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Takeaway: SBUX’ Schultz echoes our view that we just saw watershed moment for dot.com. RL redeems itself. China takes aim at WMT. HD deal. JWN, Neiman

INDUSTRY OBSERVATION ON ECOMMERCE

 

Last night Howard Schultz echoed our recent comments that this past holiday would prove to be a watershed moment for e-commerce:

"Holiday 2013 was the first in which many traditional bricks and mortar retailers experienced in-store foot traffic give way to online shopping in a major way. Customers researched, compared prices and then bought the brand and items they wanted online, frequently using a mobile device to do so. This was also the first holiday in which consumers embraced the convenience and flexibility afforded by physical and digital gift cards with a passion. Instead of gifting a particular item, many consumers instead chose to give the gift of choice."

From Our Note on January 9th: Takeaway: With all the companies putting up disappointing sales, we wanted to throw out a factor that we think is critical. Yes, weather was terrible as the month closed out (and got worse in January). But one thing we'll keep in mind is our view that this holiday will go down as a watershed year for the shift from bricks and mortar to dot.com. The chart below shows that over the past 10 years there has been a steady increase in e-commerce's share of total spending, but we think that when this quarter's numbers are reported, it will show the greatest increase in the slope in the history of the internet. Our belief is that shopping is behavioral, and an increase in dot.com will only feed upon itself and continue to gain share in 2014. 

What's New Today in Retail (1/24) - chart5 1 9

COMPANY NEWS

RL - First look: Team USA Olympic opening ceremony uniforms

(http://www.usatoday.com/story/life/2014/01/23/first-look-ralph-lauren-opening-ceremony-uniforms/4786049/)

"Team USA's opening ceremony uniforms for the Sochi Olympics are a patchwork of American iconography — of oversized stars and stripes and multicolored rings and names and numbers."

"They're also a patchwork of American craftsmanship — of wool carted from Oregon, spun in Pennsylvania and North Carolina, and knit in California."

What's New Today in Retail (1/24) - chart1 1 24

Takeaway: No surprise that RL is making a big deal about these uniforms being 'a patchwork of American craftmanship'. It's still reeling from the PR headache of putting uniforms on athletes in 2012 that were made in China. You may or may not like the uniforms below, but there's no mistaking what country they represent.

HD - The Home Depot Acquires Blinds.com

(http://ir.homedepot.com/phoenix.zhtml?c=63646&p=irol-newsArticle&ID=1893217&highlight=)

"The Home Depot...today announced that it has acquired Blinds.com.  Based in Houston, Blinds.com is the #1 online window coverings retailer in the world.  The acquisition closed today, and terms of the deal were not disclosed."

Takeaway: This makes sense for The Depot, as it's been trying to build out more on the home furnishings side as opposed to the home renovation side.  But we're surprised to see HD deploy capital in online blinds. There are a lot of categories that lend themselves perfectly to the online marketplace. But we don't think blinds is one of them. We're not saying it's a bad deal. But for a company that so rarely acquires other businesses, we're just a little surprised about this one.

NM - Neiman Marcus Says 1.1 Million Cards Affected by Data Breach

(http://www.bloomberg.com/news/2014-01-23/neiman-marcus-says-1-1-million-cards-may-be-affected-by-breach.html)

  • "Neiman Marcus Group Ltd., the luxury retailer, said about 1.1 million credit cards may have been compromised in a data breach that occurred last year."

Takeaway: At least it's not 40 million.  Our sense is that the average Neiman customer is still shopping there come hell or high water -- even with a data breach. On the other hand, Target customers will much more easily shift to other alternatives -- because there are alternatives. Not quite the case with Neiman.

WMT - Wal-Mart Assures Product Safety in China

(http://www.wwd.com/retail-news/mass-off-price/wal-mart-assures-product-safety-in-china-7392760)

  • "Wal-Mart Stores Inc. has responded to a critical report on Chinese state-run television this week, assuring that it does not cut corners in safety checking or approving products for sale at its 400-plus stores in China."
  • "The company released a detailed statement on Friday in response to a story that appeared on state broadcaster CCTV Thursday evening accusing Wal-Mart of circumventing China’s retail product permit procedures for profit. The report said Wal-Mart had violated proper procedures in instances of more than 600 products that went to its shelves."

Takeaway: Wal-Mart is doing everything in can here. But the reality is that when a Chinese State-run TV station sets its sights on you, even the best PR response is probably not enough.

JWN - Sarah Jessica Parker Teams With Nordstrom

(http://www.wwd.com/fashion-news/fashion-scoops/shop-with-sjp-7392225)

  • "To promote her new shoe line, SJP, Sarah Jessica Parker is teaming up with Nordstrom for a series of pop-up shops at select stores nationwide. The multicity tour kicks off Feb. 28, coinciding with the line’s official launch date."
  • "Through March 2, Parker will be on hand at Nordstrom’s Treasure & Bond location in SoHo to sell shoes, greet fans and sign the product. Following her New York stint, Parker will be making personal appearances from March 5 to 9 at Nordstrom locations in Seattle, Los Angeles, Chicago, Miami and Dallas, respectively."

 

Takeaway: Sex and the City has been off the air for a decade now…we must have missed the memo that Sarah Jessica Parker is still relevant.

Patagonia - Patagonia Names Rose Marcario CEO

(http://www.wwd.com/markets-news/people/patagonia-names-rose-marcario-ceo-7392027)

  • "Patagonia on Thursday appointed Rose Marcario, chief executive officer of Patagonia Works, the parent company of Patagonia, Inc., to the dual post of president and ceo of Patagonia. Prior to serving as the ceo of Patagonia Works, Marcario served as Patagonia’s chief operating officer and chief financial officer. Casey Sheahan will step down as ceo of Patagonia, Inc., effective Feb. 7, in order to spend more time with his family in Colorado."

LS&CO - Craig Nomura to Head Retail at Levi's

(http://www.wwd.com/retail-news/people/craig-nomura-to-head-retail-at-levis-7391353)

  • "Craig Nomura has been appointed president of global retail at Levi Strauss & Co., effective Feb. 3."
  • "Nomura, most recently senior vice president of global development at Williams-Sonoma Inc., will also serve as executive vice president of the San Francisco-based jeans and sportswear firm and report to Chip Bergh, president and chief executive officer."
  • "He succeeds Joelle Maher, who left Levi’s in June to join Gymboree Corp. as chief operating officer."

INDUSTRY NEWS

SAP to develop single vertical solution for fashion sector

(http://www.fibre2fashion.com/news/technology-company-news/newsdetails.aspx?news_id=158789)

  • "SAP AG announces plans to collaborate with key customers to better meet the challenges faced by apparel, footwear and accessory companies. Working with adidas, Luxottica and Tommy Hilfiger, SAP envisions bringing a new fashion solution to the marketplace that will better enable fashion brands to manufacture their products and sell them to retailers and consumers using one single, vertical solution."