Author: Chad Symens

Demographic trends firmly favor small luxuries, according to a report from Bank of America Merrill Lynch. Vanity capital is globally at $3.7 trillion, with expectations to grow to $4.5 trillion by 208. Typical products range from cosmetics and smartphones, to fitness wear and health foods. They also include high end products like art, cars and fine wine.

The demographic trends include women who have more disposable income and are particularly prone to spend on small luxuries that improve their appearance, like anti-aging cosmetics. Over 40 percent of 25 to 35 year old Americans say they are already using or plan to use anti-aging products. Sales of anti-aging cosmetics grew by 5% to $25 billion in 2013 and sales are projected to rise by another 29% by 2018. Companies selling vanity products are seeing their stocks increase. Vanity capital stock earnings are forecast to grow by 37% over the next two years.

Accelerated Analytics’ customers who sell into this space include L’Oreal, Estee Lauder, Chanel, LVMH, Shiseido, Clarins, Coty, Elizabeth Arden, Osmotics, and Strivectin.

Source: CNBC

The Manufacturing Purchasing Managers’ Index (PMI), which measures the performance of the managing sector based on five weights: New Orders (30%), Output (25%), Employment (20%), Supplier Delivery Times (15%) and Stock of Items Purchased (10%), decreased in the US In April.

A reading above 50 indicates an expansion of the manufacturing sector, while below 50 represents a contraction. April PMI in the US decreased to 54.2 from 55.7 in March. Manufacturing PMI in the US averaged 54.24 from 2012 until 2015, reaching an all-time high of 57.9 in August 2014 and a record low of 51 in November 2012. This rate of expansion was the slowest so far in 2015.

Japan, China, France, Germany and the US all reported readings that decreased from expectations. Japan, China and France had readings below 50. This is a continued downward trend for Japan and China. Numbers were a reversal for Germany and the US, which had been producing some great numbers so far this year.

US survey respondents generally cited softer new business gains, especially from international markets. This contributed to a softer increase in pre-production inventories. Supplier lead times lengthened for the twenty-second month, with a number of companies noting ongoing transportation delays at west coast ports at the beginning of the year.

Sources: Bloomberg, Trading Economics

The Consumer Price Index for All Urban Customers increased 0.2 percent in March, reported by the US Bureau of Labor Statistics on April 17.

The index for all items less food and energy rose 0.2 percent in March, the same as seen in January and February. Many sub-indexes rose in March, including apparel, household furnishings and operations and recreation. Apparel grew 0.5 percent, its third consecutive increase. Household furnishings and operations rose 0.2 percent.

The Consumer Price Index for April 2015 is scheduled for release on Friday, May 22.

Source: US Bureau of Labor Statistics

The US Census Bureau reports monthly on inventory levels for retail, wholesale and manufacturing sectors. This trend will impact retailers themselves, consumer goods manufacturers, suppliers to those manufacturers and transportation carriers.

The inventory-to-sales ratio in retail has been declining pretty steadily for the last 20 years, with the exception of 2008 when the recession hit full force and retailers were caught with too much inventory relative to quickly declining demand. But most recovered quickly, shedding inventories to put things back on the downward trend line within one year.

The retail inventory-to-sales ratio reached a low sometime during early 2012, but has been slowly increasing since then, mainly due to the fact that interest rates are so low (meaning the cost of holding inventory is less), but also perhaps due to increased optimism on the part of retailers as well.

Source: Supply Chain News

Total apparel industry dollar sales grew 2% in the retail calendar year ended February 2015. However, in-store sales of apparel fell 2%. While New York and Los Angeles are the biggest US markets selling clothing, smaller regions like Orlando and Washington, DC are now the top markets for dollar volume increase for the apparel industry. Washington, DC showed in-store sales up 14%.

Both Orlando and Washington, DC generated strong sales performance both in-store and online. Online sales in the industry grew 19% overall. The top markets such as Los Angeles did grow online sales by double digits. However, in most cases the markets that are outperforming in the industry as a whole are those with greater in-store sales growth than online gains.

“The big regions are no longer leading apparel industry sales growth,” said Marshal Cohen, chief industry analyst for The NPD Group, in a statement. “When New York and Los Angeles don’t even make it into the top 10 list of DMAs driving apparel growth, we have a big opportunity gap in the market. We need to understand the cause in order for the apparel industry to regain traction moving forward.”

Source: Forbes

Traditional Black Friday takes place the day after Thanksgiving, the biggest shopping day of the year and the most recognized branding for shoppers. Retailers are attempting to use that recognition to drive sales this spring with “Spring Black Friday” events.

Home Depot stores started its “Spring Black Friday” with a cyber week of deals at HomeDepot.com. Trying to make an online event stick is important to Home Depot because it is becoming more reliant on its web site sales for growth. The chain did not open any new stores in the US last year, but e-commerce sales grew 37% to $3.8 billion, accounting for 5% of total revenue.

Home Depot competitor Lowe’s is holding its Spring Black Friday event for the third straight year. Retailers outside of home improvement are also trying to make Spring Black Friday a tradition. Bon-Ton Stores has held one every year since 2012 and had its most recent one two weeks ago.

Source: Bloomberg Business

Major retailers, trade groups and politicians gave an outpouring of congratulatory remarks last week following the introduction of trade legislation with potentially large implications for the retail industry and US economy.

The trade promotion authority (TPA) legislation, titled the “Bipartisan Congressional Trade Priorities and Accountability Act of 2015” is a necessary precursor for the President to negotiate and finalize free trade agreements such as the Trans-Pacific Authority Agreement and the Environmental Goods Agreement, both of which are seen as benefitting to the retail industry.

The TPA is designed to provide clear negotiating objectives for trade agreements that create new opportunities for American business and its global competitiveness. The most important issues for retailers in the agreement, which covers 14 Asian countries except China, are the elimination of duties and creation of workable rules on high-tariff items, such as apparel and footwear.

The Retail Industry Leaders Association (RILA) issued a statement in January when the trade policy was introduced to the agenda. “Trade is crucial to the retail industry and to breaking down barriers to provide open access to products and markets around the world. Trade Promotion Authority (TPA) could create tremendous new opportunities for generations of American workers.”

Sources: RILA, Retailing Today

US consumer sentiment, which measures Americans’ assessment of their personal finances, rose higher than expected in April, based on a University of Michigan survey released Friday. Analysts were hoping to see a rating of 94 in April, after a March rating of 93. Preliminary results for April rises the rating to 95.9. The survey did a reading of consumer expectations, and it rose, as well, to 88 from 85.3 in March.  “Although the leading economic index still points to a moderate expansion in economic activity, its slowing growth rate over recent months suggests weaker growth may be ahead,” said Ataman Ozyildirim, Economist at The Conference Board, in a statement.

However, this is the second-highest level of consumer confidence in more than eight years. The report “is encouraging given that the March payroll report was a little bit weaker and some of the other data around the consumer has been softer,” said Michelle Meyer, deputy head of U.S economics at Bank of America Corp. in New York. “The fact that consumers are feeling better hopefully will translate into greater expenditures over time and that’s been a missing link to the economic recovery this year.”

Sources: CNBC, MarketWatch, Bloomberg

The US Environmental Protection Agency and Department of Energy will be hosting its annual Energy Star Partner of the Year awards in Washington, DC, on April 20. Of the approximately 16,000 companies who partner with the EPA on their broad-based energy efficiency program, 128 companies are being recognized as Energy Star Partners of the Year.

Retailers among the 128 winners include Home Depot, Sears, Best Buy, Kroger, Kohl’s, Food Lion, Staples and JC Penney. “Energy Star Partner of the Year Award winners are delivering advanced energy efficiency solutions that help American families and businesses save money by saving energy. Their efforts play an important role in protecting the environment by reducing greenhouse gas emissions, while also moving our nation closer to a clean energy future.” said Department of Energy Secretary Ernest Moniz. Adds EPA Administrator and event key note speaker Gina McCarthy, “Our Energy Star Partner of the Year award winners demonstrate that energy efficiency is a smart business decision that supports their bottom line, and helps their customers save money and energy.”

Source: Retailing Today

The National Retail Federation conducted a Tax Return Survey to determine where refund money will be spent by consumers. Two-thirds of the shoppers surveyed were expecting a refund. 47% of shoppers will put their refund into savings, 39.1% will pay down debt and 25.1% will use their refund for daily expenses.

Among consumers surveyed between the ages of 18 to 24, 54.9% plan to put their refund into savings and 34.4% will pay down debt. “Americans are thinking of the future, and remaining financially secure is a big part of that,” said NRF president and CEO Matthew Shay.

However, a survey conducted by the International Council of Shopping Centers found that 47% of consumers would spend their refunds on goods and services including apparel, electronics and convenience items.

Retailers are vying for tax refund dollars with specials and marketing campaigns. Banana Republic is conducting email marketing that states “the antidote to taxes is a click away” and Amazon is urging customers to “take a break from filing taxes and scoop up new spring footwear”. Other online retailers, such as Foot Locker, Babies R Us, Bon Ton, The Gap and Ann Taylor are offering deals on Tax Day with percentage-off specials.

Sources: Forbes, International Business Times, Huffington Post