UPS, FedEx And The Holiday Season Risks

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The e-commerce industry has really picked up in the past few years. With increasing internet connectivity and many new companies entering the space, online sales are at an all-time high. In 2013, almost 41% of the world’s internet users purchased products online. The size of the market is increasing every year in double digits and could continue to do so for the foreseeable future. To put this into perspective, the current size of the e-commerce industry is $1.6 trillion (which represents growth of about 20.4% year-over-year) and accounts for only 6.6% of total retail sales worldwide ($24 trillion). With the emergence of cost-effective smartphones, and cheaper, more widespread internet access, the potential for growth in the sector remains immense.

A positive effect of the e-commerce boom is that ancillary industries such as the courier services and delivery sectors, should see corresponding growth. Package volumes could increase consistently year-over-year, especially during the holiday season spanning November through December. Intuitively, higher package volumes should mean higher revenues for courier companies such as FedEx and UPS . However, this may not necessarily be true if delivery companies fail to cope with heavy increases in volumes, which could result in major setbacks. Accordingly, while the holiday season represents a big opportunity for the courier companies, it also represents a substantial risk.

In 2013, UPS and FedEx underestimated the volumes to be expected during the holiday season, and as a result both companies were somewhat underprepared. Heavy snowfall and harsh winter conditions slowed them down further. Since then, both companies have carried out a wide variety of changes across the board. The companies have invested heavily in technology to increase delivery efficiency, while upgrading their sorting facilities. Several hubs across the globe have been renovated to ensure the highest productivity. UPS and FedEx have also decided to hire a larger number of seasonal workers – drivers, sorters and other support positions – during peak periods to enable smooth functioning.

In response to these challenges, UPS has invested heavily in its technology. The company recently acquired Chicago-based Coyote Logistics for $1.8 billion. Coyote Logistics will provide UPS with the technology to ensure that there are no empty spaces on the company’s delivery trucks. This will allow the space on trucks to be utilized in the most efficient manner. The company has also increased the number of trucks equipped with the ORION technology in the U.S. ORION helps drivers find the fastest and most fuel-efficient ways to deliver packages. Almost 70% of the company’s trucks in the U.S. are now equipped with the technology. Apart from this, UPS has also invested heavily in Europe, increasing the number of trucks available while upgrading its sorting and automation facilities.

Earlier in the year, both FedEx and UPS introduced dimensional weight pricing, which essentially takes into account both weight and volume (length, breadth and height) of a package. This practice ensures that customers optimize their packaging in an attempt to save costs. Recently, UPS also decided to introduce a surcharge on large packages. Both changes in pricing policies should allow trucks to be filled to their highest capacities, allowing larger volumes to be moved.

A problem that both companies are facing is the difficulty in predicting e-commerce trends during the holiday season. In Q4 2014, UPS invested more than was required for the period, which had an impact on the company’s financials. While both companies stand to benefit greatly from the increased volumes, FedEx and UPS need to find the right balance to be able to make the most of the e-commerce boom.

http://www.forbes.com/sites/greatspeculations/2015/11/20/ups-fedex-and-the-holiday-season-risks/?utm_source=followingweekly&utm_medium=email&utm_campaign=20151123

Walmart Promises Not To Run Out Of Top Items Like TVs This Black Friday

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With Black Friday a mere two weeks away, Walmart has announced its game plan for the most anticipated shopping day of the year.

The world’s biggest retailer has mined sales data from years past and stocked its stores with extra inventory on hot items.

Walmart wants to ensure that the intrepid bargain-hunters who line up for doorbuster deals hours before its 6 p.m. Thanksgiving Day opening don’t leave disappointed.

“Walmart will never be the retailer that broadcasts a great price on Black Friday and then ends up only having a few in stock,” said chief merchandising officer Steve Bratspies. “We bought deep on televisions, toys and more to ensure hundreds of customers in a store – not tens of customers – get the gift they want.”

Walmart will have more than 1 million TVs, 15 million movies and 10 million pajamas in stock for its Black Friday sale.

Among its best deals, per its Black Friday ad released on Thursday: a Roku 32” Class Smart HDTV for $125, popular wearable fitness tracker the Fitbit Flex Wristband for $59, and video game console package deals including a PlayStation 4 Uncharted bundle for $299.

The big-box retailer is bringing back its one-hour guarantee on a handful of its most-coveted products, including Beats Studio Headphones ($169) and a 16GB iPad Air 2 Gold ($399). Even if a store runs out, as long as a shopper buys the item between 6pm and 7pm on Thanksgiving Day, Walmart guarantees they’ll receive it by Christmas.

The Bentonville, Ark-based chain will be making most of its deals available on Walmart.com at 12:01 a.m. PST on Thanksgiving Day, meaning online shoppers can get a jump on their holiday lists before the turkey is even in the oven.

http://www.forbes.com/sites/clareoconnor/2015/11/12/walmart-promises-not-to-run-out-of-top-items-like-tvs-this-black-friday/

Fast Food Workers Plan Tuesday Strikes In 270 Cities, Vow To Take $15 Wage To Voting Booth

http://www.forbes.com/sites/clareoconnor/2015/11/09/fast-food-workers-plan-tuesday-strikes-in-270-cities-vow-to-take-15-wage-to-voting-booth/?utm_source=followingimmediate&utm_medium=email&utm_campaign=20151109

On Tuesday, November 10th — exactly a year before Election Day — fast-food and other low-wage workers will walk off the job in 270 cities and towns across the country as part of a push for a nationwide $15 minimum wage.

These strikes will take place across battleground states like Ohio, Florida and Virginia, as well as in cities like New York, where workers recently won a new $15 hourly wage but will protest in solidarity.

Fast-food employees will be joined by workers from other industries that typically pay low hourly wages, including home care, child care, residential care, maintenance, and security. Adjunct professors — who make, on average, around $31,000 annually — will also be on hand.

Elected leaders, clergy allies, Black Lives Matter activists, immigration advocates and members of women’s groups will all be present at various walkouts and rallies across the U.S, according to Fight for $15, the union-supported group behind this movement.

The day of action comes as the issue of minimum wage takes center stage in the run up to the 2016 presidential election. Fight for $15 notes that all three major Democratic candidates support higher pay for low-wage workers. Hillary Clinton has, however, stopped short of endorsing a $15 federal minimum wage, instead calling for a hike to $12.

The federal minimum wage is at present $7.25 an hour. A recent report by the Alliance for a Just Society found that Americans on average have to earn $16.97 an hour to make a living wage — that is, to pay for housing, utilities, and childcare while putting a modest amount of savings away for emergencies.

As workers get set to push for a pay boost, Republican presidential candidates have been voicing opposition to a federal minimum wage. Carly Fiorina described the federal government’s role in setting a minimum wage as unconstitutional in the most recent GOP debate.

As MSNBC noted, fellow mainstream Republican candidates Marco Rubio and Jeb Bush have also opposed a federal minimum, although not as strongly as the former Hewlett-Packard HPQ -7.69% CEO.

There are millions of votes at stake in this battle, given that approximately 42% of the U.S. workforce makes less than $15 an hour. A recent study of workers making less than that sum commissioned by the National Employment Law Project found that 69% of unregistered voters would register to vote in support of a candidate backing a $15 federal minimum wage and union rights.

http://www.forbes.com/sites/clareoconnor/2015/11/09/fast-food-workers-plan-tuesday-strikes-in-270-cities-vow-to-take-15-wage-to-voting-booth/?utm_source=followingimmediate&utm_medium=email&utm_campaign=20151109

Volkswagen Sinks Deeper Into The Mire

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Since the emissions scandal broke in September 2015, Volkswagen (VW) has delivered three things: a third-quarter loss, a new CEO and an investigation into the “rogue coders” who supposedly fitted cheat software on up to 11m vehicles worldwide. None of these are satisfactory.

The third-quarter loss is due to provisions of 6.7bn Euros against anticipated fines, alteration costs for the 11m vehicles, and compensation for customers whose vehicles will, as a result of those alterations, have poorer fuel economy and diminished performance. Most analysts think the provisions will be nowhere near enough: estimates of the final cost for Volkswagen vary from 15bn to 25bn Euros. And this is without taking into account consequential losses for customers, over which Volkswagen may face lawsuits: the second-hand value of Volkswagen automobiles is already falling sharply. Volkswagen’s third quarter results were bad, but future results may well be far worse.

The new CEO, Matthias Mueller, was formerly the boss of Porsche, VW’s premier high-performance brand. Appointing an insider to replace a CEO who has stepped down due to a major scandal is hardly indicative of a major change in management and culture, which is what VW really needs: it would have been far better if the new CEO had come from elsewhere.

But there is now a more serious shadow over Mr. Mueller. On November 2nd, the US’s Environmental Protection Agency (EPA) notified Volkswagen of a second breach of clean air legislation (my emphasis):

Today, EPA is issuing a second notice of violation (NOV) of the Clean Air Act (CAA) to Volkswagen AG, Audi AG and Volkswagen Group of America, Inc. This NOV is also being issued to Porsche AG and Porsche Cars North America. These five companies are collectively referred to as Volkswagen (VW). The NOV alleges that VW developed and installed a defeat device in certain VW, Audi and Porsche light duty diesel vehicles equipped with 3.0 liter engines for model years (MY) 2014 through 2016 that increases emissions of nitrogen oxide (NOx) up to nine times EPA’s standard. The vehicles covered by today’s NOV are the diesel versions of: the 2014 VW Touareg, the 2015 Porsche Cayenne, and the 2016 Audi A6 Quattro, A7 Quattro, A8, A8L, and Q5.

So this time, the luxury VW brands are affected. Including Mr. Mueller’s Porsche. Oh dear.

In a statement, VW emphatically denied that it fitted “cheat software” to its luxury brand. But it also attempted to tone down the severity of the EPA’s charge. VW described the alleged violation thus:

The United States Environmental Protection Agency (EPA) informed Volkswagen Aktiengesellschaft on Monday that vehicles with V6 TDI engines had a software function which had not been adequately described in the application process.

Somehow, “developed and installed a defeat device” became “not adequately described in the application process”. So VW’s defense amounts to “We didn’t do it, and anyway it wasn’t a crime”.  I can’t see this going down well with US regulators. This is a very poor start for the new CEO.

And things have since gotten a lot worse. After the EPA’s first violation notice, VW’s Board announced an investigation to establish whether there were other “irregularities” in relation to emissions testing for VW vehicles. And yes, it seems there are. On November 3rd, VW admitted that “unexplained inconsistencies” had been found in the testing process for CO2 emissions.

What VW seems to have done is understated CO2 emissions data for some of its brands, enabling it to make unrealistic (and therefore misleading) fuel economy claims:

Under the ongoing review of all processes and workflows in connection with diesel engines it was established that the CO2 levels and thus the fuel consumption figures for some models were set too low during the CO2 certification process.

VW says about 800,000 vehicles are currently thought to be involved, mostly in Europe. But the question that immediately springs to mind is – why are only some brands affected? Why overstate fuel economy figures for some models but not others? This doesn’t seem likely. It’s worth remembering that the NOx emissions scandal originally involved less than 500,000 vehicles and was limited to the US: the figure is now 11m worldwide. This, too, could quickly spiral. And importantly, some of the vehicles involved this time have petrol engines. The scale of this scandal could be much, much bigger.

I suppose the claim that only some brands are affected might support VW’s argument that the emissions scandal is entirely caused by a small number of software engineers. But that argument was already hard to swallow, and is now frankly incredible. No way is this a “rogue coder” incident. This is systematic rigging of emissions test data to give VW an unfair (and illegal) competitive advantage over its rivals.

And it is tax fraud, too. A number of countries give discounts on vehicle tax for vehicles with low CO2 emissions. So some of VW’s customers have unwittingly paid a lower vehicle tax than was actually due. They are now liable for the unpaid tax, and could in theory face prosecution. According to the Wall Street Journal, the German government has pressured VW into offering to pay the additional tax bills:

Volkswagen Chief Executive Matthias Müller asked EU finance minister to ensure that their national tax authorities “charge Volkswagen directly, and not our customers, for any additional taxes.”

VW estimates that this latest scandal will cost it around 2bn Euros. This is in addition to its estimate of 6.7bn Euros for the NOx emissions scandal. Neither figure seems likely to be remotely adequate. VW faces far larger bills once litigation costs and compensation are taken into account.

VW has now been downgraded by the credit ratings agencies Moody’s and S&P, and all three major ratings agencies have it on negative watch for further downgrades. Moody’s, discussing the latest revelations, goes to the heart of the matter:

These new developments pose additional risk to Volkswagen’s reputation, future sales and cash. They also suggest serious internal control and governance issues, which may be more widely spread than believed initially, that Volkswagen will have to address aggressively in the coming months.

The scandal is already beginning to affect sales of VW vehicles. In the UK, sales in October were down 9.84% year-on-year across all models, including petrol engines – a huge drop. Further falls seem likely, and sales in other countries are falling as well. Toyota has now overtaken VW as the largest car manufacturer in the world by sales.

Unsurprisingly, VW’s share price – already down by a third due to the NOx emissions scandal – tanked again when the CO2 emissions news broke. VW is still financially strong, but to regain the confidence of customers and investors it will have to make far more radical changes to its management, governance and culture than have been evident so far.

http://www.forbes.com/sites/francescoppola/2015/11/07/volkswagen-sinks-deeper-into-the-mire/?utm_source=followingimmediate&utm_medium=email&utm_campaign=20151107

Top 10 Resume Rules

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  1. Resume should be geared towards the job that you want.
  2. Lose the objective statement. It is no longer about what you are looking for. It is about what you can do for the employer. Start with a profile/summary.
  3. Bullets should be action oriented and results focused. Provide specific examples of your experience. Why is it important?
  4. Use bullets, not paragraphs.
  5. Lose irrelevant content. i.e., leave off past industry certifications.
  6. Make sure it is error free.
  7. Keep it to an appropriate length. 1 page for every 10 years of experience. Think about content and formatting. Do not put only a few lines on the second page.
  8. Formatting should be clear and legible
  9. Ensure you can elaborate on anything you have listed.
  10. If you have questions, seek help from mentors, classmates, professors, coworkers, etc!

*Provided by Forward Thinking Resumes Webinar

Eccles School of Accounting Top 25 Best Programs

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The David Eccles School of Accounting was ranked 21 for the Master of Accounting (MAcc) program and 22 for the undergraduate program, this year.

It is an honor to have been and currently be a part of  such an amazing program at the University of Utah. I graduated from the David Eccles School of Business in 2014, having attained my Accounting degree.

What made, and constantly makes, this program one of the top in the nation was, and is, the high level of teacher talent, academic rigor, and ethical conduct. To say the least, an accounting degree is not “a walk in the park!” Furthermore, the connections with the public accounting firms, as well as the relationships with industrial firms, are extremely strong. Networking opportunities are endless.

http://www.business.utah.edu/news/eccles-school-of-accounting-ranked-in-top-25-programs-in-us/

REI Stores Will Be Closed On Black Friday And Encourage Customers To Get Outside Instead

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REI – a privately held niche retailer that primarily sells outdoor recreation gear, sporting goods and apparel – announced this week that they will be closed on Black Friday this year and instead encourage their customers to “opt out” of shopping and instead spend time outside.

In an email sent to their customers, REI stated the following:

This Black Friday the co-op is doing something different. We’re closing all 143 of our stores. Instead of reporting to work, we’re paying our employees to do what we love most—be outside. We want you to be the first to hear—not just what we’re doing, but why. We’re passionate about bringing you great gear, but we’re even more passionate about the experiences it unlocks for all of us. Perhaps John Muir said it best back in 1901: “thousands of tired, nerve-shaken, over-civilized people are beginning to find out that going to the mountains is going home.” We think Black Friday is the perfect day to remind people of this essential truth. And don’t worry, you’ll still enjoy great deals on great gear all holiday season long. But on this one day, we’re going to #OptOutside and we want you to join us. While the rest of the world is fighting it out in the aisles, we hope to see you in the great outdoors. Visit optoutside.rei.com and you’ll discover great ways to #OptOutside from coast to coast. Let’s get out there, REI.”

Shoppers are encouraged to opt out of Black Friday and instead get outside by niche retailer REI. Their message to #OptOutside was announced on Monday, October 26, 2015. (Matt Peyton/AP Images for REI)

Additionally, REI President and CEO Jerry Stritzke shares the following on the #OptOutside website from REI – which also includes a countdown clock leading up to this big day.

For 76 years, our co-op has been dedicated to one thing and one thing only: a life outdoors. We believe that being outside makes our lives better. And Black Friday is the perfect time to remind ourselves of this essential truth. We’re a different kind of company—and while the rest of the world is fighting it out in the aisles, we’ll be spending our day a little differently. We’re choosing to opt outside, and want you to come with us,” Stritzke shared on the REI website.

With many stores planning to open as early as Thanksgiving – including Walmart, Target TGT +0.00%, Best Buy BBY +0.00% and Kohl KSS +0.00% – and countless others opening early and staying open late on Black Friday, it comes as a bit of a surprise that REI is planning to instead close their stores. Then again, this could be among the smartest marketing moves we see among retailers this holiday season. Driving attention to their stores and rallying customers to bring attention to their #OptOutside message may just be the right combination for REI to gain holiday sales success – despite their closed stores on Black Friday. One customer who feels this way is Colorado based Heather Stinnett, who was excited to see REI announce their plans for Black Friday in an email she received this past Monday.

I love the idea that REI is closing their doors on Black Friday when everyone else seems to be opening early or worse, opening on Thanksgiving. It speaks volumes about their brand integrity, which is something I’ve always valued as a consumer. And while I hadn’t necessarily planned to shop at REI this holiday season, their message to #OptOutside has motivated me to not only get outside on Black Friday, but also to support REI this holiday season as a customer,” Stinnett stated.

Stinnett and other customers will have to wait to shop online at REI.com, as well, on Black Friday. Their bold move to close their stores also includes freezing online orders until Saturday. Additionally, only a handful of employees will be working on Black Friday while the other 12,000 plus get a paid day off… on one condition, that is. And that’s to get outside.

As always, only time will tell if this marketing move lives up to it’s expectations… but I can assure you one thing. This niche retailer of 143 stores just launched themselves some fantastic attention leading up to the busiest shopping season – not just day – of the year.

http://www.forbes.com/sites/nicoleleinbachreyhle/2015/10/27/rei-stores-will-be-closed-on-black-friday-and-encourage-customers-to-get-outside-instead/?utm_source=followingimmediate&utm_medium=email&utm_campaign=20151027

Snowbird Site Visit

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October 23, 2015- It is always nice to get out of the valley and take a trip into the woods. Snowbird is located 30 minutes from the SLC International Airport. It is a destination resort and isn’t meant for “newbs.” Experienced skiers and snowboarders ride this resort because of the variety of terrain and the 500″ of fresh snow each year. In 2011, the resort experienced its largest snowfall, 776″.

The Eccles Outdoor Industry Club had the chance to visit Snowbird and talk with Jim Powell, the Director of Marketing. One cool thing they changed this year is RFID ticketing. Now, skiers can ride around with an RFID card, instead of using the traditional paper tickets. With this new system, parents can load $200 on the their child’s card and let them go off on their own.

https://www.facebook.com/groups/EcclesOutdoorIndustryClub/

Upgrades:

http://www.snowbird.com/winter/upgrades/

UofU Executive MBA Ranked 22 in the Nation, According to Financial Times

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Wow, what an amazing feat. The David Eccles School of Business just keeps moving up in the ranks, year after year. I am proud to be a part of such a great program, and cannot wait to give back once I leave my mark in the Full-Time MBA program.

“The program ranked No. 22 nationally and No. 83 globally, moving up 8 and 12 spots respectively. The Eccles School’s program also ranked No. 4 in the West.”

http://www.business.utah.edu/news/eccles-school-executive-mba-ranked-22-in-us-by-financial-times/

As Walmart Forecast Dips, Is It Also Losing The Low-Price Battle To Amazon?

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Walmart shocked Wall Street on Wednesday when its CFO announced a dour earnings forecast not just for this fiscal year, but the next two.

The disappointing forecast — the result, said CEO Doug McMillon, of multi-billion-dollar investments in e-commerce technology and an hourly worker wage boost to $10 — saw the stock sink 10%. In one morning, the Bentonville, Ark.-based retail giant lost well over $20 billion in market value.

The jury is still out on whether this stock plunge, Walmart’s biggest one-day drop since 1988, is an overreaction on the part of investors. McMillon is selling the news as part of a “three-year growth plan” that’ll see the chain better able to compete online with the likes of Amazon.com AMZN +3.03%

They certainly have plenty of ground to gain. As Forbes contributor Walter Loeb noted, less than 3% of Walmart’s total sales today come from e-commerce. Macy M +2.00%, by way of comparison, makes 8% of its revenues from online shopping.

Still, Walmart’s greatest value proposition has always been its low price guarantee. All the technological bells and whistles in the world won’t endear Walmart to its shoppers if they aren’t making good on that promise online as well as in-store.

Data recently released by retail analytics firm Boomerang Commerce suggests that in one hotly contested category, Walmart is losing ground.

Boomerang analyzed 1,200 consumer electronics items across 490 brands over the same two-day period to see how Walmart, Target TGT -1.33%, Best Buy, and much-hyped new market entrant Jet.com were competing with Amazon on price and assortment.

Walmart was Amazon’s closest competitor in terms of assortment, boasting a 32.9% overlap with Amazon’s consumer electronics products. Best Buy and Jet overlapped by 29.5% and 16.4% respectively.

Where Walmart lost out was pricing. Its ‘most popular’ (or ‘head’, in retail jargon) electronics cost on average 8.3% more than Amazon’s. Jet.com was able to more closely match Amazon on price, with only a 1.4% premium. Jeff Bezos’ online titan discounts its gadgets aggressively, with an average of 66% off list prices, Boomerang found.

Walmart’s discounts averaged 22%, beating Target, which offered 15% off on average in this category.

The big-box behemoth did beat out Amazon on its assortment of products from the top five most popular consumer electronics brands across these e-commerce sites. Walmart and Best Buy had the most items on offer by Sony, Samsung, Fujifilm, Asus and Dell.

As Walmart invests $1.1 billion in e-commerce, its assortment and pricing may well grow more competitive. The company is also making a bet on curbside pickup, allowing shoppers to order their groceries online and collect them from the store parking lot. Right now, not even Amazon can compete with that convenience, at least in the bulk of the country. Its same-day grocery delivery service AmazonFresh is so far available only in a handful of urban markets.

http://www.forbes.com/sites/clareoconnor/2015/10/15/as-walmart-forecast-dips-is-it-also-losing-the-low-price-battle-to-amazon/?utm_source=followingimmediate&utm_medium=email&utm_campaign=20151015

50th Anniversary School of Medicine Celebration

 

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A beautiful evening spent at Little America Hotel in Salt Lake City, Utah. Bridging the past with the present and soon to be future, October 9, 2015 was a special night for the School of Medicine. Alumni from the University of Utah were recognized for their contributions, honors, and past service.

The Distinguished Alumni Award went to Val G. Hemming, MD 1966. The Distinguished Service Award fell upon James R. Scott, MD. Finally, the Distinguished Humanitarian Award was granted to Catherine R. deVries, MD, FACS, FAAP. These three individuals have helped the University in the past, now in the present, and will continue in the future.

Oh, and the best part about the future, a brand-new School of Medicine building, worth hundreds of thousands of dollars, to be built in the next few years!

https://umarket.utah.edu/um2/SOMalumnirelations/index.php

Wasatch Touring Site Visit (EOIC)

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On Wednesday, October 7, 2015, the Eccles Outdoor Industry Club visited Wasatch Touring in Salt Lake City, Utah. Riley Cutler gave us the site tour and told us all about the operations. One interesting fact is that small outdoor retail stores actually get new products in their doors quicker than larger outdoor retail stores, like Dicks Sporting Goods or REI. The reason for this is because Wasatch Touring can test out a small quantity of new products, without having to buy a large bulk of the product. Therefore, Wasatch is always up-to-date with products, well in advance of the product’s official release year.

http://www.wasatchtouring.com/

Waltman||Co Microfiber Ties

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A pure white, smooth, 100% silk tie. Narrow and skinny to be “in” for the day. Backside has microfiber material to clean your glasses, phones, and tablets. The best attribute you might ask? Well, it has to be the length! 63″ to be exact. Perfect if you are 6’7.5″ in height. It is almost impossible to find extra-long ties, plus have it be skinny, in today’s market. Waltman||Co has combined all the must haves in one product. Brilliant.

http://www.waltmanco.com/

Is Volkswagen’s New CEO The Best Person For The Job?

WOLFSBURG, GERMANY - SEPTEMBER 25:  Matthias Mueller, head of German automaker Porsche, speaks to the media after the governing board of Volkswagen announced he will succeed former Volkswagen CEO Martin Winterkorn on September 25, 2015 in Wolfsburg, Germany. Winterkorn resigned on Wednesday following charges by the U.S. Environmental Protection Agency that Volkswagen had installed software into its diesel cars sold in the U.S. that manipulates emissions test results. Volkswagen has since admitted that 11 million cars sold worldwide contain the software. The company faces up to USD 18 billion in fines in the U.S. and prosecutors in both the U.S. and Germany have launched investigations.  (Photo by Alexander Koerner/Getty Images)

When a company is beset by scandal and compelled to fire its top boss, should it really promote a trusted insider rather than breaking from the past and bringing in an untainted outsider with no institutional loyalty?

Volkswagen, which admitted last month that it had lied to regulators by rigging engines in 11 million of its heavily polluting diesel cars, had to confront that question with no time to spare. At first CEO Martin Winterkorn, 68, refused to resign, saying he was “endlessly sorry” for the scheme but insisting he had known nothing about it. Shortly thereafter, on Sept. 23, he took responsibility and fell on his sword. (The German magazine Der Spiegel reports that Winterkorn was the highest-paid German executive, earning $85 million over five years. Winterkorn is demanding he be paid the $11 million left on his contract.)

Just two days later the 78-year-old automaker announced it was appointing a longtime, well-respected VW veteran, Matthias Müller, who has headed Volkswagen’s luxury sports-car brand, Porsche, for the last five years. Müller has the support of both labor unions and Volkswagen’s controlling shareholders, including ex-chairman Ferdinand Pch, the grandson of Porsche’s founder.

Müller started at Volkswagen 38 years ago as an apprentice toolmaker for the Audi division. He left to study computer science at Munich University of Applied Sciences, returning to Audi in the IT department in 1984. He rose to product manager for Audi, and kept moving up the ranks. Close to Winterkorn, who appointed him head of VW’s product strategy, he ascended to the top job at Porsche, which owns a 51% stake in VW. Müller won praise for steering Porsche through the recession, almost doubling the delivery of new cars last year to nearly 200,000. Profit margins at Porsche are reportedly 18%.

Müller recently told Süddeutsche Zeitung that he felt he was an “approachable team player,” adding that “I do not like it when things get talked to death.”

He has also been praised for his outspokenness on controversial issues. A refugee who fled Eastern Germany as a three-year-old, he has been vocal about Germany’s response to the migrant crisis, a topic most German executives avoid. In an interview withSüddeutsche Zeitung published in early September, he recalled his own struggle to readjust to a culture similar to the place he had left, saying, “The people who are now arriving completely out of their culture. . . . We have to help.” He spoke about his feelings during a visit to a Porsche subsidiary in Schwarzenberg, a region that has been hostile to migrants. “We have to take a stand against extremism,” he said.

He’s also criticized his bosses’ interest in self-driving cars, tellingAuto Motor und Sport, a German car magazine, “I ask myself in an emergency, an autonomously driven auto is going to steer to the right into a truck or left into a compact car.”

But he has not distanced himself from Winterkorn. “It’s important to me to thank Dr. Winterkorn for everything that he has done for Volkswagen,” he said, according to a summary of his remarks provided by Volkswagen and reported in The New York Times.

Müller’s inside credentials are strong, but is he the best person to take Winterkorn’s place?

Rebecca Harris, a Green Party member of the European Parliament, told the Times that she was “disappointed” in the decision to promote Müller. Harris comes from the German state of Lower Saxony, which owns 20% of VW’s stock and is home to VW’s headquarters in the town of Wolfsburg. “What I would have loved would be now to go for a real shift, to bring in new people, not protecting the old way,” she said.

The Center for Auto Safety’s Dan Becker, director of the safe-climate campaign at the Washington, D.C.-based organization, told the Times that VW needed “to scour the house with an outsider who’s not afraid to get to the heart of this huge fraud and its perpetrators, however high. . . . Instead they’ve chosen a longtime VW crony.”

Likewise the Düsseldorf-based business paper Handelsblatt, calling the emissions scandal “Dieselgate,” says, “The time is ripe for a new beginning, but the supervisory board in Wolfsburg apparently didn’t have the courage to turn the page.” The Matthias appointment, it writes, “does not send a signal of fundamental change.” Handelsblatt goes on: “Müller is simply too closely tied to the old system.” He is indebted to Winterkorn and Piëch, the paper says. They are the people who turned VW into what it is today, “a complex, hierarchically organized power structure that’s nearly impossible to control.” Handelsblatt says that nothing happens at VW without board member Piëch’s support, but Müller will never get to the bottom of Dieselgate unless he distances himself from his longtime allies.

Several observers, including Handelsblatt, and Forbes contributor Neil Winton, have argued that VW should have picked VW brand chief Herbert Diess, a recent hire from BMW, who would have brought an outsider’s perspective and who was surely not involved in Dieselgate.

Longtime Forbes staffer Joann Muller, who has been doing excellent coverage of the VW saga, equates Müller’s appointment to “a shuffling of the deck chairs on the Titanic.” She reports that Volkswagen installed a new North American chief above U.S. President Michael Horn, and that sales and marketing head Christian Klinger is leaving the company, “not related to recent events,” according to VW. Jürgen Stackman, head of VW’s European SEAT brand is taking Klinger’s place on the board of management, and Audi sales and marketing boss Luca de Meo will lead SEAT.

VW’s decision to promote Müller also has its defenders. Stefan Bratzel, who directs a research group near Cologne called the Center of Automotive Management, told the Times that Müller stood out at Volkswagen because he spoke his mind, an attribute not shared by most VW executives.

Manuela Kasper-Claridge at German broadcaster Deutsche Welle, also praises Müller’s candor. He “doesn’t shy away from conflicts, doesn’t beat about the bush when it comes to identifying mistakes and appreciates working in a team.” Since he’s already been a successful executive for years, she writes, “He looks well suited to steer VW into calmer waters.” Still, she adds, he must be prepared to fire colleagues and shake up VW’s management structure. “The old boys’ network doesn’t count anymore,” she writes.

Müller seems like a capable CEO who has stepped into a vacuum. But he would do well to keep in mind that his company has illegally made use of so-called defeat devices in the past, as have other carmakers. In 1974, VW paid $120,000 to settle an EPA complaint that VW failed to disclose devices that tampered with emission controls on 25,000 1973 models. VW didn’t admit wrongdoing at the time, but the EPA’s complaint was similar to the current scandal: The devices deactivated emissions control systems. VW agreed to remove the devices. Cadillac, Ford and American Honda have also settled defeat device charges brought by the EPA.

Müller has a huge challenge before him. He has to investigate and fire the perpetrators of Dieselgate, he must contend with possible criminal charges in both the U.S. and Germany, a raft of likely class action suits brought by car owners and dealers, and serious damage to the VW brand. At 62, he may only be a CEO placeholder until VW finds a capable outsider to take on the daunting challenge of righting one of the worst corporate scandals ever. And maybe that’s all he should be.

http://www.forbes.com/sites/susanadams/2015/10/02/is-volkswagens-new-ceo-the-best-person-for-the-job/?utm_source=followingimmediate&utm_medium=email&utm_campaign=20151002

UofU Career Fair 2015

Career Fair

Career fairs are so much fun. A multitude of desks, filled with endless swag, including branded frisbees, chargers, pencils, pens, notebooks…the list goes on and on. Oh, and not to mention the opportunities to work with high-quality companies. It is always important to have your 30-second pitch down, or in my case, that one question I always ask employers (I will not reveal my secret “sauce” here). Overall, fairs help you learn what a company is and what job posts they have available to your liking. I know you all are wondering, what was my favorite memorabilia that I snatched? The answer: Walgreens Co. playing cards!

 

Walmart Bets On Curbside Grocery Pickup In Bid To Beat Out Amazon, Target

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On Tuesday, Walmart announced the launch of a grocery pick-up service in eight new markets including Atlanta, Tucson and Salt Lake City.

Shoppers in these as well as five test markets will be able to order their groceries online on Walmart.com, then drive to their local Walmart store to pick up their order in a designated space reserved for the service.

“With 70% of the U.S. population living within 5 miles of an existing Walmart store, this is an idea that simply makes sense for us,” wrote the retail giant’s head of e-commerce Michael Bender in a blog post.

“We have the locations already in place, and with our website and mobile app expertise, we’re able to combine those things in a way that helps our customers save time and still take advantage of our everyday low prices.”

The move comes as Walmart competitors including Amazon.com AMZN -8.87% and Target TGT +0.00% test out e-commerce grocery initiatives of their own.

Amazon is testing its subscription AmazonFresh grocery delivery service in urban markets including Seattle, Brooklyn and Philadelphia.

Target, meanwhile, has been rolling out local pickup outside stores in San Francisco, New York and New Jersey in conjunction with startup Curbside.  The Palo Alto-based company, which has raised $34.5 million to date, allows shoppers to buy goods from any nearby Target store online and then collect them without leaving their cars.

Curbside has also inked a deal with Best Buy BBY +1.25% in Bay Area markets, allowing customers to buy their gadgets via their phones and pick them up promptly from the parking lot.

Walmart will add new towns and cities to its grocery pickup rollout in the coming weeks, said e-commerce chief Bender.

“This new, easy shopping experience is an innovation that’s helpful for anyone with a busy schedule – particularly moms with small children,” he wrote in his blog post. “They can shop online and choose the pickup time that works for them, and they never have to unbuckle anyone’s seat belt.”

http://www.forbes.com/sites/clareoconnor/2015/09/29/walmart-bets-on-curbside-grocery-pickup-in-bid-to-beat-out-amazon-target/?utm_source=followingimmediate&utm_medium=email&utm_campaign=20150929

Neiman Marcus Shoppers Flock Online, Nordstrom Also Flying High

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When fellow Forbes contributor Walter Loeb told me he’d read that high-end retailer Neiman Marcus is reporting more than 25 percent of its revenue comes directly from online sales, I said the reporter must’ve garbled the information. That’s such a high percentage of sales it strains credibility. After all, online sales represent approximately 7.2% of total retail sales in the United States (source: Census Bureau, Department of Commerce).

Granted, apparel holds the largest share (according to eMarketer, in 2015 17.2% of total eCommerce sales will be generated by apparel), but 17% of 7% is still a pretty small number. How could it be?

Turns out I was wrong. Retail trade publication Internet Retailer also offered up the 25% number as cited by Neiman’s Chief Operating Officer Don Grimes on the company’s Q4 2015 earnings call. Couple that statistic with an increase in sales at stores open longer than a year of more than 2%, and it gets clear why the retailer is filing for an IPO. Those are some serious increases across the board.

To ground this data in reality, I took a look at Neiman competitor Nordstrom JWN +0.00%, data. It turns out that eCommerce accounts for 19% of that company’s total sales. Compare that with mass merchant retailers Walmart and Target TGT +0.00%. According to Fortune magazine, each generates about 3% of its total sales online. Granted Walmart and Target sell products other than apparel, but the order of magnitude different is somewhat shocking.

For retailers like Nordstrom and Neiman, “omni-channel” has become a reality. While they’re still spending a bundle on great-looking stores, they’ve got to figure out a way to manage their inventory in a new world. After all, you don’t necessarily want to keep safety stock for on-line sales…and you have to seriously consider that you’re likely going to go out of stock on something. The only way to satisfy the customer is to get that inventory from one of your stores.

The art of managing this inventory is the core of the next retail frontier. I knew that. I’ve heard this consistently from retailers and the technology vendors that serve them.

The part that’s surprised me is the retailers who have to traverse that frontier first. Neiman’s on its way, and if it gets omni-channel right, its IPO could be a real barn burner.

 

http://www.forbes.com/sites/paularosenblum/2015/09/28/neiman-marcus-shoppers-flock-online-nordstrom-also-flying-high/?utm_source=followingimmediate&utm_medium=email&utm_campaign=20150928

Lassonde Student Entrepreneur Conference 2015

Winners

The Student Entrepreneur Conference (SEC) is held each year at eBay in Draper, Utah. The 2015 SEC had an innovation tournament, networking sessions, and a keynote speaker. The speaker this year was Travis Cook from SolutionStream.

I helped put on the innovation tournament and participated in it as well. The first session we formed teams and generated ideas about how to solve the problem of the traditional alarm clock. The second session we started building our prototype, “HappyWake,” and performing iterations. The last session we perfected our prototype, and formulated a 2 minute speech, to be presented in front of the audience.

In the end, we won $100 and took home our “Functionality” trophies. During our tournament, my team specifically focused on the problem, how to solve the problem, and what was realistic. (The picture above displays our final prototype; a robot that throws balls on the sleeper’s head, and tickles them to wake them up in the morning!)

 

Volkswagen’s CEO Has Resigned, But That Doesn’t Solve Its Problems

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Volkswagen’s CEO, Professor Martin Winterkorn, has done the decent thing and fallen on his sword. This is his resignation announcement, posted on the company’s website:

“I am shocked by the events of the past few days. Above all, I am stunned that misconduct on such a scale was possible in the Volkswagen Group.

As CEO I accept responsibility for the irregularities that have been found in diesel engines and have therefore requested the Supervisory Board to agree on terminating my function as CEO of the Volkswagen Group. I am doing this in the interests of the company even though I am not aware of any wrong doing on my part.

Volkswagen needs a fresh start – also in terms of personnel. I am clearing the way for this fresh start with my resignation.

I have always been driven by my desire to serve this company, especially our customers and employees. Volkswagen has been, is and will always be my life.

The process of clarification and transparency must continue. This is the only way to win back trust. I am convinced that the Volkswagen Group and its team will overcome this grave crisis.”

 It was hard to see how he could remain in post. Within a day of the US Environmental Protection Agency’s announcement on Monday September 21st that Volkswagen had rigged emissions tests on approximately half a million diesel automobiles sold in the US, Volkswagen’s share price had dropped by over 30%, wiping $27bn off its market cap. On Tuesday September 22nd, after giving a 6.5bn Euro profits warning that was quickly dismissed by analysts as vastly over-optimistic, Volkswagen admitted that 11m cars worldwide were fitted with the “cheat” software. The German newspaper Die Welt speculated that the costs of customer redress, regulatory fines and lawsuits might be sufficient to bankrupt Volkswagen (my translation, original in German):

The scandal has reached a dimension that could threaten the existence of what is currently the largest automaker in the world. The billions of costs and penalties that await the company, could crush even the best-capitalized corporation.

Volkswagen’s Executive Committee accepted Prof. Winterkorn’s resignation and indicated that other heads will roll too. And then they said this:

The Executive Committee have decided that the company will voluntarily submit a complaint to the State Prosecutors’ office in Brunswick. In the view of the Executive Committee criminal proceedings may be relevant due to the irregularities. The investigations of the State Prosecutor will be supported in all form from the side of Volkswagen.

According to the UK’s Telegraph newspaper, while the Executive Committee was meeting, the public prosecutor’s office in Brunswick announced “a preliminary investigation of unnamed employees at Volkswagen in connection with the allegations of diesel emissions manipulation”. It seems the Executive Committee, anxious to prove their goodwill, will voluntarily cooperate with this investigation. Something tells me a few Volkswagen middle managers are about to have the book thrown at them.

Prof. Winterkorn’s resignation is the latest in a spate of high-profile CEO resignations. Earlier this year, Toshiba’s CEO, Hisao Tanaka, resigned when the company’s six-year accounting fraud was exposed.  And the CEO of United Airlines, Jeff Smisek, resigned on September 8th over a federal investigation into whether the airline had traded favors with the chairman of the Port Authority of Newark and New Jersey.

But not many have been so prompt. In fact most embattled CEOs try to hang on. Being pushed, rather than falling, is the order of the day. Some even manage to stay put. Here’s a sample:

  • BP’s Tony Hayward resigned after three months of such inept handling of the political fallout from the Deepwater Horizon oil spill in 2007 that he was described as the “most hated man in the US” (in an interesting twist, Fortune reports that Volkswagen has just hired the legal team that handled the Deepwater Horizon lawsuits)
  • Barclays’ Bob Diamond famously refused to resign after the bank was fined over $450m by regulators on both sides of the Atlantic for rigging benchmark rates: he was eventually forced out by public outrage
  • Deutsche Bank’s Anshu Jain suddenly resigned in June 2015 to everyone’s consternation, only two weeks after being given full responsibility for devising and implementing a new strategy to restore the ailing behemoth’s fortunes: but not long afterwards, the German regulator BAFIN issued a damning report which held Jain personally responsible for the bank’s numerous regulatory failures
  •  It took UBS’s CEO, Oswald Grübel, over two weeks to resign after the rogue trader incident that nearly destroyed the bank in 2011
  • Maria das Gracas Foster finally got round to resigning as CEO of Petrobras in February 2015 after over thirty executives were arrested on corruption charges
  • Stuart Gulliver remains at the helm at HSBC despite the bank’s indictment for sanctions breaking and money laundering
  • António Horta Osório still runs Lloyds Bank despite a string of regulatory fines for offenses committed on his watch.

Prof. Winterkorn is to be commended for his prompt action.  If only other CEOs were so willing to accept responsibility. Sadly, far too many prefer to delegate blame to their juniors.

But there is a wider issue here. Prof. Winterkorn may not have personally been involved in the test rigging, or even known about it, but in the rarefied world of multinational corporate CEOs, ignorance is no defense. That such corrupt practices took root and became widespread indicates weak corporate governance and executive incompetence. When this happens in a bank, we say it is “too big to manage” and call for it to be broken up. But “too big to manage” is not simply a phenomenon of the financial sector. Very large corporations such as Volkswagen are also next to impossible to manage. And they are also too big to fail. The US bailed out General Motors in the 2008 financial crisis because of the consequences for its massive workforce if it were allowed to fail. The same is true of Volkswagen.

Prof. Winterkorn presided over the massive expansion of Volkswagen, priding himself on the fact that it had become the largest vehicle manufacturer in the world. Pride goes before a fall, they say. Nowhere is that more true than at Volkswagen. Prof. Winterkorn’s pride has caused not only his own fall, but also possibly that of the bloated corporation he created. And who knows what the economic consequences will be. I fear that it will not be Prof. Winterkorn who will pay for his folly, but Volkswagen’s employees, shareholders and customers, and ultimately the people of Germany.

http://www.forbes.com/sites/francescoppola/2015/09/23/volkswagens-ceo-has-resigned-but-that-doesnt-solve-its-problems/2/

TEDxSaltLakeCity 2015

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This was my first TEDx event, and it was absolutely amazing. I heard from speakers in various industries, including bicycling, skiing, and medical. A complete list of the speakers is below.

One key takeaway was people need to transfer knowledge to other people and help one another succeed. An example given was the computer mouse. Not one person can make and sell the computer mouse, starting from raw materials, all the way to selling it to a customer. Our World has become so complex that relationships are pertinent for success. Helping one another allows for resources to be distributed properly and efficiently. Maximizing resource utilization leads to less waste (Six Sigma) and better improvements in all aspects of business (Kaizen).

Thank you Salt Lake City, for providing such an intriguing event and I hope to attend in the years to come as well.

Speakers (in alphabetical order by last name):

  1. Austen Allred
  2. Nate Bagley
  3. Erik Brunvand
  4. David Eyer Davis
  5. Ivy Estabrooke
  6. Ken Grover
  7. Thea Holcomb
  8. Kevin Jones
  9. Nalini Nadkarni
  10. Ben Rollins
  11. Nicole Roundy
  12. Hala Saleh
  13. David York

Macy’s, Inc. to Hire 85,000 Seasonal Associates in 2015

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Macy’s, Inc. today said it plans to hire seasonal associates for approximately 85,000 positions at its Macy’s and Bloomingdale’s stores, call centers, distribution centers and online fulfillment centers nationwide for the 2015 Christmas and holiday season. The company’s 2015 seasonal hiring plan is essentially flat to last year.

“Macy’s and Bloomingdale’s customers have come to appreciate the higher level of our staffing and service throughout the Christmas and holiday shopping season, and our associates love the employment and income-earning opportunities at this very special time of the year,” said Terry J. Lundgren, Macy’s, Inc. chairman and chief executive officer. “We first offer our current associates the opportunity to work extra hours over the holidays, then supplement our ongoing workforce with seasonal hires. This enhanced staffing allows us to provide additional help to customers, whether they are shopping in stores or online.”

Seasonal associates at Macy’s and Bloomingdale’s serve customers on the selling floor, work in store operations positions, interact with customers via call centers, and staff the distribution and fulfillment centers that coordinate shipments to stores and directly to customers who buy online or via mobile. Macy’s, Inc. is one of America’s largest online retailers.

Macy’s, Inc.’s 2015 seasonal hiring plan includes the following:

  • Approximately 12,000 of the 85,000 total seasonal positions will be based in direct-to-consumer fulfillment facilities that support sales generated by the company’s omnichannel business strategy. These positions are located in megacenters in Goodyear, AZ; Cheshire, CT; Tulsa, OK; Portland, TN, and Martinsburg, WV, and well as in product-specific fulfillment centers in Sacramento, CA, Stone Mountain, GA, Secaucus, NJ, and Joppa, MD.
  • About 1,600 associates will be hired to interact with customers via telephone, email and online chat at customer service centers in Mason, Ohio; Clearwater, FL; Tempe, AZ; and St. Louis, MO.
  • More than 1,000 persons will be hired across the country to support the 88th annual Macy’s Thanksgiving Day Parade, Santalands and other iconic holiday events.

“These seasonal positions represent much-needed jobs for America, and they fill an important niche in the employment spectrum. Especially at the holidays, we employ students working during break to help pay tuition, retirees seeking to remain active and individuals from many walks of life wanting to supplement their income. We are proud to offer them this opportunity to work in a fun, fast-paced and respectful environment,” Lundgren said.

Most seasonal positions are part-time, often with flexibility to fit the availability of the individuals hired. Many positions require the applicant to work evenings, weekends or overnight. In some cases, temporary seasonal associates are offered open year-round positions based on their skills and performance over the holiday season.

Applications for seasonal positions at Macy’s and Bloomingdale’s are being accepted at www.macysJOBS.com and www.bloomingdalesJOBS.com. Candidates who submit applications online will receive a response via email. Hiring for store sales positions will begin in mid-October. The company has already begun hiring for sales support positions, such as in distribution centers, call centers and store receiving.

“We have many examples of associates who started with us in temporary seasonal positions and stayed to enjoy a long and fulfilling career with our company. Seasonal employment is often an opportunity to get to know potential future employees and to identify talent that we can recruit as needs arise,” Lundgren said. “The holidays are a magical time of year, and helping customers select gifts from Macy’s and Bloomingdale’s is a special experience that generations of associates have enjoyed and found rewarding.”

Macy’s, Inc. employs about 166,900 associates on a year-round basis.

http://pressroom.macysinc.com/press.aspx?catid=0&pcatid=0&mkid=360&pid=17200

Toys ‘R’ Us Hiring Fewer Seasonal Workers, Target And Walmart Holding Steady. Will Service Suffer?

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The all-important holiday season is bearing down upon us. In just 10 short weeks, people all around the United States will be sitting around their Thanksgiving tables, in their living rooms watching football, scrolling through their tablets for bargains or waiting on lines at physical stores to buy the deals of the day.

In preparation for that holiday season, retailers traditionally staff up. They bring in seasonal workers to accommodate the rush, help with customers and re-stock shelves. This tends to happen over the month of October, so retailers have support to receive new merchandise, prepare signage and shelves, and be ready to help customers.

This morning, RetailWire published a piece on planned temporary staffing levels (Full disclosure: I am a RetailWire “brain trust” panelist, which means I contribute to its commentary often).

In the piece, we learned that Target is keeping temporary staffing levels consistent with last year – hiring 70,000 seasonal employees. For its part, Toys ‘R’ Us is actually reducing temporary staff from last year’s level, from 45,000 in 2014 to 40,000 this year.

Separately, it was reported that Walmart will keep seasonal hiring consistent with last year’s numbers as well – staying constant at 60,000 temporary workers.

All the companies mentioned in the piece said they were going to give their permanent workers more hours to take up the slack as well as giving more hours to the workers they do hire.

So this begs the question: will service levels remain the same, improve, or decline? I believe we’ll see a mixed bag. There are some real plusses to managing the workforce this way, and a couple of definite minuses.

First let’s look at the plusses.

Retailers are more willing to increase base pay of their existing workers than ever before. In fact, my company has data (free registration required) that indicates those whose year-over-year comparable sales – a key retail metric – outperform their peers have increased the ratio of payroll to sales in their companies. That means their payroll is growing at a faster rate than their sales are, and it drives even larger increases in sales.

What they’re not so willing to do is train them. In the same report I cited above, we found that 42% of retailers spend less than 10 hours PER YEAR training new in-store employees. The figure is even sadder for existing in-store employees – 59% of retailers spend less than 10 hours per year training them.

In that context, it makes sense to hire fewer new associates, especially if they’re not going to stay around. Better to save those few hours of payroll for other things.

Theoretically, service levels should remain the same. Knowledgeable store employees can provide far better service than those we’ve come to think of as “warm bodies” on the selling floor.

If those are the plusses, what are the minuses? Quite simply, it’s all about burnout.

Not all tasks in stores are about helping customers. Especially around the holiday season, there’s a tremendous amount of work that can only be called “thankless.” The commonly used term for the task is “recovery.” That’s what happens at the end of the selling day, after the doors have closed. At that time all the items that have been moved hither and yon around the store, onto floors and into dressing rooms and who knows where else have to be returned to their rightful locations. Customers expect to see clean, orderly stores when they arrive. The only time to make that happen is after hours.

Smart retailers will give the majority of these tasks to their seasonal workforce, but people are also needed to direct and supervise them. If those same workers have been working hard all day taking care of customers and doing cursory clean-up on the floor, they’re going to be tired. And that’s the risk retailers are running.

Tired workers are cranky workers. And cranky workers generally don’t provide the kind of service shoppers expect.

I don’t agree with the retail observer in RetailWire who said “Changes to the way consumers shop are making it possible for stores to meet increased demand with fewer extra workers.” In fact, I think just the opposite is true: changes to the education level of consumers make it impossible for retailers to meet demand without a strong staff of educated workers.

Retailers are taking the gamble that a well-trained workforce is better than a poorly trained one. They hope that just like workers are willing to take Thanksgiving Day shifts, staff might appreciate the extra money from longer hours in the run-up to the Christmas holiday. Will they succeed? A season is not the same as a day.

It’s a strategy that’s not without risk…and the sheer volume of consumer shopping choices raises the stakes. We’ll have to wait and see what we hear from exit interviews and how chain sales results pan out.

http://www.forbes.com/sites/paularosenblum/2015/09/17/toys-r-us-hiring-fewer-seasonal-workers-target-and-walmart-holding-steady-will-service-suffer/?utm_source=followingimmediate&utm_medium=email&utm_campaign=20150917

Why Donald Trump is Wrong About Macy’s CEO Pay

Donald Trump, president and chief executive officer of Trump Organization Inc. and 2016 Republican presidential candidate, during an interview on Bloomberg Television's "With All Due Respect" at the Trump Bar of the Trump Tower in New York, U.S., on Wednesday, Aug. 26, 2015. Trump said that he agrees the carried interest tax "loophole" should be eliminated and that it is "tremendous burden" on country's finances. Photographer: Michael Nagle/Bloomberg via Getty Images

The Donald has a new target.

Move over Fox News host Megyn Kelly: Donald Trump has a new target.

Macy’s M -1.19% CEO Terry Lundgren is the GOP presidential front-runner’s new punching bag.

In an interview over the weekend with CBS’s “Face the Nation” host John Dickerson, the Trump was asked about CEO pay – which Dickerson said is, on average, 350 times larger than the average worker’s compensation – and how that plays into inequality.

Trump responded by pointing out that CEOs stack their boards with allies that won’t stand in the way of high pay. He specifically called out one company: department store operator Macy’s. He went on to say that CEOs are making “enormous amounts of money and it is a complete joke.” A Macy’s representative wasn’t immediately available to comment on Trump’s statements.

It isn’t exactly a surprise that Lundgren generated Trump’s ire. Macy’s enraged Trump earlier this year when it announced it would phase out its Trump line of menswear after the Republican presidential candidate made derogatory comments about Mexican immigrants.

Trump’s attacks on Lundgren’s compensation, however, are completely unfounded.

Most of the compensation that Macy’s grants senior management is performance based and that means the company’s board, no matter how friendly it is to Lundgren, doesn’t have a direct hand in how much the executives are compensated.

For Lundgren, 87% of total direct compensation is through incentives that are tied to changes in stock price and other pre-determined performance objectives. The targets focus on sales, earnings before interest and taxes, and cash flow (roughly half is tied to Macy’s earnings performance).

Lundgren, CEO at Macy’s for 12 years, is certainly well paid. His total compensation totaled $16.5 million in fiscal 2014. But just $1.6 million of that was in salary (roughly flat with the prior two years). Most of the compensation was tied to stock and option awards.

Macy’s has performed very well under his watch, generating consistent gains in sales and profits. The top line has increased from $25 billion in 2010 to $28.1 billion last year, while adjusted earnings grew from $2.39 billion to $2.89 billion over the same period.

Macy’s stock has also performed well over the past several years, vastly outperforming the benchmark Standard & Poor’s 500 index, and the S&P retail index. A $100 investment in Macy’s at the end of January 2010 would be worth north of $400 five years later (including the reinvestment of dividends). Over that same period, the S&P 500 and retail index only grew to around $200 each.

To be fair, Macy’s is currently underperforming: Shares are off about 12% so far this year, lagging the S&P 500. Macy’s generated headlines recently when it announced plans to close 40 stores. But that more muted performance won’t be reflected into executive compensation until next year.

http://fortune.com/2015/09/14/trump-macys-ceo-pay/

Thursday Boot Company

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My MBA classmate brought to my attention this company out of New York City. I took a look at their website and watched their Kickstarter video. They took a workman’s boot and mixed it with a trendy, fashionable boot. What they came up with is a niche in a market. A space where others have not been, at this point in time. Entrepreneurship is intriguing and I hope this company makes it far in business.

http://thursdayboots.com/

Jos. A Bank Scaled Nack on the Main Reason People Shop There, and Sales Are Tanking

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Jos. A Bank has been scaling back on its massive discounts, and now sales are tanking.

The retailer’s “buy-one, get-several-free” deals on men’s suits, sport coats, sweaters, and more helped make Jos. A Bank a household name.

But Men’s Wearhouse, which acquired Jos. A Bank last year, recently began phasing out the promotions, saying they were no longer sustainable.

Jos. A Bank’s same-store sales fell 9.4% in the second quarter, compared to a 1% increase a year earlier.

Analysts say fewer promotions are largely to blame for the drop.

Jos. A Bank’s promotions ran so frequently that they became the butt of late-night TV jokes. But customers came to expect the deals, according to Neil Saunders, CEO of Conlumino, a retail-consulting firm.

“Moderating promotional activity is extremely difficult for Jos A. Bank, which has come to rely on highly generous offers (such as buy one, get three free) in order to drive customer traffic and [spending],” Saunders wrote in a recent research note.

The fact that Jos. A Bank has to rely on such drastic measures to attract customers is a clear sign that the brand is in need of a refresh, Saunders wrote.

To improve its appeal, Men’s Wearhouse has been introducing new clothing and shoes that are designed to attract younger customers to Jos. A Bank stores.

“It’s this focus on newness that will give us the best shot at winning a larger share of closet with existing customers and expanding our reach to new and younger customers,” Men’s Wearhouse CEO Doug Ewert said on an earnings call Wednesday.

“Bottom line: We need to give customers new reasons to shop at Joseph Bank and [give] our stores more ammunition to grow their business.”

Saunders says younger customers won’t save Jos. A Bank, however.

“Introducing Men’s Wearhouse product into Jos A. Bank stores is not the solution, especially as the audience for the latter is older and more conservative than the former,” he wrote.

Saunders said Jos. A Bank “will remain problematic” for Men’s Wearhouse going forward.

But Jos. A Bank won’t be returning to the “buy-one, get-seven-free” model any time soon.

“We know most men don’t want to buy suits four at a time,” Ewert said on the call Wednesday. “These promotional offers are not working for our customers, and they are not working for us.”

http://www.businessinsider.com/jos-a-bank-scaled-back-on-the-main-reason-people-shop-there-and-sales-are-tanking-2015-9

Investors Fret as Macy’s Launches Growth Ventures

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Macy’s is one of Cincinnati’s hardest-hit stocks after a month of market volatility, with shares down a bruising 20% from the all-time high it hit in mid-July.

The tumble snaps an almost seven-year winning streak as the Cincinnati-based retailer deftly navigated the Great Recession and its lingering aftermath that dragged down so many competitors.

But 2015 has proved to be choppy for Macy’s as it explored opportunities to take its growth to new heights.

Early this year, Macy’s bought a beauty and spa retailer. Then in May it announced the launch of an off-price concept called Macy’s Backstage. Last month it announced a joint venture to expand e-commerce into China.

Despite all the new initiatives, Macy’s delivered back-to-back first and second quarterly profit results that disappointed Wall Street. Also, during a summer that made Macy’s sweat, an activist investor loudly suggested the retailer consider selling or spinning off its real estate assets.

“Growing sales is where it all starts — if you can’t increase the top line, ultimately you won’t grow profits,” said Terry Kelly, principal with Bartlett & Co.

Last week, Macy’s opened the first four off-price stores in New York City. The retailer says it will open another two this year, then ramp up the number of stores in 2016.

Macy’s Backstage is shaping up to be a command performance as analysts eagerly await results.

What appears to have shaken investors is its growth prospects, which Macy’s started 2015 planning to address head-on.

In February, executives talked about the beginning of a “third phase” for Macy’s as it disclosed annual results for the 2014 fiscal year that ended Jan. 31.

The first two phases were: first, in 2005 when Macy’s doubled in size after buying out its largest rival, May Department Stores and second, in 2008 when Macy’s refined its integration strategy to boost stores performance and profitability.

Until this year, Macy’s had outperformed by maximizing its profitability, if not its sales. In 2014, Macy’s netted a $1.5 billion profit on $28.1 billion in sales, compared with the $995 million profit in 2007 when it did $27 billion in sales.

Macy’s latest venture to grow its overall sales, Macy’s Backstage, moves the retailer into off-price retailing, a faster-growing category populated by the likes of TJ Maxx and Ross Stores. Analysts note Macy’s rival Nordstrom has found renewed growth with its off-price chain, Nordstrom Rack, which has become a $3.2 billion chain itself.

Analysts say Macy’s Backstage could help groom the next generation of Macy’s shoppers with an appealing mix of less expensive merchandise. But the trick will be to not unwittingly encourage existing Macy’s customers to trade down.

“It’s a no-brainer for them: off-price is the fastest growing segment of the apparel industry, they need to be in,” said Howard Davidowitz, chairman of New York retail consulting firm Davidowitz & Associates. “TJ Maxx is the most successful apparel retailer of the last decade bar none.”

Davidowitz said off-price concepts have been the growth engines of rivals Saks and Nordstrom.

While Macy’s is getting into the segment later than the rivals, Davidowitz noted Macy’s existing network of suppliers should make it easier for the company to negotiate special lines of apparel for Backstage.

Meanwhile, Macy’s is also pursuing expansion of the Bluemercury specialty beauty and spa chain it bought in February for $200 million. The retailer says it will open another 10 free-standing stores by the end of the year, which will expand the total store count to 76. Macy’s will also open four Bluemercury stores within Macy’s locations by the busy holiday season as well as cross-sell its merchandise on macys.com.

Even as Macy’s presses ahead with constructing off-price and beauty stores, the retailer disclosed in August it is also hired real estate advisers to “intensely study its real estate portfolio to determine where opportunities exist.”

The examination came a month after a new Macy’s investor, hedge fund manager Jeffrey Smith, loudly suggested the retailer split off its real estate holdings into a separate company and then rent its properties from the new business. Smith’s Starboard Value bought 2.9 million shares or 0.8% of Macy’s in the spring, government disclosures show.

The theory behind such a move is it would be a bonanza gain for Macy’s shareholders and the retailer would free up money that’s tied up in real estate. Macy’s officials have resisted the move, saying there are advantages to owning stores and that each store is different.

But last month, the company also announced a deal to redevelop its Brooklyn store and sell half of its floors for $270 million to an office developer.

Macy’s sagging quarterly results and stock performance ironically come as the U.S. economy appears to be picking up steam.

Growing jobs and lower gas prices mean more discretionary income for American shoppers, normally a strong sign for consumer stocks such as Macy’s.

Still, Andy Stout, managing director of investments at Simply Money in Symmes Township, noted a hefty chunk of the strong 3.7% increase in U.S. gross domestic product came from inventory building — businesses restocking their warehouses in anticipation of more consumer spending.

“People don’t believe gas prices are going to stay down yet. They’re not spending their gas dividend,” Stout said. “Prices are going to have to stay down for a few more months before people change their habits.”

http://www.usatoday.com/story/money/business/2015/09/06/investors-fret-macys-launches-growth-ventures/71816760/

Will Backstage Save Macy’s?

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Macy’s M -1.51% debuted its new discount concept called Backstage last week, offering up a sneak peak of the department store chain’s off-price format. Is this a case of too little too late, or the end of the era?

Perhaps a little of both.

Macy’s Backstage is a discount outlet much like Nordstrom’s JWN -1.39%Rack, Off Fifth by Saks Fifth Ave and Neiman Marcus’ Last Call. It’s positioned to compete with off-price chains Kohl’s KSS -2.00%, Marshall’s and T.J. Maxx , retailers that continue to claim a growing portion of shopper’s apparel and home dollars.

It’s an edited down selection of apparel discounted from Macy’s department stores with the addition of some new names and merchandise. There are shopping carts and big dressing rooms with charging stations, something that should appeal to  younger shoppers, the very ones Macy’s has been courting with its marketing and mobile programs.

Making Macy’s cool with Millennials has been a difficult task for the retailer, something management openly acknowledges. Off-price retailers are popular with younger, value-oriented shoppers. They like a bargain and enjoy the treasure hunt-like experience.

Many have asked what took Macy’s so long to come up with the concept. Backstage could very well be too late, as fellow Forbes contributor Barbara Thau has pointed out.

But it also could be the idea that finally saves Macy’s from a doomed future as a mid-priced department store tied to the dying mid-priced mall.

At 30,000 sq. feet, the store is small enough to put in modern shopping centers alongside The Rack, Off Fifth and Marshall’s. It frees the retailer from the regional mall, and puts it right in the parking lot where its shoppers spend much of their time.

Macy’s has spent too much time trying to be upscale, and outside of the first few floors of the Herald Square flagship store in Manhattan, it’s an attempt that is sorely misplaced. Neiman Marcus and Nordstrom are better luxury retailers and the Macy’s-owned Bloomingdales banner is better suited to the task.

So why did it take Macy’s so long to come up with the concept? In many ways, management had a lot on its plate — absorbing acquisitions and creating the first truly national department store brand. So much of Macy’s operations were outdated that getting its existing house in order has been the priority.

And in that regard, Macy’s has done remarkably well, but improved performance-based store remodels, new brands and mobile marketing campaigns is nearing its end. Macy’s needs something more dramatic.

Hello Backstage.

Macy’s is testing these stores in the New York Metro area, not necessarily the best test for what plays in the rest of the country. It will have six in total there by the end of the year. But I suspect Macy’s has a pretty good idea as to how well these will translate to other markets. It’s already a time tested and very successful retail concept. One that should provide Macy’s with a formula that could save it from an otherwise dismal future tied to large, mall-based stores.

http://www.forbes.com/sites/lauraheller/2015/08/31/will-backstage-save-macys/

Back To School Roundup: Amazon Beats Walmart On Deals, With Target More Pricey

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The beginning of September is a frenzied time in retail aisles, with the last of the back-to-school deals fighting for space with Halloween costumes and — soon enough — holiday paraphernalia.

Each year, more parents turn to online shopping for their last-minute needs for the new school year, looking for great deals and fast shipping on stationery, clothes, shoes and electronics.

This year, e-commerce consultancy Profitero examined online prices for a white paper on shopping trends and found that Amazon beat out two if its biggest competitors, Walmart and Target TGT +2.60%, for back-to-school deals.

Profitero examined 3,849 of the exact same products with identical brands and barcodes across Amazon, Walmart and Target’s e-commerce sites on the same date (August 18th, around the annual peak for these purchases).

The company found that Amazon’s prices were a fraction lower — 1% — than Walmart’s. Target’s prices, meanwhile, were 25% higher then Walmart’s overall.

Profitero’s analysis found that 91% of the top-selling office supplies on these e-commerce sites were eligible for Amazon’s Prime membership program, which includes free shipping for a $99 annual fee.

Of the best-sellers across all three sites, shoppers chose household-name brands to fill their kids’ pencil cases: Scotch, Expo and Sharpie were the top-selling office products.

In the computer and accessories category, Amazon’s electronics ranked #1; Profitero found that the e-tailer’s Amazon Fire tablets have been hugely popular this back-to-school season. PC company Asus and gadget favoriteApple AAPL +4.46% rounded out the top three.

As for kids’ apparel, a brand the fashion-forward love to hate was the best-seller for both boys’ and girls’ shoes: Crocs.

The hardy plastic clogs have had something of a resurgence since little Prince George was photographed wearing them in June. Look for the company to feature on back-to-school shopping lists for years to come.

http://www.forbes.com/sites/clareoconnor/2015/09/02/back-to-school-roundup-amazon-beat-walmart-on-deals-with-target-more-pricey/?utm_source=followingimmediate&utm_medium=email&utm_campaign=20150902

Walmart Pledges $25MM On Katrina Anniversary But The Region Needs Stores

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The anniversary of Hurricane Katrina is cause for reflection. The disaster — both the natural and man-made ones — continues to impact the gulf coast. Charitable efforts continue — Walmart recently made a large monetary pledge — but the real charity may be opening stores in areas sill under-served by retail and in desperate need of goods and services.

As Hurricane Katrina approached the gulf coast, retailers were among the earliest making preparations and strategizing relief. Walmart arrived in the effected area before FEMA, and it wasn’t alone. Notably, Home Depot and Lowe’s arrived with building materials, generators, and other items critical to first survival, and later rebuilding. Electronics stores and auto supply outlets made equipment available and all worked tirelessly to ensure the safety of their employees.

But it was Walmart in particular, that got called out for the efficiency and speed with which supplies made it to effected areas. The retailer had established an emergency operations center at its Bentonville, Arkansas headquarters and used it to plan relief efforts.

Retailers during Katrina functioned far more efficiently than municipalities. They had stores and employees to protect and took precautions that preserved their investments. Then they went further.

Many companies empowered local employees to otherwise unusual things. CVS permitted a loss prevention coordinator to set up a mobile pharmacy to serve evacuees from New Orleans and filled roughly 20,000 prescriptions from a temporary site inside the Houston Astrodome, according to Loss Prevention Magazine.

There have been social media posts regarding these retail efforts as people note the 10 year anniversary of Katrina, all thankful and grateful to these companies for either treating them right as employees or for the much needed goods supplied.

In all, Walmart raised $20 million in cash, donated 1,500 truckloads of merchandise and enough food for 100,000 meals, the Wall Street Journalreported in 2005. It also promised a job to all of its displaced workers.

While Walmart wasn’t alone in these efforts, its size, advanced technologyand data centers allowed to respond faster and bigger than any other retailer. It’s also worth noting that Walmart was quick to respond to the World Trade Center disaster on 9/11. One reporter friend recently recalled the sight of Walmart trucks heading into New York City as the bridges and tunnels were clogged with those heading out. Walmart had no stores there at the time, it still doesn’t, but it sent supplies in to help relief workers.

Retail trade associations have been deeply involved in emergency response efforts. The Retail Industry Leaders Association and the National Retail Federation have members that sit on the Department of Homeland Security’s council. And it’s not just about disaster response, but company’s advanced data collection and analytics capabilities often put its predictive and planning capabilities ahead of the government’s.

For all these successes, there have been quite a few ways in which retail has failed in the aftermath of Katrina. Notably, many of these stores never re-opened in some of the most devastated areas. There are good business reasons for this of course, the lower population can’t support big box stores and operating at a loss as a customer service isn’t much of an option. Big businesses aren’t charities, but can be charitable.

Walmart last week pledged $25 million over five years to support organizations in disaster recovery and resiliency efforts worldwide. Part of this money is earmarked for grants to select local nonprofits in the U.S. Gulf Coast region.

Here’s a thought: What about pledging to open locations or aid small independent retailers in doing so?

New Orleans has recovered much in these 10 years, but it’s still very much  work in progress. The poorest areas like the hard-hit Lower Ninth Ward are still suffering and the lack of retail has hindered the rebuild and return of residents.

What if national retail chains opened some of the newly developed small format stores in these underpopulated areas? What if grants were made available to small businesses? Could a company the size of Walmart or Target let an independent operator tap into its purchasing power or distribution system, to get goods to markets too small to warrant a bigger box?

I don’t have the answer to these questions, but it’s hard to imagine that an organization big enough to achieve first responder status in a national emergency couldn’t figure out how to seed a different kind of recovery, the kind that brings people back, feeds, clothes and nurtures them with the goods and services that only retail can provide.

http://www.forbes.com/sites/lauraheller/2015/08/30/walmart-pledges-25mm-on-katrina-anniversary-but-the-region-needs-stores/?utm_source=followingimmediate&utm_medium=email&utm_campaign=20150830

Macy’s Launches Personal Stylist Shopping Service

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The retail giant is set to launch its new stylist service My Stylist@Macy’s this fall, complete with complimentary personal shopping and the ability to make in-store appointments online.

In a company release Wednesday (Aug. 26), Macy’s said its free service will be available at 135 select stores nationwide, with the goal of helping shoppers find the perfect items for themselves, as well as guiding customers in selecting gifts for family and friends.

“We are ecstatic to bring this unique shopping experience to our customers,” Susan Bertelsen, Macy’s group vice president of My Stylist@Macy’s and Wedding & Gift Registry, said in a company statement. “Macy’s prides itself on offering the best range of fashion and accessories, as well as gifts for loved ones. With My Stylist@Macy’s, we will bring this expertise to the customer on a more personal level, and help ensure that they walk away with exactly what they need, from every day to life’s biggest moments.”

The launch of My Stylist@Macy’s is the company’s latest move to continue enhancing the shopping experiences of its in-store consumers while also fighting against the aggressive push many of its eCommerce rivals are making into the retail sector.

Last week the retailer announced plans to upgrade its fitting rooms in select stores with high-tech gadgets in order to build upon one of the few advantages brick-and-mortar retailers have over their eCommerce-only counterparts.

Macy’s digitally revamped dressing rooms will use technology such as smartphones and tablets to enhance the customers’ experiences.

According to Bloomberg, Macy’s is piloting these new fitting rooms in the women’s swimsuit and athletic department at a store in Manhattan Beach, California, where customers can browse products displayed on mannequins and use a Macy’s app on their mobile device to have a particular item delivered to a dressing room in their selected size.

Once in the fitting room, customers can request additional sizes and other items using the same mobile app. The goal is to have customers spending more time trying on clothes and less time rummaging through racks.

Boosting the in-store customer shopping experience with new technologies and services may be Macy’s best bet in its ongoing competition with eCommerce giant Amazon.

A recent prediction from analysts at financial services firm Cowen foresees Amazon becoming the No. 1 U.S. apparel retailer by 2017, “comfortably passing” Macy’s for the top spot.

The team of Cowen analysts, led by John Blackledge, said it estimated Amazon’s U.S. retail apparel gross merchandise value will rise from $16 billion in 2015 to $52 billion in 2020, with the company’s U.S. market share increasing to 14 percent, up from 5 percent.

http://www.pymnts.com/news/2015/macys-launches-personal-stylist-shopping-service/#.VeM9B_ZVikp

Gap to End ‘On-Call’ Shifts For Workers

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Apparel retailer Gap Inc said it would end on-call shifts at all of its stores and improve scheduling policies to provide employees with at least 10-14 days’ notice.

The decision follows an inquiry by New York State attorney general Eric Schneiderman’s office into the legality of on-call shifts at 13 retailers, including Gap, Target Corp, JC Penney Co Inc, Abercrombie & Fitch Co and TJX Cos Inc.

On-call shifts require workers to be on call for shifts that may be canceled with little notice. The system allows retailers to adjust staffing based on store traffic forecasts made by scheduling software. Companies can then reduce over-staffing and under-staffing.

Each of Gap’s five brands were aligned to phase out on-call shifts by the end of September and had committed to phase in the new schedules by early 2016, Gap spokeswoman Laura Wilkinson said in an email.

When Schneiderman began the inquiry in April he said on-call shifts might violate New York law which calls for employees to be paid for at least four hours at the basic minimum hourly wage for any scheduled shift they report for.

“I commend Gap for taking an important step to make their employees’ schedules fairer and more predictable,” Schneiderman said in a statement on Wednesday, which made no further comment on the findings of the inquiry. (on.ny.gov/1LBM75a)

Abercrombie & Fitch said this month that it would end the practice for all workers paid by the hour, while lingerie retailer Victoria’s Secret, owned by L Brands Inc said in June it would end on-call shifts for workers.

http://uk.reuters.com/article/2015/08/26/gap-workers-idUKL4N1115MN20150826

6 Reasons Utah Is Taking the Tech World by Storm

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There are many areas in America–San Francisco, Boulder, Austin, New York, Washington DC–that are widely-known as hotbeds for technology and innovation. Utah isn’t as widely-recognized, but is quickly rising up the ranks as a focal point for tech and startups.

Here are some of the reasons the Beehive State is taking the tech world by storm:

1. Environment

In four of the last five years, Utah has been ranked by Forbes as the best state for business in America. There are many contributing factors–large talent pool, low cost of living, technology hub, job growth, favorable economic climate–and the time ahead is just as bright, with Forbes projecting Utah to continue as a pro-business powerhouse into the foreseeable future.

2. Quality Over Quantity

Utah is never going to lead the nation in quantity of venture-backed tech startups, that’s Silicon Valley’s area of expertise and it’s not changing anytime soon. Where Utah’s tech startups are making noise is in the quality of venture-backed deals, specifically the amount of money raised on a per-deal basis. 2014 saw two Utah hotbeds–the Provo-Orem area ($51.3M) and the Salt Lake-Ogden area ($17.2M)–rank in the top three nationally for dollar-per-deal average. Quality over quantity might be an overused statement, but it rings true here.

3. Homegrown Talent

While Utah has shown a propensity for attracting top out-of-staters, it’s the homegrown talent that really speaks to a bright future in the Beehive State. Nearly all of Utah’s biggest success stories, from Pluralsight to Vivint to InsideSales, follow similar paths–native Utahns starting a company, keeping it headquartered in Utah, and slowly but surely building an empire. And with two of the nation’s leading collegiate entrepreneur programs–The Rollins Center for Entrepreneurship & Technology at BYU and The Lassonde Entrepreneur Institute at University of Utah–continually feeding the talent pool, Utah can rest assured that even as times change, the talent remains the same.

4. Mormon Missionaries

I know this might sound a bit out of the norm, but think about it. Sending 18-19 year old guys & gals all over the world to teach anyone they come in contact with about religion!?! That is one of the hardest ‘sales’ job anyone can have. I am biased, as I served my mission in southern Brazil, learned to speak Portuguese, loved the Brazilian people, and essentially matured to become a fairly responsible adult.Mormon missions are completely voluntary, to be exact, you have to pay your own way to go. I saved up my entire childhood in order to pay for the 2 years abroad. But the reason I bring it up here, is because it made me 10x better at my interpersonal communication…aka sales skills.

Utah is full of bi-lingual, returned missionaries, who know how to work incredibly hard (you may have seen the missionaries knocking on doors in your neighborhood), they have high integrity, and they know how to communicate with people. This is why companies like Oracle, Thumbtack, EA Sports, Microsoft, Adobe, and so many more companies are building offices in Utah to take advantage of not only lower cost employees (it’s cheap to live in Utah), but also for the quality and experience of the talent pool.

5. Events, Events, Events.

There are numerous weekly events–Startup Grind, Startup Conversation Series, One Million Cups, Startup Weekend–designed to highlight the rising tide of the Utah tech and startup scene. A number of Utah startup heavyweights, including Domo, Instructure, and Qualtrics, have created multiple-day events to let others learn what it takes to create a successful business. There is even StartFEST, Utah’s largest grassroots startup festival that encompasses an entire week (Aug. 31-Sept. 5) in downtown Provo and features 100 speakers, events, workshops, and concerts. Just like there can’t be smoke without fire, there can’t be successful startup events without a successful startup community.

6. Utah Venture Capital

CB Insights wrote in October 2014: Don’t Sleep on Utah. With Funding Nearing $1B, the State Has Become a Venture Capital Hub.

There are fantastic Utah investors such as:

  1. Peterson Partners/Ventures
  2. Kickstart Seed Fund
  3. Peak Ventures
  4. Pelion Venture Partners
  5. Mercato Partners
  6. Signal Peak Ventures
  7. Zetta Venture Partners
  8. Subtraction Capital
  9. Epic Ventures
  10. Sorenson Capital
  11. Dolphin Capital Group
  12. Banyan Ventures
  13. Aries Capital Partners
  14. Clarke Capital Partners
  15. Crocker Ventures
  16. Alta Ventures
  17. Stoneway Capital

Some alternative investors or angel groups also include:

  1. InnoVentures Capital Partners
  2. University Venture Fund
  3. BYU Cougar Capital
  4. Campus Founders Fund
  5. Decathalon Capital Partners
  6. Salt Lake Life Science Angels
  7. Rock & Hammer Ventures
  8. REES Capital
  9. Utah Angels 2
  10. Plus550
  11. Park City Angels
  12. SLC Angels
  13. Lendio
  14. USTAR
  15. Utah Microenterprise Loan Fund
  16. BoomStartup

If I forgot to mention someone–please add it to the commentary below, so we can have a full list to be as relevant as possible. Also, what are other reasons you believe Utah is on the rise?

http://www.inc.com/bubba-page/6-reasons-utah-is-taking-the-tech-world-by-storm.html

Macy’s Forms Joint Venture to Test E-Commerce in China

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Macy’s, Inc. has announced it has formed a joint venture with Hong Kong-based Fung Retailing Limited to explore retailing in China.

The joint venture, which is 65 percent owned by Macy’s, will start with an e-commerce pilot. For Macy’s, the joint venture is expected to develop significant new lessons on customer preferences and buying patterns in China.

Under the joint venture, Macy’s plans to begin selling in China in late 2015 through an e-commerce presence on Alibaba Group’s Tmall Global, a marketplace that connects overseas branded retailers to Chinese consumers. To be based in Hong Kong and called Macy’s China Limited, the joint venture will curate a Macy’s online merchandise assortment especially for Chinese customers and fulfill Tmall Global orders from Hong Kong through local logistics channels, including LF Logistics, an affiliate of Fung Retailing.

“By making Macy’s accessible in China, we have an opportunity to deepen our relationship with domestic and international customers and to grow sales said Terry J. Lundgren, chairman and chief executive officer of Macy’s, Inc. “We have been closely following the development of the Chinese marketplace for many years and have learned that success requires that we have the right partners to help us navigate the unique needs and characteristics of consumers in China.”

“We believe that, through the joint venture, Macy’s online presence on Tmall Global will give us insight that will serve us well in evaluating future international initiatives,” added Peter Sachse, Macy’s, Inc. chief innovation and business development officer.

“The potential for growth is significant,” said Sabrina Fung, Fung Retailing’s executive director. “While the Chinese online consumer is already one of the savviest in the world, there are untapped spaces to fill. There is demand for the quality and variety of power brands and authentic products associated with the world-famous name of Macy’s.”

Macy’s China Limited will be led by Kent Anderson, who will serve as managing director. Anderson is a veteran Macy’s, Inc. executive and long-time president of macys.com. Sabrina Fung will represent Fung Retailing’s interest on the board of the joint venture company.

“As is always the case with Macy’s, we will test and learn as we progress and grow our business in China. We will take one step at a time,” Sachse said. “We intend to be a long-term player in this region of the world, and that requires we understand the customer so we can deliver an online shopping experience that Chinese shoppers will appreciate, value, and love.”

Macy’s began selling overseas into China and about 100 other countries with an edited assortment on macys.com in 2011. These goods are shipped to international customers from the United States. In the upcoming e-commerce test, Macy’s China Limited will ship to Chinese customers from inventories in Hong Kong, which is expected to improve speed, flexibility and pricing for the customer.

No physical Macy’s stores are planned for China at this time, but may be considered in the future based on the company’s experience in its e-commerce pilot.

Macy’s China Limited is expected to invest approximately $25 million in the operations of the joint venture over the next 18 months, of which Macy’s, Inc. will fund 65 percent.

http://www.globaltrademag.com/global-trade-daily/news/macys-forms-joint-venture-to-test-e-commerce-in-china

Stores Are the New Black

The Grove Shopping Mall - Los AngelesTerry Lundgren, CEO of Macy’s, borrowed this quote during his opening remarks at the University of Arizona Global Retailing Conference in Tucson back in April, attributing it to NYU-Stern Marketing Professor Scott Galloway, who also happens to be one of the world’s experts in digital marketing.

Calling stores “the new black” is a nod to that old-fashioned expression referring to something that’s come into style. Simply said, it means they are not only not going to be replaced by e-commerce, they will thrive as the “in vogue” standard-bearer for retailing. In fact, even more dramatic than Galloway’s assertion that stores are now in vogue is his prediction that pure-play e-commerce is actually going away.

Bolder still, at a DLD event in Europe earlier this year, Galloway said, “E-commerce companies are either going to open stores or go out of business.” On the other hand, he also said, “(brick-and-mortar) retailers need to be excellent at digital or they will go out of business.” He went on to say, “I also believe that Amazon cannot survive as a pure-play retailer. Stores are the new black in the world of e-commerce. We’ve discovered these incredibly flexible robust warehouses called stores … retailers are not befuddled prey waiting around to be disrupted. They are in fact growing their e-commerce businesses.”

Wow. Amazon won’t survive as a pure-play? I think I’ve heard that somewhere before!

So, stores are here to stay, and of course I’ve been saying that for years. Forget about the panic among traditional retailers in the early 2000s over the fear of e-commerce decimating brick-and-mortar business. Fifteen years later e-commerce represents a paltry 7 percent of all retail sales, with the remaining 93 percent channeling through stores. However, the smart traditional retailers are changing, and changing in some pretty dramatic ways, if they want to be successful.

12533951The big change is that it’s not about online and off-line any more, it’s digical, (a mash-up of digital and physical), to use Galloway’s term, and yet another word for omnichannel, or allowing customers to shop how, when and where they want. And digital, while rapidly growing, is simply synergistic with physical stores.

Galloway also said that Amazon’s Achilles’ heel is its shipping costs, which are exploding 40 percent per year. “Over the last nine months those costs have gone up actually by more than 40 percent, which is not sustainable, not even for Amazon. It took in shipping fees of $3 billion, but spent $7 billion on transportation costs. Two-thirds of Christmas packages were brought to you free, up from one-third in 12 months. This is a race to the bottom. They’ve forced other retailers into free shipping. Click and collect: Order online, pick up in-store. Pretty boring but it’s a big trend, because it turns out that stores are great flexible warehouses.”

The New Rules Of Retail

“Shopping hasn’t changed. Consumers love shopping in stores, and retailers continue to focus on winning the war on traffic and conversion.” — Margo Georgiadis, president of the Americas for Google.

In fact, as reported many times here, the CEO of Walmart was quoted in The Wall Street Journal a year ago, making a declaration that Jeff Bezos should be very concerned about it at the very least, and shaking in his boots, as it potentially becomes his worst nightmare. The Walmart chief said, “…We don’t have 4,500 stores (referring to their total number in the U.S.), we have 4,500 distribution centers that also (double) as retail stores.”

Bezos should be shaking in those boots and opening physical stores sooner rather than later, because Walmart will crush Amazon once it puts its mind to doing so.

So, a decade after multiple dot-com bubbles have come and gone, the simple truth is that people love to shop in stores, and they’re not going to stop doing so. Furthermore, they can now shop online and pick up their purchases in the store (a.k.a., distribution center).

From “The War Is in the Store” to “The War Is Before the Store”

Regardless of Galloway’s credentials, the fact that Lundgren chose to endorse the statement is of particular significance, given the fact that Macy’s is considered by many experts to be the poster child of “all-line innovation” and omnichannel retailing. Last year, the retailer was the seventh-largest online retailer in the country, after Amazon, Apple, Walmart and others. Yet many people, even those in our industry, consider Macy’s a traditional department store. Macy’s was also named Mobile Retailer of the Year by Mobile Commerce Daily.

Lundgren’s endorsement not only signals his understanding of the store as a more important touchpoint than ever before—as the ultimate experience for customers—but also his recognition that while the “war” for the consumer’s purchase used to be waged primarily in the store, today the war begins on many different fronts just to get them to come to the store, to build traffic. And what used to be called “marketing 101” is now on the steroids of the Internet, smartphones, apps, social networks, big data and whatever new technology that popped up five minutes ago.

So for those of you who are cutting back on store budgets in order to invest in technology because you think that’s what will prepare your business for the next five years, let me tell you it’s not an either/or thing. It’s imperative to do both.

That’s a bummer, right? Spend millions on IT infrastructure and front-end systems and back-end systems, and on top of that, build out spectacular physical stores with analog and digital experiences that will knock customers’ socks off and make them loyal to your brand so that they’ll think of it first?

No fair, you say? Ha! I’m only getting started here.

Macy’s, for example, committed to enormous investments across both the online and offline platforms. It started when the recession hit with a major reorganization, transitioning its buying offices to 60 districts, moving all the merchandising people to New York, to be close to suppliers, and moving its Innovation Lab group to San Francisco, because that was the best place to compete for the Silicon Valley talent. Brilliant, no?

Macy’s invested in no fewer than 11 innovations last year, including Apple Pay, Mobile, Same Day Delivery, iBeacon, Image Search, RFID and more. There will be even more investment this year. They’re building fewer brick-and-mortar stores, and putting 150 percent of the savings into technology. They’ve found that by touching the customer through mobile, desktop and in-store, they can forge a more powerful relationship. The consumer who starts on her phone, then comes to the store, then tries on product, then goes back and looks on the desktop—spends 8 times more than the customer who experiences the brand through only one touchpoint.

Also speaking at the conference in Tuscon, Margo Georgiadis, president of the Americas for Google, and a former retail consultant at McKinsey, said, “Shopping hasn’t changed. Consumers love shopping in stores, and retailers continue to focus on winning the war on traffic and conversion.”

But the battleground is bloody. During the last two months of 2010, according to Google, retail traffic was 39 million in the U.S. Five years later, it was 18 million, almost half. Yet total retail sales grew from $641 billion to $737 billion in that period. So while consumers are making fewer trips to stores, once they get there, they spend more. Conversion rates are higher. Maybe in the past, a shopper would go on one reconnaissance mission for every actual buying trip. Today, lots of that recon work, or research, can be done online, resulting in a consumer who’s more ready to buy when she walks into the store.

People do 3 billion searches every day on Google. A full 20 percent of them, or 600 million, are shopping related. People are essentially walking around with every store, mall and brand in the world sitting comfortably in their pockets 24/7. Most of the buying will still happen in stores, but the shopping, browsing, evaluating and comparing steps are all moving online.

According to Healey Cypher, former head of innovation at eBay, 78 percent of consumers now practice webrooming, preshopping online before visiting the store. EBay’s research found that of consumers who went online pre-store and checked mobile or used some kind of interactive digital in-store, 86 percent of them converted, or bought something. And the lift to spend was a whopping 40 percent.

And the technology tools that retailers are using in-store to engage, delight and surprise consumers, and make the shopping experience neurologically addictive and one that they will seek out again and again, include digital mirrors and robotics to bring product to dressing rooms; interactive screens to see and order product; digital payment to cut down on waiting … and the list goes on and on.

Georgiadis said that to win the war for traffic before they come to the store there are three steps: 1) Own your “tribe” (know your customer) and build the entire value proposition around that customer’s dreams, 2) Commit to all-line—become seamless with respect to channels and touchpoints, and 3) Surprise and delight the customer. Deliver magic moments.

Surprise, Surprise: Millennials and Gen Y Prefer Stores

Clay Cowan, CMO at luxury off-price e-tailer Gilt Groupe, said that contrary to what most people think, online is not the preferred fashion channel for millennials or Gen Y. Their favorite way to shop is in mono-brand stores, where the experience, authenticity and storytelling of a brand come to life. But retailers must beware of this uber-sophisticated group of shoppers: “Gen Y is extremely price conscious. Having weathered a recession, they know how to game the system. They research a ton before they buy, and they’re very savvy.”

Cowan added that retailing has always been a social activity that people do with friends. Now, rather than literally going to stores with friends, the trend is that millennials’ pinning, liking, following, blogging or sharing their finds digitally is opening up all kinds of opportunities for retailers to engage with their consumers, and enabling consumers to engage with others in their networks, before, during and after the store. This is just another punctuation of the fact that the war is before the store.

And of course, adding to the importance of all the aforementioned points is the statistic projected by Forrester Research that by 2020 between 30 and 40 percent of total retail spending will be done by millennials.

A Final Note

At the end of the day, all that has been written about a “new black” is a static new standard or rule. It is all fluid and dynamic. Therefore, strategy and process always need to change because technology and the consumer are always changing.

As Terry Lundgren said: I’ve heard for many years that everyone’s going to kill the department stores, but
I feel better than ever…We’re not slowing down, we’re not stopping, the custom the same thing.”

And the war I’ve been using as a metaphor is also not just one war today. Indeed, the war is on two fronts: the war is before the store, and in the store. Do you think this is making our lives more complex, costly and anxiety ridden? You betcha!! But live with it. There is no option except to embrace all options.

http://therobinreport.com/stores-are-the-new-black/

Macy’s CEO Lundgren on Tight-Fisted Consumers

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There is good news and bad news when it comes to Americans’ balance sheets. The good news is we’re getting healthier because we’re saving more money, and the national savings rate is back up to 5%. That’s also the bad news, because we’re saving our money rather than spending it. That keeps the retail business limited and caps economic growth. We continue to see evidence that while things are getting better, this economy remains fragile as the once red-hot Chinese economy slows, and people here at home worry about their jobs and finding work. I caught up with one of the leaders in retailing, the CEO of Macy’s, to find out what’s happening. And while Terry Lundgren, has yet to see a real pickup in spending, he’s not waiting around for it. Instead, he’s expanding into China and growing his online business, waiting for some of that savings to pour back into the economy. Our interview follows, edited for length and clarity.

Q: What are you seeing right now in terms of the consumer?

A: The consumer is saving more aggressively than they have in the past. He or she is spending in certain categories like housing, home improvement and automobiles. They’re going out to restaurants. But it’s not adding up to dynamic growth for the U.S. GDP. So it’s actually pretty sluggish. And we’re not getting our share. So there’s not a lot of activity on the apparel, accessories, footwear side of the business. We’re benefiting when somebody buys a house — they often will buy furniture and mattresses and things of that nature. But we’re just not seeing them in the rest of the categories (in which) we had hoped they would be spending by now. Tourists are also not here because of the strong dollar making things expensive.

Q: A lot of people are also talking about these off-price competitors —  the cheaper outlet versions. Is that part of the industry taking market share?

A: Yes. The consumer has been trading toward these off-price alternatives, and we’re actually getting into that business at Macy’s for the first time. We’ve had Bloomingdale’s outlet stores in the past. We’re continuing to open more of them. But for the first time, we’re opening Macy’s Backstage Stores so that we can participate in this off-price, in some cases discontinued merchandise, from a prior season offering that some of these other stores are benefiting from.

Q: Gaso prices have been declining, putting more money in pockets. And we’re expecting them to put that money back into the economy. But they’re not. What’s holding people back?

A: People are saving more than they have in the past. And I think some of those big-ticket items are eating up not only their ability to spend, but their time. I do believe that they’ll circle back over time once they’ve got their house, their car, repaired their home, or put in a new patio, etc., and purhase more broadly in the discretionary category. This economy doesn’t work unless consumption is robust in a fairly broad way because it drives GDP growth. It’s two-thirds of the economy and it’s driven by consumption. And so for us to see jobs, and the productivity of those jobs, be robust, it has to be because consumption. But it has not been as strong as we would have expected it to be. Once they start spending again, that will create more jobs and put more money back into the economy.

Q: Do you think they’re worried about their medical care? Is that why they’re saving so much more money?

A: They have been spending more on health care. That’s one of the categories where you’re seeing consumer spending increase. And I suspect that that will continue to happen throughout the balance of the year.

Q: You lowered your guidance for the rest of the year. Are you expecting promotions and expenses to weigh on things going forward?

A: I lowered my sales guides because of our sale of our adjacent property to our Brooklyn store, and … because of the weakness that we’ve had in the first half of the year. I’m making sure we don’t buy inventory for a higher plan than what we can expect to sell through. And so those are the precautions we’re taking as we guide for the second half of the year.

Q: But should we expect some promotions and sales?

A: This last quarter I actually took a major promotion out of the June period, a friends and family event, and frankly, it hurt us. What you’ll see is a very similar calendar at least in the case of Macy’s and Bloomingdale’s in the second half of the season. So yes we’ll be as promotional as we were last year.

Q: Let me turn to the China story. You entered an agreement with Alibaba to bring a Macy’s to China consumers.

A: Yes, the Fung Retailing Group. it’s gonna be 65% owned by Macy’s, 35% owned by Fung Retailing Group. They have a tremendous amount of experience in China. They have 1,000 stores already in China, specialty stores and vast knowledge. And we’re gonna set up a business there that’s going to be an online business working with Alibaba and their online division. And we’ll launch this fall season.

Q: China is the story of the moment for markets and the global economy because people are worried that the economy there is actually slowing. Perhaps this is actually not the time to enter China?

A: I actually think, Maria, this is the best time to enter because if you’re already there and you’ve had the benefit of the last several years of growth, it’s a challenging time for you. I think this is a good time for businesses like mine that were not there, but actually can build from a lower base. And, without any question, that’s where the middle-class consumer of the future is going to reside.

Q: There has been a lot of intervention by the Central Bank there. At one point they closed and stopped trading in Shanghai because they wanted to stop the bleeding. Do you worry that there’s too much government intervention in China?

A: This is a moment in time that there’s a lot of chaos and turmoil. If you were in China as I was three years ago, and attending some of the meetings with the president and other governments leaders, you know that while there’s going to be rocky moments along the way … they really do believe in a 7-year plan. They’re going to make mistakes. We all are. And with a growing economy like they have, we’re complaining about the growth slowing down. But it’s still growing at a rate significantly faster than the U.S. economy.

Q: Let me ask you about brands because that’s one thing that’s very important to the Chinese are logos and brands. But recently people have been saying, “Look, you don’t want to show excess. You don’t wanna wear the logos.” I know Michael Kors and Ralph Lauren are two very popular brands sold at Macy’s. Do you see a weakness there?

A: Whenever you see Ralph Lauren results or Michael Kors’ or Calvin Klein’s results, you can assume that we’re not far off of what it is they’re reporting about their businesses because we’re the largest customer. And when any of these big brands slow down, that affects our business. But I would never count out brands like this. These brands have had such a history of performance not just with us, but around the world.

What we all have to do is excite the customer and find product that they don’t really have, but, in fact, do want. There’s going to be a point in time where they’re going to go to their closet and say, “You know what? I really do need something new here and fresh.”

Q: What’s the catalyst to get things moving again?

A: Customers have to feel better about their financial situation because of the savings rate, which is higher than it has been traditionally. If you go back in time, Americans have had savings rates at the zero level for many years. Now that range is up to about 5%. At some point they’re going to say, “We can afford to splurge again.”

I also think frankly that fashion has to stimulate some of that activity, and we haven’t had a great deal of new fashion cycles that demand to change your wardrobe. And finally, I think you’re starting to see some real growth again.

Q: Where does the growth come from at Macy’s?

A; We’ve made one acquisition in the last 10 years and that was Blue Mercury. We’re opening 10 more of those. We’re the seventh large Internet company in America. And so we clearly have an advantage in the online space in terms of competing with other pure play online retailers.

http://www.usatoday.com/story/money/2015/08/14/macys-ceo-lundgren-consumers-bartiromo-money/31716449/

Here’s Macy’s Plan to Revive its Slumping Sales, Profits

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Macy’s M -0.84% keeps skidding.

The department store chain on Wednesday reported itssecond quarter in a row of declining sales, and blamed everything from a drop in international tourism to shifting consumer spending priorities to a corporate re-organization earlier in the year that continues to distract executives.

Macy’s, which also owns the upscale Bloomingdale’s stores, said comparable sales fell 2.1% in the three months ended August 1- while Wall Street analysts were expecting them to rise 0.4%. And its profit fell 26% to $217 million. The poor showing led the retail to lower its full year forecast halfway into 2015, and now Macy’s expects total sales to slip 1% for the year, rather than increase by that amount.

It’s unusual to see Macy’s on the ropes. Coming out of the recession, it deftly outmaneuvered competitors like J.C. Penney JCP -0.97% and Kohl’s KSS -8.83% of years, thanks to earlier investments in e-commerce and those stores’ merchandising missteps. It also benefited from have a more middle-class customer, less squeezed by the poor economy.

But more recently, Macy’s has been struggling to keep that edge: in a symbolic turn of events, TJX Cos, TJX 1.44% the owner of T.J. Maxx and Marshalls which has been siphoning business from department stores for years, finally surpassed Macy’s in size in 2014. And despite Macy’s digital muscle, analysts still expect Amazon.com to surpass it in 2017 as the #1 seller of apparel in the U.S.

Let’s have a closer look at what ails Macy’s, and at the steps it’s taking to get back on track.

1) Shift in consumer spending away from categories like apparel and home furnishings to travel, entertainment and electronics:

Chief Financial Officer Karen Hoguet said Macy’s again struggled with these consumer spending patterns last quarter, a big problem for a retailer that gets virtually all its business in those categories. Of course that doesn’t explain why Macy’s fell short of expectations, given that it has been calling out these trends for a few quarters now.

“We see opportunities for generating more sales from our customers,” Hoguet told analysts on a conference call. “It is clearly getting harder. As I said, there’s a lot of competition for the dollar in categories other than what we sell.”

2) A drop in international tourism:

Macy’s gets about 5% of its revenue from international tourism, or $1.5 billion a year. The Manhattan flagships (including Bloomingdale’s) and stores in San Francisco and Chicago are a big draw for international tourists. Hoguet said that drop in tourism lowered its comparable sales by a percentage point. She shouldn’t expect any relief anytime soon between the weak euro and the Chinese yuan, which has been devalued for two days in row. That is especially true of Bloomingdale’s, which felt the pain of fewer tourists last quarter than Macy’s did.

3) Increasing competition:

Kohl’s and Penney are back on the upswing (we’ll know more this week whether that has continued, when both retailers reported their second-quarter earnings), and T.J. Maxx continues to grow, squeezing Macy’s in its traditional department store business.

Both Kohl’s and Penney have made huge strides in integrating their stores and e-commerce, narrowing their tech gap with Macy’s. What’s more, both Kohl’s and Penney have been upgrading their own stores brands, which generate half of sales and also are exclusive to them, meaning they have more pricing power and are an attraction when those items are a hit with shoppers. Macy’s gets about 25% of its sales from house brands.

4) Sluggish economy:

Unemployment might be a multi-year lows and the economy humming along, but that’s still not translating into robust business for Macy’s, or retailers in general. Last month, the National Retail Federation lowered its 2015retail spending forecast.

 

So how is Macy’s responding?

1) Expanding outside the United States

Unlike Penney, Kohl’s or Sears, Macy’s has a cachet abroad, and it will try to see if that can translate into a sales bonanza when it opens its first international store in 2018 in the UAE. Macy’s on Wednesday also announced the creation of China Limited, a joint venture with Chinese retailer Fung Retailing Limited to launch an online flagship store on Alibaba’s online shopping mall for brands, Tmall Global. This will be Macy’s second attempt at e-commerce in China.

2) Taking on T.J. Maxx head-on

Next month, Macy’s will open the first of its Backstage outlet/discount stores that are squarely aimed at winning back customers that have defected to rivals like T.J. Maxx, but also to keep pace with competitors like Nordstrom which are aggressively opening their own discount chains.

Macy’s CEO Terry Lundgren admitted in June that he wasopposed for years to the retailer taking the off-price plunge, and it remains to be seen whether the market needs a new entrant, even one with Macy’s pedigree.

3) Beefing up its e-commerce

Looking to remain an e-commerce leader, Macy’s is testing out same-day delivery in more cities now and keeps pushing its other tech initiatives like smart fitting rooms.

4) Expanding its Bluemercury beauty retail chain

Macy’s keep expanding the Bluemercury chain of beauty stores it bought last year, with a view to bringing in new products to its stores (and compete with Penney’s Sephora stores, along with Kohl’s improved beauty sections) but also benefiting from that brand’s popularity. It is adding 10 locations and will reach 76 in all by year-end.

5) Raising money from its real estate

Macy’s is under a ton of pressure from activist shareholders to raise billions of dollars from its real estate, including its iconic Manhattan store. While the company is studying it seriously, it did announce plans to sell its downtown Brooklyn store to real estate developer Tishman Speyer, but lease back a few floors.

With Macy’s core department store business in a long slump, it remains to be seen how much longer the retailer can resist investor entreaties to get cash from more such assets.

http://fortune.com/2015/08/12/macys-sales-decline/

Big Bucks: Retail’s Top Earners

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Retail management may be well-paid, but on average their compensation falls slightly below what top executives earn in other sectors.

Still, the WWD list of Retail’s Top 25 Highest Paid Executives from U.S. publicly traded firms reveals that from a pay perspective, life in the C-suite can be sweet.

The top 25 included chief executive officers, chairmen, presidents, and executive vice presidents who collectively earned $347 million in 2014, with the top 10 earners bringing in nearly $200 million in total. Sixteen of the top 25 executives earned more than $10 million last year. Taking the top spot was Carol Meyrowitz, ceo of The TJX Cos. Inc. with $28.7 million in total 2014 compensation. Brian Cornell, chairman and ceo of Target Corp., took the number-two spot with a close $28.2 million. And L Brands Inc.’s Les Wexner was third with earnings of $24.1 million.

J.C. Penney Co. Inc.’s Marvin Ellison, president and ceo-designee, was next on the list with total compensation of $19.6 million while Wal-Mart’s Gregory Foran, executive vice president, took the number five position with $19.5 million. Pay amounts and titles were for the most recent fiscal year reported to the Securities and Exchange Commission.

On average, the top 25 retail executives earned $13.9 million, which is below the national average of $16.3 million as tallied by the Economic Policy Institute, which notes that since 1978 ceo pay has risen “997 percent, a rise almost double stock market growth.”

Executive pay packages vary between retailers, but generally include equity, base pay and a performance payout. On that last note, shareholder value is the key metric. “Today’s executives are being measured more by the value they create for the company’s owners than by simply getting the job done,” said Tyler Ridgeway, director of human capital resources at Kreischer Miller.

And as economic conditions shift, so do the performance metrics. In a recent report and corporate survey from Meridian Compensation Partners LLC, Jerrold Rosema, consultant at the firm, said 60 percent of companies polled have already “set their annual incentive performance goals higher in 2015 than in 2014, indicating increased expectations as the broader economy continues its recovery.” Given current conditions of overall apparel spending, some companies may even lower performance goals. Either way, though, performance incentives are often much larger than base salaries.

TJX for example, sets a $1.5 million base salary for Meyrowitz — and the rest of the ceo’s $28.7 million pay package is incentive- and equity-based. The retailer also has different performance metrics for each of its retail brands. According to the company’s proxy filing, the long-term cash incentives divisional weighting for Marmaxx is 68.5 percent with a cumulative, three-year performance target of $6.9 billion in adjusted net earnings. The company’s other three brands have weightings of 10.5 percent each. In other words, if the retailer meets the earnings goals over the three-year period, Meyrowitz and the executive team are awarded their incentives.

“Adjusted pre-tax income over a multiyear period was considered by the [executive compensation committee] to be an appropriate metric to use as a basis for plan targets to motivate and reward long-term performance, as it is a core business metric used across our company to plan long-term growth, manage our divisions and evaluate our long-term performance,” TJX said in its proxy statement adding that the divisional weightings and targets “were challenging, but reasonably achievable and that using the weighted combination of performance of our main divisions helps to promote our team-based approach to achieving our goals.”

Another important trend in executive pay includes “say on pay,” which requires companies to allow shareholders to vote on executive compensation. The requirement was passed under the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act. Although there’s been little analysis on if or how “say on pay” exactly influences executive pay packages, one thing is clear: few companies fail to pass the measures. According to research from compensation consulting firm Semler Brossy Consulting Group, only about 3 percent of U.S. companies that had votes on “say on pay” failed to pass it.

Other noteworthy issues include the impact of mergers and acquisitions. At Men’s Wearhouse, for example, the compensation committee issued equity awards and a special bonus to executives in the fall of 2014 rather than during the normally scheduled “annual grant process in 2015,” the retailer noted in its proxy.

The company said the “accelerated issuance of equity awards and the special one-time cash bonus” to its top executives was done “in recognition of the outstanding efforts of senior management in connection with the successful conclusion of the Jos. A. Bank transaction.” As a result, Men’s Wearhouse ceo Douglas Ewert watched his total compensation package rise 167 percent.

Bottom line: Retail executive pay winners are those who deliver consistently strong profits as well as those who can navigate a successful merger. Increasing shareholder value is critical, and everything else is just chump change.

executivepay

http://wwd.com/retail-news/trends-analysis/retail-top-earning-executives-10195736/

$20 Million Remodel Coming to South Towne Center

South Towne Center redesign and renovation renderings.

SANDY — Starting next month, one of the south valley’s largest shopping centers will undergo a major renovation.

Managers of South Towne Center announced a $20 million, 18-month redesign project scheduled to get underway in a few weeks.

Beginning in August, the 1.3 million-square-foot shopping center will go through a significant overhaul that will include improvements to landscaping, lighting and the parking lot to accommodate a new off-ramp from northbound I-15 that will exit directly onto mall property, among other upgrades.

“We’re expanding our food court, we’re adding some outdoor seating, adding new entrances, just lightening and brightening everything,” explained Alicia Rutledge, marketing manager for South Towne Center.

The renovation will take place in stages, Rutledge said, and the center will remain open throughout the process. The project is expected to bring in new local and national retailers, and is slated for completion by fall of next year, she added.

Last November, the mall was purchased by a partnership between El Segundo, California-based Pacific Retail Capital Partners, along with Goldman Sachs and Silverpeak Real Estate Partners. Pacific Retail is an owner and manager of regional shopping centers nationwide, including Broadway Mall in Hicksville, New York; Colonie Center in Albany, New York; West Oaks Mall in Houston; Yorktown Center in Lombard, Illinois; and Queen Ka’Ahumanu Center in Kahului, Hawaii.

Located at 10450 S. State, South Towne Center includes a 966,000-square-foot, two-story indoor shopping mall with about 150 stores and restaurants, as well as an adjacent 312,000-square-foot outdoor retail property called Marketplace.

As one of Utah’s largest shopping centers, South Towne is anchored by Macy’s, J.C. Penney, Forever 21 and Dillard’s, while the adjacent Marketplace also includes retailers such as Target and Barnes & Noble.

Over the past few years, the Salt Lake Valley has seen City Creek Center built in downtown Salt Lake City, as well as a major overhaul and expansion of Fashion Place Mall in Murray. In the wake of those developments and in an effort to remain competitive, the company said the new project has been in the works for a while.

“This renovation will create a vibrant, contemporary, outdoor-inspired shopping experience with more entertainment and dining options to serve customers of all ages,” said Gary Karl, Pacific Retail Capital Partners executive vice president. “As South Towne Center enters its 30th year serving the Sandy community, it is the perfect time to enhance the customer experience.“

Though the center’s tenants generally welcome the redesign, some also expressed concerns about the yearslong trend in the declining number of shoppers visiting the property.

“I want to see how the mall is going to bring in more brand-name (tenants) into the mall,” said Tony Luu, owner of Fast Fix Jewelry and Watch Repair. “More (shopper) traffic; that’s what we need.”

Rutledge said management is aware of those concerns and is already in the process of addressing them.

“We’re in negotiations with a lot of different retailers, (and) we have a lot of things in the works,” she said. “We have great plans and a lot of exciting things coming.”

Announcements of new tenants could be on the horizon over the next several months, she said.

The South Towne Center redevelopment is part of The Cairns, Sandy’s 1,100-acre city center “mountain meets urban” project. A cairn is a man-made pile of stones indicating someone is headed in the right direction.

The project from 9000 South to 11400 South and I-15 to near State Street will connect mountain adventures with urban living, explained Sandy communications director Nicole Martin.

The Cairns will feature new apartments and condominiums, restaurants, office space and new retail space, in addition to the multimillion-dollar South Towne Center renovation, she added.

“It plays right into the ‘mountain meets urban’ concept of our overall city center,” Martin said. The environment elevates the mixed-use elements of office, retail and residential with the amenities expected of an active urban lifestyle, she said.

“The mall renovation is huge for Sandy city and for the state of Utah,” Martin said. “They will be creating a shopping experience that is unlike any other here in the state.”

http://www.ksl.com/?nid=148&sid=35413318

Macy’s, Target Ready Fresh Fashion Takes For BTS

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Amid predictions of more confident back-to-school shoppers, both Macy’s and Target are offering peeks at their fall marketing efforts. For Macy’s, the emphasis is on 1970s bohemian looks, denim-on-denim and plenty of “athleisure” offerings. And for Target, it’s chic comfort, served up by some of the web’s hottest young dance phenoms.

The National Retail Federation unveiled its back-to-school spending forecast, which predicts per-family spending will decline to $630.36, including electronics and apparel, down from $669.28 last year. And it forecasts total spending of almost $25 billion. (When back-to-college spending is included, the total is expected to reach $68 billion.)

But the decrease is more a result of last year’s splurges, the Washington D.C.-based trade group says, pointing out that consumer confidence around BTS is high. The survey says that this year, some 76.4% of families with school-age kids say they will change their spending because of the economy. That’s down from 81.1% last year, and the lowest its been in the seven years the group has been tracking it. And in the past 10 years, families have spent an average of 42% more suiting kids up for the new school year.

“Heading into the second half of the year, we are optimistic that economic growth and consumer spending will improve after a shaky first half of the year,” say NRF President and CEO Matthew Shay in its release.

One change, though, is that the survey finds shoppers intend to hold off before getting started, with fewer than one in five starting two months early, and 30.3% planning to shop one or two weeks before the opening bell, up from 25.4% last year.

The NRF also included questions about omnichannel intentions, with 48.4% planning to use ship-to-store offerings, and 92.1% looking for free shipping deals.

And increasingly, kids are calling the shots, with

86.4% of parents saying kids influence 25% or more of back-to-school purchases.

So it makes sense that marketers are increasingly courting the stars that influence kids most. Macy’s, for example, is staging in-store events with teen singer-songwriter Daniel Skye. And it’s also organizing back-to-school shopping parties hosted by celebrity vlogger Lindsey Hughes.

While Target says it won’t unveil its new spot until Aug. 2, it’s already teasing a preview, which includes dancing sensations Maddie Ziegler, Mace Maya and Kida the Great testing out its stretch denim, and promising a Tori Kelly cover of the Jackson Five’s “ABC” as a theme song.

http://www.mediapost.com/publications/article/254035/macys-target-ready-fresh-fashion-takes-for-bts.html

The Lamborghini Huracan Will Rip Apart Your Daily Driving

My next car! :)

 

The Lamborghini Huracan is a confusing beast.

Its base model costs $237,000. That’s considerable, to be sure, but it’s half the price of the Lamborghini Aventador.

It’s arguably the subtlest modern Lamborghini ever designed, especially when you consider the electro-’80s-style edges of the Gallardo and the multiple gaping vents of the Murcielago. But its rib-cage-like back, exposed engine cavity, and spaceship profile remain the most extreme style elements on a production car today.

It’s touted as the “driver-friendly” Lamborghini, suitable for canvassing both town and country. Stephan Winkelmann from Lamborghini even told me it was “easy on the road.” That must be a relative term. Its excruciatingly low clearance, 14-mpg gas mileage, absentee cup holders, dangerous lack of visibility, and miniscule trunk—I hesitate to even label it as such—make it painful as a weekend conveyance. On the way out east last Sunday morning, I was sweating speed bumps and the gas gauge—all the while fending off the overflow tote I had to place at my feet.

The Huracan is a two-door, two-seat sports coupe.
Photographer: Hannah Elliott for Bloomberg Business

Those last bits—the parts about low clearance, zero visibility, and that insatiable thirst for fuel—are nothing new. Heck, we expect this sort of thing when we drive a Lamborghini. It’s part of the adventure.

Yet I would argue that at this point, Lamborghini has got to move at least a hair’s width past that old model. I know it’s painful. But it can’t get away with those sorts of annoyances anymore. No longer is Lambo the esteemed family-run Italian house making dozens of cars a year for connoisseurs and enthusiasts who delight in indulging their inner automotive masochist, as it was in the 1970s. It’s part of Volkswagen, making thousands of cars a year, largely in Germany, for everyone from Kanye West to second-string power forwards in L.A.

None of this means the Huracan is a bad car. (Well, it is bad in the best sort of naughty way. It’s fun to use to blow past people on the highway, and it gets a lot of attention on the street.) But it does all mean that this bull is a mixed breed of Italian heritage forced to contend with conflicting demands from a neo-luxury, ultra-global market.

If you decide to buy a Huracan, go in with both eyes open, as it were. If you don’t, you’re going to get burned.

Focus Your Mind

Priority No. 1: You must focus when you drive this car. The Huracan deserves it. It’s too powerful and fast and special—unlike the slick McLaren 650S, it has real personality—to treat casually. This car is born of track monsters, an animal built around a 602-horsepower direct-injection 5.2-liter V10 engine that can reach 200 mph on a casual afternoon jaunt.

The Lamborghini Huracan contains a 602-horsepower V10 engine. Its doors do not open upward.
Photographer: Hannah Elliott for Bloomberg Business

Aside from the matter of the ulcer-inducing lack of clearance—there’s a button that raises the chassis as a sort of buffer over abrupt inclines, which does help—the Huracan eats asphalt at the speed of the national debt. It’ll go zero to 60 mph in 2.9 seconds, which well beats the $176,000 Porsche 911 GT3 RS and the $200,000 Ferrari California. (It basically equals the $245,000 Ferrari 458 Italia, but it does not come near the blistering and $845,000-plus Porsche 918 Spyder.)

I first drove this car when I worked for Forbes almost a year ago. At the time, I didn’t get to drive it on the track—so this time, up at Lime Rock racetrack near Sharon, Conn., I made sure to floor it, literally. You will, too, when you drive this. It’s impossible to resist the urge. When you accelerate, the thrust pushes you back as if you’re passing through a force field into some sort of other dimension. Though, for my money there are other cars—like that McLaren 650S—that just feel a shade quicker as you push them to the edge.

The Huracan also contains Lamborghini’s first-ever attempt at a seven-speed dual-clutch automatic transmission, with four-wheel drive to boot. The gear modes include the “manual” Strada or the automatic Corsa. In both, the transmission operates unobtrusively and willingly—if not with quite as much élan as you might find in a Bentley Continental Coupe. There is a blissful lack of turbo lag, of any hesitancy whatsoever, when you punch the gas.

The turn signal on the Huracan works similarly to that of a motorcycle.
Photographer: Hannah Elliott for Bloomberg Business

Work That Body

The Huracan is made from aluminum, with carbon-fiber components in the bulkhead, center tunnel, and B-pillars, which accounts for a 10 percent weight loss over the Gallardo. That means it’s better—lighter—around corners than predecessors. As I wound up Route 22 on the way to Lime Rock Park, it felt less like a brick and more like a very insistent pit bull. Thick but pliable if you get it pointed in the right direction and keep a firm hand on the collar (read: steering wheel). It’s about as wide in the shoulders as a pit bull, too.

Accelerating in a straight line means tightening your stomach muscles as you feel the small of your back flatten against the seat. The subtle hum of the engine—hidden behind the top note of its roar—as the car launched under me confirmed that I had just achieved liftoff.

Here is how it’s different from others in its price range: The best, fastest, most elegant Bentleys, Ferraris, Rolls-Royces want to help you when you drive. They aspire to conspire with you. The Huracan feels reptilian in comparison. It has power. It has edge. But it’s no easy breezy driver (see reasons stated above); it’s certainly not interested in developing any sort of mutually beneficial relationship.

The trunk of the Huracan will fit one weekend tote.
Photographer: Hannah Elliott for Bloomberg Business

The Huracan is going to do what nature and its reptilian brain decree. You, as driver, are accessory to that instinct. Don’t get it twisted.

Obey the Beautiful Reptile

About that visibility. The windshield is so narrow and slanted I had to crane my neck down any time I wanted to see if the stoplight in front of me had turned green yet. And you might as well remove the rearview mirror and give it back to the dealer before you drive off the lot. I couldn’t see a thing with it back there as I drove upstate, no matter how many times I adjusted it. On the Huracan, side mirrors are your friends.

(Along my drive to Connecticut, I stopped by the garage of a well-known auto racing champion. His longtime mechanic, a white-haired man with his own impressive array of ’70s-era drag racing credentials, told me he could see the visibility problems from the moment I pulled in the drive: “That’s a beautiful car,” he said, leaning toward me conspiratorially. “Beautiful and useless.”)

But yes, beautiful. I love how the Huracan looks. It tells everyone that it’s crazy and intimidating and fast and mean—and it doesn’t have to use a single word to convey that message. No, you won’t get those suicide doors that swoop up like they do on the Aventador, but you do get those sick vents along the rear roof, and the low-slung swagger of a race car. It sounds strange to say, but everything else is minimal. And rightfully so. The audacity of those lines alone demands enough attention, emotionally. This is the kind of car you feel you could sketch in about three lines.

Inside the Beast

The interior is unusual; all of the buttons are grouped in a row across the center console, like a rocket ship, and the start button sits hidden under a fire-engine red flip-top cage. There’s a whole process to engaging the parking brake—but it all fits with the overall character of the car. Other oddities: The turn signal is a single button that you push with your thumb and have to manually turn off half the time, too, as it’s not very sensitive. The gauges are all electronic, rather than “real” analog; the slim, disappearing door handles flip open when you push the unlock button; and the heated sport seats ($2,800 extra if you want them) are firm enough to make you sore after a day on the track.

The Huracan contains distinct styling elements, especially along the rear.
Source: Hannah Elliott for Bloomberg Business

And, as I mentioned, the trunk is basically an offense to anyone who believes in traveling with more than one pair of shoes.

So, the car is by far the most versatile model Lamborghini makes. It’s a real weirdo. But you knew that. And as Billy Joel sings, “It just may be a lunatic you’re looking for.”

http://www.bloomberg.com/news/articles/2015-07-17/the-lamborghini-huracan-will-rip-apart-your-daily-driving

PVH’s Apparel Deal With Trump Ends As Macy’s Cuts Ties With Tycoon

Trump

(Reuters) – PVH Corp <pvh.n> said it would wind down the production of Donald Trump’s menswear after exclusive retail partner Macy’s Inc <m.n> decided to stop selling his products in protest against racist remarks made by the real estate tycoon.

PVH, whose brands include Tommy Hilfiger, Calvin Klein, Van Heusen and Arrow, signed a licensing deal in 2004 for making shirts and neckwear products under the Donald J. Trump brand.

PVH’s agreement with Trump was to end in 2018, the company said on Tuesday.

The Trump Organization was not immediately available for comment.

Donald Trump, in a June 16 speech announcing his Republican candidature for the November elections, described migrants from Mexico to the United States as drug-runners and rapists.

Other companies that have cut ties with Trump include Comcast Corp’s <cmcsa.o> NBCUniversal and Spanish language TV network Univision Communications Inc [UVN.UL].

NBCUniversal said it would not air Trump’s annual Miss USA and Miss Universe pageants.

Trump slapped a $500 million lawsuit on Univision last week for ending its contract to broadcast the Miss USA pageant.

http://www.businessinsider.com/r-pvhs-apparel-deal-with-trump-ends-as-macys-cuts-ties-with-tycoon-2015-7

Gap’s Fashion-Backward Moment

21-RETAIL-master675

 

At 8:50 on a Wednesday morning, nearly two dozen shoppers hovered in front of H&M’s new global flagship store on the corner of West 34th Street and Avenue of the Americas in Manhattan, eager to get inside as soon as the doors were unlocked at 9.

Directly across the street, a Gap store was also preparing to open. A lone woman stood in front. She was handing out fliers for a Cuban restaurant as pedestrians hurried by.

The contrast summed up the state of American retailing. One by one, iconic brands like Gap, J. Crew, American Apparel and Abercrombie & Fitch have reported slumping sales, while chic and cheap foreign fast-fashion brands like H&M, Uniqlo and Zara are opening bustling stores and luring away customers once devoted to a more basic American style.

American midmarket fashion has lost its way, and no other company epitomizes that as much as Gap. The company announced last week that it would close a quarter of its 675 North American stores over the next few years.

But the closures represent the latest in a decade of stumbles for a brand that was once so cool that the actress Sharon Stone wore one of its turtlenecks, with a Valentino skirt, to the 1996 Oscars. In 1998, its “Khaki Swing” television commercial, all smiles and American optimism, aired to 76 million viewers during the final episode of “Seinfeld.” The brand also became seared in popular consciousness that year as the maker of Monica Lewinsky’s infamous stained blue dress.

In a presentation to investors last week, Art Peck, Gap’s chief executive, spoke somewhat poignantly about the brand’s downward trajectory. When Gap’s latest round of store closures is done, its footprint in the United States will fall to just two-fifths of its peak in 2000.

“We had our moments of glory, but they’re not followed with consistent moments of glory,” Mr. Peck told investors at Gap’s corporate headquarters in San Francisco. “None of us are happy with our performance now.”

Once the master of casual, supplying Americans with staple khakis, denims and button-down shirts, the company is finding that its once-stable American customer base has splintered. Luxury is booming; at the other end of the market, discount retailers like T. J. Maxx and Burlington Stores are seeing robust gains. Gap, Abercrombie and their peers are stuck in the middle.

But they have also faltered at a game they once dominated: being the go-to destination for the legions of teenagers and young adults with money in their pockets and time on their hands. That role has fallen to juggernauts like H&M, based in Sweden, and Zara, owned by the Spanish company Inditex, which turn out cheaper versions of runway trends in weeks. H&M’s 368 stores in the United States, set to grow by 65 this year, get a fresh shipment of styles daily. Uniqlo, owned by the Japanese giant Fast Retailing, is most like Gap in that it sells basics. But Uniqlo markets basics at cheaper price points, in dozens of colors in high-tech fabrics, and offers midprice collections by designers and celebrities, including Jil Sander and Pharrell Williams. The company’s footprint here has grown to 42 stores in four years, and more are planned.

In September, yet another foreign fast-fashion brand is set to land on American shores. Primark, based in Dublin, plans to open 20 locations and will sell items for even less than H&M: Its latest catalog features $8 halter neck dresses and $10 bikinis. American retailers still outnumber the upstarts, but they are locked into outdated formulas.

“Back in the ’80s and ’90s, there wasn’t real access to higher-level fashion,” said Kate Davidson Hudson, co-founder and chief executive of Editorialist, an online fashion magazine. “It was the heyday of business casual, and stores did well selling core staples.”

“But now, everybody sees what’s on the runways on social media and on blogs, and everybody’s a critic, and shoppers want it as soon as they see it,” she said. “Brands like Gap just feel very dated.”

Sales at Gap stores open for at least a year, a closely watched figure in the retail industry, have fallen for 13 straight months. The company’s upmarket brand, Banana Republic, has also stumbled, though Gap’s cheaper Old Navy label has done well.

At Abercrombie & Fitch, comparable sales have fallen for three straight years and the brand is in the midst of an overhaul, which includes covering up the hunky shirtless male models who functioned as something of a corporate logo. Last week, the brand confirmed that Katia Kuethe, formerly of Lucky magazine, would be its new creative director. Even J. Crew, long a retail darling with a fiercely loyal following, has suffered from an increasingly stale formula of print, sequins and basics. J. Crew announced early this month that it would eliminate 175 jobs and replace the head of women’s design at its namesake brand.

The two-block stretch of 34th Street between Fifth and Seventh Avenues is a time capsule of retail, anchored on one end by the massive century-old Macy’s Herald Square store and increasingly populated by the foreign chains of the moment — Zara, Uniqlo and three H&M stores, including the airy 63,000-square-foot flagship, which opened last month and is, according to a corporate spokeswoman, the largest H&M in the world.

Sprinkled among them along the crowded sidewalks are older, familiar American mall staples like American Eagle, Banana Republic, Old Navy and others, along with Gap.

At a vibrant, three-story Uniqlo, Dhushyanthy Tharan of Hoboken, N.J., shopping on her 26th birthday for a long-sleeve button-down shirt, said she found the selection to be of higher quality and more stylish than at the Gap. “I love their materials, the cotton and linen, and their style,” she said. “It’s very young.”

“I have checked at American Eagle and the Gap,” she added, “but I never really find anything there.”

One of the people waiting for the H&M doors to open was Tianna Robinson, 30, of Brooklyn, who, unsatisfied with her wardrobe choices that morning, planned to pop in to buy a shirt for a business meeting later in the day.

“I know that no matter what,” she said, “I’ll be able to find a shirt that’s presentable and price-worthy. And it’s cute!”

H&M is her “go-to” store, Ms. Robinson said, but she also likes Zara. “Gap,” she added, “I don’t go to as much, to be honest.”

Mr. Peck and his team seemed to suggest to investors last week that Gap and its sister brands would start to emulate their fast-fashion rivals. Gap’s brands will focus on improving the product, they said, and on speeding up the time it takes to get new styles into stores.

“We are looking at what is starting to trend externally, and feeding that into our process very quickly to testing,” said Jeff Kirwan, Gap’s global brand president. “Then if it tests well, and we feel confident in the early results, we’re going to invest more and move on forward.”

But in reality, it will be difficult for Gap and other American brands to catch up to the likes of Zara, for example, which owns garment factories around the world, giving it a measure of control that permits a quick response to emerging trends. That “vertically integrated” setup lets fast-fashion brands constantly deliver new styles to stores, often in small batches. Fast-fashion retailers have come under increased scrutiny, however, for their heavy reliance on low-wage factory workers, many of whom work in dangerous, grueling conditions, as well as for the environmental toll of throwaway fashion.

Nevertheless, it takes far longer for Gap, which does not own any factories, to source new designs and get fresh styles on its racks. The company hired new design chiefs this year, but in a telling sign of just how much it lags in speed and flexibility, Mr. Peck said that their new products would not show up until next spring, because the brand had already bought the bulk of its stock for the rest of this year.

“Vertically integrating your supply chain can take years to accomplish, and tens of hundreds of millions of dollars to implement the right way,” said Andrew Billings, senior manager of the retail and consumer practice at the New York consulting firm North Highland. “That’s not something that’s going to happen overnight.”

That doesn’t mean the process couldn’t be faster. Even without its own factories, a company like Gap could “work with your design team and reduce the number of sample rounds to make quicker decisions,” Mr. Billings said. “They might be able to turn something over in 15 weeks, which would be drastically faster than your typical fashion calendar, which is more around 45 weeks.”

American brands are also saddled with the remnants of a shopping mall culture that is fast vanishing. Many of Gap’s coming store closures are expected to be at malls that have suffered from declining foot traffic and slumping sales. The national retailers that once anchored those malls, like J. C. Penney and Sears, also are floundering, at the same time as e-commerce is picking up steam.

By contrast, the foreign labels setting up shop in the United States are getting their pick of the best real estate, said William Susman, managing director at Threadstone Partners, a New York consumer and retail advisory firm. And overseas retailers, from the start, are used to operating all of their locations as high-traffic, high-grossing flagship stores, he said.

“The mall doesn’t really exist abroad as it does here. You have High Street locations in Europe whose economics really resemble flagship stores,” Mr. Susman said. “They have a very different real estate strategy.”

But most pressing for declining brands, retail specialists say, is bringing a dose of inspiration to an outdated assortment of clothing. At J. Crew, that means fewer fashion faux pas, like its universally panned “Tilly” cropped sweater that wound up on the sale pile. For Abercrombie, that means less reliance on logos to appeal to a generation now tired of blatant brand marketing. For Gap, that means sprucing up what has become a lineup of bland basics with no discernible point of view.

That hasn’t happened yet. The brand appears to be sticking to its basics strategy, albeit in a dizzying array of choices. Gap offers at least 11 categories of women’s jeans: true skinny, slim straight, girlfriend, authentic boyfriend, sexy boyfriend, always skinny, curvy skinny, real straight, perfect boot, long & lean and legging.

“There’s no creative direction, there’s no creative identity, and the shopper can perceive that,” said Ms. Davidson Hudson, of the Editorialist. “Gap needs to say: Here are the two silhouettes that we think are important this season. These are the two we’re standing behind. Here’s your perfect pair.”

Daniel Kulle, president of H&M in the United States, had similar advice for his American rivals. He said that H&M still saw “a huge opportunity to grow, for the next couple of years,” in the United States.

“If you don’t keep constantly updating your fleet, if you don’t have the right trends and collections season after season, your customers are just going to go somewhere else,” Mr. Kulle said in an interview.

“You have to keep your customers curious,” he said. “Then they have to keep coming into your stores to see what’s new today.”

http://www.nytimes.com/2015/06/21/business/gaps-fashion-backward-moment.html?smid=li-share&_r=0

This Woman Could be the Next CEO of Kohl’s

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Kohl’s Corp. has named chief customer officerMichelle Gass to the newly created principal officer position of chief merchandising and customer officer, filling the long-vacant chief merchandising officer position as Kohl’s begins a search for chief operating officer, another new position.

This positions Gass, who came to Wisconsin-based Kohl’s in 2013 from Starbucks Corp., to potentially succeed CEO, chairman and president Kevin Mansell down the line. Once appointed, the chief operating officer would also be a possible contender for the top job.

This reshuffling at the top is part of the retailer’s ongoing “Greatness Agenda,” a plan to turn around the company’s stagnant same-store sales and reposition Kohl’s to compete against online retailers such as Amazon, as well as select a successor for Mansell.

In her new position, Gass will oversee all of Kohl’s merchandising, planning and allocation, and product development functions. She will also continue leading Kohl’s overall customer engagement strategy, including the company’s marketing, public relations and social media efforts.

In the interim, Mansell has assumed direct oversight of the company’s digital and e-commerce strategies and operations.

Kohl’s previous chief merchandising officer, Donald Brennan, resigned in April 2014. A Wall Street Journal article at the time foreshadowed the management shakeup to come spurred by Brennan’s departure.

The company’s search for a COO will look outside the company. The role will include direct responsibility for the company’s store operations, logistics and supply chain network, information and digital technology, e-commerce strategy and operations, and store construction and design.

“Kohl’s had previously announced an external search for a new chief merchandising officer. However, during the course of this search, it became apparent that Michelle’s passion for merchandising and new brand acquisition made her the perfect leader for our product and merchandising functions,” said Mansell in a press release. “The close connection between our merchandising and customer engagement strategies has been a key driver in the progress we have made in the early stages of our three-year plan with the goal of becoming the most engaging retailer in America.”

Other longtime leaders at the company (NYSE: KSS) Wes McDonald and Richard Schepp have also been promoted to principal officer positions as chief financial officer and chief administrative officer, respectively.

http://www.bizjournals.com/bizwomen/news/latest-news/2015/06/this-woman-could-be-the-next-ceo-of-kohls.html?ana=lnk