Customers Search Internet For Back To School Deals

by Sharon Edelson
From WWD Issue 07/19/2011

Facing sticker shock at the pumps, consumers are traveling no further than their computers to log onto price comparison search engines for back-to-school deals for their kids.

While b-t-s shopping budgets will be flat or shrink slightly as cautious consumers maintain a recession mind-set, e-commerce is poised to significantly gain market share, as it did last Christmas season when it more than doubled its growth rate. “The Internet is already highly promotional,” said Walter Loeb, founder of Loeb Associates. “That’s where retailers are gaining share. Many retailers at the mall were empty last Sunday. Success this b-t-s season will be selective and it won’t be for all retailers. There’s no sense of free spending exuberance. Department stores will get their share if they don’t have a sale every Friday and Saturday,” as has been their custom during the b-t-s selling period.

A b-t-s forecast survey by PriceGrabber, a part of Experian, found that 69 percent of consumers plan to shop online and use comparison shopping sites as a money-saving technique, compared with 23 percent in 2010. Forty-one percent of shoppers said they’ll visit retailer Web sites this b-t-s period to print out coupons, versus 33 percent last year.

“Clothing retailers will always benefit from the b-t-s shopping season, and we suspect that the increase in purchases in this category can be attributed to the recent wide availability of affordable, designer-inspired clothes,” said Graham Jones, general manager of PriceGrabber. “Parents looking to keep their kids on-trend may find it easier to stay within their budget by comparing prices online for a discounted pair of designer jeans and extending the life of the expensive electronics they already own.”

PriceGrabber’s survey found that 48 percent of consumers plan to spend $250 or more on b-t-s purchases, and 25 percent will spend $500 or more, a modest decrease from b-t-s budgets in 2010, when 56 percent of consumers said they’d spend $250 or more and 31 percent planned to spend $500 or more. The survey of 2,612 U.S. online consumers was conducted May 12 to 19.

The NPD Group’s study of consumers’ purchasing intentions for the b-t-s season saw little change in the amount shoppers plan to spend. The same number — 38 percent — said they planned to spend more this year than last, and 22 percent said they would spend less in both periods. Once again, value is their modus operandi.

“We have a clear sign that ‘trendy and fashionable’ or ‘influenced by friends’ is shrinking and ‘value’ is gaining momentum,” said Marshal Cohen, NPD’s chief industry analyst. “The study’s results clearly point out that consumers will be shopping later, looking for value, and searching out lower priced options.”

That should benefit mass chains like Target, Kmart and Wal-Mart. “Target.com continues to be a destination, especially at monumental moments like b-t-s,” said a spokeswoman for the retailer. “There’s an expanded assortment on Target.com, an option for students to make lists and a back-to-college checklist where we’ve curated a list of products students need as they head back to college. Even if they’re not shopping online, our guests are doing some homework and preview shopping.”

A key launch for b-t-s is Denizen jeans from Levi’s, with styles for the whole family. The brand, which is exclusive to Target, features jeans in a variety of washes, dyes and fits. Skinny jeans for boys and girls are $17.99. Shake it Up, the new collection from the Disney Channel’s D-Signed brand, consists of fashion tops, leggings, screen prints and jackets inspired by Ashley Tisdale’s Sharpay character from the “High School Musical” series. Customization and personalization of items for b-t-s includes Paul Frank stationary and notebooks, where kids can color the iconic monkey to their liking.

“B-t-s is the second biggest season” next to Christmas, in terms of sales, said Mark Snyder, chief marketing officer at Kmart. “Our customer is compressing the frequency of her trips and saying she’s being more thoughtful and deliberate in what she’s choosing.”

Kmart is trying to leverage social networking in the b-t-s arena. “Selena Gomez has 4 million followers on Facebook,” Snyder said, referring to the actress, whose Dream Out Loud collection is sold exclusively at Kmart. “With the celebrity deals you put together today, you negotiate with them to tweet and do Twitter parties. In the old days it was, ‘How many appearances can you make?’”

Kmart’s silver bullet, according to Snyder, is layaway. “In this post credit-crazy world, it’s one of the things that will get the customer into the store, along with great prices. We grew layaway in 2009 by 3 million families.Layaway is growing in influence every year,” he said.

However, Amy Noblin, a retail analyst at Weeden & Co., said retailers are adopting a more conservative tone with regard to b-t-s. “The economic data have been mixed. There’s a lot of uncertainty around pricing,” she said, referring to how higher cotton prices will impact consumer prices. “That’s the big wild card. Retailers are waiting to see what [their competitors] are going to do with pricing. Certain retailers have been able to deflect some increases to the spring. The price increases will be bigger in the second half of the year. The more cotton-exposed categories are up more.”

For example, Noblin said graphic T-shirts are up $2 to $5, hoodies up by $10 and there are more high-priced denim stockkeeping units offered in the category. “You’re going to see more promotions that help mask the price increases,” she said.

Denim will be important, as always, with styles ranging from “the skinniest leg through boot cut to straight leg to a slightly wider flare,” said Tana Ward, senior vice president and chief merchandising officer for American Eagle Outfitters Inc. “It’s not really about one fit.”

American Eagle’s b-t-s offerings have more of a rocker influence with the marketing message “We the People,” edgier graphics on T-shirts and crop tops. Pre-planned promotions start as early as this week and will continue throughout the season. Ward said American Eagle continues to see more visitors online.

“To truly win b-t-s, J.C. Penney is reaching a new and younger customer through unique digital experiences,” said a J.C. Penney Co. Inc. spokeswoman. “We want to be part of their online social circle through virtual tools that enable them to express their personal style while getting involved in a worthy cause.”

That includes using mobile devices, QR codes, MS Tags and location based check-in this b-t-s season. Penney’s is leveraging the popularity of haul videos, which blend video blogging and a fashion show-and-tell, with a Haul Nation contest on its Facebook page. Teens can upload their haul videos for a chance to win a trip to New York City.

Stardoll, a new brand for b-t-s based on Stardoll.com, is bowing at Penney’s. With more than 100 million users worldwide, Stardoll.com claims to be “the world’s largest fashion and dress up games community for girls.” Penney’s is capitalizing on the popularity of girls designing and dressing personalized “MeDoll” avatars by using those style trends to create Stardoll clothing and accessories, such as five-pocket jeans, $23.99, and floral flounce tops, $17.99. The retailer is also launching its largest-ever online cause marketing campaign to benefit kids’ after-school programs, a spokeswoman said.

Sears is introducing a new juniors brand called American Star. Mix and match related separates feature trendy looks with an “uptown bohemian” feel, a spokeswoman said, adding, “It’s an inspirational collection for us.” Superstretchy jeans and jeggings come in a range of washes and fits this season and jeans have details such as “bling” on the back pockets.

“We do see a trend in increased shopping in September as many kids check out what their friends are wearing, take note of those trends and return to the stores or go online to purchase additional, key items,” she said.

Brooklyn Lease Negotiations Continue For Walmart, Penney's

Wall Street Journal
By Eliot Brown and Joseph De Avila

The Related Cos. is in advanced lease negotiations with Wal-Mart Stores Inc. and J.C. Penney Co. about anchoring a mall in southeast Brooklyn, according to people familiar with the matter.

Wal-Mart has long been considering the site overlooking the Belt Parkway just west of Howard Beach. But talks have intensified in recent months as the company has expanded a publicity campaign and taken steps to mollify potential critics, the people said.

The outlook for the 630,000-square-foot development—which would accomplish Wal-Mart's longtime goal of opening a location in the city—was boosted by J.C. Penney's strong interest. The combination of the two large stores would likely give the project sufficient financial viability to move forward despite the uncertainties that continue to cloud the slowly recovering economy.

J.C. Penney, which was based in Manhattan for about seven decades before moving to Texas, already has stores in all four other boroughs. But Wal-Mart doesn't, and its possible entry into the city has sparked strong opposition from labor unions, community groups and some elected officials.

Hurdles to Wal-Mart's beachhead remain. For starters, Related has yet to finalize a purchase of a portion of the site from the state, the price for which has come under criticism from Wal-Mart opponents.

But the project doesn't require further approval by the City Council, typically a major obstacle for developers. Given a 2009 rezoning, Related is free to build any big-box store on the site once it takes control.

Representatives for Wal-Mart, J.C. Penney and Related declined to comment on lease negotiations. "We still have not signed any leases anywhere in the city," Steven Restivo, a spokesman for Wal-Mart, said last week. "We continue to evaluate opportunities across the five boroughs."

Wal-Mart and J.C. Penney would take around 150,000 square feet each in the planned Gateway Center II mall, according a person familiar with discussions. The project would sit just north of Related's Gateway Center mall, which was completed in 2002 and houses a Target and a Best Buy.

Wal-Mart, which has unsuccessfully sought to break into the New York market in the past, has been investing considerable resources in an attempt to pave the way for an entrance over the objections of a powerful set of unions and elected officials.

Two labor groups, the United Food and Commercial Workers and the Retail, Wholesale and Department Store Union, have been particularly aggressive in combating Wal-Mart, which has long been opposed to a unionized work force. They are joined by elected officials including Council Speaker Christine Quinn and community groups worried about the giant discounter's impact on local merchants.

To counter the critics, Wal-Mart has launched a public-relations campaign to tout the retailer's virtues through fliers and newspaper and radio ads.

In the first four months of the year alone, Wal-Mart spent more than $1.7 million on consultants, most of which was directed at firms that do advertising and polling, according to lobbying records.

Earlier this month, the company announced a $4 million donation to a New York City job program at a news conference with Mayor Michael Bloomberg. Wal-Mart also recently signed up as a $150,000 sponsor for a summer concert series hosted by Brooklyn Borough President Marty Markowitz that includes performances by such artists as Queen Latifah.

The sponsorship drew praise from Mr. Markowitz, who has been critical of Wal-Mart in the past. In a statement on Sunday, he said he isn't "philosophically" opposed to Wal-Mart, but declined to comment on Related's plans. He said he believes the retailer should pay "a fair wage" and allow workers to unionize.

The push seems to have created a sense of inevitability among many elected officials, particularly given that the company has said it only intends to take space in stores where City Council approval isn't necessary, making it difficult to block. Earlier this year, Wal-Mart also won some labor support by signing a five-year contract with the Building and Construction Trades Council of Greater New York that guarantees that any of the company's store construction would be done with union labor.

Even Ms. Quinn, a vocal Wal-Mart critic, earlier this year offered to broker a deal between the company and the Hunts Point Terminal produce market. Under the deal, Wal-Mart would have committed to buying at least 5% of its produce from the market, although talks fizzled.

Aides to Ms. Quinn last week downplayed the potential deal and said Ms. Quinn hasn't changed her position on Wal-Mart and that she continues to oppose the company coming to New York.

Critics of the possible Wal-Mart Brooklyn development have recently stepped up efforts to block Related's purchase from the state of a 21-acre piece of the mall site. Related already controls the rest.

Last week, critics released a state memorandum from the Office of General Services that detailed how Related had renegotiated the purchase price for the state-owned land. The price was reduced in 2010 to $14.5 million from the $32.5 million it agreed to pay in 2009.

According to the memo, the price was changed partly because of an appraisal that showed a lower value for the site. Also, Related had been counting on at least $7.5 million in expected government incentives that proved unavailable. The mall is part of a larger 227-acre development that includes low-income housing, retail and parkland.

"The Gateway 2 development will expand on the enormously successful project that has already brought great economic benefits to this area," creating thousands of jobs, said Joanna Rose, a spokeswoman for Related, last week.

The land sale must be approved by state agencies and the state comptroller. A spokesman for the comptroller's office said last week that it hadn't yet received the proposal.

Mike Boylson Leaves Penney's

by David Moin
From WWD Issue 07/18/2011

J.C. Penney Co. Inc.’s marketing team has experienced a string of departures, among them its top official, Mike Boylson, executive vice president and chief marketing officer.

Boylson’s exit has raised speculation that incoming chief executive officer Ron Johnson has already begun cleaning house at Penney’s. Johnson is expected to bring a lot of change to the business, just as he did at Apple, where as senior vice president of retail he orchestrated the brand’s fast-paced, innovative and highly productive retail strategy from its inception in 2001 to more than 300 stores currently in the U.S. and abroad.

Boylson left Penney’s at the beginning of July, though Penney’s did not announce his departure despite his stature and long history there. Boylson joined the retailer as a management trainee in 1978, rose up the ranks to store manager, district manager, vice president and director of marketing planning and promotions, and finally executive vice president in April 2003. He oversaw a huge, high-profile marketing program with an annual advertising budget estimated at around $1 billion.

Two other marketing executive also recently left Penney’s: Nick Bomersbach, vice president of marketing for jcpenney.com and a 10-year veteran of Penney’s, and Christine Laczai, director of digital marketing who has been with Penney’s for two years and previously worked with VF Corp.

In confirming Boylson’s departure Friday, Penney’s said it has begun a search for Boylson’s successor. “Mike Boylson informed J.C. Penney in early June of his intention to retire on July 1,” a Penney’s spokeswoman said. It’s expected that Penney’s will hold off on filling the other vacancies until a new executive vice president of marketing is determined. Bill Gentner, Penney’s senior vice president of marketing planning and promotions, is acting as interim chief marketing officer.

Johnson joins Penney’s board on Aug. 1. and becomes ceo in November but has already been getting his feet wet. He accompanied Penney’s current ceo and chairman, Myron E. “Mike” Ullman 3rd, to Hong Kong for the chain’s annual supplier summit, where key suppliers learn about the state of Penney’s business and long-range plans.

In addition to making organizational changes, Johnson is expected to drive Penney’s Web presence, introduce new products and get the Penney’s team to think differently. Penney’s close to $18 billion in sales last year is still under prerecession volumes, but the company has the potential for growth and for elevating its image to attract younger customers. Johnson was lured to Penney’s by the prospect of reinventing another slice of retail, just as he did with the technology sector, and by the opportunity to be the top gun at a multi-billion dollar corporation.