ETD: 741 Black Friday; Direct Costing; Cheapskate Retailing
Rules; Why Do Spammers Bother?; Retail news
E-Tailer's Digest
etd_post@gapent.com
Tue, 25 Nov 2003 06:08:48 -0500
E-Tailer's Digest --- Everything for the Retailer
Issue #0741 November 25, 2003
George Matyjewicz, Moderator mailto:georgem@gapent.com
Published by: GAP Enterprises, Ltd. http://www.etailersdigest.com
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CONTENTS
[1] Greetings
[2] Black Friday
[3] Direct Costing
[4] Cheapskate Retailing Rules
[5] Why Do Spammers Bother?
[6] Retail news
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[1] Greetings.
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Hi All:
Thursday is Thanksgiving here in the U.S. and Friday is the start of the
holiday shopping season. So, this will be the only issue published this
week.
Thanks for the kudos on the Direct Costing special report. Joe Dweck gives
us an example of how he uses direct costing in retail. As I said, direct
costing is normally associated with manufacturing. However, many companies
use it in other industries.
Next week we have another special report from Jeff Haefner. Stay tuned.
We have a lot of retail news today, as we start hearing about retailing and
the holidays. I hope you get your fair share of business this year.
Let's hear about your business, which will remain for posterity at
our "Members: Who Are You?" site.
http://etailersdigest.com/resources/members/index.htm And we have a form
there for you to tell us about you. As I said when I first proposed this
idea, we have "known" each other for a long time, yet we often don't know
anything about each other. So, tell us who you are and what you do.
Now, let's get to everything for the retailer.
Sincerely
George Matyjewicz, PhD
Chief Global Strategist, GAP Enterprises, Ltd.
mailto:georgem@gapent.com
http://www.etailersdigest.com
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[2] Black Friday
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This Friday kicks off the 2003 Holiday Season, affectionately known as
Black Friday. Historically it's the day when retailers bottom line goes
from red (loss) to black (profit).
Last year, a survey by the National Retail Federation (NRF) found that 75.6
percent of consumers shopped on "Black Friday" weekend. Many started in
the wee hours of the morning.
Online sales were brisk as well. A comScore Media Metrix study showed that
"Black Friday" online sales increased 30 percent from the same time last
year. And America Online reported that online sales by its subscribers grew
26 percent from November 25 to December 1 compared with 2001.
The spending spree was encouraging to some analysts, because consumer
purchases make up approximately two-thirds of U.S. economic activity.
Consumers' year-end purchases constitute roughly half of some retailers'
profits.
Predictions for 2003 are an increase in sales of from 4% to 7% over last
year. E-commerce is expected to increase 22% to 29% over last
year. (http://retailindustry.about.com/library/holiday/blholidaysales03.htm)
What's it look like for you this year? I hope you have a very successful
Black Friday and a prosperous holiday shopping season.
George
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[3] Direct Costing
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We are in the process of assigning similar costs to our travel and
entertainment expenses. We do a lot of business entertaining to promote our
pharmacies. The costs go to the G/L as T&E or Advertising and the vendor
will be American Express or a caterer, however we really needed to assign
these costs to the offices that we entertained, and then compare the sales
from those offices with the associated expenses.
I called my accounting software firm, just 2 days ago, to utilize a
"project" feature or an "extended database" feature of the A/P G/L package
that will track these expenses as they are applied upon invoice entry.
In a former company we also utilized 'statistical accounts' to track
similar types of expenses; i.e., ones that already hit the G/L in one
category, but must be tracked for other informational purposes. These
statistical accounts are for information tracking only and are not
financial accounts that would require balancing etc.
This is to show as an example that is not manufacturing the need for such
"Direct Costing."
Joe Dweck
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[4] Cheapskate Retailing Rules
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When sales dip, blame it on the weather.
At least that's the story this earnings season. But isn't the real problem
for department store chains such as Federated Department Stores, May
Department Stores, JC Penney and Sears Roebuck more basic than that?
Shoppers aren't shopping. And when they do, they aren't buying department
stores' mainstay: apparel.
Wal-Mart Stores and Target have cleverly siphoned off some of this
business with their own private label goods while Kohl's has cherry-picked
some department stores' most profitable customers. Five years ago,
department stores had 21.5% of the retail market, a figure that slumped to
18.7% in 2002 with some of the share going to discounters.
What's happened to the rest? Off-price retailers swallowed it up, writes
Brian J. Tunick, a JP Morgan analyst, in a recent report. Once a dowdy,
off-mall concept that survived off closeouts and liquidations, off-price
retailing has come of age. Retailers such as TJ Maxx and Ross Dress For
Less built their own distribution and sourcing networks, permitting them to
expand nationally. Goods are now made just for off-price merchants keeping
inventories consistent.
Off-price retailers grew at a compounded annual rate of 6.5% between 1998
and 2002, while the U.S. apparel market contracted by about 15%. The sector
accounted for $13.7 billion of the $162.7 billion apparel market (2002 sales).
The big market share losers: department stores (down 4.7%) and factory
outlets (down 5.1%), according to NPD Fashionworld. Together, they lost
more than $7 billion in sales. That's a lot of socks and underwear.
Two of the biggest off-price winners: TJX and Ross Stores have close to
2,600 stores, and that number is expected to grow long term to more than
4,000 stores. They have combined sales of $17 billion. Both are growing
their square feet at a combined rate of 10% to 12% annually, buying back
stock at roughly $200 million to $250 million per year and paying a dividend.
TJX (2003 estimated revenue: $13.2 billion), best known for its TJ Maxx,
Marshalls, HomeGoods and AJ Wright stores, earned 2002 net income of $578
million, or $1.08 per share. TJX's earnings are expected to increase 17% to
$1.25 per share this year. Ross Stores (2003 estimated revenue: $3.9
billion) earned $201 million, or $2.52 per share, in 2002 and is expected
to post a 13% increase in 2003 EPS. Other off-price companies include
Retail Ventures, Burlington Coat Factory and Stein Mart.
Unlike department stores, off-price retailers have limited fashion risk,
minimizing markdowns and offering more stable gross margins. And the sector
has begun attracting more upscale clientele--customers who have shifted at
least a portion of their apparel dollar from department stores. More than
half of off-price shoppers earn more than $49,000 annually.
So what's driving all this cheapskate behavior? Shoppers are more educated,
more convenience-driven and less willing to pay department store markups
when they do shop for fashion. They cross-shop, browsing department stores
to see what's available, then try to buy the same or similar goods, at
off-price retailers located conveniently across from the mall, at 60% to
80% off. Major department store chains have aided the shift by closing
stores. Expansion-hungry off-price chains can now lease vacant retail space
in prime regional mall locations for off-price rents, aiding comparison
shopping.
"They used to have to travel somewhere else to do this. A customer may go
out and buy a nice suit and then shop an off-price retailer for a shirt and
tie to complement it," says Marshall Cohen, chief industry analyst at NPD
Group in Port Washington, N.Y.
Shoppers may be buying, but investors may want to wait. JP Morgan's Tunick
said he would hold off buying the stocks of TJX and Ross near term since
the favorable growth prospects are factored into the stocks. At 16.5 times
2004 estimates, the off-price sector is trading at a premium to its
historical averages of 13.6 times earnings.
They may not be bargains, but certainly off-price stocks worth shopping.
Article at...
http://www.forbes.com/2003/11/14/cz_mt_1114retail.html
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[5] Why Do Spammers Bother?
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You set up your anti-spam software or the junk mail filters in your email
program to block a certain domain, sender address or keywords, only to have
the same message come through from a different address or using tricks
(such as putting periods between the letters of words) to get through.
So why do spammers both to try to circumvent filtering systems when it
should be obvious that those who try to block their messages don't want
them and are not going to respond to the spam messages or buy the spam
products?
Of course, many spam messages aren't sent directly by the advertiser.
Instead, the company selling the product contracts with a spam a/k/a
"e-mail marketing" company to send out X number of messages to everyone on
email lists that they buy from various sources (often from other companies
with whom you have actually done business), or from e-addresses they glean
from web sites or discussion lists.
The reason spam marketing proliferates? Spammers are paid by the message,
rather than by the number of responses! If advertisers who use their
services demanded a different method of calculating payment, i.e., pay for
positive results, it would help to take away some of the incentive for spam
companies to work so hard to get messages through to people who don't want
them.
Perhaps if we take an active ban against companies whose products are
included in spam messages, the message may get through. Personally, I
don't buy and I send a note to the legitimate company telling them why I
won't buy and telling them I will let as many people as I know not to buy
for the same reason. One of these is Norton products.
What do you think?
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[6] Retail news
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Franklin Mint Restructures, Scales Back
The Franklin Mint is dismissing two-thirds of its workforce as part of a
business restructuring plan, according to a report in the Philadelphia
Inquirer. "We've recognized that attracting new collectors under our prior
business model was not working," said company spokesman Howard Lucker.
"We're going to develop a new, smaller business focused on our core
competencies of product development and marketing." The privately held
company will focus on its die-cast cars, airplanes, and Harley-Davidson
collectibles. The Franklin Mint, founded in 1964, began primarily as a
maker of coins, but eventually produced a wide range of collectible
products. The company will lay off 200 full time employees as well as a
number of freelancers and long term temporary workers. "It's the death of
the Franklin Mint and the death of every company out there saying, 'We're
in the collectibles business,' " said Unity Marketing's Pam Danziger. "It
didn't see the maturing of its market. It didn't see that young people
don't want this stuff."
+++ [Next]+++
Toys R Us to Close 182 Kids and Imaginarium Stores
Following a net loss of $38 million in the third quarter ending November 1,
2003, Toys R Us announced that it will close 146 freestanding Kids R Us
clothing stores and 36 freestanding Imaginarium stores, as well as three
distribution centers supporting those stores. The closings, expected to
conclude by January 31, 2004, will eliminate 3,800 jobs, representing 11
percent of Toys R Us stores nationwide. "The accelerating deterioration in
the financial performance of these freestanding stores has led us to
conclude that it is in the best interests of our company and of our
shareholders to cease operation in these freestanding stores," said
chairman and chief executive John Eyler. The Kids R Us business reported an
11.4 percent comparable store sales decline for the third quarter of 2003.
The company's Babies R Us business reported a 3 percent increase in
comparable store sales, and is considering reopening 15 of the Kids stores
as Babies R Us stores.
Quinn Halford, Editor In Chief
Matthew Kalash, Editor
Gifts and Dec Magazine
www.giftanddec.com
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