ETD: 777 SOX: A Badge of Honor; Retail Growth; Demographics that Define the Luxury Market

Thu Apr 15 17:58:38 GMT 2004

  E-Tailer's Digest --- Everything for the  Retailer
  Issue #0777                    April 15, 2004
  George Matyjewicz, Moderator         mailto:georgem at gapent.com
  Published by:  GAP Enterprises, Ltd.  http://www.etailersdigest.com
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   CONTENTS

  [1]  Greetings
  [2]  SOX: A Badge of Honor
  [3]  Retail Growth
  [4]  Demographics that Define the Luxury Market

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  [1]  Greetings.
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Hi All:

I'm in Chicago at the Super Strategies trade show.  Then heading to Atlanta 
for the weekend.

It's an interesting show, all about Sarbanes-Oxley.  Then I read an article 
in RIS News about how SOX is coming to retailing within two years.  Stay 
tuned.

Retail growth figures are out and they are up here in the U.S.  And across 
all retail segments, which is a good sign.  It signals a stronger economy.

Jim Straw has some comments on the luxury market.  What do you think?

Tell us about your business which will remain  for posterity at 
our  "Members: Who Are You?" site.  We just updated all those postings that 
we were delinquent with the 
updates.  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 at gapent.com
http://www.etailersdigest.com

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  [2]  SOX: A Badge of Honor
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Remember when the ISO 9000 standards first appeared?  Manufacturers were up 
in arms about the costs and work associated with becoming ISO 9000 
compliant.  Yet those purchasing from these manufacturers found ISO 9000 to 
be a way to measure manufacturers to see from which company would it be 
best to consider purchasing.  Now, manufacturers proudly post big signs at 
their plants with the simple words "ISO 9000."

Well the same thing is about to happen in the financial world.  In an 
article in RES News, they report that Wall Street investment analysts will 
grade retailers on their level of compliance with the Sarbarnes-Oxley Act 
within two years, according to Smith Barney's retailing expert Deborah 
Weinswig.  As you all know I have been heavily involved with SOX for the 
past year or so.  I predicted this badge of honor way back when I first saw 
it.

And why not?  SOX requires CEOs and CFOs to certify that they have adequate 
internal controls in place to mitigate risks that would prevent them from 
meeting corporate objectives.  There are 11 titles in the act, all of which 
define what's expected of organizations and what happens if they fail to 
comply (simple answer - they go to jail).  I won't bore you with the 
details.  Suffice it to say, while it is a lot of work, it is a good thing.

While it is now required for publicly-traded companies, I see it coming 
down to not-for-profits within a year, and then down to privately-held 
companies.

What does this mean to you?  Soon, your banker will require that you comply 
with SOX.  And, if you are going public, you will surely need to 
comply.  Basically it means, get your act together now, before it's too late!

An article in the Wall Street Journal stated the amount of time 
and  estimated costs to comply, which were quite significant:

Under $25 million in sales - 1,996 hours - $280,000
$25 million to $99 million - 3,080 hours - $740,000
$100 million to $499 million - 5,118 hours - $780,000
$500 million to $999 million - 6,950 hours - $1.04 million
$1 billion to $4.9 billion - 13,355 hours - $1.83 million
Over $5 billion - 31,201 hours - $4.67 million

While this is not top priority for survival today, it will be soon.  So get 
prepared.

If you need any help or want more information, send an email to 
mailto:georgem at gapent.com?Subject=ETD_SOX_Info

George

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  [3]  Retail Growth
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Retail sales in the U.S. climbed 1.8% in March, following an earlier report 
of strong job growth, suggesting that the economy continues to grow even as 
the favorable tax effects and low mortgage rates wear off.  The increase in 
retail sales was broad based; 1.2% at furniture retailers; 1.9% at clothing 
stores; 10.6% at building material and garden supply stores; 2.1% at auto 
dealers.

CVS Corp, with 4,187 retail and pharmacy stores nationwide saw a 6.4% 
increase in same store sales.  Interesting to note that they attributed the 
increase to better targeted sales due to tracking buying habits through 
customer discount cards.  And you thought they were giving you a deal ;-).

The growth was not adjusted for inflation, so price increases account for 
some if the gains.  Building materials in particular.  For new homes, 
materials are expected to add $7,000 to $8,000 to the cost of a typical home.

How are you doing?

On a quasi-related note, not all retailers are doing well.  Target is 
looking to sell it's Marshall Fields stores, and Federated appears to be 
the likely buyer.  That gives them an entree into Chicago, which they 
haven't had.  They'll keep the flagship store as marshall Fields and change 
the others to include the Macy's name.  Probably like they did in Atlanta 
with Rich's (Rich Macy).

George

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  [4]  Demographics that Define the Luxury Market
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It ain't what it used to be.

I  pity the young  people of today.  They really have no idea what luxury is.

They buy sardine cans with a shield on the front and actually think they 
are riding in a Cadillac ... having never ridden in a "real" luxury car. 
Even the cars labeled "Luxury" have no luxury to them ... just the name.

First Class travel used to be a luxury; with  special treatment. Today, 
First Class travel only offers a little more leg room and a wider seat.

The  list goes on and on - but - having never known "real" luxury, the 
younger set have to satisfy themselves with the things "named" luxury 
without the substance.

Too bad ...  luxury  used to be worth  paying for.

Jim

http://www.businesslyceum.com

+++ [Moderator's Comments] +++
Good points Jim.  Now you sound like our fathers who used to say "remember 
the good old days" <grin>.

But it is true.  Luxury on autos is now a better grade of plastic.  Then 
again, is the public willing to pay for true luxury?  Look what happened to 
the Concorde jet.  Not enough passengers, so they closed the doors.

Yet, folks are willing to pay $5 for a 50 cent cup of coffee at 
Starbucks.  Go figger.

George

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