ETD: 799 Retail Downshift Could Arrive a Month Early; Office Depot Revamps Retail Format; Ford rolls out wireless inventory replenishment system

[E-Tailer's Digest]

  E-Tailer's Digest --- Everything for the  Retailer
  Issue #0799                 July 8, 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]  Retail Downshift Could Arrive a Month Early
  [3]  Office Depot Revamps Retail Format
  [4]  Ford rolls out wireless inventory replenishment system

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  [1]  Greetings.
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Hi All:

There are some interesting retail news items today.  This is the midway 
point in the year, and another measuring point for retailing.

The Street reports a retail downturn in June, which they predict is the 
start of the retail slump ("growth deceleration") for the year.  Hopefully 
they are wrong again as analysts have been in the past.  How are you doing 
this year?

I see that Office Depot is revamping it's retail format.  I suspect they 
are following Staples who has been going through this and are changing all 
stores.  Staples new format was a little annoying until you got used to 
it.  I personally believe there are a number of chains who need to change 
format before they lose more market share - Toys R Us and Home Depot to 
name two.  What do you think?

WalMart's major success program all centered around technology.  They 
learned early on how critical technology is to control costs, increase 
business and improve profits.  Which is why I am always looking at new 
technology ideas (like RFID).   Ford has announced a roll out of wireless 
inventory replenishment at one of their new plants.  That has to do wonders 
for the business.  IMHO, wireless technology is mandatory for any business 
with an inventory or point-of-sale.  Now, when you have sidewalk sales you 
bring your wireless POS to the street.  Are you using wireless?

Many business owners don't understand the value of a retail supply 
chain.  They more times you turn inventory, the more profit.  The quicker 
you get product to market, the more profit.  The more you decrease shrink 
(loss) the more profit.

Tell us 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 at gapent.com
http://www.etailersdigest.com

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  [2]  Retail Downshift Could Arrive a Month Early
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Retail sales in June were probably the weakest of the year so far, and 
could mark an early start to the growth deceleration most analysts foresee 
in the back half of 2004.

Several things weighed on consumer spending last month, including cold, 
rainy weather, high gas prices and several holiday calendar shifts. 
Discounters could bear the brunt of the pain, despite having the easiest 
comparisons over last year.

Same-store sales in June likely rose by 3% to 3.5%, according to Michael 
Niemira of the International Council of Shopping Centers. He cited the 
weather for the lackluster performance and noted the warnings last week 
from discounters Wal-Mart and Target.

June's expected results would compare with June 2003's 2.4% aggregate 
increase, according to ICSC data, and would be lower than the prior months 
in 2004, when growth ranged from 7% in March to 4.4% in April.

Looking at the big picture, the significance of any June is generally low 
compared with other months. "It's a transitional month," said Richard 
Hastings, retail analyst at Bernard Sands. That might not the case in 2004.

"June is going to turn out to be the month that signals the beginning of 
moderation of retail chain stores and of consumer spending," said Hastings. 
Hastings said aggregate same-store sales will probably return to more 
normal annualized growth rates of 3% to 4% each month for the rest of the 
year.

Still, analysts have expressed concern since early 2004 that it will be 
harder for most retailers to show strong gains in monthly same-store sales 
in the second half, in part because of the strength of the 2003 
back-to-school season. July to September saw some of the best retail sales 
gains of 2003, with September growth the year's highest at 5.9%.

The best hope for June 2004 is that shoppers stayed optimistic though the 
month. Consumer confidence in June jumped to a reading of 101.9 -- a 
two-year high -- from a revised reading of 93.1 in May, according to the 
Conference Board. That compared with a reading of 83.5 in June 2003.

Hastings agrees that the consumer is doing fine. "Things are looking up. 
The summer oil and gas crisis never materialized, and gas prices ... are 
steady." He noted that part of the reason for the confidence is that 
consumers are spending on big-ticket purchases, such as houses and cars, 
before interest rates jump.

Details at...
http://www.thestreet.com/markets/meredithderby/10169636.html

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  [3]  Office Depot Revamps Retail Format
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Office Depot unveils Millennium2 (M2), a retailing format developed from 
the ground-up by a cross-functional task force picked by Office Depot 
Chairman and CEO Bruce Nelson. The task force was given one mandate: 
Reinvent the retail model by creating a store that is less expensive to 
open, more efficient to operate and easier to shop. Together, the marketing 
and merchandising organizations, store operations unit and IT group, set 
forth to completely revamp existing processes and ways of doing business.

As part of its strategy each of Office Depot's M2 stores will feature eight 
web-based, wireless kiosks allowing customers to order products from 
OfficeDepot.com, configure personal computers and research personal loyalty 
points as well as shopping history, states Joseph Jeffries, director of 
retail store operations in Internet Retailer. M2 also includes PCs that are 
fully imaged and wireless to increase functionality and reduce the number 
of staff needed on the sales floor.

"M2 is intuitive, logical and designed specifically for the way people make 
purchase decisions," says Nelson. For example, he notes that products are 
grouped in highly visible, strategically located pods, with core supplies 
at the outer perimeter of the store, signed for optimal visibility and easy 
purchase and furniture and technology at the center to better support 
consultative sales and the area in which the majority of staff will be 
located during peak buying hours.

Overseeing the M2 launch on a daily basis is Rick Lepley, EVP of North 
American Retail for Office Depot, and who was responsible for putting 
together the original M2 project team. According to Lepley, the extensive 
research conducted for M2 indicated that customers want two specific things 
when shopping at an office supply superstore: "For basic supplies, they 
want convenience, including help in getting oriented, the ability to find 
everything on a shopping list and fast checkout. For technology and 
furniture, they want information and advice, including assistance and 
support from knowledgeable staff and the ability to touch and try out 
various product options. M2 executes beautifully on both of these fronts."

Article at...
http://www.imakenews.com/edgellris/e_article000278032.cfm?x=b3j4Gm3,b1PJcv1q

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  [4]  Ford rolls out wireless inventory replenishment system
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Ford Motor Company is automating parts replenishment with a real-time 
location system (RTLS) at its new Dearborn Truck Plant at Rouge Center in 
Michigan.

The new installation is an extension of Ford's existing relationship with 
RTLS vendor WhereNet Corp. The WhereCall wireless parts replenishment 
system will help Ford execute new flexible manufacturing processes to 
rapidly adjust to shifting market demands for its F-150 pickup trucks. For 
already uses the system at multiple sites in North America and Europe.

WhereCall devices provide an alternative to paper-based Kanban (parts 
replenishment) systems or hardwired electronic call systems.

"Having served Ford as a customer for more than four years, and with 
installations in more than 60 Ford plants around the world, we are excited 
to expand our presence at River Rouge and to play a technology role in the 
manufacturing of Ford's F-series," said Tom Bacon, vice president of the 
automotive division for WhereNet. "The River Rouge facility is a showcase 
for Ford Motor Company. With projected annual capacity of about 250,000 
F-150 pickups, Ford needed a wireless system that could deliver efficiency 
and flexibility gains to optimize its production processes along the 
assembly line and to expedite shipping into the delivery chain. WhereNet 
delivers multiple applications in a single, integrated wireless system."

River Rouge is one of the first installations of WhereNet's 
second-generation, Ethernet-based technology. The WhereCall messaging 
devices are used to submit parts requests from the factory floor. Line 
workers activate the devices when a certain inventory level is reached, and 
send a signal through the WhereNet location sensors to initiate replenishment.

According to Bacon, WhereNet and Ford are developing the capability to wire 
the WhereCall devices directly into programmable logic controllers (PLCs) 
to automate replenishment alerts at unmanned stations in the plants.

Article at...
http://www.frontlinetoday.com/frontline/article/articleDetail.jsp?id=100973

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