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KRISTIN BENTZ President Talented Blonde LLC 484-794-2644 kristinbentz@mac.com
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KRISTIN BENTZ President Talented Blonde LLC 484-794-2644 kristinbentz@mac.com
In case you missed it, here is last night’s retail rant on ($WMT) Wal-mart and their latest effort to lure consumers in the store: price-matching any item from Nov 1-Dec 25th and refunding the difference in a $WMT gift card. Find a cheaper item elsewhere? Just bring the original $WMT receipt and the competing store’s flyer to Wal-mart and they will refund the price difference in a gift card. The price -matching includes on-line purchases as well as lay-away. This is clearly $Wmt’s way of taking off the gloves in preparation for a retail rumble this holiday season. But is it a tacit admission of a greater fear out there for America’s largest retailer?
Indeed, post “The Great Deleveraging” coined by my former colleague and mentor Chip Dickson in the book of the same name, consumers are SAVING not spending. They are paying off credit cards, accelerating mortgage payments, etc. So, that discretionary income that would go to retail is already spoken for; that’s not good for merchants expecting to get out of the red this holiday season.
Therefore, retailers really need to pull all the stops to get YOU in the store-and FAST. Expect crazy promotions and door busters, price-matching, and yes . . .LAY_AWAY. It’s baaaaaaaack.
“”
In case you missed it, here’s an excerpt from my segment on “Cavuto on Business” on OWS Protesters. Feisty!
First off, the GroupOn $GRPN marketing/road show team did an excellent job at using the media to temper/lower expectations on the IPO the past two weeks… 35 million shares @ $20 is a much better pricing than anyone expected when the week began…
I think the folks at Zynga may be breathing a sigh of relief as well since they and many other social media potential IPO’s were worried that GroupOn could sour the juice in that market…
All that aside, I am not a huge fan of GroupOn in 2012 and beyond..
In my observation of Groupon, it’s beginning to skew more toward national deals. That means lower margins as national merchants have the leverage to negotiate a better deal.
While Groupon clearly provides outstanding discounts to consumers at local businesses, the value to the merchant has been hotly debated. An example in the S-1 cites a business that sold Groupons and “more than half of the Groupons were sold to new customers.” That means close to half were sold to existing customers – a roughly 75% revenue hit on existing customers is something that merchants need to figure into their calculations.
GroupOn just got a heavyweight competitor to enter the ring of daily deal market when Google $GOOG announced Google Shopper for iPhone…While Google may be justifiably fearful of Facebook’s reach on search and data mining in the future, GroupOn should be equally fearful of Google and their advantages in local deals for the consumer…
There are lots of things the deal companies can do. But none of them are in their financial interests in the short term.
The core problem is that the interests of GroupOn are opposite to the interests of the business. The deal companies want to sell as many deals as possible to all comers. Not only does this generate more revenue, it’s more operationally efficient. (It’s much easier to write one description for 2,000 coupons than 20 descriptions for deals of 100 each.)
Businesses want a much smaller number of ideal customers.
There’s also a bit of game theory involved. The daily deal sites are dependent on cheapskates for revenue growth. If you make it harder for the cheapskates, they’ll use some other site.
If you look at the mean purchases per user in the Groupon S-1, they’re just below 2 in established markets and a large portion (80%) of registered have never purchased anything. That likely means that a small number of people are buying a lot of deals… exactly what merchants don’t want.Catch me on Fox Business today at 1:30 pm ET breaking down the IPO.
In case you missed it , here’s a little more detail on what’s on the horizon for Groupon $GRPN post IPO, from my segment on Fox Business News today.
Stores Ramp Up Competition for Black Friday: MyFoxPHOENIX.com
If all the Black Friday midnight openings and Thanksgiving Day store openings are any indication, retailers get it: It’s time to bring out the big guns.
$GPS is opening 1000 Gap stores, 800 Old Navy’s, and 54 Banana Republic stores. (um, if you look at stock performance you’ll see why), and Macy’s $M is opening on midnight on the eve of Black Friday, as is $TGT, Target, $WMT , and a slew of others.
But will shoppers bite? With technology changing the way Americans shop, does Black Friday even matter? Just like Back-to -School shopping, Black Friday is becoming less and less important as a shopping day, and more a symbolic kick-off to the Holiday Season. We are a Buy-now, wear-now society. That’s just the new normal. And unless Christian Louboutin has a door buster, there’s no way in hell I’m lurking around the Mall at midnight Thanksgiving night.
Moreover, as this consumer continues the ‘Great Deleveraging’, and pays down debt, cuts up credit cards, and pays down mortgages, this new SAVER mentality, while it may keep the consumer more fiscally fit, it doesn’t do much to help the economy. Hence the resurgence of the dreaded “LAY-AWAY.” It’s baaaaaack! Yes, what was once the dirty little secret of retail is back in full-force as retailers realize they must provide flexible ways for consumers on a budget to pay for their Christmas gifts. K-mart ($SHLD)has the “Gap” of holiday commercials dedicated to Lay-Away. Now that’s a tacit admission to the state of the consumer right there.
Some interesting data points to consider below:
An overwhelming majority of Americans don’t plan on shopping during Black Friday.
This surprising finding comes from a survey of 2,429 drafted by e-tailer Ebates and conducted just last week by Harris Interactive.
The survey discovered:
• Most Americans (87%) don’t buy the majority of their gifts during the Thanksgiving Weekend (Thanksgiving Day, Black Friday, and the following Saturday and Sunday)
• The majority shop instead during December (51%)
• One in ten Americans (10%) said they shopped during the week before Christmas and only one out of one hundred (1%) admitted to buying holiday gifts after Christmas!
In fact, shoppers are twice as likely to shop online as opposed to fighting the crowds at stores and malls on Black Friday:
• Only 34% of Americans said they were likely to battle the crowds in the malls or in stores during Black Friday.
• 71% said they are likely to go online to shop during the same time.
And this season will see more online shopping than ever before:
• 83% of Americans say they will shop online for holiday gifts this season
• 44% saying they would spend half or more of their holiday gift budget shopping online.
*Saving Consumers doing more damage than good to the US Economy.
*The Great Deleveraging (paying off credit cards, accelerating mortgage payments) doing more to threaten the economic recovery than help it. This does NOT bode well for the Holiday shopping season.
* Expect retailers to pull out all the stops EARLY via promotions and price matching to lock in sales as early as possible. Hence $GPS is opening on Thanksgiving DAY, as well as the usual suspects opening doors at midnight on Thanksgiving night: Best Buy, Macy’s,ToysRUs, etc.
*Since the financial crisis erupted, millions of Americans have ditched their credit cards, accelerated mortgage payments and cut off credit lines that during the good times were used like a bottomless piggybank.
* two-thirds of Americans polled online in July by U.K. research firm Absolute Strategy Research said they planned to either reduce their debt within a year or stop borrowing altogether.
*As a result, total household debt—through payment or default—fell by $1.1 trillion, or 8.6%, from mid-2008 through the first half of 2011, according to the Federal Reserve Bank of New York.
* Auto loan and credit-card balances in August had their biggest drop since April 2010, the Federal Reserve said.
* Since the recession ended in mid-2009, the U.S. economy has expanded at a 2.5% annual rate, far slower than the average growth of 4.3% during the first two years of the previous four recoveries.
If their lackluster Q3 performance was any indication, Wal-Mart is in desperation mode.
First it was the Holiday Price Match promotion launched in OCTOBER. Then the resurrection of Lay-away, and now wacky hours on Thanksgiving day. All desperate efforts to get Joe Six-pack in the door and to spend MORE. But, if $WMT is struggling, that begs the question about the rest of retail.
At $WMT margins are becoming razor thin since they can’t hedge on commodities like last year. Commodity prices (corn, cotton, etc) have been at high levels over a year now.
Think of our economy as a tripod (discount, middle market, and luxury). The middle market leg was the first to go, as “tweeners” and aspirational consumers had to trade down from $M Macy’s and $TGT Target to $WMT and $KSS. Now the discounters are feeling the pain at the margin since they can’t hedge. Moreover the $WMT customer also had to trade down to $DLTR and $FDO, so that’s where THAT share of wallet went. Everything is connected y’all.
And then, there’s LUXURY. My fave sector right now. As Burt Tansky once told me, “The luxury consumer never really goes away, instead of buying two Chanel suits, she’s buying one.” Stocks like $PPR Printemps, $LVMH, $BRBY Burberry $RMS Hermes, and $CFR Richemont have been killing it. While I don’t predict luxury dropping off the map, eventually it will be hit if this economy doesn’t turn around. However, I believe this economy will turn by late 2012, possibly into a boom with lower taxes and alternative energy leading the way to new jobs. But it will be a bumpy road now until Election Day. Obama needs to lose though, or all bets are off.
I see a perfect storm forming… lower taxes, alternative energy from coal and natural gas, less regulation, and Europe in shambles.
All these elements create jobs and when unemployment dips, the consumer gets stronger and so does the housing market. And, the big money is still here to invest. There are tens of trillions of dollars on the sideline, waiting for America to get off the mat. I know we will come out swinging.
-Talented
Christmas Shopping 2011: It’s a Buyer’s Market: MyFoxPHOENIX.com
Updated: Monday, 21 Nov 2011, 1:01 PM MST
Published : Monday, 21 Nov 2011, 1:01 PM MST
VIA FOX10 Phoenix-Linda Williams
PHOENIX – Black Friday is just days away and as we head into the shopping season, now more than ever, people want to shop smart. We talked to a retail expert who says 2011 is a buyer’s market.
Thinking of buying something electronic? If you’re holding out for that big screen HDTV, this might be the year to go for it.
“Prices have come down so much. There are so many options and before it used to be this huge investment you had to make..they were $2,000 and hung on your wall and now they’re compact..they’re easier to use and there are a ton of them,” said retail expert Kristin Bentz.
If something softer and gentler is more your style, be aware of high cotton prices. You might receive some form of sticker shock when buying the basics, such as cotton socks and underwear.
“Socks and underwear — the dreaded gift that you don’t want to get in your stocking. That’s going to cost you a lot more this year — same jeans, t-shirts, apparel, things you don’t think about — retailers have to pass that cost on to you,” said Bentz.
If a Black Friday strategy is your preference this season and you have the energy and the patience, go for it. For some, especially in this economy, slow and steady wins the race. Bentz says layaway is more popular than ever. Toys R Us, K Mart $SHLDand Wal-mart $WMT are just some of the stores offering it as an option.
“Layaway used to be the dirty little secret of retail..you wouldn’t talk about it, you wouldn’t tell your friends about it. You would go and dole out your money and wait to get your item out of hock. It’s a grave statement on the economy right now because you see all of these retailers are really pushing these huge commercials — they’re really glossy and dynamic about layaway,” said Bentz.
It’s also a shift in what’s considered cool. Those status symbols that teens and even adults once craved have changed.
“If you’re talking about status and luxury, really technology has become the new fashion statement. That’s how people are defining themselves and what niche they’re in — what type of phone you have, do you have an iPad…” said Bentz.
“Really people are whipping out their phones and putting them on the table where it used to be pulling up in a certain type of car or wearing a certain type of watch and it’s really evident in teens,” Bentz adds.
Then there’s timing. During the last holiday shopping season, Bentz says retailers overbought, especially in clothing and were forced to do some deep discounts, so it was last minute shoppers who scored.
Bentz warns this year, stores are more cautious — the waiting game might not work this time.
“If you see something in the store right now for a price that you like that’s affordable to you, buy it now. Because they may not replenish..because they just want to get rid of the inventory they already have,” said Bentz.
What makes it even tougher for retailers is there is no “it gift” this year. Remember the years of Furby, Tickle Me Elmo — nothing has emerged yet as a must-have toy or gift, so retailers have their work cut out for them.
For more articles about retailers as you navigate the holiday season, check out Kristin’s Bentz’s web site,TalentedBlonde.com .
Ok, seriously, this is the most hilarious attempt #OWS has made. Occupy Black Friday? These “Occupy” losers are trying to throw rocks against the assault rifle that is BLACK FRIDAY.
Here’s an excerpt from their website:
“Keep in mind that we are not occupying small businesses or hardworking people—we must make a distinction between the businesses that are in the pockets of Wall Street and the businesses that serve our local communities.
We are NOT anti-capitalist. Just anti-crapitalist.”
They call on their drum-circle deadbeats to “Occupy Large Chains and Publicly Traded Retail” on the Black Sabbath of Retail. Here are a few:
Amazon ($AMZN) (um. REALLY, how are you going to get that BEST of PHISH CD loaded on to your I-pod)
Abercrombie ($ANF) (shocking–guarantee 90% have hoodies in their closet)
AT&T ($ATT)- hmmmm wonder what carrier they area all using for their droids and I-phones)
Wal-Mart ($WMT) doubt ANY of these kids have ever even step foot in a $WMT)
Macy’s ($M) Good luck trying to even get in the door on Black Friday, let alone PROTEST.
We’ve has murder, rape, assault, public urination, and Grand Theft from #OWS protesters. Now we have kamikaze pilots.
If these protesters intend to try and block entrances to leading Black Friday retailers like Best Buy ($BBY), Wal-mart ($WMT), Macy’s ($M), then it will resemble Godzilla crushing those tiny little tanks.
How about trying to block Jon Corzine’s estate, or Jeff Immelt’s house if they REALLY want to protest the incestuous government/big business relationship. In Philadelphia, OCCUPY lurks were blocking LABOR UNION workers from construction projects in that area. There is a huge difference between the private labor unions and GOVERNMENT worker unions, which are the real scumbags, like SEIC.
No one talks about it, but the private guys are sick of #POTUS.
Ps–ever see the exterior of a Wal-Mart on Black Friday? Ever see the interesting $WMT shoppers before? I pity the fool who tries to block Uncle Buck from the 70 inch HDTV. Yeah. Good luck with that.
Best Cyber Monday Deals to be Found on Smartphone: MyFoxPHOENIX.com
Many thanks to Kristen Keough for a great segment:
Best Cyber Monday Deals to be Found on Smartphone
Free shipping is a must, retail expert says
Updated: Sunday, 27 Nov 2011, 9:37 PM MST
Published : Sunday, 27 Nov 2011, 9:37 PM MST
PHOENIX – First it was Black Friday, and now shoppers are anxiously awaiting another buying bonanza — Cyber Monday — where finding deals takes a little finesse.
The best tip this year is to use your smartphone. Unlike Black Friday, Cyber Monday deals change throughout the day, so you want to keep checking before you buy.
Last year, Cyber Monday sales topped $1 billion, and this year, they could be even bigger because shoppers are going mobile.
“When you can shop from your phone, it opens up a whole new avenue,” said retail analyst Kristin Bentz.
Bentz said your best bet for getting a cyber steal is to start with your favorite store.
“I really suggest going to the retailer that you’re excited about, checking out their address, and actually following them on Twitter,” Bentz said.
The best bargain of the day will likely be tweeted.
“Neiman Marcus is great at that. They’ll do a blast at noon to say, ‘50 percent off on x,’ and whoever is paying attention will get that great deal,” Bentz said.
Since deals change throughout the day on Cyber Monday, you may want to be picky about when you pounce, but Bentz said some items are worth taking a gamble.
“Apple $AAPL is considered like a luxury item. It never goes on sale, like Prada, Gucci $PPR never go on sale, so the fact they did these deals on Black Friday, that’s very important. So consumers who were mindful should’ve jumped on that deal,” Bentz said.
If you think you’re all shopped out, consider this — you could find a better deal on Cyber Monday on a product you just bought on Black Friday.
“Absolutely the lead for this price match thing is Walmart $WMT. They came out in October and said, ‘If you find anything that we’re offering for less, bring it in with the receipt.’ They’ll give you the difference in a Walmar $WMT gift card,” she said.
Bentz said if you’re not getting free shipping, you should go to another retailer.
Kristin Bentz, weighs in on whether a shaky economy will impact holiday shopping.
The Results are in! Cyber Monday spending hits $1.25 Billion, according to AP,the busiest on line shopping day in history, and a 22% increase vs. last year. Black Friday was also up 9% vs. last year. But as we all know, 2 successful blow out days do not a season make. And you can’t talk about Black Friday without talking about Macy*s $M.
A very wise man once told me (Terry Lundgren, $M CEO and uber retailer)that you have to look at November and December TOGETHER to get an accurate read on the consumer, and their thirst for holiday deals:
” Black Friday is a big volume, very important kick off to the Holiday shopping season, but it is just that. The Kick Off! The November/December combined period is the right way to evaluate the performance of the Holiday season. We have a nation wide Black Friday event, but success is in the details of our product/value/service level execution for each customer shopping Their local Macy*s. We believe we have an advantage vs. our competitors due to our My Macy*s organization structure, systems, and talented team of people living and working in 69 cities across the country.”
As you avid readers of Talented Blonde are aware, I have been extraordinarily bullish on the luxury goods space for at least the past two years. Why?
According to a new presentation by Stephen Kraus, Bob Shullman based on Ipsos Mendelsohn survey data from September and October 2011, 94% of affluents (defined as adults living in households with at least $100,000 in annual income) had purchased luxury in at least one of the 15 categories measured, and 70% intend to buy luxury in at least one category in the coming year. Even among those making less than $100K in annual household income (whose points of view we also measured for this presentation), the pull of luxury is widespread: 92% had made a luxury purchase, and 59% plan to do so in the coming year. Only 15% of Affluents and 8% of non-Affluents tell us they simply aren’t interested in luxury. http://luxurysociety.com/news/22427
The uber wealthy will still spend on the items that they want, but are on the sidelines when it comes to capital investment, due to the lousy economic conditions, uncertainty, lousy tax structure and Government over-regulation.
Since 40% of the households in the U.S. are responsible for 60% of consumer spending, how can one really gauge the sentiment of the uber wealthy? One could argue the sentiment of the hyper-rich is just as important as the sentiment of Joe SixPack in indicating a turnaround in global economic conditions. I believe fine wine is the best barometer, since it has served as a real-time indicator of global sentiment the past 3-5 years. The equivalent in this realm to the University of Michigan sentiment number is Chateau Lafite-Rothschild, the Big Daddy of Bordeaux — specifically the 1959, 1982 and 2000 vintages.
One tool accessible to individual investors and wine fund investors alike is the relatively new London International Vintners Exchange, which operates the Liv-Ex 100, an index created in 2001 that allows wine investors to track the prices of 100 of the most sought-after vintages.
Currently, the index is almost exclusively focused on Bordeaux, although it also tracks Champagne and a bit of Italian wine. Although the Liv-Ex universe is limited, given the number of regions that produce great wine today, investors who have focused on the index’s top wines have seen solid annual gains of around 16 percent. (By contrast, the S&P 500 was up a mere 5.5 percent in 2007).
Some details to consider:
• Fine Wine Auction markets are demonstrating double-digit growth
• Fine Wine is uncorrelated with stocks & bonds, thus offering a risk hedge
• Fine Wine is a luxury category appealing to less price sensitive consumers
• The supply of fine wine is somewhat fixed and depleting regularly
• New regional markets are emerging for fine wine consumption growth
The Liv-Ex Fine Wine Index calculates the leading 100 fine wines in the world at any time, and uses a number of factors, not only price, to gauge the overall fine wine environment. Wine investors are seeking bondlike security with stocklike returns,” says David Sokolin, author of Investing in Liquid Assets. “People invest in wine because they think it’s interesting.”
The funny thing is how wine was generally 2-3 months ahead of the Dow/S&P if you look at the past 5 years.
From the tippy-top of the housing market in 2006 to the Lehman/AIG debacle in 2008 to the Greek tragedy this summer/fall, it seems like fine wine prices are just slightly ahead of the equity markets.
They say that the stock market is 6-9 months ahead of the economy, so using that logic, one might pay more attention to wine as an important indicator. Here’s to finding a little Chateau Lafite in your stocking–or cellar. Cheers!
- Talented
Today,McDonald’s Corp. ($MCD), reported impressive November same store sales results: +6.5% YOY in the U.S. I know I have barked for close to a year now on bi-furcation at retail: Joe Six-Pack Misery Index
But now this even spills over to the consumer as a whole; not just consumer soft-lines retail. Like the stellar performance of the Dollar Stores ($DLTR $DG), these recent sales numbers from $MCD further illustrate the consumer is trading down. Add $MCD to the Joe-Six Pack Misery Index. $MCD 1.Consumer Zero.
With 18% of Americans receiving some sort of government transfer payments, its not that hard to do the math. Add to that, sky-rocketing commodity costs for beef, corn, and virtually every other pantry staple, and it’s no wonder consumers are no longer “Eatin’ Good in the Neighborhood” ($DIN) and are breezing through the Golden Arches.
“We’re listening to our customers and delivering what they expect from McDonald’s by optimizing our menu, modernizing the customer experience and broadening accessibility to our Brand,” said McDonald’s Chief Executive Officer Jim Skinner. “McDonald’s steadfast focus on our customers and our operations under the Plan to Win is driving the sustained momentum of our global business.” In the U.S., the continued strength of McDonald’s breakfast daypart, everyday value, the addition of the seasonal Peppermint Mocha to the McCafé line-up, and the Chicken McNuggets promotion drove the 6.5% increase in November comparable sales.”
Hope they bring back those Mc Donald’s Christmas Gift Certificates . . .
Some stats to consider:
$MCD: Performance by segment was as follows:
U.S. up 6.5%
Europe up 6.5%
Asia/Pacific, Middle East and Africa up 8.1%
Conversely, the Luxury goods market is THRIVING, especially jewelry and watches. In November, luxury goods group Richemont posted its results for the six months to September 30, showing sales had increased by 29% to €4.21bn (£3.53bn) and that operating profit had increased to €1.08bn (£934m) compared with the same period the previous year.
The other fine jewelry brands owned by the group reported sales gains of 34% over the six months, with Cartier and Van Cleef & Arpels performing particularly well, while its watchmaking sector had sales growth of 30%. When you consider that Richemont owns brands such as Jaeger-LeCoultre,Vacheron Constantin, it’s obvious that this growth isn’t being driven by volume sales.
Richemont isn’t the only Lux Stock killing it. French conglomerate LVMH, ($MC) which stables brands like Tag Heuer and De Beers, saw its watch and jewelry business increase each quarter sequentially for the first nine months of 2011, showing organic growth of 26%. Burberry ($BRBY) also reported a net profit of £117m for its six months ending September 30, and revenue of £830m. As class warfare comes to the forefront of the 2012 election, the candidate that comes up with solutions to bridge this gap between the haves and the have nots will prevail.
As a follow-up to my last post on $MCD , here’s a clip on why McDonald’s continues it’s global domination in #QSR and continues to reap the reward of a bi-furcated consumer market.
“Zynga is likely to be priced between $8.50 and $12 and raise $900 million in its IPO who could come as soon as this Friday. ”
1. Zynga really is a forerunner of how gaming will be done in the future…
2. Their brilliance in hooking up with Facebook $FBOOK and Amazon $AMZN gave them the possiblility for handling exponential growth..
3. Zynga $ZYNG has basically brought the concept of branded”virtual goods” and sponsorships in less than five years to multi-billion dollar reality today.(Ok, so Farmville and Mafia Wars aren’t REALLY reality-but you get it. )
4. Although at first blush, $ZYNG may look like a Seinfeld stock (a stock about nothing,)
I view it as another recession/ bi_furcated consumer market play. The faction of the consumer that is actively entrenched in these virtual games is trying to escape reality. They’re sitting in a cubicle in front of a computer all day. They don’t have the discretionary income to escape to a tropical locale, or even Disneyworld $DIS. So, being the “Don” of your own mafia crew, or the queen of all you survey in CastleVille, YOU create your OWN reality. Your way.
Now, quit reading this and get back to work!
1.$ZNGA has approx. 260 million subscribers or close to 50% of all Facebook $FBOOK users… That is a GOOD thing to be tied to Facebook’s growth.
2. The most rapidly growing sector for both $ZNGA and Facebook $FBOOK is the over 40 consumer.That bodes well since that demographic is a sector that spends (and works.)
3. The “virtual goods” market was less than $10 million in 2005, and has grown to a market that will top $3 billion in 2011. $ZNGA is the largest provider of “virtual goods” and that market is expected to grow to $10 billion by 2015.
4. As $ZNGA expands, look for “branded virtual goods” to become more and more a part of their revenue. Fashion and athletic apparel retailers will be the most apparent advertisers/Sponsors of ZNGA as users “dress” their avatars. E.g. Dressing your Mafia Wars Don in a Versace Suit, or Bruno Magli Shoes. Or shodding your avatar in Jimmy Choo’s shoes, and Michael Kors $KORS apparel from head-to-toe. Imagine your virtual LeBron James in the latest custom Nike’s $NKE. The sponsorship possibilities are endless.
5. $ZNGA will be able to develop games that are digtially updated on the fly, like sports and military games. Imagine not needing a game CD or Xbox $MSFT and just logging on Facebook $FBOOK/Zynga $ZNGA for latest games that portray updated to the moment statistics. For sports games, that would be huge to say the least.
6. Never underestimate the loyalty of the gamer. Again, 260 million subscribers–with mediocre desk jobs–and no life. Boom. You are the king of all you survey.
As most of you know I’ve been incredibly bearish this holiday season, and have been lamenting my bi-furcated market theory at retail for well, over a year now. Today’s news on Sears $SHLD and K-MART should come as no surprise, and is a crystal clear illustration of how the middle class–and their dollars –are vanishing from middle market retail. The consumer that “aspired” to shop at SEARS (yes–they existed), has now traded down to Wal-Mart $WMT, Kohl’s $KSS, Dollar Tree $DLTR, Dollar General, $DG Dollar General, Target, $TGT as they get squeezed out of the market by 8.6% unemployment, an anemic housing market, unease about tax policy, and general economic uncertainty.
Meahwhile, there is a dirty little secret about those killer Black Friday sales – and no retailer in their right mind would admit it, but: More sales mean more returns. That’s just a simple formula at retail. In fact, the NRF is reporting a record $462.8 B in returned goods this holiday selling season, an +4.25% vs. ly. Why?
Consumers got retail fever with all of the Black Friday hype and promotions, and spent their wad that first weekend. When reality sets in and you’re sitting on the floor looking at all those receipts, buyer’s remorse sets in and BOOM! RETURNS. It will be interesting to see the ratio of returns redeemed for cash vs. merchandise. This added to the fact that much of the holiday spending was being rung up on consumer credit cards – not the most encouraging of signs.
But, savvy retailers can always capitalize on an emerging trend. Macy*s, $M have broadened and LOCALIZED their footprints, they are able to “catch” that fringe consumer that also had to trade down from Saks, $SKS, Nordstrom $JWN, and the like. And, at the top of the consumer pyramid? The LUXURY consumer. Yep–it’s lonely at the top. Lux retailers like $LVMH, Tiffany $TIF, Burberry $BRBY $PPR, (GUCCI) , Hermes $RMS , and $AAPL (YES, I consider APPLE a luxury brand),are thriving due to the Global thirst for luxury goods, as Russia, India, and China get in on the act.
But what about rising consumer confidence? Well, digging in to last week’s numbers tells me that the picture is not all that rosy: employers are just FIRING at a slower rate, not creating the jobs that Americans so desperately need. And don’t forget the intense seasonality surrounding the unemployed this time of year. Many of those individuals just quit searching for employment and hunker down with friends or family until the New Year. Watch January filings. My hunch is they increase substantially.
Lastly, be mindful when tracking the success or failure of the Holiday selling season, that one need look at November and December TOGETHER. Black Friday does not a season make. Consumer shopping behavior mirrors and hour-glass, with a big pop on Black Friday, then a lull historically for the next few weeks until “Super Saturday,” the last Saturday before Christmas. Look, I want the consumer AND the economy to come back swinging just like the next blonde, but I AM a realist, and I want you to have all the facts –even the ones “they” don’t want you to know. My prognosis? I anticipate a lukewarm holiday sales number–better than last year–but not by much.
-Talented
Although I hate bad news, I do want to give you all a subtle (and we ALL know how subtle TB can be . . .) reminder that I have been the lone contrarian analyst out there vis a vis poor retail holiday sales throughout the months of November AND December. And unfortunately my predictions proved true: Retail Sales rose 0.1% in December. No, that wasn’t a type-o.