Large Retailers Are Tapping the Urban Markets

Reported in the Los Angeles Times, Target is planning to open a store, focusing on the sale of groceries and home basics, in downtown Los Angeles.

Target took advantage of the recent downturn in the real estate market and purchased a space in the 7+Fig mall in Los Angeles to open a new, smaller store. Target feels as though it has been neglecting the urban market that could prove to be a great resource of revenue.

Residents of the downtown area expressed that they would love a Target in the area to be able to conveniently pick up basic groceries during their busy schedules.

Other retailers such as Wal-Mart and Costco are looking to take advantage of the untapped urban market and offer smaller stores that would provide groceries and household basics to a busy working demographic in downtown areas.

This seems to be an a great move in terms of distribution channels for these large retail companies. Building smaller stores that offer the shopping "basics" in highly populated urban downtown areas will make these companies' products more accessible to those who lead busy lifestyles and it will also widen their customer base.

The only challenge these retailers will face is the acquiring of expensive real estate in urban areas.

http://www.latimes.com/business/la-fi-1104-downtown-target-20101104,0,6438689,full.story

Attack of the Tall Dolls

In past generations girls used to play with dolls until the beginning of their teenage years, but research has shown that now girls stop playing with dolls at the age of 7. Disney like Toys 'R' Us are starting to sell taller dolls in order to appeal to the older kids (11 years old) Disney has just come out with Princess Tiana, Ariel, and Cinderella as bigger dolls. It has been researched that the bigger a doll, the more a little girl can relate to it. Dolls are also now coming with more modern clothes and with accesrories such as books in an attempt to reach out to older girls.

I think they are adapting in a very smart way. Research marketing is incredibly important when it comes to this. I have first hand experience watching 7 year old prefer and iphone or ipod than a doll. I think it is going to get very tough for dolls even after this, many challenges arise as the newer generations will all be technology based. Unless these toys become robots within a doll look, I don't see how dolls will continue to exist within the next few generations.

-Jacky Meltzer
http://online.wsj.com/article/SB10001424052702304173704575578291510042572.html?KEYWORDS=retail

Coach Sales, Profit Jump

            Coach Inc.’s sales jumped this past year with a 34% increase on sales and have said that they are ready for the holiday season and beyond. Despite their lower pricing strategies and muted consumer spending, Coach has proved to significantly grow in developing markets. They are extremely thrilled with their success and even have plans to open up more full-priced stores in New York City. Also, because of their increase in sales, they plan to expand in China, where the country “represents the single largest geographic opportunity for Coach”. The article also stated, “Coach posted earnings of $188.9 million from $140.8 million and that revenue jumped 20%.”

            I am actually surprised that their sales have increased because of the fewer amount of consumers buying products in general throughout this bad economy. I would also think that even though they are lowering their prices on their goods that they still wouldn’t increase their sales by much. However, I am proud of their strategies and think that expanding their stores across the nation and around the world will only feed them for even more success. Globalization is said to be one of the most effective factors of succeeding in a business, and I think that Coach will benefit from it.  Do you guys think that they will continue to attract  more costumers to their company, or do you think it will only be a “one-time success”?

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http://online.wsj.com/article/SB10001424052702303390704575575881503013638.html?mod=WSJ_Retailing_leftHeadlines

Posted by Tania Dabdoub

Barnes & Noble Creates E-books for Kids

Barnes & Noble is creating new children e-books for their new electronic reading device called Nook Kids. These e-books will include "enhanced editions of classics," picture books, and novels. These new e-books are geared toward 3-8 year olds and will be available online. The Nook Kids electronic readers will have a touch screen display and some of the children e-books will have interactive elements.

With the changing times and changing technology, I see Barnes & Noble's Nook Kids idea to be a way to keep up with these times and stay ahead of competitors. I think some parents will go for the idea, as the enhanced picture books and interactive features will be appealing to their young children and entice them to read and learn. It also, however, could just be putting a video game in the hands of a child; children may skip over the reading aspect and just play around with the interactive features. In addition, the price of these Nook Kids readers must be reasonable because things put into the hands of a young child do suffer a bit of damage. Parents would not want to spend large amounts of money on something that will be broken in a matter of minutes.

It will be interesting to see how many of these Nook Kids readers Barnes & Noble actually sell. It will be an indication of whether technology has now reached an even younger generation or children classics should remain classics in printed form.

http://online.wsj.com/article/SB10001424052702304354104575568741495194492.html?mod=WSJ_Retailing_leftHeadlines

Happy Holidays to the Retail Industry

The National Retail Federation has been doing some research and has concluded that this holiday season consumers will be more flexible with their spending.

A survey of 9,000 consumers revealed:

- 61.7% said the economy will affect their spending

(declined from 65.3%)

- 41.8% said sales or discounts are "the most important factor in their purchasing decision"

(declined from 43.3%)

- 5.3% said customer service is a "more important factor"

(increased from 4.4%)

- 12.7% said "merchandise quality" is also very important

(increased from 11.8%)

- 57.1% said they will "self-indulging," shopping for themselves

(increased from 52.9% )

- 65.1% said they will doing their holiday shopping at discount stores

(decreased from 70.1%)

Overall, the survey shows that this year consumers will be more lenient with their pocket books when the holidays come around. What does this mean for retailers? Retailers will definitely see a boost in profits from holiday shopping traffic, but they will also have to be creative in attracting consumers to shop. More focus will have to be put on the consumers and their wants because more consumers are valuing quality customer service. Quality control is also something retailers will have to consider.

Although many consumers say they will be shopping at discount stores and that discounts are the most important factor in the decision to spend, there has been a significant drop in the number who will be shopping at these discount stores. Discounters will face competition with more expensive stores to attract consumers to their stores, especially with the increase in the number of consumers who want to "self-indulge" this holiday season. Advertising good product quality and good customer service could be a way to lure consumers.

The survey also shows that people are slowly recovering from the economic downturn. It may be getting closer to the time in which consumers return to "normal" spending habits.

http://online.wsj.com/article/BT-CO-20101019-707102.html

Grocery Stores Increase Ad Spending

            During this bad economy, supermarkets (who are now not the only places to buy the groceries) have been spending their money on advertising to repel competition from drug stores and dollar stores. For example, chains including Pacific tea and Safeway Inc. are lowering their prices on numerous items in hopes to attract more customers. Although these chains haven’t increased their profits by much, they are building up their reputation in terms of being known for their low-priced goods. In today’s society, it is also extremely hard to succeed with these type of companies, for they are also competing with places such as Wal-mart, Walgreen Co., and Target-places that all have grocery offerings at cheap prices. In the beginning of this year, data shows that advertising spending rose 19% to $393.3 million. That portrays a  huge increase in spending within this industry.

            What shocks me is that despite their low prices and increase on advertising, these companies aren’t benefiting much from it. For example, Safeway reports to decline 1.1% in third-quarter sales due to their new strategy. Just as Jefferies & Co. analyst Scott Mushkin states,” Advertising alone is not going to be the magic bullet…they have to marry it with real actions.”

            I believe that his statement is 100% true. This new strategy is effective in a way that it will attract a lot more customers. However, advertising alone won't do the job of bringing success to the company. Companies can’t just have the mind-set that they will prosper because of this strategy. They must continue working hard to find ways to bring more and more people to buy from their stores. I am not surprised that many of these chains haven’t done so well, especially this year, for there exists so much competition. After reading this, do you guys think that it is foolish of these companies to spend so much on advertising even if  there shows no increase in sales, or do you think that over time, they will benefit from it?

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http://online.wsj.com/article/SB10001424052748704763904575550182011131788.html?mod=WSJ_Retailing_leftHeadlines

Posted by Tania Dabdoub

NFL, Nike Stitch Apparel Deal

There are 53 players per NFL football team, 22 total players on the field at one time, dozens of coaches, coaching assistants, and other staff on the sidelines, referees, and not to mention hundreds of thousands of fans. The NFL is a huge enterprise, so for Nike to be able to claim putting their logo on all of the clothing and equipment for the NFL for a designated number of years is probably one of the best investments a sports attire retailer can make. The Nike symbol will be everywhere; the camera zooms in on the players, it's there; and when fans buy a jersey to support their favorite team and player, it's there.
The NFL needed to sell this advertising niche in order to make up for the deficit and increase revenue. One billion dollars was quite the huge investment on Nike's part, but I am positive that it will be a beneficial partnership for both companies. And, personally, I'm looking forward to seeing the new gear that Nike produces in order to support my NY Giants.

Source: http://online.wsj.com/article/SB10001424052748703440004575548144277455632.html?mod=WSJ_Retailing_leftHeadlines

--Leah Stoltz