HIGHLIGHTS


RETAIL – BUSINESS DIVERSITY

Video Rental: Blockbuster Rolls Subscriptions, McDonald's Tests Vending
Two big companies have made significant news in video rentals this week. Blockbuster here said it has rolled out its in-store Movie Pass, which is similar to the subscription model used, online by Netflix and Wal-Mart.
For fees ranging from $24.99 to $29.99, customers can rent an unlimited number of DVD or VHS video titles, up to two or three at a time, and keep them indefinitely with no due dates or late fees. Meanwhile, McDonald's, Oak Brook, Ill., is reportedly testing Redbox vending machines in its 105 Denver restaurants, offering video rentals for $1 a day, with payment by credit card. About two dozen machines have been installed so far, according to media reports. In a previous test in the Washington and Baltimore markets, McDonald's had tried vending units offering a wide array of convenience items, but the video rental component was the most successful, the media reports said.
Data; May 04

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RETAIL – EUROPE

Wal-Mart Eyes European Expansion With Asda
Wal-Mart here is considering rolling its Asda banner out to additional European markets as it explores the possibility of expanding into every country in Europe, Lee Scott, chief executive officer, reportedly said during a visit to Brussels, Belgium, where he is meeting with regulators.
Wal-Mart currently operates Asda in the United Kingdom and has stores in Germany; otherwise, it does not have a presence in Europe. “We’re definitely interested in growth, and a lot of that will come outside the U.S.,” said Bill Wertz, a Wal-Mart spokesman. He told SN he could not confirm Scott’s specific remarks. According to a report in the Financial Times online edition, Scott said the company would expand in Europe through a combination of acquisitions and new-store development.
Date; May 04

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E-RETAIL - CORPORATE

Amazon.com's Bezos ducks questions on Toysrus.com suit
Annual corporate shareholder meetings sometimes hold an element of surprise. Online retailer Amazon.com yesterday had its own unscripted moment.
Dan Barr, a productivity consultant from Seattle, led shareholders in three "hip-hip-hoorays" during the online retailer's question-and-answer session at Bell Harbor Conference Center. The audience seemed reluctant to participate at first, but warmed up by the third cheer.
"I suppose it was because, often, there was kind of a deafening silence," said Barr, 62, of starting a tradition two years ago to lead cheers at local corporate annual meetings. He headed one at Nordstrom's annual meeting yesterday, too.
"These are fabulous companies," said Barr, who attended 17 annual meetings last year. "I think (shareholders) ought to be celebrating and encouraging them to be the very best."
Amazon's annual shareholders meeting serves as the one time each year that noninstitutional investors can meet and question Chief Executive Jeff Bezos. One shareholder suggested strengthening Amazon's executive compensation policy. The proposal received 3 percent of the shareholder vote.
As has become customary, Bezos used part of the time to show off a variety of the online retailer's better-selling, if not more unusual, products. He selected from a wall of items arranged next to letters from A to Z.
Next to H was the Stiletto-brand hammer, a 15-ounce piece of titanium that sells for $174.99 in the retailer's home and garden store.
"This is the hammer of choice - solid cast titanium," Bezos said, holding it up for investors to see. "That's important in case your hammer ever needs to go Mach 3."
S stood for Sweet Mele's Hawaiian Coconut Surfboard Syrup, which sells in the gourmet food store for $3.69.
"Our anti-Atkins strategy is that, as groceries shed products like this and replace them with healthy, high-protein products, we'll be the last man standing," Bezos quipped.
Amazon last year reported a $35.3 million profit on $5.3 billion in sales, as its customers responded to deep discounts and a standing free-shipping offer on orders of more than $25.
After the meeting, Bezos declined to answer questions from reporters about a lawsuit brought last week by partner Toysrus.com.
"It's active litigation," he said. "It's not appropriate to comment on it."
In August 2000, the companies signed a 10-year deal to operate co-branded toy and baby stores online. But Toysrus.com sued Amazon on Friday, alleging it violated that arrangement by allowing other retailers to sell toys and baby products on Amazon's site.
Toysrus.com, a division of Toys R Us, has paid more than $200 million since the deal began for the right to exclusivity, according to the lawsuit.
The deal became the cornerstone of Amazon's strategy to expand its selection through partnerships with other retailers. Its largest partners include retailers such as Target, Borders.com and Office Depot.
Prominent mediator Randall Wulff, principal of Wulff, Quinby & Sochynsky in Oakland, Calif., oversaw talks on Thursday and Friday. Toysrus.com filed the lawsuit on the second day.
Wulff said yesterday that a lawsuit doesn't mean the end to mediation, and he has encouraged both sides to consider returning to the table. "It's not unusual to retire, let the dust settle, reflect maturely and then return," he said.
Amazon's shares closed yesterday at $43.62, up $1.99.
Source; Seattle Times, May 04
Write; by Monica Soto Ouchi, Seattle Times technology reporter

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CORPORATE – APPAREL

Russell Athletic launches new logo to reflect athleticism authenticity
Russell Athletic, the flagship brand of Russell Corporation, recently unveiled a more athletic and evolutionary version of its classic red and blue capital "R" logo that has been seen for decades on thousands of sports teams worldwide.
Source; Yahoo, May 04

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FOCUS

E-RETAIL – STATISTICS

Excluding travel, online retail sales grew 34% to $72 billion last year
Excluding travel, online retail sales in the U.S. grew 34% in 2003 over the previous year, reaching $72 billion, with a rising economic tide “floating all boats,” meaning that all product categories online did well.
Online revenues in every product category gained (with the exception of autos and auto parts, due to a survey methodology change.) The growth rate in categories that have greater maturity online, such as computers and books, took a back seat to that of newer categories. For example, online sales of sporting goods grew 104% in 2003 over 2002; while the flowers, cards and gifts category grew 98% and health and beauty grew 93%.
Overall, online sales accounted for 5.4% of total retail sales in 2003, up from 3.6% in 2002. In 2004, online sales are projected to account for 6.6% of total retail sales. One of the most significant changes from 2002 is that in the aggregate, all retailer types recorded operating profitably in 2003. A total of 79% of retailers posted positive operating margins for their online businesses last year, with retailers in the aggregate reporting operating margins of 21%.
Web-based retailers showed the greatest improvement in operating margins over last year, turning a loss of 16% in 2002 to a gain of 15% in 2003.
According to recent market report online retailing has experienced its own version of survival of the fittest, pointing out that those that failed to control costs and attract consumers shut down. Store-based retailers improved profitability, reporting average operating margins of 7% in 2002 to 21% in 2003. With average operating margins of 28%, catalog-based retailers were retail’s most profitable group in 2003.
A recent survey found that while retailers’ investment in technology such as cross-channel tracking systems was flat between 2002 and 2003, the multi-channel experience of the customer didn’t suffer as a consequence. The web influenced one in four offline purchases, the retailers reported. 87% of retailers now accept in-store returns of online purchase, up from 78% last year. However, as cross-channel integration improved as retailers encouraged shoppers to buy in stores and online traffic increased, conversion rates fell – to 2.4% in 2003 to from 3.2% in 2002.
According to the report’s authors, online sales and profitability gains in 2003 indicate most retailers have mastered the basics of online selling. The key to the next phase for retailers is differentiating themselves on the basis of marketing, merchandising, and the quality of the multi-channel experience.
As investment in digital marketing reaches an all-time high, retailers must experiment with local search, word-of-mouth marketing, and e-mail segmentation in order to reach new customers and create intimacy with existing ones,” the report states. “Combining merchandising expertise with automated technology will produce more relevant product recommendations and increase customers’ loyalty, as will offering custom products.”
Including travel, the survey found that online sales in 2003 grew 51% over the previous year to reach $114.1 billion.
Source; VWB
Write; LuisB, May 04



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