Author: Chad Symens

The latest Consumer Fuels Survey results show that lower gas prices are not changing consumer buying behavior. Gas prices fell $.25 per gallon in September and $.60 since July. However, only 15% of consumers surveyed say they will spend more on non-fuel items in the coming month.

Declining gas prices are not increasing consumer optimism about the economy, as the recent stock decline is a concern for them. 89% of consumers say low gas prices are good for the economy, but 41% say the recent stock market decline has had an impact on their finances.

One segment of consumers are more optimistic. Among consumers aged 18 to 34, 23% say they will spend more money shopping this month.

Source: Retailing Today

Staffing agencies for logistics companies and retailers are reporting having trouble hiring warehouse workers to stock holiday inventory. The need for warehouse workers has grown as online shopping sales have increased. Increased online ordering raises the difficulty of warehouse jobs requiring more picking, packing and higher volume work in the warehouses.

Companies have had to raise starting pay to attract workers. Most logistics warehouses are located in similar geographic clusters, and retailers are competing for the same workers. UPS plans to hire 90,000-95,000 seasonal workers for the holidays. Retailers are commenting that rising e-commerce sales means less need for traditional store clerks and more need for people to handle shipments.

Source: Wall St. Journal

A new survey by HRC Advisory indicates that 80% of retailers are not prepared to transform their supply chains for a customer-centric, omnichannel model. 95% of retailers said their biggest issue is mitigating online returns, which can run as high as 30% and are very costly for a retailer.

The high cost of online returns come from returns of online purchases to a store that does not carry that particular item. Also, when returned to a fulfillment center there are costs for freight, damage and a lost opportunity for a replacement sale in the store.

All of the retailers surveyed felt that fully integrating inventory and fulfillment between the online and physical store channels would achieve the most effective customer outcome and the lowest margin risk.  But 52% of them stated they do not have the systems in place to provide the required visibility to inventory in each store.  Only 35% had capabilities for vendor drop-ship and order in store and deliver to the customer. 60% of those retailers have plans to further invest in their e-commerce systems to provide an improved customer experience.

Currently, only half of the retailers were currently able to present customers with accurate inventory information and to fulfill the entire order at the time of the online purchase, and only half could ensure fulfillment from the closest location when an item is available in multiple locations and distribution centers.

Only 25% of retailers are starting initiatives to combine fulfillment from stores and warehouses to manage both channels more cost-effectively.

Vendors who use POS data analytics tools, such as Accelerated Analytics, to help track and manage inventory levels in stores and fulfillment centers can work with their retailer buyers to optimize their working capital investments in inventory and partner with them to create a better customer experience and reduce their lost sales opportunities.

Source: Chain Store Age

The Consumer Spending Report US Spending Index increased 1.7 points in September. 28.7% of adults surveyed rated the US economy as excellent and 30.3% said it is getting better. There was a divide between Democrats and Republicans: 56% of Republicans felt the economy is getting worse, while Democrats had a much higher percentage believing the economy is excellent or getting better. While in most months adults aged 40-64 rate the economy and personal finances low, this month this age group had the highest percentage of respondents believing their finances are excellent.

The Retail Spending Index decreased 0.9 points. The percentage of adults that expected to spend on household expenses declined, with only 10% saying they expect to spend more. 51.2% responded they spent the same as the previous month. The outlook for next month appears to also remain flat.

Source: Chain Store Guide

Belk’s board of directors unanimously approved a merger with Sycamore Partners, expected to be completed in the fourth quarter of 2015. Belk agreed to be 100% acquired in a transaction with an estimated value of approximately $3 billion.

Founded in 1888 by William Henry Belk, Belk is the largest family-owned and operated department store in the US. Chairman and CEO Tim Belk will remain chief executive and the company will continue to be headquartered in Charlotte, NC. Belk operates 300 stores in 16 southern states.

“We are delighted to have found a financial partner that sees what we see in Belk: a 127-year-old brand that remains relevant today with exceptional customer loyalty in small, medium and large cities throughout the South,” said Belk. “We plan to grow Belk by executing our current strategic initiatives and undertaking new growth initiatives together with Sycamore. This transaction is an across-the-board win for our stakeholders.”

Source: Chain Store Age

Ten questions to get you started on a severe weather continuity plan.

Tropical Storm Erika has caused at least 4 deaths and widespread flooding as she moves past Dominica and Puerto Rico.  The current forecast model cone suggests a path right over Florida with Miami impacted early Monday morning (31 Aug).  The model is uncertain because traveling through the Caribbean could strengthen Erika into a hurricane, steer her toward the Carolinas, or just create mild to moderate flooding and wind.   

Florida is a huge retail market for Home Depot, Lowes, CVS, Walgreens, Walmart and many other retailers.  The east coast of the U.S. has millions of people in several large cities.  With a possible impact from Tropical Storm Erika less than three days away, now is the time to evaluate the risk Hurricane Erika poses to your business. This is a great exercise for not only this storm but also so that you can quickly and proactively act when the next storm is on the horizon.  

Ten Questions to Start Your Severe Weather Planning

1. Are my products impacted by the severe weather?  
2. What products are impacted?
3. Is the impact from the severe weather before, during, after, all the above?
4. What are my retail customer’s policies for store operations before, during, and after severe weather?
5. How will I be kept up to date on actions my retail customers are taking as a result of severe weather?
6. Can I create and save reports with the SKUs and stores I expect would be impacted by a severe weather event?
7. Can I purchase weather alerts or data to more quickly initiate our planning process?  

Developing a detailed understanding of how severe weather could impact your business and then using that to create a comprehensive process map, with actionable steps, is critical to business success when a severe weather event occurs.   After you have created your plan review it in detail with your retail buyer and replenishment managers.  They are likely to have input which will strengthen the plan further, and it’s also very possible they will be willing to share resources which are part of their severe weather plan like advanced weather forecasts, and emergency store operations communications you might not otherwise have been able to access.  Is there model for Tropical Storm Erika more detailed than generally available information right now?

I would also recommend adding Twitter into your communication monitoring process.  During a storm news travels very fast on Twitter.  If you have taken the steps above to identify specific stores you can monitor Tweets by simple saved searches and hashtags.  You can also send Tweets using hashtags if you want to get a message out quickly which is related to the weather and your product. 

Retail can be severely impacted by weather, but with proper planning allowing your business to act prior to a storm or react very rapidly to a storm, your business doesn’t have to be negatively impacted. In fact, a severe weather event could be a tailwind for your business. 

Lowe’s reported an 8.4% increase in profit for Q2 2015, with net earnings of $1.3 billion and $1.20 a share. This up from last year’s Q2 earnings of $1.04 billion and $1.04 per share. Analysts were expecting results of $1.24 per share.

The home improvement retailer’s net sales rose 4.5%, which was in line with expectations. Same store sales at stores open at least a year were up 4.3%.

“We posted solid results for the quarter and were able to capitalize on big-ticket market share opportunities with strong growth in categories like appliances and outdoor power equipment,” Lowe’s CEO Robert Niblock said in a statement.

As of July 31, 2015, Lowe’s operated 1,846 home improvement and hardware stores in the United States, Canada and Mexico representing 201.4 million square feet of retail selling space.

For fiscal year 2015, Lowe’s expects to add 15 to 20 new home improvement and hardware stores, and expects total sales to increase 4.5% to 5%.

Sources: USA Today, MarketWatch

Home Depot Inc. announced Tuesday that an improving housing market helped it to beat quarterly sales forecasts in Q2 2015. Net income rose to $2.23 billion. Net sales rose 4.3% to $24.83 billion, beating analysts’ estimates of $24.69 billion. Same-store sales rose 4.2%.

Home Depot raised its projected sales for the year to a growth of 5.2%-6%, above its earlier 4.2%-4.8% previously projected range.

US housing starts rose to an 8-year high in July as builders increased construction of single-family homes.

“We saw balanced growth across our business resulting from strength in the core of the store as well as the continued recovery of the U.S. housing market,” said Home Depot CEO Craig Menear.

Sources: Reuters, USA Today

The US Consumer confidence index decreased in August to a score of 92.9, down from July’s 93.1. The index score was expected to increase.

Retail sales increased 0.6% in July, attributed to employment rates rising. July’s unemployment rate hitting a seven year low of 5.3%.

“Renewed strength in personal finances largely offset slight declines in prospects for the national economy and buying conditions. The declines in prospects for the economy probably reflect the expected increases in interest rates, while the eventual but small impacts from falling commodity prices,  and a weaker global economy have yet to occur,” stated Richard Curtin, director of the Michigan Survey of Consumers.

Source: PYMNTS.com