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R3: REQUIRED RETAIL READING

February 10, 2010

We’ve been tracking food stamp usage as a proxy for the low income consumer and the trends have been quite alarming for just over two years.  However, the recent monthly data (through Nov ’09) suggests a slight change on the margin in the year over year growth trajectory of SNAP participation.  

TODAY’S CALL OUT

So you may be scratching your head with the title. What the heck is SNAP? SNAP is the Supplemental Nutritional Assistance Program, formerly known as the Federal Food Stamp program. We’ve been tracking food stamp usage as a proxy for the low income consumer and the trends have been quite alarming for just over two years. However, the recent monthly data (through Nov ’09) suggests a slight change on the margin in the year over year growth trajectory of SNAP participation. Slowing growth in the number of Americans receiving benefits is flat out positive for our country. The flip side here is that this may be yet another factor in a slowing trend for those retailers (DG, FDO) that cater to consumers relying on SNAP. This is definitely something to watch. Take a look at the shorter and longer term trends below-

R3: SNAP Participation Growth Slowing - SNAP and FDO and DG

R3: SNAP Participation Growth Slowing - Food Stamps Historical

LEVINE’S LOW DOWN 

  • In an effort to source some creativity from new places, Bloomingdales flagship 59th location has conducted open casting calls for designers. However, the designers are not being sourced for apparel but rather to decorate the store’s prime window displaces. So far the company has recruited two different design bloggers to create window displays. The current Helmut Lang windows were designed by a DIY blogger who authors a site called P.S –I Made This.
  • Despite the push by marketers to tap into the “real” opinions and views of consumers via social media, a recent study by the Edelman Group may suggest this “authenticity” isn’t as pervasive as it seems. According to the Edelman Trust Barometer, the number of people who view their friends or peers as credible sources of information about companies dropped from 45% to 25% since 2008. Other information sources such as TV, radio, and newspapers showed substantial declines in their “trust” levels as well. The key conclusion from the study goes on to suggest that that American consumer is “scarred” from the last 18 months and is now much less willing to trust a single source of information when making a purchase decision.
  • After we highlighted Wal-Mart’s efforts to consolidate its vendor base and narrow its SKU count in the CPG aisles, Gildan confirmed that the same approach it being taken in apparel. In the case of GIL, they are one of the key beneficiaries of these strategic moves with their underwear program presented under the Starter brand name.

MORNING NEWS

Target enables customers to redeem gift cards through their mobile phones - To redeem a gift card, one must remember to bring it to a store. Not anymore at Target Corp., where consumers at any of its 1,740 stores need only remember to bring their mobile phones. Target shoppers can save gift card information to their Target.com accounts, either through Target.com or the mass merchant’s mobile site m.Target.com. When at a register, a customer with an Internet-enabled phone can access her card information, which pulls up a 2-D bar code. A clerk scans the bar code on the phone’s screen and the amount is taken off at the register. “The addition of Mobile GiftCards to our suite of mobile shopping solutions further simplifies the Target experience for our guests,” says Steve Eastman, president of Target.com. Target is among the first American retailers to deploy the necessary scanning hardware to scan two-dimensional bar codes, which are popular in Japan. Larger retailers like Target using 2-D bar codes could create a trend in the U.S., some experts say.  <internetretailer.com>

Walt Disney Japan Buys Retail Networks - All shares of Retail Networks Co., operator of Disney Stores in Japan, were recently acquired by The Walt Disney Company, Japan. RNC was a wholly owned Oriental Land subsidiary. In the recent acquisition, RNC will continue to run Japan's Disney Stores, but now as a wholly owned Disney subsidiary, beginning on April 1. Financial details were not disclosed.

Oriental Land is the operator of Disneyland Tokyo. <licensemag.com>

Marc Jacobs Sues Ed Hardy - Marc Jacobs has filed an infringe‑ment lawsuit against Ed Hardy parent company Nervous Tattoo Inc. over a handbag design. The complaint, filed by Jacobs’ Marc Jacobs International, centers on an Ed Hardy handbag the Jacobs firm claims infringes on its pending Scrambled trademark and the trade dress associated with its Pretty Nylon tote. According to court exhibits, the Ed Hardy bag at issue is a quilted tote with the brand’s name in stitched block print, features shared by the Jacobs Pretty Nylon bag. The Jacobs bag has been available since early 2007, according to the complaint. Attorneys for Jacobs wrote that the tattoo-based brand’s bag makes use of a trade dress that is “confusingly similar” to their client’s and that any infringement “has been intentional and willful, calculated specifically to trade off the goodwill that plaintiffs have developed in their successful Marc Jacobs Pretty Nylon tote bags.”  <wwd.com>

Bergdorf's Opens Children's Department - When it comes to children’s wear, Bergdorf Goodman isn’t kidding around. A 1,200-square-foot shop on the seventh floor for infants to size 6, with a floor-to-ceiling tree house, opened Tuesday. It’s called Little BG and displays a mix of traditional and contemporary styles and designer brands, which suggest you’re never too young to be chic. For a relatively small department, there’s a wide range, from suitings to casual sportswear, as well as Steiff mohair stuffed animals, sterling silver gifts from Monica Rich Kosann, rattles, rocking horses and keepsake boxes. The department is particularly comprehensive in layette, with a collection of hand-embroidered footies and playsuits made from soft Pima cotton, Italian-made cashmere booties, onesies and receiving blankets, and Moses baskets and gift sets.  <wwd.com>

25% of the top 100 retailers have no formal Facebook presence, says study - 

A quarter of the top 100 retailers in the Internet Retailer Top 500 Guide have no formal Facebook presence and another quarter have fewer than 10,000 fans, according to a new study from customer satisfaction measurement firm ForeSee Results Inc. That means that those retailers are missing opportunities to engage consumers, says the report, since of the 69% of online shoppers who say they use social media sites 56% follow at least one retailer on at least one social network. Shoppers who interact with a company on a social media site report being more satisfied, more committed to the brand and more likely to make future purchases from that company. The study found that 49% of respondents who become a fan of, or follow, a retailer do so to learn about special deals and options, 45% to learn about products, and 5% for customer support. That’s exactly what marketers want to hear from consumers, says Ertell. <internetretailer.com>

E-retail spending finished flat for 2009, comScore says - A strong holiday season kept online retail from finishing 2009 in negative territory, and offers hope for a better year for e-retailers in 2010, web measurement firm comScore Inc. said in a report released today. E-retail sales trailed the prior year for most of 2009, but year-over-year gains of a few percentage points in November and December allowed e-retail to finish the year at $129.8 billion in sales, essentially unchanged from $130.1 billion in 2008. The holiday season comeback “does suggest that the tides of consumer sentiment are beginning to turn and that 2010 may be a healthier year for retail e-commerce,” noted comScore’s report, “The 2009 U.S. Digital Year in Review.” Despite the fall-off from growth rates that were consistently in double digits before slipping to 6% in 2008, the web remains a relative bright spot for retailers, comScore says. “New buyers continue to enter the channel, and as average spending per buyer rebounds off its 2009 lows, the e-commerce channel should return to healthy growth rates,” the report says.  <internetretailer.com>

Sales at Wholesalers Climb, Stockpiles Decrease -  Sales at U.S. wholesalers climbed in December for a ninth consecutive month, leading to an unexpected drop in stockpiles that may keep spurring orders. Purchases increased 0.8 percent after a 3.6 percent gain in November, the Commerce Department reported today in Washington. Inventories fell 0.8 percent following a revised 1.6 percent increase that was the largest in more than five years. A record inventory drawdown last year has opened the door for factories to pick up production, leading a recovery from the worst recession since the 1930s. Another report showed job openings climbed in December for the first time in three months, signaling employers are gaining confidence the expansion will be sustained in coming months.  <bloomberg.com>

U.K. January retail worst in fifteen years - Despite the Christmas sales which boosted the UK's fashion retailers, January saw the lowest sales growth in fifteen years. UK retail sales values fell 0.7 per cent on a like-for-like basis from January 2009, when sales had risen 1.1 per cent. On a total basis, sales rose 1.2 per cent against a 3.2 per cent increase in January 2009. The snow and terrible weather hit the retail sector, especially discretionary items. Over the month, clothing and footwear showed gains on a year ago, but other sectors, like homewares and furniture showed declines.  <fashionunited.co.uk>

European Outdoor Group Restructures Board - Members of the European Outdoor Group (EOG) elected Monday a new president and agreed to restructure their board. “As the industry itself changes, the European Outdoor Group has felt it necessary to restructure to ensure the appropriate flexibility to accommodate the requirements and demands of its growing membership and the industry itself,” said Mark Held, secretary general, of the EOG. From the existing EOG Board, Albrecht von Dewitz of Vaude, announced his decision to step down from the Board. Rolf Schmid of the Mammut Sports Group, has stepped down as president and Claes Broqvist of Odlo, has stepped down as vice president. Both Schmid and Broqvist will remain on the board as ordinary members and this will aid continuity and ensure the EOG retains experience. Bernd Kullmann of Deuter has been elected as vice president and Jean-Marc Pambet of Salomon and Eddy Codega of C.A.M.P. have formally joined the board.  <sportsonesource.com>

Education costs top consumer price increases since 1990 - Prices paid by urban consumers in 2009 for a sampling of goods and services increased the most since 1990, especially for items heavily influenced by government policies. The cost of education increased by more than 200 percent during the 20-year period, followed closely by the cost hikes in health care and fuel, according to data gathered by the Bureau of Labor Statistics for the Consumer Price Index. The index, which will be released for January next week, measures buying habits of urban wage earners and clerical workers. The index is used as an economic indicator -- to measure inflation, for example, and as a means of adjusting the value of a dollar. On the other side, the cost of personal computers declined by nearly 90 percent, leading the list of price drops on items tracked by the Bureau of Labor's CPI index. Other large drops were seen in the costs of TV sets, audio equipment, toys and photographic equipment. The cost of all items in the index increased by more than 71 percent from 1990 to 2009, the American Institute for Economic Research analysis of CPI data shows. <indystar.com>

Gallup Economic Weekly: No Super Bowl Boost - No change in economic confidence, job creation, or consumer spending last week. Falling stocks, a lower unemployment rate, winter storms, and even the approach of the Super Bowl and the parties that surround it seem to have had little impact on American consumers last week, as Gallup's Economic Confidence Index was unchanged at -29 -- virtually the same reading as those of the prior three weeks. Job market conditions also remained essentially the same, as Gallup's Job Creation Index was at 0 -- compared to -1 the prior week and 0 for the week ending Jan. 24. Even with parties to hold and paychecks in hand, self-reported consumer spending remained unchanged at an average of $60 per day last week.

R3: SNAP Participation Growth Slowing - G1

What Happened (Week Ending Feb. 7)

  • Economic Confidence was unchanged once again last week, as Gallup's Economic Confidence Index stood at -29. Forty-eight percent of Americans rated the economy "poor" and 11% rated it "excellent" or "good." Thirty-seven percent said the economy is "getting better" while 57% said it is "getting worse." Consumers' mood seems largely unaffected by weekly events these days, as economic confidence remains flat. Not only did the Super Bowl seemingly make no impact, but neither did the plunge in the stock market nor the global credit market concerns that spawned the plunge.
  • Job Creation inched back to 0 last week from -1 the prior week -- matching conditions of two weeks ago. Twenty-four percent of employees reported that their companies are hiring and 24% said their employers are letting people go. Both hiring and firing activities have shown virtually no variation so far in 2010 -- a situation that might not be so bad if overall job market conditions weren't so bleak.
  • Consumer Spending continues to disappoint. Last week's Super Bowl preparations -- particularly because it was a paycheck week -- might have encouraged consumers to increase their spending, at least on the margins. Instead, self-reported daily spending in stores, restaurants, gas stations, and online was flat, averaging $60 per day -- the same as the prior week and identical to spending during the same week a year ago. Evidence continues to mount that what turned out to be a "new normal" for spending during most of last year may also characterize consumer spending during the first part of 2010 -- if not longer.

R3: SNAP Participation Growth Slowing - G2

 <gallup.com>