days after Nike announces it was leaving the Denver location H&M steps in. In fact, the pending vacancy was obviously known in the market for some time, but the perception is H&M’s appetite for new locations is notable. With plans to open 250 doors this year on a base of only ~2200 we’ll be seeing more of this in the coming months.
Adidas Raided for Alleged Price Fixing in Japan - The Japan Fair Trade Commission on Tuesday raided the Japan subsidiary of German sporting goods maker Adidas AG over its alleged pressuring of retailers not to discount its popular sports shoes series named EasyTone. Kyodo News reported that Adidas Japan was suspected of pressuring retailers to sell the product for 10,000 to 15,000 yen ($118-177), and of suspending shipments for stores that did not comply. Adidas, the world's second-biggest sporting goods maker, began selling the EasyTone shoes, under the Reebok brand, in Japan in 2009. The series has more than half the market for muscle-toning shoes in Japan, estimated at about 10 billion yen annually, Kyodo said. <SportsOneSource>
Hedgeye Retail’s Take: Not an endearing move from a brand perspective. However, the reality is that it will impact consumer’s purchasing decision very little.
Brooks Brothers Fashions a m-Commerce Platform - A retailer with roots in the 19th century has jumped into the 21st century with a new mobile commerce site targeting its affluent fashion buyers who carry the latest smartphones. Brooks Brothers has launched an m-commerce site that enables shoppers to search or browse the merchant’s entire catalog of products and complete purchases. Four category links—Men, Women, Boys, Girls—sit at the top of the home page of the site, built by m-commerce technology provider Digby. Immediately below is a search box; retailers in m-commerce usually give prominent placement to the site search box for consumers on the go who want to get straight to a product they’re looking for. A large hero shot consumes the middle of the screen. Below that image are category bars, then smaller bars that link to a store locator (with GPS functionality that pinpoints the nearest Brooks Brothers store), a page that enables consumers to sign up for Brooks Brothers e-mails, and a page for tracking orders. At the bottom of the home page are Contact Us, Privacy Policy and Help links. <InternetRetailer>
Hedgeye Retail’s Take: Some retailers have very sexy e-commerce sites many of which include lots of flash technology, which is an unmitigated disaster when it comes to translating to mobile functionality. Mobile platforms require individual attention – something more retailers are beginning to realize…even Brooks Brothers.
Google “checks in” with Retailers - In a move to better compete with such location-based mobile check-in programs as foursquare, Facebook Places and shopkick, Google Inc. is adding check-in offers from national chains including American Eagle Outfitters and Finish Line to its Google Latitude app. American Eagle Outfitters is offering up to 20% off a total purchase for check-ins, sandwich shop Quiznos a free sub when consumers buy one sub of equal or greater value, and Finish Line $10 off on purchases of $50 or more. Radio Shack is also participating and Macy’s will soon join in. Google began last month offering discounts and deals for consumers who checked in to participating merchants in Austin, TX. Now consumers can check in to receive discounts at thousands of locations across the U.S., Google says in a blog post. To check in, a consumer opens the app and taps a button to activate the GPS that senses the consumer is within a store or other location. <InternetRetailer>
Hedgeye Retail’s Take: Google was not a first mover in the location-based technology game and now they’re having to play a game they aren’t used to – catch up. Our sense it’s going to take quite a bit more than 20% deals to drive interest in their technology and we’re looking forward to seeing what the company comes up with.
Chinese Consumers Altering Luxury Goods Landscape - Advertising executive John Kwok recently spent thousands of dollars on a traditional-style Chinese jacket at luxury retailer Shanghai Tang's Pedder Street store in the heart of Hong Kong's business district. Shoppers such as Kwok represent the future for Chinese luxury goods buyers, seeking out goods that emphasise China's culture rather than just the Western heritage and exclusivity that have proven so effective to date, industry experts say. "You can't find anything similar at other international labels," said Kwok, describing his Shanghai Tang purchase. "It's not about price, but availability." Across from Pedder Street, at the upscale Landmark shopping mall, brands such as Gucci and LVMH vie for Chinese shoppers, whose appetite for luxury goods is expected to make China the world's biggest luxury market within five years. Brands such as Shanghai Tang, part of Richemont Group , and Hermes, which launched its China-focused label Shang Xia late last year, may have a head start in meeting changing appetites, analysts say. <EconomicTimes>
Hedgeye Retail’s Take: Traditional Chinese cultural fashion is certainly not mainstream, but there’s no reason to think that it won’t slowly bleed into the global fashion scene. While many global retailers ride continued demand for traditional Americana style, the reality is that as the share of global purchasing power shifts towards Asian consumers, retailers will follow. Given significant cultural hurdles, expect western brands to start acquiring local talent – particularly those that have already made the move to establish a physical presence.
