ETD: 996 An e-tailing milestone; Back-to-School Retail
Forecast; Merchants Fight Against Organized Theft
E-Tailer's Digest
etd_post at gapent.com
Tue Aug 1 13:27:49 GMT 2006
E-Tailer's Digest --- Everything for the Retailer
Issue #0996 August 1, 2006
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] An e-tailing milestone
[3] Back-to-School Retail Forecast
[4] Merchants Fight Against Organized Theft
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[1] Greetings.
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Hi All:
Everybody has their particular economic
indicators to watch. Some like new home sales,
others like same store sales, others watch the
trends of the Federal Reserve. Personally I like
to watch the wholesale price index and the
manufacturing sector. Those tell me how the
retail sector will be in 60-90 days. There is
another economic forecast that helps retailers.
The success of the back-to-school shopping season
helps retailers gauge how strong the Christmas
holiday season is likely to be, along with
allowing the retailers to pinpoint emerging
trends and popular products prior to the start of
the holiday shopping season. Check it out in 3 below.
Amazon.com finally made a profit - their first
since inception in 1995! That may not be big
news to the investment community, but it is great
news to us in the e-tailing world.
In the brick & mortar world, organized theft is
killing retailers. And we're not talking about
the Mafia stealing expensive goods - we're
talking gangs of ordinary people who are
organized to steal basic goods like Enfamil baby
formula, over-the-counter brand name drugs like
Tylenol and Advil, Gillette razors and jeans,
including brands like Polo Ralph Lauren. So watch your stores.
Now, let's get to everything for the retailer.
Sincerely
George Matyjewicz, PhD
Chief Global Strategist, GAP Enterprises, LLC
mailto:georgem at gapent.com
http://www.etailersdigest.com
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[2] An e-tailing milestone
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Amazon.com finally did it. They had their first
quarterly net profit since the company started in 1995. One cent a share!
That may not be cause for celebration in the
finance world, but we all know about the Internet
world. Amazon is a success story finally. In
October 2000, Gartner forecast that Amazon would
reach this goal in the fourth quarter of 2001.
Amazon has long been seen as the key player in
selling goods to consumers over the Internet.
That's partly because the company was very good
at it. And there was a general feeling that if
Amazon failed, the whole idea of selling over the Internet would fail.
Now that Amazon has announced its first quarterly
profit, memories of the Peapod and Webvan
failures will fade as businesses register this milestone.
Amazon's profit in the fourth quarter of 2001 was
$5.1 million, compared with a loss of $545.1
million in the year-earlier period. For the full
year, Amazon still showed a net loss of $567.3
million. But that was less than half the previous year's loss of $1.4 billion.
The quarter's profit was less than 1 percent of
sales, and there would have been a loss but for a
$16.3 million gain on foreign exchange. Amazon
has been taking painful steps to reduce costs,
such as a major restructuring effort that closed
four main support centers and cost 1,300 jobs.
Restructuring does not always deliver benefits,
but in Amazon's case, fulfillment expenses are
down 17 percent in the quarter, and cuts
elsewhere meant total operating expenses fell 53 percent.
More impressive, however, was Amazon's sales
performance. In a generally weak economy, it
pushed sales up 15 percent to $1.1 billion for
the quarter. Amazon was probably helped by some
U.S. consumers being reluctant to visit stores
for holiday shopping. But the company has been
effective at discovering customers' interests and
persuading those customers to spend more on each visit.
CEO Jeff Bezos said Amazon will continue to be a
retailer that works hard to lower prices. That
strategy is different from the deep discounting
that Amazon used to offer. Consumers value
convenience more than price from online
retailers. Amazon can certainly deliver
convenience, and it has shown that online
retailing is becoming accepted. It is possible to
make a profit from e-tailing.
Details at...
http://news.com.com/2009-1017-821238.html
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[3] Back-to-School Retail Forecast
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Back-to-school spending is estimated reach $17.6
billion, up from a poor showing of $13.4 billion
last year, according to the National Retail
Federation’s (NRF) 2006 Back-to-School Consumer
Intentions and Actions Survey. According to the
survey conducted by BIGresearch for the NRF,
families with school-aged children plan to spend
an average of $527.08 on back-to-school items, up
18.7 percent from $443.77 last year.
Average Back-to-School Spending by Category
by family for primary and secondary school age children
• Electronics/Computers: $114.38
• Apparel/Accessories: $228.14
• Shoes: $98.34
• School Supplies: $86.22
Most of the spending increase will stem from the
electronics category, where spending is expected
to rise more than $1.5 billion to $3.82 billion in 2006.
The success of the back-to-school shopping season
helps retailers gauge how strong the Christmas
holiday season is likely to be, along with
allowing the retailers to pinpoint emerging
trends and popular products prior to the start of
the holiday shopping season. Retailers are
expected to encourage consumers to begin their
shopping sooner rather than later with "a variety
of unique and fun merchandising strategies"
according to Phil Rist, Vice President of Strategy for BIGresearch.
When Consumers Plan to Begin Back-to-School Shopping
• 2 months or more before school begins: 16.5%
• 3 weeks before school begins: 41.9%
• 1-2 weeks before school begins: 32.5%
• The week school begins: 6.6%
• After school begins: 2.5%
Discount stores continue to be a popular
destination for back-to-school shoppers, but for
the first time in years, department stores should
expect an increase in shopper traffic as well.
Where Consumers Plan to Shop for Back-to-School
Respondents selected multiple answers
• Discount stores: 72.2%
• Department stores: 53.3%
• Specialty stores: 30.9%
• Office Supplies stores: 35.8%
• Drug Store: 16.3%
• Online: 15.2%
• Catalogs: 5.0%
Regional Back-to-School Spending Forecast
Consumers in the West are beefing up their
back-to-school budgets ($409.19 last year vs.
$479.45 this year), while spending in the South
is expected to rise as well ($434.09 in 2005 vs.
$544.54 this year). While consumers in the
Midwest cut back in 2005 ($404.68), they are
expected to bump up spending ($521.10) this year.
The only area where consumers are pulling back is
in the Northeast, where consumers will be
spending an estimated $456.38, down from $513.07 in 2005.
Article at...
http://retailindustry.about.com/od/sales_holiday/a/back_to_school.htm
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[4] Merchants Fight Against Organized Theft
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This is an ongoing issue. It is not an issue that
you are going to solve Stores are worrying less
about teens stealing CDs than about sophisticated
criminals like Samih Fadl Jamal of Mesa, Ariz.,
the ring leader of a major organized theft
operation that stole and resold millions of
dollars of baby formula throughout the country.
Such highly sophisticated groups have been
targeting retailers for several years, but
merchants are just starting to come together to
fight organized retail theft, developing crime
databases and establishing crime squads.
Organized theft costs the industry an estimated
$30 billion annually and rising. Customers also
pay a hefty price too. The National Retail
Federation, the industry's largest trade group,
estimates that shoppers pay almost 2 cents on
every dollar they spend to cover the cost of retail theft.
The increased focus on this issue was underscored
earlier in July, when news broke that Wal-Mart
Stores Inc., the world's largest retailer, will
no longer prosecute one-time thieves unless they
are between ages 18 to 65 and steal at least $25 worth of merchandise.
Wal-Mart, which had a zero-tolerance policy,
joins a number of retailers who are putting more
of their energy into bigger shoplifting crimes.
But that doesn't mean that the nation's retailers
are giving a free pass to petty shoplifters. They
emphasize they are still going to catch and stop such thieves.
'This is not an invitation to petty theft,' said
Sharon Weber, a Wal-Mart spokeswoman. 'We are
hard targets for crime and we intend to stay that
way.' In fact, Weber warned that the new policy
is only a guideline for stores, and such thieves
will still be detained and will be prosecuted if
they refuse to show identification or are violent.
Unlike average shoplifters, who steal for
themselves, those who are involved in organized
crime steal the goods and resell them to flea
markets, pawn shops or on the Internet. They
typically focus on specific brands and products
that carry a high resale value, are in constant
demand and have a high profit margin. Among some
of the coveted items are Enfamil baby formula,
diabetic strips, over-the-counter brand name
drugs like Tylenol and Advil, Gillette razors and
jeans, including brands like Polo Ralph Lauren.
Both the NRF and the Retail Industry Leaders
Association launched password-protected national
crime data bases online, which let retailers
share information about thefts to detect whether
they've been a target of organized crime. In the
past, merchants had never shared information, so
rings could hit various stores in one area without being detected.
Meanwhile, retailers like Gap Inc., Sears
Holdings Corp. and Wal-Mart _ all of which are
participating in these data bases _ also have
their own organized crime squads. They're also
using more sophisticated cameras in their stores
to detect suspicious activity. Retailers would
not give details on their efforts for security reasons.
Earlier this year, Congress authorized funding
for an organized retail crime task force run by
the Federal Bureau of Investigation. According to
Eric Ives, FBI's unit chief for the major theft
division, the agency will develop its own crime
data base that may combine those of both retail associations.
Still, criminals are responding with shrewder
tactics. They carry out stolen merchandise in
bags lined with foil or duct tape to avoid
tripping security-tag alarms at the door or use
sophisticated technology to print out counterfeit receipts and labels.
These organized groups have also become shrewd
about who they dispatch to do the stealing.
According to Joseph LaRocca, vice president of
loss prevention at the NRF, many of these rings
use pregnant illegal immigrants, who if caught,
are usually deported before their child is born in the States.
According to LaRocca, a growing problem over the
past year is a dramatic increase in the reselling
of stolen products on the Internet, an area that
is harder to track than flea markets or pawn shops.
'You don't realize that a longtime drug user that
you would never do business with is behind Uncle
Bob's online store,' LaRocca said.
Ives and LaRocca both noted that there isn't a
specific profile of shoplifters, who could be
from all ethnic backgrounds and regions.
Investigators say they move from region to
region, and could target one specific item, or
even one retailer throughout the country.
Ives noted that over the last two years, violent
gangs, particularly one called MS-13 which has
its roots in South and Central America, have
become a growing force behind organized retail theft.
Thieves could also be criminals like Jamal, who
employed more than 20 others to steal infant
formula at stores around the country from 1997 to
2003. The goods were then sold to other
wholesalers and stores in other states through
his company, Jamal Trading Co. in Tempe, Ariz.
According to reports, Jamal's company gained $11
million in profits from the sale of $22 million of stolen baby formula.
Jamal was convicted last year of 20 charges and
sentenced to 10 years of prison, according to the FBI.
For a long time, it was hard to detect such
organized rings because stores had been secretive
about giving out information about their
incidents. Even now, stores remain anonymous in
the database, which allows stores to see such
details as how the crime was committed to what
the criminals looked like. The identity of the
merchant can be limited to location of the crime
and the type of retailer. Stores can identify
themselves when they send an e-mail to another retailer.
State laws have been weak on shoplifting; many
states have continued to raise the felony theft
levels amid the overflowing of jails. That has
encouraged professional shoplifters to steal more
often without reaching the felony level, according to an NRF report.
Moreover, Ives pointed out that shoplifting
doesn't become a federal crime until at least
$5,000 in stolen merchandise crosses state lines.
And Ives noted that U.S. attorney general's
offices don't prosecute unless the figure is $50,000 or higher.
Many stores declined to talk about what specific
measures they are adopting, but said that only by
joining will they make a dent in the problem.
Still, they are realistic.
'This is an ongoing issue. It is not an issue
that you are going to solve,' said Bill Titus,
vice president of loss prevention at Sears.
Stores, he said, have all this inventory, and
criminals are trying to get at that.
'Our job is to get ahead of it and prevent it,' he said.
Article at...
http://hosted.ap.org/dynamic/stories/R/RETAILERS_ORGANIZED_CRIME?SITE=WIJAN&SECTION=HOME&TEMPLATE=DEFAULT
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