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Beverly Hills water wasters ‘should be ashamed

October 30, 2015 Leave a comment

la times

The city of Beverly Hills and three other water suppliers face financial penalties for falling short of state water conservation mandates, officials said Friday.

Statewide, Californians cut their urban water use in September by 26.1% compared with the same month in 2013, regulators said. The reduction was below the 27% decline recorded in August and the 31% savings in July.

In addition to Beverly Hills, the cities of Indio and Redlands and the Coachella Valley Water District were issued a $61,000 penalty for failing to meet their conservation mandates, officials said.

Cris Carrigan, director of the Office of Enforcement of the State Water Resources Control Board, said he is “sure” there are water users in Beverly Hills that are “very conscientious and doing their part.”

“To those who aren’t, and are wasting water,” he added, “I’d say yes, you should be ashamed of yourselves.”

Beverly Hills officials could not immediately be reached for comment.

Redlands spokesman Carl Baker said in an email that “we were notified late yesterday. Right now I have no comment until we have an opportunity to seek direction from the City Council on Tuesday.”

Also Friday, Gov. Jerry Brown declared a state of emergency over the loss of millions of trees across California, the result of a bark beetle infestation made worse by the drought.

Brown asked the federal government to help “mobilize additional resources for the safe removal of dead and dying trees.”

The U.S. Forest Service recently estimated that more than 22 million trees have died in California, Brown said.

The statewide conservation effort kept California in compliance with Brown’s restrictions for the fourth consecutive month. Earlier this year, Brown ordered cities and towns across the state to slash their water consumption by 25% amid a four-year drought.

As the hot summer months give way to cooler temperatures and more rain, officials have cautioned that it may prove harder for Californians to save water.

Experts say outdoor watering decreases in the winter, so residents and businesses who want to keep conserving at high levels will need to look indoors.

“There is still ample opportunity for indoor conservation but it’s more of a challenge,” said Max Gomberg, the water board’s climate and conservation manager. “It is not as simple as turning off your irrigation.”

In order to attain the statewide 25% reduction in urban water use, the board assigned conservation “standards” to each of the state’s 411 urban suppliers earlier this year.

Suppliers with a history of high per-capita water use were ordered to cut as much as 36% off 2013 totals. Suppliers with a history of lower consumption were told to cut as little as 8% or, in rare cases, even 4%.

Despite the good overall results, some individual water districts have struggled to meet their targets. In August, for example, six suppliers missed their mark by more than 15 percentage points. An additional 54 suppliers were off by between five and 15 percentage points.

Regulators met over the summer with some lagging districts and later issued conservation orders to eight of them. The orders demand that the districts take specific steps to save more water.

About 100 suppliers have received so-called information orders requiring them to send more information about the conservation measures they have undertaken, Gomberg said.

Under the drought regulations, water districts that violate a conservation or information order can be fined up to $500 per day. The water board can also send violators a cease-and-desist order, which carries a stiffer penalty: up to $10,000 for each day of non-compliance.

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E-commerce software provider NetSuite reports a 34% hike in Q3 revenue

October 30, 2015 Leave a comment

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The provider of cloud-based e-commerce and business operations software, NetSuite, says it’s getting strong demand from B2B clients.

Increasing demand from manufacturers, distributors and wholesalers for e-commerce software integrated with financial software contributed to a sharp increase in third-quarter revenue for NetSuite Inc., the company says.

“Distributors, wholesalers, and manufacturers are all in a similar situation, where matching the demand side of the equation with the supply side is very important for efficiency in that business,” CEO Zach Nelson said in a conference call with stock analysts last week. “The combination of [NetSuite’s] commerce front-end with all of the capabilities we have in the enterprise resource planning and services resource planning are very important for them.”

Manufacturers and distributors use enterprise resource planning, or ERP, systems to manage such operations as inventory, financial accounting and customer relationships. During the third quarter ended Sept. 30, more than 430 manufacturers, distributors, wholesalers and retailers deployed NetSuite’s SuiteCommerce e-commerce platform, along with its OneWorld global business software systems, the company says. “OneWorld sales accounted for more than 50% of new business, and we had a higher number of customers upgrading to OneWorld than in any quarter in history,” said Ron Gill, chief financial officer.

Total Q3 revenue increased 34.2% to $192.8 million from $143.7 million a year earlier.

The majority of NetSuite’s new clients are small-and medium-sized businesses involved in industrial distribution or in employee benefits administration, Nelson said. WHSmith, a retail chain offering books, periodicals, stationery and gifts based in the United Kingdom, launched NetSuite SuiteCommerce in Q3 as an e-commerce platform for selling to businesses. “WHSmith sells its own brand and selected branded merchandise to over 200 franchise stores and various wholesale customers throughout the world,” says David McGrath, head of shared I.T. services at WHSmith. “To meet the needs of our customers we needed to develop a world-class business-to-business commerce capability. NetSuite SuiteCommerce offers an ideal combination of rapid time to market and rich functionality that will help us support the growth of our franchise and wholesale business.”

Other companies that have recently deployed SuiteCommerce include Maclaren, a manufacturer of baby strollers, and Domino’s Pizza, which uses NetSuite’s e-commerce software to let its franchisees order supplies. Businesses located in the Europe, the Middle East and Africa regions showed the strongest demand for NetSuite software, Nelson said. “In Q3, EMEA continued its streak as being our strongest region,” he said. “During the quarter, we doubled down on our investment there.”

NetSuite generates about 25% of its revenue outside the United States. The software provider opened two new European data centers in Q3—one in Dublin, the other in Amsterdam—to support increased demand as well as to accommodate changing requirements in European data privacy. NetSuite also hired sales and marketing staff at its European offices during Q3, and now has a total of 700 personnel based in Europe.

NetSuite does not break out sales of SuiteCommerce, its e-commerce software, from sales of it broader OneWorld software that companies use to manage globally dispersed operations and balance their financial books, track sales, customer history and inventory, among other functions.

“In 2015, we’ve grown the sales organization about 48% year over year, which is probably the fastest we floated in several years,” Nelson said. “Our services organization has grown concomitantly with that, it’s a little bit of 50% from a year earlier. For us, when we hire sales people, we’re often also hiring services people to ensure that implementation and ensure customer satisfaction.”

NetSuite also reported for the third quarter ended Sept. 30:

  • $154.7 million in revenue from software subscription and support services, up 33.6% from $115.8 million a year earlier;
  • Sales and marketing costs of $102.1 million, up 36.7% from $74.7 million;
  • Product development costs of $36.1 million, up 26.2% from $28.6 million;
  • A GAAP net loss of $37.3 million, which widened by 27.3% from $29.3 million;
  • Non-GAAP net income, which excludes such expenses as stock-based compensation and costs related to acquisitions, of $2.6 million, down from $8.3 million.

GAAP, or generally accepted accounting principles, is the set of accounting rules used by U.S. publicly owned companies.

NetSuite didn’t provide year-to-date financial figures for its first nine months, which it will release next month in its 10Q third-quarter financial statement filed with the U.S. Securities and Exchange Commission.

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E-commerce is a bright spot in Q4 for MSC Industrial Supply

October 30, 2015 Leave a comment

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Internet sales neared 60% of total sales for MSC Industrial Supply’s fiscal fourth quarter.

The fiscal fourth quarter wasn’t an easy one for MSC Industrial Supply Co., as a drop in oil prices and a strong U.S. dollar dampened demand from manufacturers for MSC’s business and industrial supplies and caused its total net sales to inch up just one tenth of 1%. “Conditions worsened as the quarter progressed,”president and CEO Erik Gershwind said Monday on an earnings call with stock analysts.

But things were better in MSC’s online business, as e-commerce sales increased a relatively strong 5.7% in the quarter, which ended Aug. 29, to $412.44 million from $390.20 million a year earlier, Gershwind said on the call, according to a transcript provided by Seeking Alpha. As a percentage of total sales, E-commerce increased to 56.7% from 53.7%.

Gershwind said that online sales were also helped by customers purchasing more through MSC’s vending business, which lets companies place online orders for such supplies as drill bits and work gloves that their employees can retrieve from worksite vending machines stocked by MSC. “Vending and e-commerce remain strong, as our customers continue to leverage our technology platforms,” he said on the earnings call.

The company includes in its total e-commerce sales figure sales through its vending business and its web sites, MSCDirect.com and discount site Use-Enco.com; other unnamed web portals; XML-based online ordering systems; and electronic data interchange, or EDI, which uses private networks to exchange invoices and other business documents. MSC sells metalworking services in addition to a wide range of products that companies use in the maintenance, repair and operation of their facilities.

Although it doesn’t break out sales for the e-commerce sites, Gershwind said MSCDirect.com has performed particularly well following investments to that site’s functionality. “We’re really pleased with the performance of the website,” he said, adding: “A lot of the investments that we’ve made into functionality have worked out quite well.”

Gershwind didn’t elaborate on MSCDirect.com’s improvements, but MSC has made several site upgrades over the past year designed to make it easier for customers, including those arriving on its site from Internet searches, to more easily find and purchase products.

Gershwind added in the earnings call that MSC recently added about 150,000 SKUs to its e-commerce site, bringing to about 1 million the number of SKUs it sells online. In addition, MSC said in a 10K financial statement filed with the U.S. Securities and Exchange Commission that it plans to continue expanding and changing its online SKU count in 2016. “Customers continue to drive more of their fulfillment needs electronically,” MSC says in the filing. “To support this trend, we believe that increasing the breadth and depth of our online product offering and removing non-value-added SKUs is critical to our continued success.”

MSC also reported for the fourth quarter ended Aug. 29:

  • E-commerce increased to 56.7% from 53.7% of total sales, which increased only 0.11% to $727.41 million from $726.62 million.
  • Net income of $59.0 million, down 6.1% from $62.8 million a year earlier;

For the full fiscal year, MSC reported:

  • E-commerce sales increased 21.0% to $1.62 billion from $1.34 billion;
  • E-commerce increased to 55.6% from 48.0% of total sales, as total sales increased 4.4% to $2.910 billion from $2.787 billion in the prior year;
  • Net income of $231.31 million, down 2.0% from $236.07 million the prior year.

MSC is No. 97 in the B2B E-Commerce 300, a new ranking of B2B e-commerce companies by annual web sales published by Vertical Web Media, which also publishes B2BecNews, B2BeCommerceWorld.com and the business magazine Internet Retailer.

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LinkedIn Has a Pleasant Surprise for Wall Street

October 30, 2015 Leave a comment
The New York Times
Friday, October 30, 2015
For the latest updates, go to nytimes.com/bits »
Daily Report
| The news wasn’t all bad this week for social media companies reporting their quarterly earnings.
After the close of trading on Thursday, LinkedIn, the social media site you often forget about when you’re not looking for a new job, announced earnings that beat expectations, sending the company’s stock up more than 12 percent in after-hours trading.
Revenue at the Mountain View, Calif., company rose 37 percent from the same period last year to $780 million. LinkedIn lost $40.5 million, or 31 cents a share, up from $4.3 million, or 3 cents a share, last year. But not including certain expenses like employee stock compensation, the company would have made 78 cents a share, well above the 47 cents a share analysts were expecting.
More important, LinkedIn also raised its financial forecast for the full year.
That stands in contrast to another big name in social media, Twitter, whichreported its earnings earlier in the week. While Twitter saw significant revenue growth in the most recent quarter, the one number Wall Street is watching – user growth – remained stagnant. And the San Francisco company also dampened expectations for its fourth quarter.
There doesn’t appear to be a common message to be gleaned from results from the two companies. Twitter’s challenges are well documented. And LinkedIn appears to be finding more ways to squeeze money from its less glamorous service.
Next week, Facebook will announce its quarterly results, which are expected to be strong. Perhaps the only big question will be how much advertising Facebook is pulling away from the smaller social media companies.
Related Google+ Page
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Today’s Top Retail Stories

October 30, 2015 Leave a comment
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How Android Wear might know if you’re a vehicle driver or a passenger

October 30, 2015 Leave a comment

It’s safer to reduce wearable device functions while driving but only if it’s done for the driver. Google has an idea how to let passengers still use their smartwatch while in the car.

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Being a patent, the wording is broad and applies to wearable devices in general. With Google Glass now refocused on vertical markets, it’s more likely that Android Wear watches would be the first devices that could benefit from the patent.

By knowing if an Android Wear smartwatch or other wearable device is being used by a driver, Google could limit the amount of touchscreen interaction for safety reasons. In that case, perhaps the only way to use the watch would be through voice commands and audio feedback.

Since a vehicle’s passenger isn’t required to keep their eyes on the road, there’s no need to provide the same limitations to them. In fact, it would be downright annoying for the smartwatch to detect travel movement and reduce functionality for someone who’s along for the ride.

The technology that Google outlined in the patent, of course, isn’t quite new but it would be an improvement.

There have long been mobile apps that detect when you’re in a moving vehicle and reduce on-screen functions or read incoming messages aloud. The problem is that it’s more difficult to tell if the smartphone is being used by a driver or a passenger; it’s easier with a wearable device since the driver’s movement can be seen as they steer or shift the car.

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Mastering a Seamless B2B/B2C Omni-Channel Experience

October 30, 2015 Leave a comment

Live Webinar – Wednesday November 181PM ET / 10AM PT

ccording to Forrester Research, B2B online sales are forecast to grow at a rate of nearly 64% to top $1.1 trillion by 2020, comprising 12% of all B2B sales, and the forecasted revenues for B2B eCommerce this year alone total $780 billion more than double the $334 billion predicted for all of direct-to-consumer retail sales online.  We can all agree – the imperative to integrate the B2C website with the B2B website has never been greater.

Join us for an exclusive webinar with guest speaker, Andy Hoar, Principal Analyst, from Forrester Research who will discuss the fast-growing and ever-changing B2B eCommerce landscape and outline what merchants need to know in coming months.  Also join special guest, Pam Schechtman Vice President, Enesco Corporate e-Channel, who will provide insights and best practices Enesco followed to create a seamless experience for their B2C and B2B commerce merchants.

Tune in to our live webinar with your team and bring along any questions to the Q&A session!

Hope to see you there!
-The eTail Team

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Why are fashion’s stars ditching big brands?

October 30, 2015 Leave a comment
 WGSN

BY SARA MCCORQUODALE

2015 will forever go down in history as the year fashion’s big names quit. But why? WGSN’s senior teams shares their thoughts

OCT 29, 2015

donna karan, alexander wang, alber elbaz, raf simons
T

o say 2015 has been a year of exits in fashion is no exaggeration. Alexander Wang from Balenciaga, Donna Karan from Donna Karan International, Raf Simons from Christian Dior and now Alber Elbaz from Lanvin, albeit under apparent duress.

But why are designers who helped shape fashion houses’ recent histories exiting for pastures new? Does it simply reflect a shift in working culture or is it a sign the industry has become a negative place for creative talent? WGSN’s senior team shares their views…

Entrepreneurialism is more appealing than stability
Carla Buzasi, Global Chief of Content, says: “This isn’t shocking when you consider how career paths are taking shape these days. People are continually looking for new adventures and perhaps more so in fashion. Where the goal used to be getting to the top of a huge brand, entrepreneurialism and being in control of your own destiny has such appeal now – I think that’s what designers are aspiring to.”

The demand for newness is unsustainable
Lizzy Bowring, Director of Catwalks, says: “It seems fashion has become too frenetic and you can’t continually work creatively under this pressure – there comes a point when you burn out. It’s not just in high fashion either, it’s at every level of the industry. There is a constant consumer demand to deliver newness but working at this pace and creating this output is, conversely, making things feel very stale very quickly.” 

The true customer is not the focus
Lauretta Roberts, Director of Brand and Propositions, says: “This really feels like a watershed moment and I think we need to ask ourselves how many collections a year we actually need. Production and communication in the industry are completely out of sync and this would be a good time to address that. There is a feeling designers have to create moments for Instagram instead of moments for the customer – it’s just not sustainable.”

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A Perfect Storm Revisited

October 30, 2015 Leave a comment

The US Apparel Industry’s Perfect Storm

Retail shopping is being transformed by technology in multiple ways. A recent article in USA Today titled ” Why shopping will never be the same,” by Jon Swartz touches on a few of them.

We will probably never see a “perfect storm” like this again, where crisis level problems meet solutions of opportunity head on. The confluence of technology and need has never been more in sync than today.  Yet with all this opportunity the apparel trades continue to resist change, marching like proverbial Lemmings off the cliff into the sea, swimming desperately for any new low labor cost port offshore.  But the reality is that the existing US apparel marketing philosophy of mass foreign production, seasonal market floods, massive markdowns, and overflow dumping, is not sustainable economically, environmentally or politically.  

Yet we have solutions close at hand if we just extend our reach.  Here is a list of the available technologies that have developed separately over the last ten years.

  1. We have a massive sophisticated consumer base with an expanding multichannel retail infrastructure ready to serve them.
  2. We have spent hundreds of millions of dollars on developing bar code SKU based prediction profiles for trends and purchasing patterns.
  3. Both the government and the private sector have created efficient and accurate tracking and communication/control programs for supply chain management.
  4. Governments, universities and private companies have developed incredible levels of design, visualization, and software for digital 3D and CAD design to streamline apparel product applications.
  5. Sophisticated security technology has morphed into amazing size and shape scanning capable of providing accurate individual measurements for personal clothing.
  6. Cutting and sewing technologies and techniques are evolving at digital speeds.
  7. Today’s huge digital printing industry’s “change-on-the-fly” technology is perfect for the shorter runs needed by today’s fickle fashion industry.
  8. New advances in chemical-physics have unlocked the ability to permanently dye, print, and imprint polyester, spandex, nylon, and micro-fiber fabrics that dominate today’s worldwide fashion choices.

All these technologies and opportunities add up to a radical new approach to apparel with integrated design, selling and production called PAM (Purchase Activated Manufacturing).  PAM integrates all the above technologies n one continuous process above to produce custom designed, fitted, colored, printed, and labeled garments in individual mini-plants at huge profits.  These mini-plants will eliminate finished goods inventories, virtually end pollution and water use, and return a large segment of the exported apparel jobs back to the USA!

Lets examine the impact of the mini-plant on each of  “The Top Challenges in Apparel Retail” as compiled in a recent white paper named “Apparel’s New Reality” distributed by Apparel Magazine.

The Top Challenges in Apparel Retail

Reducing Out-of-Stocks. This is more critical than ever to apparel retailers, since many have adopted defensive-inventory practices designed to keep only as much inventory in the store as is absolutely needed. This has put significant pressure on retailers to enhance supply chain efficiency by having real-time visibility to merchandise levels in their stores and at distribution centers.  Mini-Factory:  Garments are stored in digital form and sized to fit and produced when purchased.  The is no out-of-stock for any product ever stored in the inventory i.e., a standard DVD will hold over 1200 digital garments including all colors and sizes.

Lowering the Cost of Inventory. Retailers had to adapt during the recession, making difficult cuts to their inventories in order to avoid overstocks and markdowns. But the short selling seasons of apparel, as well as frequent reconfiguration of products on the sales floor, makes this challenge particularly poignant in the apparel industry. Mini-Factory: By targeting PAM production on high inventory cost and high risk designs, colors and prints, retailers can use a single display or touch screen image in place of product on the floor.

Improving Speed to Market. Fashions change at blinding speed, and new trends and consumer preferences emerge at the blink of an eye – today, even more than in the past. Apparel brand-owners must get their products from the design center to the store faster than ever, and retailers must stock and sell those products immediately while consumer interest is at its highest – and before the next selling season begins. Mini-Factory: With real time design, on the fly patternmaking and one-off production, retailers can test the market continuously without delay or cost.  Consumers can make and color and print changes and see them on their body before thy purchase.

Reducing or Reallocating Labor. Gross margins on apparel have dropped significantly in the past two years as a result of the recession, as retailers have slashed prices to move merchandise. This has put renewed pressure on retailers to be more efficient with their labor allocation in order to recoup a few percentage points of margin lost by price-cutting. Additionally, more retailers have begun adopting source tagging, moving the process of attaching tags to the front end of the supply chain, where it can be done more cost effectively.  Mini-Factory: Consolidation of tasks removes the dye-house, the wet printer, the label maker, the hang-tag printer, the cutter and all the transportation and duties in between these sites.  The key to gross profits is not paying less per person but to pay less people.  We have already sent most of these jobs overseas, a mini-factory will pay less people higher wages and still more than double gross profit.

Generating Data to Manage and Maximize Programs. As both sales and gross margins have slipped among apparel retailers and brand owners in recent years, more money has been spent on direct-marketing programs to drive store traffic and encourage purchasing activity. But retailers need additional, real-time information in order to determine what promotions are working and which ones are not, while manufacturers need this information to determine which retailer marketing campaigns they will continue funding.  Mini-Factory: PAM is both real time and real money data, plus you get size and demographic details never before available.  Remember there are no markdown or sale promotions because you have no inventory to markdown.

Preserving Brand Integrity. Apparel counterfeiting remains a huge, vexing problem. It robs retailers of legitimate sales opportunities, erodes margins, confuses supply-chain partners and erodes a brand in the eyes of consumers who receive shoddy substitutes for the real thing. Retailers and brand-owners are taking extra steps to ensure that their brands are properly and consistently presented to consumers. Mini-Factory: Total manufacturing control of you high end products allows security and anti-counterfeit techniques and applications never before possible.

Enhancing Customer Satisfaction. Research from Harvard Business School has consistently noted that when a product is out of stock when a customer comes in, that customer is highly likely to shop for the product in another store and perhaps unlikely to return again in the future to the original store for that product. It also means that the customer doesn’t buy additional apparel products and accessories, robbing the retailer of important add-on sales and profits. Mini-Factory: The consumer participates in the fitting and coloring in real time online or in the store and since the inventory is digital nothing is ever out of stock.

Reducing Shrink. Apparel is the number-two category for shrink worldwide, according to the Global Retail Theft Barometer. Reducing shrink is a huge step toward improving the bottom line of apparel retailers, especially considering that higher-margin products such as accessories, designer-label clothing and intimate apparel are stolen at even higher rates. Mini-Factory: Every garment has an owner before it even starts through the factory. Elimination of shrink is a major contributor to increased gross profit.

Maximizing Sales. At a fundamental level, retailers are in business to sell products that their customers want to buy, and they need to do everything possible to maximize sales. Having the right mix of products, maintaining adequate shelf availability, and keeping prices competitive are all key to their long-term success. Mini-Factory: The PAM selling strategy increases consumer participation, provides for multichannel convenience (in store, online/in store pickup, online/ship) and creates personal tailor level customer loyalty.

An example of the PAM/Mini-Factory strategy for recovering our apparel manufacturing base can be seen daily in thousands of Lowes, Home Depot, Orchard and other home centers and paint stores through the country.  Paint was a staple product for years but it suffered from high inventory costs and large floor space consumption.  The problem was every color had to be in stock and if you did try to mix a new color it was almost impossible to match the customer’s chip.  Sound familiar…?  Then a smart you lady decided to try using a new low cost spectrophotometer technology to store all concentrated colors and produce them right at the counter in the store with white paint! in Voila!… Purchase Activated Manufacturing mini-factories were born! Suddenly, integrated diverse technologies joined to reduce waste and inventory and more than double gross profit.

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Today’s Top Retail Stories from Fierce Retail

October 28, 2015 Leave a comment
FierceRetail October 28, 2015
1. Walgreens acquires Rite Aid for $17B
2. Kohl’s to open smaller formats and FILA shops
3. Target doubles down on visual merchandising
4. Starbucks goes more upscale with London’s Reserve Bar
5. Apple launches shopping category before Black Friday

Industry Voices: REI to close on Black Friday and live by its brand value

Also Noted:
Spotlight On… JCPenney CEO says Ron Johnson was like a bad prom date
Stories from around the Web and much more…

Digital drives in-store by getting local and personal

Using digital channels to drive traffic in-store means not only getting personal with shoppers, but also structuring the corporate organization to live and breathe omnichannel. David Sturrus (left), Walgreens’ director of digital marketing and strategy, shares how Walgreens transformed its structure, then got local and personal with targeted marketing.

Mobile and data are key to omnichannel

When thinking how to strategize for omnichannel, Abercrombie and Fitch, Walgreens and Fanatics all put mobile first, but for varying reasons. With mobile in the mix, these retailers also have the opportunity and challenge of dealing with much more data. Fanatics CEO Doug Mack (left) shares his vision for the future of mobile and data.

Join other retail professionals in the conversation! Be sure to follow us on Twitter at @FierceRetail and visit us on LinkedIn!

Executive News
1. Chico’s finds new CEO in Walmart vet

More News From Across the Retail Industry
1. REI will be closed on Black Friday
2. 84% of consumers to shop before Black Friday
3. Walmart testing drones

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Rising Inventories at Macy’s and Other Major Stores Fuel Holiday Profit Worries

October 26, 2015 Leave a comment

Sourcing Journal

by Judith Russell
Posted on October 26, 2015 in Retail

MacysMacys

Is Macy’s choking on merchandise?

The department store retailer’s inventory levels have grown at an alarming rate in the most recent two fiscal quarters, increasing by 2.7% and 3.8%, respectively, while total sales in those periods fell by 0.7% and 2.6%.

Macys SalesInvGrowthMacysSalesInvGrowth

In the first quarter, which ended May 2, the company blamed the higher-than expected increase in stock levels on the resolution of the West Coast ports slowdown and the weaker-than expected sales, particularly in high tourist traffic markets hit hard by the strong dollar.

Three months later, on the company’s second quarter earnings call, Macy’s (M) CFO Karen Hoguet said the inventory uptick for the second quarter, which ended Aug. 1, happened because they “brought in merchandise earlier than last year to get better set for back to school.”

What will be the next excuse?

“Retailers are already starting to blame the unseasonably warm weather in September,” said Rebecca Duval, VP Equity Analyst for Blue Fin Research. “But when you think about it, it’s never really that cold in September anymore.”

Then what’s causing the inventory build-up?

“People were expecting a pickup in September that just didn’t materialize,” said John Kernan, managing director at Cowen and Company. “It’s a total mess out there. Absolutely horrible numbers from North American retailers. Everyone just mis-planned demand. In the third quarter they’re going to guide fourth quarter weakly.”

Kernan, who covers branded apparel and footwear at the financial services firm, went on to say “When you’re seeing gross and merchandise margins going in the direction we’re seeing, it’s clear there’s a total oversupply of inventory in the retail apparel market.”

Although Macy’s—which opened three of its test concept Backstage off-price stores in the New York area in September—might be the most dramatic example of sales growth in large apparel retailers failing to keep up with rising inventories given its size and market share, it’s certainly not the only one.

Dillard’s (DDS), which until late last year had been enjoying a turnaround in its business, saw sales growth slow in the first and second quarters of 2015, and inventory jump a higher-than-expected 4.8% and 3.3%. Gross margin declined by 54 basis points in the most recent quarter.

DDSSalesInvGrowthDDSSalesInvGrowth

And at Nordstrom (JWN), whose off-price unit Rack sales have been growing faster than its full retail division, inventories have experienced faster growth than sales in each of the past four fiscal quarters on a year-over-year basis.

JWNSalesInvGrwthJWNSalesInvGrwth

Mid-tier department store Kohl’s (KSS) has also been feeling the glut, with inventory growth accelerating in each of the past two quarters, but sales increases remaining in low single-digits.

KSSSalesInvGrowthKSSSalesInvGrowth

At off-price leader TJX Companies (TJX), inventories have increased by more than 10 percent in each of the past two quarters, while sales growth has been at a more modest mid-single-digit level.

TJXSalesInvGrowthTJXSalesInvGrowth

Off-pricer Ross Stores (ROST), whose sales are 40 percent of TJX’s, but whose revenue growth has been impressive over the past several quarters, is also contributing to the oversupply in the sector, with inventories rising by around 20 percent in each of the last two quarters, at more than twice the level of sales growth.

ROSTSalesInvGrowthROSTSalesInvGrowth

Department, chain and discount store sector sales have declined in eight of the past 10 months on a smoothed annualized basis, according to the U.S. Department of Commerce, but total inventory in the sector has steadily risen. DDCSalesInvGrth

“Some stores are planning and managing inventory better than others,” said Blue Fin Research’s Duvall. “The teen and millennial space, for example, is more trend-driven, which is motivating consumers to buy, allowing retailers like American Eagle and Express to have an easier time, but for the older missy mainstream consumers, who do more of their shopping in department stores, there isn’t a compelling style trend motivating them to buy, so there is more inventory build-up.”

Duvall also feels there’s some consumer fatigue around fast fashion. “We’re hearing that Forever 21’s business is challenged, and has been for some time. H&M is expanding its footprint really rapidly in the U.S.”

Duvall then added: “I think consumers are tired of buying something you can’t really wash.”

She went on to say that although the sourcing strategies employed by fast fashion players are starting to be implemented by their slower counterparts, without a clear market direction the payoff is sometimes elusive. “Retailers who can chase business, and who are platforming fabric, can keep inventory and promotional levels at bay. Many are trying to do that, but with traffic and sales declining, it’s very difficult to know which direction to go.”

Meanwhile, merchandise shipments keep coming. Government data shows that imports of apparel have increased year-over-year in each of the past six months. In July and August, the last months for which apparel import data are available, imports hit new record levels.

AppImp2015AppImp2015

All in all, it looks like this year will be an even more promotional holiday season than last year, if that’s even possible. But then what?

Cowen’s Kernan predicts there will be an imminent rationalization of square footage in the market. “There’s an enormous amount of bad real estate out there that people are trying to get out of. Sears needs to close a lot of square footage and when they do, other stores in the mall have clauses in their contracts allowing them to get out of the mall if the anchor leaves, so we are going to see a right-sizing of brick and mortar square footage. We clearly need to see a lot of supply come out of the market. 2016 is the year in which everyone’s going to try to get this right.”

Sourcing Journal

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New Product Drives Levi’s Net Income Up 15%

October 15, 2015 2 comments

rivet

BY OCTOBER 14, 2015 BRANDS

Levi's brand women's denim collection

Could denim be on the rebound? Driven by new products, retail expansion and marketing initiatives aimed atfemale consumers, Levi Strauss & Co. reported a 15 percent net income gain for third quarter 2015 to $58 million, compared to $51 million in the same quarter last year.

Wholesale totals increased seven percent, which the company pinned on new product introductions in the Americas, including the Levi’s brand women’s denim collection. Growth in the Americas was complemented by eight percent sales growth in Europe and Asia derived from retail expansion in the regions.

Adjusted EBIT, which excludes the charges associated with the company’s global productivity initiative and debt refinancing, was $128 million, up eight percent from $119 million in the same quarter of 2014, reflecting the higher gross margin and higher constant-currency revenues. On a constant-currency basis, adjusted EBIT increased 23 percent.

Levi’s anticipates that it will incur additional restructuring charges related to its global productivity initiative, a plan launched in 2014 to streamline the company’s product development, supply chain and distribution network, and to generate annual cost savings in the range of $175-200 million. Levi’s now expects that the majority of the related actions will be implemented by the end of 2016.

Gross margin for the quarter grew to 50.2% of revenues compared with 48.7% of revenues in the same period one year ago. The increase was primarily due to lower negotiated product costs and streamlined supply chain operations. SG&A expenses of $455 million were flat compared to third quarter 2014. Operating income of $115 million in the period was up from $105 million in the same quarter of 2014 reflecting higher adjusted EBIT.

“In the third quarter, we were encouraged by the initial response to our new product introductions, as well as the continued strength of our international retail business,” said Chip Bergh, Levi Strauss & Co. president and chief executive officer, in a statement. “Although we expect traffic at retail to remain challenging in the fourth quarter, we are confident in our ability to grow full-year sales and adjusted EBIT on a currency-neutral basis.”

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These Smart Leggings Help Your Jeans Fit ‘Like A Glove’

October 15, 2015 Leave a comment

rivet

BY OCTOBER 14, 2015 BRANDS

likeaglove

These Smart Leggings Help Your Jeans Fit ‘Like A Glove’

While smart clothing startups like Fitcode are using apps to help women find the perfect jean, competitor LikeAGlove is going one step further and actually bringing the jean customization process to the front door of the consumer.

For $39.99 (soon to be upped to $99.99), women are sent a pair of leggings with built-in sensors to measure their figure. An accompanying iOS or Android app then does all the work and the numbers are used to calculate a women’s exact size, including waist, hips, inseam and more.

LikeAGlove promises that women will then be able to shop their database of more than 2,000 jeans, though the company has yet to announce what brands will actually be available at launch.

rivet

These Smart Leggings Help Your Jeans Fit ‘Like A Glove’

Orders placed before Dec. 1 will be delivered in Q1 2016 while everyone else will have to wait until summer 2016.

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G7 Countries Commit to Actions on Labor and Environmental Protections in Supply Chains

October 15, 2015 Leave a comment

sandler

Friday, October 16, 2015
Sandler, Travis & Rosenberg Trade Report

Following a two-day labor and employment ministerial meeting in Berlin, the G7 group of countries adopted this week a declaration outlining specific actions they will take to promote worker rights and improve working conditions and environmental protections in global supply chains. Highlights of these measures include the following.

– help develop and promote a common understanding of due diligence and sustainable supply chain management in practice and encourage the implementation of due diligence procedures in supply chains of both multinational and small and medium-sized enterprises

– encourage businesses to set up due diligence plans or guides that could ease mutual recognition of responsible business standards throughout supply chains

– support initiatives to promote the establishment of tools (e.g., labels) that enable consumers, public procurers and businesses to access and compare information on labor, social and environmental standards systems used to promote more responsible value chains

– encourage, cooperate with or develop multi-stakeholder initiatives or seek the creation of a G7-wide approach in the textile and ready-made garment sector with the aim of developing measures for convergence and better implementation of labor, social and environmental standards along the entire supply chain

– better coordinate support among the G7 on sustainable textile and apparel production and sustainable cotton production, notably in Africa and Asia

– ask the World Bank to develop specific analyses and policy options for countries’ capacity building and financing tools aimed at strengthening their capabilities to integrate internationally-recognized labor, social and environmental standards into their global value chain development strategies

– create the “Vision Zero Fund,” an initiative that will fund activities and commitments that apply principles of relevant ILO standards on occupational safety and health and working conditions and will be piloted with a focus on the ready-made garment sectors of selected countries

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Fear and Loathing in the Tech Industry

October 15, 2015 Leave a comment
Thursday, October 15, 2015
For the latest updates, go to nytimes.com/bits »
Daily Report

Fear and Loathing in the Tech Industry | –>There are two emotional threads in tech news these days: The public’s loathing of pretentious tech start-ups and the fear of hackers.

Let’s start with the loathing.
Leap Transit’s tricked-out buses might have made sense ferrying high rollers around the Las Vegas Strip, but as a daily commuter bus in San Francisco they appear to have been a hapless overreach.
What Leap, the defunct high-end transit service, intended to do made sense: Cater to customers frustrated by overcrowding on popular transit lines traveled by the city’s Muni buses. But where Leap appears to have gone off the rails is an assumption that customers weren’t just frustrated by local buses, they ached for something fancier, and were willing to pay $6, or about triple a public bus ride, to get it.
The result: Swanky buses with organic snacks and drinks, plush seats, and – in keeping with fashion – distressed wood paneling. In short, décor that looked more like the lobby of Twitter than a bus.
It didn’t work. The company had brushes with regulators and slow customer adoption. What’s more, this start-up lobby on wheels quickly came to represent the well-heeled tech industry’s disconnect from the rest of San Francisco.
Interestingly, privately owned mass transit is something of a San Francisco tradition, as this story in the local news website MissionLocal explains. Even as late as the 1970s, jitneys, as they were called, were ferrying up to 7,000 people to and from downtown.
But there was one big difference: While Leap was targeting the moneyed set, the jitneys of old were mostly a working-class affair. Passengers usually spent 10 cents a ride. By comparison, Muni’s adult fare was 25 cents and jumped to 50 cents in 1980.
At a recent auction, Leap’s two buses fetched $11,100 and $12,100. The buyers were anonymous. But don’t be shocked if they show up as moving art installations at next year’s Burning Man event in Nevada.
Now for the fear: If 2014 was the year of the hacker, an optimist would say 2015 is the year companies are going to the root of the problem: Programming mistakes. A number of big tech outfits like Google and Facebook as well as start-ups and industry groups have begun significant efforts to root out programming mistakes, bugs, and other errors made in the industry’s endless pursuit of improved technology.
Will they work? No doubt, there are still major weaknesses in critical infrastructure, and new technologies like the computerization of cars comes with risk. But in recognizing that hackers thrive on the imperfect work of people inside the industry, tech may finally be plugging the gaps that let the bad guys inside.
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