Author: Chad Symens

PwC’s annual global consumer survey of about 1,000 US respondents list Amazon as most favorite retailer with 52% of the vote. Amazon was followed by Walmart with 41% and Target 29%.

These retailers were followed by several department stores. Kohl’s was rated the highest of the department stores with 14% of the vote. Other department stores in the top 10 included Macy’s and J.C. Penny.

Home Depot came in 10^th and was the only DIY retailer to make the list.

The top reason cited by consumers were “Their prices are good”, followed by retailers having the items shoppers want in stock.

The US pattern mirrors the global pattern in another PwC survey.

The survey also captured whether consumers are “showrooming”, or browsing at physical stores but then shopping online. 68% of respondents said they have done so. However, 73% of consumers do the opposite, or “webrooming”, browsing online and buying in stores. Their reasons included delivery fees, being able to touch the merchandise, and getting the merchandise immediately.

PwC: Price Waterhouse Coopers

Resource: MarketWatch

Retail sales in the US shrank 0.9 percent in December. It is the biggest drop since January as demand fell for nine of thirteen major retail categories:

Electronic and Appliance stores, making up 2% of retailers, fell -1.6%

Clothing retailers, making up 5% of retailers, fell -0.3%

Online stores, making up 9.2% of retailers, fell -0.3%

Building Material/Garden dealers, making up 6% of retailers, fell -1.9%

In contrast, receipts rose at Furniture stores 0.8%, Health Care store 0.5% and Sporting Goods/Hobby/Book & Music 0.2%.

Total sales for the 12 months of 2014 were up 4% from 2013.

Source: Trading Economics

In an effort to better compete with online and big-box office supply retailers, Staples agreed to buy rival Office Depot in a $6.3 billion cash and stock deal. Staples said it started discussion with Office Depot in September, and the deal is expected to close by the end of 2015.

Amazon.com and Walmart have eaten into the sales of the office supply retailers.

Staples has market value of $11 billion, while Office Depot, its nearest rival, has a market value of $4 billion. Regulators denied Staples’ previous attempt to buy Office Depot in 1997 due to antitrust concerns. However, the FTC approved Office Depot’s $976 million acquisition of OfficeMax in 2013, citing increased competition in the office supply industry.

“This transaction delivers great value for our shareholders and creates a company ideally positioned to serve our customers and grow over the long term,” said Office Depot CEO Roland Smith. “It is also an endorsement of our many accomplishments and the tremendous success we’ve had integrating Office Depot and OfficeMax over the past year. We look forward to bringing our experience and knowledge to the new organization.”

“This is a transformational acquisition which enables Staples to provide more value to customers, and more effectively compete in a rapidly evolving competitive environment,” said Ron Sargent, Staples’ Chairman and CEO, in a statement. “We expect to recognize at least $1 billion of synergies as we aggressively reduce global expenses and optimize our retail footprint. These savings will dramatically accelerate our strategic reinvention which is focused on driving growth in our delivery businesses and in categories beyond office supplies.”

Sources: Wall Street Journal, RetailWire

Walmart COO Judith McKenna met with more than 400 suppliers last Friday to discuss her priorities for the retailer’s domestic business. The event was held at the Sam’s Club home office, the day after Walmart opened 33 Neighborhood Markets.

Key takeaways were simplification, best practice sharing, supply chain opportunities and small format growth.  McKenna mentioned several times throughout her speech the importance of simplification and the need for closer collaboration between merchants and operators at Walmart, using the phrase “Better Together”.

By “simplification”, Walmart means a fundamental concept of being an every day low cost operator by improving execution, reducing costs and improving sales. McKenna oversaw supply chain in the U.K., where E-commerce is more advanced than in the U.S. She views increased integration of digital and physical as a major opportunity. “We have work to do on the store experience and customer experience,” McKenna said.

McKenna has been visiting a lot of store to identify opportunities that will drive simplification.

“We want to grow and grow with you,” McKenna said, which hit home with the suppliers in attendance.

Source: Retailing Today

January 30, 2015

The U.S. Bureau of Economic Analysis today reported 2.6 percent annualized growth in real Gross Domestic Product for the fourth quarter of 2014, which is a little below consensus, but closer to the long-term trend growth rate of the economy.  The long-term trend is about 2.0 percent.

The resiliency of consumer spending shouldn’t be surprising as it is fundamentally supported by strong job growth, falling oil prices and relatively optimistic consumers, as suggested by The Conference Board Consumer Confidence Index released earlier this week.  The fundamental factors supporting spending are the strongest they’ve been in this expansion.

Investment in equipment dropped by 1.9 percent, mostly due to weakness in investment in industrial and transportation equipment, which is probably related to investment cuts in the energy sector.

The current pace of economic growth is likely to sustain strong job growth in the coming months and further reduce the unemployment rate.  The Employment Cost Index, released today as well, showed ongoing acceleration in wage growth, with wages in the private sector moving up to 2.3 percent year on year.  Further acceleration is to be expected.  The acceleration in wage growth increases the likelihood of an increase in the Fed interest rate by mid-2015.

Despite the current strength in economic activity, the downward pressure on profits, the strong dollar, and the weakening global economy are likely to partly offset the strength in consumer spending.  We do not see further acceleration in GDP growth as a likely scenario.  Moving forward, we expect the U.S. economy to grow at about a 2.5 percent rate in the coming quarters.

Source: The Conference Board

January 22, 2015

184 Million Americans To Watch 2015 Super Bowl, According To NRF Survey

The most widely watched sporting event of the year will draw an estimated 184 million viewers, for Super Bowl XLIX on Sunday, February 1.  Average viewer spending will reach a survey high of $77.88, up from $68.27 last year, with fans planning to splurge on everything from game day food and new televisions to athletic wear and decorations.  Total spending is expected to reach $14.3 billion.

“With renewed confidence in the economy and the outlook for 2015, consumers are looking forward to some good old-fashioned fun with their friends and family to celebrate the big game,” said NRF President and CEO Matthew Shay.  “Retailers will take full advantage of the expected traffic from avid fans by making sure they have adequately invested in decor, party food and accessories and other Super Bowl related inventory.”

Of the 75.8 percent planning to watch the game, nearly eight in 10 (79.3%) will purchase food and beverages, 10.8 percent will buy team apparel or accessories and 8.8 percent will splurge on new televisions to watch the game at home.

Source: National Retail Federation

Lowe’s Canada announced plans to hire 2,000 seasonal employees at its existing 37 Canadian stores for the Spring and Summer season. The company will hold its first ever Canadian National Hiring Day on March 7 at all of their stores.

Lowe’s previously announced it will be opening 25 new stores in Canada over the next three years, including stores in Lethbridge, Saskatoon and Sault Ste. Mari. These three cities have Target stores, who announced January 15 that it will be closing. This is raising speculation that Lowe’s could buy those Target locations, but Lowe’s has not confirmed it will use current Target locations as sites for their future new stores.

Lowe’s also is set to hire 30,000 seasonal employees in the U.S.

Source: Retailing Today

January 27, 2015

Sales of newly built, single-family homes rose 11.6 percent in December to a seasonally adjusted annual rate of 481,000 units, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

“This uptick is in line with what our builders are telling us in surveys and on the ground – that they are seeing increased traffic and more serious buyers in the market for single-family homes,” said Tom Woods, chairman of the National Association of Home Builders (NAHB) and a home builder from Blue Springs, Missouri.

“After a slow start to 2014 precipitated by bad weather conditions, new home sales have ramped up in the second half of the year,” said NAHB Chief Economist David Crowe.  “We can expect this momentum to continue into 2015 with the release of pent-up demand, particularly as existing home owners are trading up.”

The inventory of new homes for sale rose to 219,000 in December, which is a 5.5 month supply at the current sales pace.  Regionally, new home sales rose 53.6 percent in the Northeast, 17.7 percent in the South and 3.1 percent in the West.  Sales dropped 11.5 percent in the Midwest.

Source: National Association of Home Builders

January 27, 2015

The Conference Board Consumer Confidence Index, which had increased in December, rose sharply in January.  The Index now stands at 102.9, up from 93.1 in December.  The Present Situation Index rose to 112.6 from 99.9, while the Expectations Index increased to 96.4 from 88.5 in December.

Lynn Franco, Director of Economic Indicators at The Conference Board, said: “Consumer confidence rose sharply in January, and is now at its highest level since August 2007 (Index 105.6).  A more positive assessment of current business and labor market conditions contributed to the improvement in consumers’ view of the present situation.  Consumers also expressed a considerably higher degree of optimism regarding the short-term outlook for the economy and labor market, as well as their earnings.”

Consumers’ assessment of present-day conditions was considerably more favorable in January than in December.  Those saying business conditions are “good” increased from 24.7 percent to 28.1 percent, while those claiming business conditions are “bad” decreased from 18.9 percent to 16.8 percent.  Consumers were also much more positive in their assessment of the job market.  Those stating Jobs are “plentiful” increased from 17.2 percent to 20.5 percent.  Those claiming jobs are “hard to get” decreased from 27.3 percent to 25.7 percent.

Consumers’ optimism about the short-term outlook improved in January.  The percentage of consumers expecting business conditions to improve over the next six months rose from 17.8 percent to 18.4 percent, while those expecting business conditions to worsen declined from 9.9 percent to 7.7 percent.

Consumers’ outlook for the labor market was also more optimistic.  Those anticipating more jobs in the months ahead increased from 14.6 percent to 16.7 percent, while those anticipating fewer jobs declined from 16.5 percent to 15.0 percent.  The proportion of consumers expecting growth in their incomes improved from 16.2 percent to 20.0 percent.  However, the proportion expecting a decrease increased marginally, from 10.2 percent to 11.3 percent.

Source: The Conference Board