Posts Tagged ‘Retailing’

NRF Sound Bites

Thursday, January 13th, 2011
NRF Big Show logo

A who’s who of the retail industry converged for the NRF's annual Big Show

A who’s who of the retail industry converged at the Javits Center for the National Retail Federation’s annual Big Show in New York.

While the Internet, social networks and mobile commerce seemed to dominate much of the session topics and discussions, some of the most thought-provoking sound bites—or bytes—on the digital revolution emerged from two presentations: “100 Years of Fashion Past and a Look Ahead to 2012,” presented by David Wolfe, creative director for The Doneger Group, the trend forecasting firm, and a panel discussion by Financo, the investment banking boutique.

Here’s some sample quotables.

  • “Instant access to fashion on the Internet has been this decade’s clarion call,” Wolfe said.
  • Social networks like Facebook and YouTube have democratized fashion like never before, Wolfe said, citing sites such as Polyvore, which bills itself as a global community of independent trendsetters.

The trend has “allowed everyone to become a fashion stylist,” he said. And in an added twist, these citizen stylists, if you will, “are now being approached by retailers and suppliers to design products.”

  • Amazon has become the Wal-Mart of the online retail space: a “behemoth” offering commodity products at a bargain, said Rue La La chief executive officer Ben Fischman. “Amazon is convenience. It’s for diapers and toilet paper…versus real merchandising,” he said. “They’re not a merchandising company. They’ve got massive warehouses, but there is no theater there.”
  • In the 1990s, sportswear giants Nike and Adidas would spend “hundreds of millions of dollars on endorsements,” said Chip Wilson, founder, chairman and chief innovation and branding officer for Lululemon, the yoga specialty chain.

Lululemon is a very different kind of sportswear firm now spreading its wings in a very different era.

For the company, whose mission is to elevate the world from a place of mediocrity to greatness, according to Wilson, advertising “has to be organic,” as it aims to build a community.

Hence, “Facebook and Google are critical to what we do,” he said.

Amid all the talk of online retailing and mobile commerce being the future of retail, Michael Gould, chief executive officer of Bloomingdale’s, sounded this note: “We’ll triple our online business in three years,” Gould said. Even then, “The 59th street [flagship store] will still be a bigger business.”

Barbara Thau has been covering the retail industry for 15 years, currently as a contributing writer for CNBC.com, STORES magazine and Specialty Insider Magazine.
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The Game Changers of 2010

Thursday, December 23rd, 2010
Facebook Logo

Facebook was one of the game changers for 2010.

They emerged on the scene, came into their own, or cemented their influence on the retail sector this year.

They are a mixed group of companies, events and digital darlings, but have one thing in common: These five are poised to have a lasting impact on the retail industry long after we kiss 2010 goodbye.

Group buying site Groupon is reshaping the notion of “sale” and “bargain” in consumers’ collective psyches, and retailers must respond in kind.

Groupon just rebuffed a purchase offer from Google, further upping its mystique.

The site, which has spawned countless imitators, negotiates substantial discounts on retail, services and cultural events to subscribers in a free daily email, which are activated when a certain number of people agree to buy. A subscriber gets a hefty discount while the retailer taps into new shoppers.

Groupon mostly partners with local merchants, but national chains are now joining up, such as the Gap and Nordstrom.

Expect to see more national chains sign up with the site in 2011.

The media has lavished attention on Facebook ad nauseam. But like it or not, attention must be paid.

The social-networking site has become a portal to the world community and has seeped into every aspect of life—including shopping.

To that end, not only must retailers have a Facebook page as part of their marketing arsenal, several merchants are moving toward conducting e-commerce directly from Facebook, rather than their own web sites, shifting more of their brand content to where shoppers are spending more and more of their time.

Benefit Cosmetics, for one, the edgy beauty wholesaler/retailer, put its entire product catalog — from cosmetics to skincare and bath and body products – directly on Facebook, and added a rating and review feature so users can weigh in on products.

The “flash sale” website became a household name in 2010.

Gilt Groupe is the most famous of a new breed of Web merchants that has popularized the online sample-sale format, known as “the private sale.”

Private sales offer steep discounts, usually for 36-hours, cultivating an air of exclusivity with an “invitation only” hook to an upscale shopping base.

And in a testament to its growing influence on traditional retailers, this fall, Gilt Groupe partnered with Target to offer its members early access to two of the chic-cheap discounter’s exclusive fall collections for 36 hours.

But a bigger sign of Gilt Groupe’s imprint on retailers’ marketing strategies has just emerged.

This holiday season, retailers such as Ann Taylor and Banana Republic offered their own take on the limited-time only sale, holding “40-percent-off-the-store-for- a-few-hours” promotions during these pre-Christmas weeks.

  • Mobile Retailing

In the next few years, mobile retailing is poised to be what online retailing was for the 2000s: a new shopping frontier.

As smart phones gain mainstream appeal, mobile retailing is coming into its own. And retailers are increasingly reaching out to shoppers on their web-enabled devices with myriad mobile apps and increasingly sophisticated m-commerce sites. Merchants are already reporting this holiday that mobile retail is accounting for a noteworthy slice of their sales.

  • September 2008

The recession might be officially offer, but the dark days of September 2008, when the financial meltdown brought the country to its knees, have had a lasting effect on the consumers’ psyche.

By most accounts, consumer spending has not returned to pre-recession levels.

But perhaps more importantly, the conspicuous consumption ethos that drove much of the retail spending—and overspending—in the last decade is so, well, last decade.

The economy is still tenuous, unemployment remains high, and a good chunk of Americans have been out of work since the crisis of 2008 over two years ago.

In turn, shoppers have become more judicious in their purchases.

And a word to retailers: The younger demographic, notably Generation Y, are the new big consumer group—and they are not the big spenders that the baby boomers were.

So this decade will likely tell a whole new retail story.

Happy New Year, everyone.

Barbara Thau has been covering the retail industry for 15 years, currently as a contributing writer for CNBC.com, STORES magazine and Specialty Insider Magazine.
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Level Head in Uneasy Times

Wednesday, December 15th, 2010
JC Penney Promotion

Holiday promotions have been intense this year and may drag down profits.

As the retail sector heads into the final days of the holiday shopping season, I’m optimistic that consumers will come through this year and help retailers post improved top-line growth for the fourth quarter — and perhaps for the year. But when it comes to posting profits, I’m feeling a bit squeamish as the overall market gets a bit dizzy. Here’s why:

1. The promotional environment has been intense. J.C. Penney, for example, is pushing “Super Hot Gifts” this week in its stores with 50 percent off on selected SKUs as well as 15 percent off when shoppers use a J.C. Penney card. Meanwhile, Walmart is gearing up for more “door-buster” type promos this coming weekend on toys and electronics. These types of incentives drive traffic, but the margins can erode fast in the process. Walmart and J.C. Penney, though, are highly skilled at converting shoppers to other products that garner higher margins. Can you say the same for your business?

2. Playing the margin game can be costly. Yesterday Best Buy revealed a hard lesson. As Jeanne Poggi of The Street noted, Best Buy posted wider margins in its most recent quarter, but this came at the cost of lower revenue and a same-store sales decline of 3.3 percent. Wall Street analysts had the company pegged to post sales of $12.47 billion. Best Buy delivered sales of $11.89 billion. The company said the decline was due to a drop in market share in TVs, video games and wireless products. The problem here — according to analysts — was that that Best Buy offered too few promotions. The good news, though, is that Best Buy is pretty adept at navigating the promotional environmental and can likely drive sales in the coming week and in the post-holiday market. Again, is this something you can do with your business?

3. Inflation remains in check, which reveals sluggish economic conditions. The Labor Department reported today that consumer prices barely rose, which indicates that widespread inflation remains on hold — at least for now. The bad news is that this indicator shows that the economy is as sluggish and tired as a stubborn mule. For retailers, this means dealing in a market embedded with consumers who have tight wallets and little reason to buy. Still, consumers continue to sock money away, as the Bureau of Economic Analysis reported a few weeks ago. The BEA said the personal savings rate rose to 5.7 percent in October, up from 5.6 percent in September. This tells me that consumers have some pent-up spending desire.

So, what’s a retailer to do under these conditions? First off, you may want to stick to what you do best. Stay focused. This means not trying to second-guess consumers. Study the competition, and react accordingly. Be promotional to drive traffic, and then woo shoppers with enticing goods and exceptional service (when and where appropriate) once they’re inside your store. If you’re in the apparel business, have the right fashion/pricing/sizing mix. If you’re in harder goods, have the right level of inventory at the right price points.

And as market conditions swoops and spins, try and keep a level head.

Arthur Zaczkiewicz is a columnist for RetailConnections as well as a freelance journalist and editor, and has previously served as senior editor, financial, of Women’s Wear Daily (WWD). As a reporter and writer, Zaczkiewicz’s work has appeared in WWD, WWD The Magazine, WWD Scoop, DNR, Footwear News, Home Furnishings News, HomeWorld Business, Hotel Business, Newsday, the Times Herald-Record, New York House magazine, Retail Traffic, BNET, Specialty Insider magazine and Ulster Publishing. He has also appeared on CNBC’s On the Money and on Northeast Public Radio.
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Retail’s Online Odyssey

Tuesday, November 9th, 2010
Sears Is Doing Much More With Social Media

Sears new social version puts a twist on a time-treasured tradition

Following weeks of dire reports from industry analysts and economists regarding the holiday shopping season — the National Retail Federation is forecasting a modest 2.3 percent gain in sales this season — Forrester Research Inc. releases a report this morning saying it expects online sales to increase 16 percent to $52 billion.

“Consumers are showing a willingness to spend this season,” said Sucharita Mulpuru, Forrester Research vice president and principal analyst, in a statement. “And, almost universally, online retailers expect their holiday sales to increase this year over last year, showing industry-wide optimism.”

The report found that the online consumers surveyed said “they will make 37 percent of their purchases via an online channel this holiday season, compared with 30 percent in 2009.” Moreover, 80 percent of retailers who were surveyed in a separate report for the third quarter said “their gross online sales increased year over year for Q3,” which Forrester said was “a likely indicator that the trend is primed to continue.”

This bright and cheery outlook nicely echoed a third quarter conference call with Priceline.com executives who delivered robust sales and profits yesterday. No pun intended, but results were sky high for the online flight and travel site. Gross profits in the quarter soared over 53 percent to $666 million. Bookings were robust, even in North American. Management said the company “saw strong performance in our key European markets that was likely to some degree also helped by diminished concerns over sovereign debt issues. Our continual efforts to improve the user experience on our websites are also a contributing factor.”

For my part, that last point is a key takeaway for anyone looking to build online sales. It’s the experience that matters most — especially for online shoppers who can be more easily distracted, disappointed and deterred from not only visiting your site, but buying something too.

This is one reason why I think Sears will score well this holiday shopping season. The retailer just rolled out its new Wish Book , which is mostly focused on the retailer’s website. More exciting is how the retailer is leveraging social media this year. In a statement this morning, Imran Jooma, president of eCommerce for Sears Holdings, said the “Wish Book makes holiday shopping easier, more convenient and provides a new social element for our customers. While print and electronic versions of the Wish Book are still available, the new social version puts a twist on a time-treasured tradition. It’s your Wish Book, your way.”

So what does that mean? Well, if you check out the site here , the first thing you notice is that the page is full of faces. Shoppers’ faces. Users who sign up can follow “top shoppers” and see top scoring gifts. Other bells and whistles include apps for iPads and smart phones. It’s shopping on the go.

Bottom line is that retailers — big and small — have a chance to capture more sales this year by rethinking their online strategy. It’s not too late to tweak your efforts. Put yourself in the shoes of your customers and imagine what kind of online experience you would like to have. And if you’re not using social media tools such as Facebook or Twitter, get crackin’.

Arthur Zaczkiewicz is a columnist for RetailConnections as well as a freelance journalist and editor, and has previously served as senior editor, financial, of Women’s Wear Daily (WWD). As a reporter and writer, Zaczkiewicz’s work has appeared in WWD, WWD The Magazine, WWD Scoop, DNR, Footwear News, Home Furnishings News, HomeWorld Business, Hotel Business, Newsday, the Times Herald-Record, New York House magazine, Retail Traffic, BNET, Specialty Insider magazine and Ulster Publishing. He has also appeared on CNBC’s On the Money and on Northeast Public Radio.
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Good and Green

Tuesday, October 26th, 2010
Target gave away 1.5 million reusable shopping bags on Earth Day 2010

Target is one retailer that "walks the talk"

This past semester, I taught public relations to a group of graduate students enrolled in the International Business Institute at SUNY New Paltz. These students were from all over the globe: Sweden, Finland, Germany, and Mexico. They were bright-eyed and enthusiastic as we discussed PR issues such as the impact of social media or the recent BP oil spill.

We also weighed in on what companies were doing on the corporate social responsibility (CSR) front. Their impression? U.S. companies were great at issuing CSR reports and launching related websites, but they were lousy at communicating these efforts to the public and could do a better job of “being green” instead of just saying they were green. As my friends at SDialogue often note, companies struggle with “walking the talk.”

For example, during a one of the classes, my students asked why U.S. retailers were having a hard time getting consumers to switch from paper and plastic bags to reusable bags. They said that many retailers talk up their green initiatives, yet my students’ shopping experience while living here reveal stores that push paper and plastic. It’s such a simple fix, the students said, that can save resources and promote a retailer’s effort to be greener. What was the problem?

I explained to them that many retailers were doing well on this front, and that the expansion in the market of reusable shopping bags continues to grow. I said U.S. consumers were catching on to this green benefit, but that it was taking some time. During the practical-exercise portion of the class, the students brainstormed a program for Target Corp. where the retailer would sell reusable shopping bags at cost and then offer consumer incentives for using the bags in the form of “points” that could be redeemed for discount coupons and/or products. Great idea, I said.

Later, I recalled that Target Corp. does a lot on the green front and its social responsibility efforts are broad and deep – despite a recent boycott call from shoppers over campaign contributions. On Earth Day in 2009, the retailer doled out 1 million free reusable bags for shoppers who made purchases. The giveaway included a $2 coupon for a GE compact fluorescent light bulb. And this past year, Target handed out 1.5 million bags during Earth Day. Perusing its social responsibility website, I also learned that Target ranked first on Greenpeace’s Seafood Scorecard.

I also learned that Target was working on several initiatives on the operations level. According to its CSR report, which can be found here, Target not only turns down the thermostat and has installed more energy efficient lighting and low-flow toilets in its stores, but the company is building better stores too. Target’s latest prototype store has “energy features providing an average of 16 percent energy reduction versus our previous prototype,” the retailer states. “Our previous prototype was recognized by many utilities as one of the most energy efficient designs in retail.”

Moreover, Target created a “garment hanger reuse program” that “keeps millions of pounds of metal and plastic out of landfills,” the company notes in its CSR report. “We send clothing to our stores already on hangers, each of which gets reused an average of four times or until it’s no longer functional.” As a result, over 430 million hangers were saved from going into landfills. Broken hangers, by the way, are recycled. And, since the apparel already has hangers on the garments, sales associates at the store level don’t have to do that work.

Good green, work, right?

Yes it is. And it makes me wonder why more retailers are not engaging in these types of efforts. As a shopper who reads labels, buys local, and uses reusable bags, where I choose to shop is directly influenced by the social and environmental responsibility of a company.

Arthur Zaczkiewicz is a columnist for RetailConnections as well as a freelance journalist and editor, and has previously served as senior editor, financial, of Women’s Wear Daily (WWD). As a reporter and writer, Zaczkiewicz’s work has appeared in WWD, WWD The Magazine, WWD Scoop, DNR, Footwear News, Home Furnishings News, HomeWorld Business, Hotel Business, Newsday, the Times Herald-Record, New York House magazine, Retail Traffic, BNET, Specialty Insider magazine and Ulster Publishing. He has also appeared on CNBC’s On the Money and on Northeast Public Radio.
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A Mobile Holiday

Thursday, October 14th, 2010
mobile ecommerce

This could be the holiday season that mobile retailing really takes off

As smartphones gain mainstream appeal, 2010 could be the holiday selling season that mobile retailing comes into its own—much like online retailing did over a decade ago.

Retailers have been coming up with myriad ways to tap consumers on their web-enabled devices, looking to generate sales from shoppers on the go.

So this holiday season, we’ll see a host of new mobile-commerce sites and mobile apps designed to whet shoppers’ bargain-hunting appetites.

Retailers will also increasingly target consumers when they’re already strolling the store aisles to sway purchase decisions.

For example, a shopper will check into a store on their smartphone, hunting down that hot holiday toy. The retailer will recognize the customer, know how many times she’d shopped the store over the past few months, reward her with a 30-percent off coupon just for showing up, and offer a special promotion based on her buying history.

More apps will boast barcode scanning functions that enable shoppers to access customer reviews on a product by scanning that item with their mobile device.

Indeed, just as it has become commonplace for shoppers to research a product online before buying it in a brick-and-mortar store, retailers are now working to stoke a new habit: getting consumers to research a product at the point of sale (then hopefully buy it).

Then there’s the whole social-shopping aspect of the equation: the convergence of social networks and mobile devices.

People will share product images and holiday gift ideas with friends and family on sites like Facebook, get their opinion in real time and then make a purchase—all from the computer in their pocket.

Barbara Thau has been covering the retail industry for 15 years, currently as a contributing writer for CNBC.com, STORES magazine and Specialty Insider magazine.
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Service With A Smile

Tuesday, October 5th, 2010
Slash Root Cafe

Slash Root Cafe's exceptional service should serve as an inspiration

Here’s a tried and true equation for successful retailing: high-quality products plus top-notch service equals exceptional customer experience.

This sounds so simple, yet it’s one of the most challenging aspects of the retail business today. Let me give you an example:

This past week, after a horrendous technology fail of my old Dell Inspiron laptop, I quickly beelined to the nearest office superstore. I was ready to drop a few hundred bucks on a netbook since all of my writing and storage needs are web-based and done with Google Docs. All I needed was a cheap netbook to get onto email and onto the Internet. Done.

Once in the store, though, my shopping experience turned sour after the sales associate first questioned why I wanted a netbook and then said he was “out of stock anyway,” and that I couldn’t even buy the floor model. No worries. I then zoomed over to a competing office superstore. Although I found a slightly more congenial sales associate, he quickly said he didn’t have any netbooks in stock and was also “unable to sell the floor model.” Ok. So I raced over to a mega-electronics chain store, but got there just as they locked the door at 9 pm sharp.

Frustrated and emotionally spent, I went home netbookless. After sleeping on it, I headed out the following day to Slash Root Cafe (/root)– a local, non-profit cafe and open source/tech repair shop that is located in the small upstate New York college town of New Paltz. After my mass retail experience, it was retail nirvana. Slash Root Cafe is a collectively owned coffee shop and art/music venue that offers computer repairs and website construction for nominal fees. With the food, coffee (Fair Trade, single-origin coffee from Monkey Joe Coffee Roasting in nearby Kingston), teas and other drinks, there’s a menu, but no prices posted. Slash Root Cafe allows customers to pay what they feel is the right value. (Crazy, huh? Can you imagine going into Starbucks or Seattle’s Best Coffee and paying what you feel like is the right price?).

As soon as I entered the cafe, I was warmly welcomed by one of the co-founders, Amanda Catherine Stauble, who immediately connected me to one of the tech experts. The twentysomething shook my hand and said he uses the same laptop. He asked me what my computer needs entailed, and what software I use. He listened quietly, making good eye contact. Then he gently walked me through various options for repairing the Dell. Overall, he was pleasant, well informed and patient. In the end, I left the shop with a restored Dell that was freshly installed with a virus resistant, open source operating system and lifetime service help – all for a flat rate of $85. I nearly cried with joy.

This level of service and quality of product (not to mention innovative menu pricing for food and drink) from a non-profit specialty retailer may be unattainable at mass, but is an idea certainly worth pursuing.

A few days later, I found myself reflecting on what sets this business model apart. I reaffirmed that its the level of service that made it a wonderful retail experience. Back home in Kingston, I stopped by Monkey Joe Coffee Roasting to investigate this notion of exceptional service. If Slash Root Cafe had good products and a high-level of service, its vendors must too, right?  Sure enough, despite a brutal recession that has many retailers closing their doors, I found owners Gabe and Kathy Cicale noting that business is thriving. “It’s our staff that makes the business succeed,” Kathy said. “Gabe has also developed the craft of coffee roasting. It is a high quality product. But it is the people that make a difference.”

Arthur Zaczkiewicz is a columnist for RetailConnections as well as a freelance journalist and editor, and has previously served as senior editor, financial, of Women’s Wear Daily (WWD). As a reporter and writer, Zaczkiewicz’s work has appeared in WWD, WWD The Magazine, WWD Scoop, DNR, Footwear News, Home Furnishings News, HomeWorld Business, Hotel Business, Newsday, the Times Herald-Record, New York House magazine, Retail Traffic, BNET, Specialty Insider magazine and Ulster Publishing. He has also appeared on CNBC’s On the Money and on Northeast Public Radio.
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Retail Redux

Thursday, September 9th, 2010

Across the retail landscape, the product distribution model is being turned on its head.

Walls are coming down and unorthodox ways of doing business are emerging.

Retailers are partnering with other retailers as vendors are charting untraditional merchandising paths.

Retailers are partnering with other retailers as vendors are charting untraditional merchandising paths.

A few recent deals underline the point.

Last month, Target partnered with Gilt Groupe in an unprecedented collaboration.

Gilt Group is among a new breed of Web merchants that has popularized the online sample-sale format, known as “the private sale.”

Private sales offer steep discounts, usually for 36-hours, cultivating an air of exclusivity with an “invitation only” hook to a tony shopping base.

In a bid to capitalize on the get-it-while-you-can mystique of the private sale—and gain exposure to a whole new audience—Target partnered with Gilt Groupe to offer the online merchants’ members early access to its exclusive new fall collections: the Tucker and Mulberry fashion lines and a home décor program from John Derian, for 36 hours.

Gilt Groupe

Online shopping has put the consumer in the driver’s seat like never before

Meanwhile, Karl Lagerfeld, the iconoclastic designer famous for his highbrow collections for Chanel, will bow a new “masstige” (mass-prestige) line. And where will it be distributed? Mostly on the Internet.

And Mossimo Giannulli is challenging the traditional licensing model. The designer, whose apparel deal with Target reportedly now generates in the billions, has joined forces with teen retailer Pacific Sunwear to revive Giannulli’s Modern Amusement brand. In what licensing experts call a totally new model, Giannulli and PacificSun will now jointly find additional licensees—including retailers that don’t compete with Pacific Sunwear.

“I wouldn’t be doing this if I didn’t think it was going to become a very large business,” Giannulli told Women’s Wear Daily this month.

It’s a sign of the times: Both retailers and suppliers are looking for new ways to get their products in consumers’ hands.

The changes are also a natural outgrowth of what’s been bubbling at retail over the last decade.

For one, the Web has given power to the people.

The advent of online shopping has put the consumer in the driver’s seat like never before, siphoning away business from traditional brick-and-mortar retailers that those merchants had always just taken for granted.

At the same time, the lines have blurred between mass and class retail channels and merchandise.

Target has been a seminal force in ushering in the democratization of design by launching affordable collections from designers with upscale pedigree, such as Isaac Mizrahi, Thomas O’Brien and Jean Paul Gaultier.

Target made it ok for upscale designers to sell at a mass merchant and still maintain their upscale retail distribution—which was unheard of.

It paved the way for lines like Vera Wang at Kohl’s and H&M’s limited-edition collections from designers such as Stella McCartney and Karl Lagerfeld.

It will be interesting to see what comes next: A Forever 21 shop in a Saks Fifth Avenue store? Or perhaps “Vera’s Bridal,” a spin-off chain of David’s Bridal that sells Vera Wang gowns and home fashions? Stay tuned.

Barbara Thau has been covering the retail industry for 15 years, currently as a contributing writer for CNBC.com, STORES magazine and Specialty Insider magazine.
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Enduring Retail

Tuesday, September 7th, 2010

Wal-Mart is making its entire supply chain more sustainable

If you’re like me, you may be fatigued over the over-use (and misuse) of the terms “sustainable” and “sustainability” in the retail industry. Consumer product companies and retailers across the market are engaged in some sort of sustainability strategy — sometimes spending millions to doing so. This includes efforts to be environmentally, economically and socially sustainable.

At least once or twice a day, a press release pops into my inbox touting the latest sustainability initiative by a Fortune 500 firm. And then there are the countless newsletters and blog posts too. It seems everyone is involved with sustainability in some way or another.

Amid the sustainability and green chatter, I’m left unsure of what exactly companies are doing to be more sustainable. It all seems to be a lot of talk and little action. Indeed, as you may suspect, it’s hard to walk the talk — especially in an age of blatant “greenwashing” . But, as some say, the times are a ‘changin.

Over the past five years, firms such as Starbucks, GE and H&M Hennes and Mauritz Ab have made strides in their quest of being the most sustainable company in the world. (Check out this list here to see the Global 100 most sustainable firms.)

Within the retail sector, Wal-Mart Stores has taken a leadership role in this area by doling out massive corporate resources in a sustainability effort that is as broad as it is deep. Earlier this summer, the retail giant launched a sustainability program aimed at making its entire supply chain more sustainable. Tagged the Sustainable Product Index, the initiative is designed to create a “single source of data” for making sure products sold are sustainable.

Mike Duke, president and CEO of Wal-Mart, said in a statement in July that customers “want products that are more efficient, that last longer and perform better…“And increasingly they want information about the entire lifecycle of a product so they can feel good about buying it. They want to know that the materials in the product are safe, that it was made well and that it was produced in a responsible way.”

Duke went on to say that this is no passing trend. “Higher customer expectations are a permanent part of the future,” he added.

Higher customer expectations are a permanent part of the future”

Wow, now there’s a bold statement. Essentially, what Duke is saying is that consumers today not only possess a massive power to choose goods based on price and quality, but they also have the ability to choose products based on how good it is for the environment. Time will tell if Duke is correct.

In the meantime, the company said this past week that Andrea Thomas — who is the retailer’s senior vice president, global merchandising for home, hardlines and entertainment — will transition into the role of senior vice president of sustainability, replacing Matt Kistler, who will take on a senior vice president gig with the U.S. marketing group. According to Environmental Leader, Thomas is described as a “committed driver of sustainability” within Wal-Mart’s private label business. The choice of Thomas makes sound business sense. Her knowledge of the supply chain will be invaluable to the company as it gears up its sustainarbility index.

From a vendor’s perspective, though, implementing sustainability into the design, sourcing of materials and manufacturing of goods is surely an incredible undertaking. To be truly sustainable, most vendors will have to completely transform their business. As Wikipedia notes, sustainability means “having the capacity to endure .” And endure we must — not only for our the success of our businesses, but for a healthy planet as well.

Arthur Zaczkiewicz is a columnist for RetailConnections as well as a freelance journalist and editor, and has previously served as senior editor, financial, of Women’s Wear Daily (WWD). As a reporter and writer, Zaczkiewicz’s work has appeared in WWD, WWD The Magazine, WWD Scoop, DNR, Footwear News, Home Furnishings News, HomeWorld Business, Hotel Business, Newsday, the Times Herald-Record, New York House magazine, Retail Traffic, BNET, Specialty Insider magazine and Ulster Publishing. He has also appeared on CNBC’s On the Money and on Northeast Public Radio.
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Curb Side Dilemma

Tuesday, August 31st, 2010

These days, one of the best ways to gauge the current state of retail is to look in the trash. Well, not in it, but at it. And when I look at the trash, it’s not a pretty picture.

Curb side dilemma

Curb side garbage can often indicate the current state of retail

In my neighborhood, the trash load has been extremely light the past six months. And that tells me that people are not buying as much as they did. No doubt times are tough as retailers continue to slog through a weak sales environment. But then something interesting started happening over the past few weeks: folks have been bringing sofas, futons and sectionals to the curb. Lots of it.

Then I started seeing new furniture being moved in — from car tops and delivery trucks as well as from FedEx and UPS. And that scares the heck out me.

Furniture piled high on the curb occurring simultaneously with replacement purchases is one indicator that sales of furniture might be ticking up. Sure enough, retailers have been slashing prices on all sorts of home furnishings — from sofas and beds to tables and chairs. Even the mass retailers — who already offer cut-rate prices on furniture — are further reducing their price points. Target Corp., for example, is selling on its website wood-armed futons and convertible sectionals for $240 and $867, respectively.  Moreover, the bulk of Target’s online offering of sofas are below $500. That’s about $100 less than price points on comparable goods just three years ago.

So, does that mean we’re headed for deflation? Maybe, maybe not. Price-point deflation in one product segment doesn’t make a trend. But it is something to keep an eye on.

Just a few weeks ago, the market was giddy that producer prices rose in July. As this New York Times story suggests , the increase in prices eased worries of a deflationary environment. But then Federal Reserve Chairman Ben Bernanke shook up the market last Friday with concerns over the prospects of deflation. Steve Schaefer waxes poetically about it in this Forbes post here. So which is it? Are we headed for deflation or not?

While you ponder the question, this might be a good time to think about the impact of deflation. From my perspective, deflation has the ability to bolster sales of things such as furniture, houses and cars. The benefit is short term, though, because the drop in prices does nothing for gross margins and profits. And that’s bad for companies who depend on improved margins to grow their businesses, which means hiring workers, who then have the money to spend in a sustained and lasting way.

Still, I remain hopeful that we’ll get through this. Business deals are being made, and shoppers are still buying a few things. I haven’t seen lots of folks in the streets, have you? And no one is sitting on boxes — at least not yet.

In the meantime, the best thing to do is to figure out how to do business in an innovative way. Focusing on consumers and implementing ways to serve them better in these challenging times can keep deflation at bay by stabilizing price points via an enhanced shopping experience.

Sports Authority is working on that right now. The company just inked a deal with GSI Commerce to reconfigure and improve its e-commerce efforts. GSI said in a statement this week that Sports Authority will offer consumers “new capabilities such as ship-to store, ship-from store, in-store pickup and in-store ordering….Sports Authority will also align its online merchandise assortment with its stores, significantly improving the customer experience.”

Now that’s good thinking, and smart retailing.

Arthur Zaczkiewicz is a columnist for RetailConnections as well as a freelance journalist and editor, and has previously served as senior editor, financial, of Women’s Wear Daily (WWD). As a reporter and writer, Zaczkiewicz’s work has appeared in WWD, WWD The Magazine, WWD Scoop, DNR, Footwear News, Home Furnishings News, HomeWorld Business, Hotel Business, Newsday, the Times Herald-Record, New York House magazine, Retail Traffic, BNET, Specialty Insider magazine and Ulster Publishing. He has also appeared on CNBC’s On the Money and on Northeast Public Radio.
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