Consumer Nation
- Wednesday, 2 Nov 2011 4:18 PM ETBy:
Robert Melstein To all those who are still digging out from the deadly and massive “Snowtober” storm, some good news: The odds are good that there won’t be a “Snowvember” or “Snowcember.”
Emmanuel Dunand | AFP | Getty ImagesNew Yorkers make their way through falling snow in New York, October 29, 2011. New York has been hit by snowfall before Halloween for only the fourth time since the US Civil War. (1861-1865)A good chunk of the U.S. will experience normal or above average temperatures this holiday season. And that forecast may lead to sunny sales for the nation’s retailers.
Overall cooler weather in November, combined with above normal December temperatures in the Northeast is expected and that's the perfect recipe for strong holiday sales, according to Paul Walsh, vice president of Weather Analytics at the Weather Channel.
"Overall, it looks like we're in a much better position this year than last year," Walsh told CNBC. "When you look at the holiday season. . .we have predictions [which are] indicating that overall it’s going to be cold this winter, but less cold than last winter.”
Walsh calls this the “Goldilocks effect” — no porridge here, but just a little cold and just a little warmth equals a “just right” mix that gets the American consumer into stores.
Here’s how that barometer balancing act plays out. Colder weather drives demand for apparel (think puffy coats, hats and gloves), so that could mean good news for mass-market retailers like JCPenney [JCP Loading... ()
], Kohl’s [KSS
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] and Macy’s [M
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]. Warmer winter weather favors increased store traffic, which provides more opportunities to sell. And if consumers are less compelled to spend money on items they need in cold weather (those coats, hats and gloves), they have more disposable income to spend on non-seasonal gift items and electronics. That's when companies like Best Buy [BBY Loading... ()
], Radio Shack [RSH
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] and Sears [SHLD
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] benefit. Retailers are hoping this holiday weather shopping forecast plays out.
The National Retail Federation is predicting just an “average” 2011 Christmas season, with 2.8 percent growth in sales.
That’s way under the 5.2 percent increase retailers experienced in 2010 — and that’s with 67 percent of the U.S. population experiencing a colder than normal December. Last December was the coldest on record month for the Southeast. But even an "average" holiday season is a lot better than what retailers saw during the recession.
So what are the chances of a weekend “Snowtober” storm or a repeat of that devastating Christmas 2010 blizzard? Walsh's forecast says: not likely.
“We see there’s going to be more opportunity for people to get to the stores and the odds of having another one of these snow events on a key weekend are very low,” he said.
Okay, so maybe no white Christmas this year. But it looks like there will be some green.
Questions? Comments? Email us at . Follow Christina Cheddar Berk on Twitter @ccheddarberk.
- Wednesday, 2 Nov 2011 2:37 PM ET
Black Friday is more popular than ever with holiday shoppers, but that isn’t stopping retailers from trying to lure bargain hunters into the stores ahead of Thanksgiving.
Getty ImagesTo that end, Walmart [WMT Loading... ()
] stores nationwide will host a sale, Super Saturday, which will offer some Black-Friday-style deals. The event starts Nov. 5 at 11 am and the will go on while supplies last or until midnight Saturday. These deals are yet another example of how retailers are trying to stir up excitement and get consumers in the door early this holiday season. It also underscores how deal-crazed consumers are at the moment.
According to the retail industry trade group, the National Retail Federation, today’s consumer has high expectations. They already expect retailers to offer low prices and strong promotions, but they also want to know what they’re getting on top of that.
Walmart’s answer to that has been to bring back layaway and introduce a Christmas Price Guarantee program.
Layaway and Price Guarantees
Layaway, which allows consumers to reserve a product and pay for it over time for a small fee, speaks to consumers who don’t want to rack up a lot of debt over the holidays.
The Christmas Price Guarantee speaks to other consumers who want a great deal, and are concerned about when they should time their purchases to get it. With this guarantee, shoppers know that if they see an item they purchased advertised for less at another store between Nov. 1 and Dec. 25, Walmart will refund the difference in the form of a Walmart gift card.
Other retailers are dangling other incentives. At Sears and Kmart, both units of Sears Holdings [SHLD Loading... ()
], consumers are offered five percent of the value of qualified purchases back through its Shop Your Way Rewards program. To qualify, shoppers have to have a Sears credit card. Sears also has its own price-matching program. The retailer will match competitors’ advertised prices on the same items, plus give customers 10 percent of the difference. The bonus for Sears customers: they will get the refund in the form of tender that they paid for the item.
All of this also speaks to the greater transparency that there is with prices. Many customers either research purchases online before they shop or they use price comparison applications on their smartphones to get the best deal.
A sample of Walmart’s electronics deals for its Super Saturday promotion include a Nook Color e-reader, that will be priced at $199. It was selling for $249, Walmart said. An Xbox 360 250 gigabyte console with Kinect is priced at $399, plus you get a $50 Walmart gift card. A Sanyo 42-inch LCD TV will be selling for $398, down from $448.
Attention: Impulse Buyers
Walmart’s hope is that customers will come to buy these items, and then buy other things that aren’t on sale.
For example, Walmart also flagged its everyday low prices on some of the top holiday toys. Some of the prices were a pretty good value. For example, Cepia’s Xia-Xia hermit crabs are being sold at $9.88, compared with other retailers that are pricing the little characters at between $12 and $14 a piece.
However, Walmart’s price on the Fisher Price Action Construction Site with remote control was listed at $49.88. At Toys ‘R Us, that toy is currently selling for $39.99.
The toy retailer also is competing to woo shoppers early. It began a number of sales on Oct. 30 that will run through Thanksgiving. In addition to these deals, the retailer is advertising layaway and additional discounts through its loyalty program.
Shopping Around
So at the end of the day, shoppers have a lot of offers to consider, and many are taking the time to do just that.
The NRF said that in times of economic uncertainty consumers are willing to devote the time to find the “best” deal and they will shop all over the place, cherry picking the best deals.
People also aren’t discriminating. They will buy toys at a grocery store or stocking stuffers at a wholesale club, the NRF said.
And that explains all the activity, and also the early start times that many retailers are planning for the Black Friday madness. Kohl’s [KSS Loading... ()
], Macy’s [M
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] and Target [TGT
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] are all planning to open at midnight on the day after Thanksgiving, which is traditionally one of the busiest shopping days of the year. Others have yet to disclose their plans. Among those retailers are Best Buy [BBY Loading... ()
], which opened at 5 am last year, and Toys ‘R Us, which opened at 10 pm on Thanksgiving last year and stay open through 10 pm on Friday. Questions? Comments? Email us at . Follow Christina Cheddar Berk on Twitter @ccheddarberk.
- Monday, 31 Oct 2011 2:50 PM ETBy: Tom Rotunno
MillerCoors likely spills more beer every year than a lot of craft brewers produce, but deep in the heart of this brewing giant beats an independent spirit reminiscent of the tiniest craft brewer.
It’s there you’ll find Tenth and Blake, the division started by MillerCoors in August 2010 to handle the company’s growing portfolio of craft and import brands, which include the company’s flagship, Blue Moon, as well as the Chippewa Falls, Wisc.-based Leinenkugel and imports Peroni, Pilsner Urquell and Grolsch.
While Tenth and Blake is a recent creation, Blue Moon's origins go back to the mid-1990’s.
"People don’t understand how Blue Moon was born," says Tom Cardella, president and CEO of Tenth and Blake. "It had a similar beginning as many of the craft brands on the market today."
Blue Moon traces its roots to 1994 when Peter Coors sent brewer Keith Villa to Belgium to get his doctorate in brewing science. Villa fell in love with Belgium-style beer and on his return impressed his boss with his desire to craft his own Belgium brew. Peter Coors gave Villa his blessing — and a shoestring budget — to start Blue Moon Brewing.
Today Blue Moon, the beer, is nearly ubiquitous, joining rival craft brew Sam Adams alongside domestic lagers as typical tap beer offerings in bars and restaurants. For many consumers, these beers serve as entry points for those looking for something beyond mass-produced lagers.
And with this stature, Tenth and Blake thinks it can help other small brewers to continue its growth both by bringing new people into the category as well as by providing financial assistance to entrepreneurs trying to build their brands.
"Blue Moon will finish the year well up over 20 percent in volume growth and when you look at where we are sourcing that growth, it's bringing in consumers who were weren’t beer drinkers before," says Cardella. "It’s definitely a gateway beer and I think when you talk to a lot of other craft brewers, they recognize the value and the importance of that gateway."
But many beer aficionados still take issue with Tenth and Blake using the term "craft." Their issue? Size.
Blue Moon’s Belgian White is the single largest "craft" brand in the country.
(Sam Adams [SAM Loading... ()
], the largest craft brewer, sells more when all of its brands are counted together, and it brewed about 2.3 million barrels a beer last year. But contrast, MillerCoors, the creation of two global beer companies, Molson Coors Brewing [TAP
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] and SABMiller, brews more than 67 million barrels of beer.) But the Brewers Association defines a craft brewer as brewing less than six million barrels per year and being less than 25 percent owned or controlled by another economic interest. For Cardella, being considered "craft" is less about size than spirit.
"Coors has never tried to hide the fact Tenth and Blake or Blue Moon were part of MillerCoors," says Cardella. "There’s no doubt many consumers look at large brewers as corporations and not entrepreneurs. With Tenth and Blake, we're proud that we’re with MillerCoors."
With more than 1,700 breweries operating in the U.S., Cardella sees the beer business at an inflection point and Tenth and Blake uniquely positioned to help the craft boom continue.
"I’m a big believer. The craft business has a long future of good growth,” Cardella told CNBC. “But while there is a lot of room for growth, I think it will be more difficult for new players to keep coming in and for the existing players to fund their individual growth."
Source: Tenth and BlakeOne solution Cardella sees is equity partnerships between Tenth and Blake and smaller regional breweries. For example, Tenth and Blake recently acquired a minority stake in Georgia-based Terrapin Beer. The less than 25 percent stake will allow Terrapin to remain independent, according to the Craft Brewers Association's standards but give Terrapin access to capital to expand their brewing capacity.
"If we can allow them to maintain who they are, but get them access to our resources we can help entrepreneurs with their growth," he says. "In order to grow, a lot of these brewers will need an infusion of capital to keep going forward."
The key in moving forward for Cardella is finding an alignment of style and goals rather than a one-size-fits-all approach.
"We’re taking it slow and it's not 'big guy' buying 'little guy,' but it's recognizing the little guy has limited resources, and enhancing our own growth while helping them to get where they want to go."
Questions? Comments? Email us at . Follow Tom Rotunno on Twitter @tomrotunno.
- Friday, 28 Oct 2011 2:36 PM ET
For all the doom and gloom about consumer sentiment and holiday spending, one analyst's forecast calls for the most rapid holiday sales growth since 2004—a benchmark that makes others look like Scrooge.
Getty ImagesCustomer Growth Partners expects shopping bags to be full this holiday season.Retail consultancy Customer Growth Partners expects that American consumers have worked to put their finances in order and are ready to spend. Their forecast calls for holiday sales in the November to December period to rise 6.5 percent from last year to $554 billion.
That's twice consensus forecasts, which have put holiday sales growth between 2.5 percent to 3 percent. It also is the fastest pace for retail sales growth since 2004, when holiday sales rose 6.9 percent.
While it's worth keeping in mind that not all forecasters measure holiday sales in exactly the same way, and may not be comparable, this prediction still stands out from the pack.
"American households — at least the 91 percent with jobs — have deleveraged dramatically since 2007, while disposable income continues to rise, generating almost $50 billion a month in incremental free cash flow, even with gasoline price hikes," said Craig Johnson, Consumer Growth Partners president, in a statement announcing his forecast.
"After three years of scrimping and saving, Americans are ready to spend — strategically and smartly — but for the first time in years, very few things will stand between an American consumer and her shopping destination. This will be a very happy holiday for most families — and almost all retailers," he said, in a written statement.
Johnson's prediction is worth watching. He has been very accurate in the past. His estimates look at retail sales growth excluding automobiles, auto parts, gasoline, fuel, food service and restaurants, but including both Internet and direct-to-consumer sales, and he makes his predictions based on reported data from retailers, store and channel check and other research his firm conducts.
There are five key factors contributing to the forecast, Johnson says:
- Personal disposable income has grown 4 percent from last year.
- Savings rates have normalized to about 4.5 percent. (In 2009, the savings rate peaked at 8.2 percent.)
- A decline in the household debt service ratio to 11 percent from 17 percent in 2007.
- Pent-up consumer demand after putting off discretionary purchases.
- Consumers are excited about new fashion in stores.
On that last point, Johnson expects sales of apparel during the holiday season to outpace overall retail sales growth, with an increase of 7.6 percent. Sales of luxury items also will do well as will online retailers, dollar stores, and discount retailers.
Johnson also predicts that department stores — from Nordstrom [JWN Loading... ()
] and Saks [SKS
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] to Macy's [M
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] — will see their best holiday in years. Questions? Comments? Email us at . Follow Christina Cheddar Berk on Twitter @ccheddarberk.
- Wednesday, 26 Oct 2011 2:24 PM ET
The special deficit-reduction panel appears to be making little progress in trimming more than a trillion dollars from the federal budget — and that has prompted some to question whether this will take a bite out of consumer spending this holiday season.
Source: Dreamworks, LLCSome retail experts fear that further political gridlock in Washington will make American consumers even more hesitant to spend during the busiest shopping period of the year.The Super Committee has been negotiating behind closed doors since September, and they have until Nov. 23 — that’s the day before Thanksgiving — to reach an agreement on at least $1.2 trillion in deficit reduction measures.
Some retail experts fear that further political gridlock in Washington will make American consumers even more hesitant to spend during the busiest shopping period of the year.
When the Super Committee was forged out of the debate on whether to raise the debt ceiling, consumers reigned in spending.
But the circumstances will be different this November than they were in August, says Paul Ashworth, chief U.S. economist at Capital Economics.
The debate in August could have resulted in the federal government being shut down, he says. If this had happened, federal employees would have been laid off, U.S. contractors wouldn’t have gotten paid, and there were even discussions about Social Security checks being withheld.
This is not the case with the Nov. 23 deadline. If the committee doesn’t reach an agreement, automatic cuts will be made across the board affecting areas such as national security and domestic discretionary spending, but a shutdown won’t be imminent.
But others see the event as a potential risk.
One of the problems plaguing retailers is a lack of exciting new products to inspire consumers to shop, says Marshal Cohen, chief industry analyst at NPD Group.
“There is almost nothing new…to get the consumer excited beyond just the traditional holiday categories,” Cohen says.
Against this backdrop, the political discussions could create a big distraction for consumers. And that’s something retailers don’t want when most analysts, including Cohen, expect marginal growth at best this holiday season.
It also may be yet another reason for consumers to be downbeat. Numerous consumer surveys have shown that consumers are worried about the economy and about their rising household expenses.
One of the latest, a survey conducted by Deloitte, showed that two-thirds of consumers expect the economy to stay the same or weaken next year. As a result many consumers reported that they would be trimming their gift list and 42 percent said they planned to spend less this year.
Still, Deloitte estimates retail sales will rise between 2.5 and 3 percent this holiday season.
“It’s a downbeat story, but I have faith that they will spend more than they say they will,” says Alison Paul, vice chairman and U.S. retail & distribution leader at Deloitte LLP.
Not only do consumers often say one thing in surveys and actually do another thing, but there are groups of consumers who are not paring back as much.
Households earnings $100,000 or more annually expect to trim a mere 2 percent off of their gift spending to shell out an average of $812 on gifts this holiday season, compared with a 26 percent drop to $291 on gifts among those earning less than $100,000.
There also is something compelling about shopping on Black Friday, the day after Thanksgiving, and on Cyber Monday, the Monday that follows it, because consumers expect that is when they can snag the best deals.
Nearly three-quarters of the more than 5,000 consumers polled by Deloitte said they would hold off until after Thanksgiving to make the majority of their holiday purchases.
Last year, Black Friday was the day that rang up the most sales of the holiday season, and Cyber Monday was the busiest day for online retailers. There also was a huge surge in spending on Thanksgiving itself, especially among consumers using mobile devices.
“Consumers tend to follow the same patterns,” says John Squire, chief strategy officer at IBM Coremetrics.
“That is when there are the very best promotions and offers, when inventories are at their highest, and when shipping deals are the best,” he says.
And the lure the Black Friday bargain may trump what politicians in Washington do or say.
Questions? Comments? Email us at . Follow Christina Cheddar Berk on Twitter @ccheddarberk. - Tuesday, 25 Oct 2011 1:17 PM ET
There's been a lot of talk about whether consumer spending is sustainable given that consumers are mired in the doldrums, but a new survey suggests it is.
APWhy? Consumers appear to think that their own financial houses are in order and they believe they are prepared to weather any economic troubles that may lie ahead, according to the survey from JPMorgan’s [JPM Loading... ()
] Chase Card Services. In other words, it’s not me, economy, it’s you.
About 60 percent of those surveyed felt the economy will get worse. That negative mood has been reflected in other surveys, including the Conference Board’s consumer confidence report, released Tuesday. The index showed confidence has slipped to its lowest level since March 2009, fueled by growing pessimism about both current and future economic conditions.
But before you raise new questions about how long it will take before consumers — who are obviously worried about job security and their income — begin to rein in spending, consider this:
- In the Chase survey, 63 percent of respondents said they had changed their spending and borrowing habits as a result of the economy.
- 77 percent said they were at least somewhat financially prepared for a hypothetical large expense of $1,500.
- 66 percent said they feel at least mostly in control of their financial situation.
Whether these beliefs are justified or not remain a debate for another day, but the idea is that more consumers are taking steps to get their finances in order and they feel more comfortable about their financial security, and that may be enough to keep the consumer spending engine humming.
If consumers feel good about their own finances, they are better able to be resilient spenders. Perhaps this explains why many consumers say one thing about their money, but do another.
Chase conducted its survey of 1,016 adults between Aug. 16 and 26.
Questions? Comments? Email us at . Follow Christina Cheddar Berk on Twitter @ccheddarberk.
- In the Chase survey, 63 percent of respondents said they had changed their spending and borrowing habits as a result of the economy.
- Tuesday, 25 Oct 2011 7:30 AM ET
Toys ‘R Us is bringing back a popular loyalty program from last holiday season, and now it plans to sweeten the deal even further for customers who spend more than $200 between Oct. 30 and Dec. 24.
Getty ImagesToys 'R' Us Times SquareThis offer is yet another sign that retailers will be dangling plenty of promotions in front of customers, hoping to get them to hit their stores early and often this season.
On Monday, Wal-Mart Stores [WMT Loading... ()
]announced it would offer customers a price guarantee in the form of gift cards to U.S. shoppers who buy something at their store and then find it cheaper somewhere else. At Toys ‘R Us, members of the loyalty program will receive 10 percent back on purchases they make between Oct. 30 and Christmas Eve. And for those customers who spend more than $200 during that period, there are additional coupons that will be sent to their email during the course of 2012, which will add up to an additional $100 in savings on select merchandise.
Last year, about 2 million customers signed up for the Rewards ‘R Us program during the holiday season to take advantage of last year’s 10 percent promotion. About 24 million customers have signed up for the loyalty program since it was introduced in 2008.
Typically, Rewards ‘R Us members receive $5 back for every $150 they spend using their Rewards card during specified three-month periods.
Using Layaway to Woo Consumers
The holiday promotion is only the latest step Toys ‘R Us is making to woo customers. Earlier this month, the retailer announced that it would expand its layaway program in the vast majority of its stores.
Layaway allows consumers to reserve items with a deposit and pay for them over time.
Toys ‘R Us said consumers who select layaway also would be eligible for the loyalty program rewards.
Walmart and several other major retailers also offer layaway. Walmart’s program began on Oct. 17, and the company said it is meeting its expectations so far.
“Given the state of the economy, we’ve seen much more promotional intensity, and gimmicks as well,” said Walmart Chief Merchandising Offer Duncan Mac Naughton, during a conference call Monday.
Promotion-Heavy Holiday Online
Even online there is an expectation for a promotion-heavy holiday season.
In a recent survey conducted by BigResearch for Shop.org, a retail trade group, about nine in 10 online retailers said they plan on offering free shipping at some point during the holidays. That’s up from 84.8 percent of online retailers who responded this way in 2010.
Those free shipping offers also will come earlier in the holiday season compared with last year. About one-third of the online retailers said they would offer free shipping earlier than they did last year. Many online retailers also will have more money to spend on these promotions.
About 56.3 percent of the 51 online retailers BigResearch surveyed said their budget for free shipping promotions is either “somewhat” or “significantly higher” than last year.
According to Shop.org's eHoliday survey, about 68 percent of the retailers they surveyed expect their online sales to rise by at least 15 percent or more this year.
That's good news for shipping companies. On Monday FedEx said it expects holiday shipments to rise 12 percent and it will add about 20,000 workers to handle the extra volume.
Analysts said the surge in volume at Fedex [FDX Loading... ()
] is being driven by a combination of gradual economic improvement as well as increasing e-commerce sales. Questions? Comments? Email us at . Follow Christina Cheddar Berk on Twitter @ccheddarberk.
- Friday, 21 Oct 2011 1:35 PM ET
Source: MattelThe limited-edition Barbie from Tokidoki has several tattoos on her body.It’s time to cue the Barbie outrage.
Let’s face it, Barbie likes buzz and she’s gotten herself into another media frenzy just in time for the holidays.
Mattel [MAT Loading... ()
] has released a Barbie doll designed by Tokidoki, a Japanese-inspired lifestyle brand, and it is stirring up a controversy because the doll, which sports a pale pink bob, is covered with tattoos on her neck and shoulders.No doubt, there are plenty of people who will object to the doll, but this is not a mainstream Barbie product intended for young girls. The $50 doll is being marketed to adult collectors. Only 7,400 were made and, according to the Tokidoki Website, they are all sold out.
The doll is Mattel’s latest in a series of dolls it has done with designers over the years. Other examples on the Barbie Collector website include the Countess Dracula doll designed by Bob Mackie, the Bob Mackie Circus doll and a Barbie dressed in a catsuit designed by Christian Louboutin. These designer dolls sell for $150 each.
Source: MattelThe Totally Stylin' Tattoos Barbie allowed children to place small tattoo stickers on the doll's body.It also isn’t the first time "Barbie" and "tattoo" have been uttered in the same breath.
In 2009, Mattel released Totally Stylin’ Tattoos Barbie, which came with small tattoo stickers that children could place on the doll. (The dolls are still available on Amazon.) There also was collaboration with Harley Davidson [HOG Loading... ()
] in 2008, where Barbie wound up with a giant pair of wings tattooed on her back. To be sure, Barbie doesn't need a tattoo to stir up controversy. Some feel the Barbie doll itself is controversial because her unrealistic body proportions set a bad example for young girls. Beyond that, however, there have been other examples of controversial dolls.
For example, the Barbie Collector website once offered the Silkstoe Lingerie Barbie, which wore a black bra, panties, and garter belts. The doll isn’t available on the Mattel website anymore, but it can be found on Amazon.
And last year, Barbie Video Girl, a Barbie doll with a pinhole video camera in its chest, prompted the Federal Bureau of Investigation to pass around a memo warning that the doll could be used as a tool by pedophiles (there were never any reports of it actually happening).
Questions? Comments? Email us at . Follow Christina Cheddar Berk on Twitter @ccheddarberk.
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