R3: REQUIRED RETAIL READING

October 5, 2010

Expect the Visa/Mastercard settlement to facilitate changes at the POS.  It’s likely that consumers will see small discounts or rebates in return for using a particular form of payment.  With Discover representing the lowest cost credit card provides, we wouldn’t be surprised to see lower prices at retail for those using the card built on giving cash back.

RESEARCH ANECDOTES

- Ked’s is entering the sustainable shoe game with a version of it’s classic sneaker made from organic cotton.  The line, called Organic Champions, is also comprised of stitched eyelets and tea-stained laces.  Sounds like Ked’s may be looking to emulate a little bit of Tom’s success.

 

- On average American’s aged 12-24 spend two hours and fifty two minutes on the internet per day, about 5 minutes longer than the same group spends watching TV.  Playing video games is also a big part of this demographic’s daily routine, with an hour and ten minutes devoted to that activity.

 

- Keep an eye on where retailers are spending advertising/marketing dollars. According to an AdweekMedia/Harris Poll, 75% of Americans are reportedly confused by ads on television. In what might suggest marketers are getting too cute with their creativity, this study supports that retailers should consider further diversifying advertising channels toward mediums such as e-commerce, mobile, or even good old fashion print.

 

- As the “private” online sale becomes more mainstream, new e-commerce players are evolving with new twists.  Enter Birchbox, a new beauty e-commerce site which sends consumers a box of oversized product samples monthly for a fee of $10.  The consumer can then purchase the full-size product at Birchbox after having tested it.  The site also offers loyalty points as well as original editorial content.

OUR TAKE ON OVERNIGHT NEWS 

 

Adidas Outdoor Selects Sales Groups to Represent Brand as it Enters the US Next Fall - Adidas Outdoor, which will enter the U.S. market next fall, has selected two more rep agencies. The Hartford Sales Group will represent the brand in California, Arizona and Nevada and RCP Pursuits landed the account in the Hawaiian Islands. <sportsonesource.com>

Hedgeye Retail’s Take: Adi’s new outdoor product is still a year away from hitting shelves, but the company’s decisiveness will give these seasoned agencies plenty of time to educate accounts and work initial shelf allocations come its U.S. launch in Fall 2011.

New Balance Reorganizes Specialty Sales Organization - New Balance announced that effective January 3, New Balance will reorganize the company's Specialty Sales Organization in an effort to accelerate business results in the distribution channels of New Balance stores, family shoe, and running specialty. Highlights of these changes include the launch of a New Balance Store and Family Shoe Specialist organization as well as a stand-alone Running Specialty Team. <sportsonesource.com>

Hedgeye Retail’s Take: With mid-single digit share in athletic footwear and increasingly more innovative product in the market from competitors, we haven’t seen much out of New Balance recently – something that will have to change in order for these segmented sales teams to have a chance both maintain and gain share.

Kate Spade to Make UK Retail Debut - US womenswear label Kate Spade will open a pop-up shop in Covent Garden in London this month.  <drapersonline.com>

Hedgeye Retail’s Take:  Kate Spade has a lot going on besides growing profitability and continuing to deliver positive comps. Its launching new fragrances, expanding internationally, targeting Brazil and China, signed a JV with Japan, and is testing its Jack Spade concept. These are small but meaningful.

Golfsmith Looks To Drive Sales With An App - If a golfer runs out of balls or tees at the end of 18 holes, he can type in Golfsmith.com in his mobile phone’s web browser and buy more. However, golfers with iPhones can now access a richer Golfsmith mobile experience through the retailer’s new iPhone app. Golfsmith has designed the app with m-commerce technology provider Digby to make researching and purchasing products and accessing promotions much easier. The mobile app offers rich features including a special flash sales promotions board and product demonstrations by Golfsmith product experts.  <internetretailer.com>

Hedgeye Retail’s Take: Bad news for those courses which discourage use of cell phones during play. 

Beyonce's Mom Expands Line at Select Wal-Marts - Tina Knowles, mother of recording artist Beyonce, is rolling out 30 new sportswear pieces for her exclusive line this month at select Walmart stores and Walmart.com. Miss Tina by Tina Knowles, which originally launched in August 2007, includes denim, graphic T-shirts, embellished tops, day dresses, tunics, jackets, leggings and track suits. The line retails for $20 and under. Knowles is also founder and co-director of the House of Dereon and Dereon. <licensemag.com>

Hedgeye Retail’s Take: In the midst of a major merchandising transition, it appears that Beyonce’s Mom remains a winner at Wal-Mart.  Unfortunately this line isn’t going to move the needle as the overall apparel strategy remains in limbo.

China Shoe Consumption to Double - Footwear consumption in China will double in the coming years, according to the China Leather Industry Association (CLIA) president Zhang Shu Hua. Speaking at the All China Leather Exhibition in Shanghai, Zhang said that although official figures are hard to put together, her organization estimates that Chinese consumers buy an average of 1.5 pairs of shoes each per year. She added that this was likely to double, which means that the global footwear industry will soon have to find a way of supplying China with an extra 2 bn pairs of shoes a year. <fashionnetasia.com>

Hedgeye Retail’s Take: If true, supply will begin to command increases in pricing.  Yet another reason to keep an eye on inflation, although this trend would certainly be longer-term in nature. 

Credit Card Rules Change - Visa Inc. and MasterCard Inc. agreed today to allow retailers to offer rebates to consumers who use a lower-cost payment form, for example, a debit card instead of a credit card, or a credit card that does not offer rewards and thus does not cost the merchant as much to accept. The two big card brands announced they were making the changes as part of a settlement of a lawsuit filed today in federal court by the U.S. Department of Justice against Visa, MasterCard and American Express Co. American Express refused to settle and say it will contest the lawsuit. It remains to be seen how much online retailers will benefit from this settlement. Some say it will free online retailers to accept payment options such as PIN-debit should such systems gain traction, and will open up competition in the burgeoning field of mobile payments. Others are skeptical that any online retailers will find it worthwhile to steer a shopper to a lower-cost card, at least for a single purchase. <internetretailer.com>

Hedgeye Retail’s Take: Expect to see low cost provider, Discover, making a push at the POS as well as retailers offering % discounts tied to certain payment forms in a near future. 

US Retailers Upbeat on Holiday Comps But Hesitant on 2011 Inventory - Major U.S. retailers are entering the holiday shopping season with much more optimism, according to the latest BDO USA, LLP Retail Compass Survey of CFOs. The survey found a much lower percentage of CFOs expect negative comps. CFOs are split over whether too much inventory (53%) or insufficient inventory (47%) presents a greater threat to their holiday sales. Despite keeping a close eye on inventory, nearly half of retail CFOs (42%) plan to measurably increase inventory purchases in the first half of 2011. Others are holding off – 16% are delaying planned increased inventory purchases until the second half of 2011, and 24% are waiting to increase inventory until 2012 or later. Only 17% of CFOs plan to increase their inventory levels during the 4th quarter of 2010 in time for holiday shopping.  <sportsonesource.com>

Hedgeye Retail’s Take: Despite an uncertain demand environment, we agree that there are very few retailers placing aggressive bets on inventory as a means to drive sales.  Promotional activity still remains a wildcard.

 

Italy's Leather Goods and Accessories Sector Bouncing Back - After almost two years of decline, Italy’s leather goods and accessories sector appears positioned to begin bouncing back. The favorable indicators include stores that are rebuilding inventories amid growing international demand, said industry executives attending Mipel, the four-day leather goods and accessories show. Signs of improved sentiment are stronger now than they were in March and companies from Russia are placing larger orders. The trade show drew 16,200 visitors, flat compared with the March edition, but a 13.6 percent boost versus the same period last year, organizers said. About half of those attending came from abroad. Exhibitors said buying interest from China and Korea was significantly improved compared with last year, and orders from the U.S. over the same period were slowly picking up, helped by a weaker euro. <wwd.com/business-news>

Hedgeye Retail’s Take: Perhaps another sign of recovery on the higher end of the price point spectrum as Italy tends to produce goods in less price sensitive niches.