Wednesday, July 14, 2004

RETAIL – INTERNET

PMA Expands Photo Web Site Offering to Enhance Retail Experience
TakeGreatPictures.com here, a joint Web site of the Photo Marketing Association (PMA) and the PhotoImaging Manufacturers and Distributors Association (PMDA), will add a feature highlighting special sales and retail activity, it announced earlier this week. The addition is geared toward enhancing consumers’ retail shopping experience. Visitors to the site will be able to click on a “Special Offers Near You” link to find location listings for retail options available in their state each month. PMA and PMDA launched the Web site several years ago to increase consumer awareness and enthusiasm for new photoproducts, tips and techniques.
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RETAIL – FOOD SECTOR

Wild Oats Enters Cincinnati
Wild Oats Markets, Inc., the US nation's No. 2 natural and organic supermarket chain, will be moving into the Cincinnati market with a new store opening in the Deerfield Town Center July 21.

The opening is part of the company's ambition to expand existing markets over the next three years. "We have very aggressive growth plans," Wild Oats spokeswoman Sonja Tuitele told Progressive Grocer. "This year we are opening about 12 stores; next year we will open 20 stores; and in 2006 and beyond we will be opening about 40 stores a year."

In the near future Wild Oats plans to do the bulk of its expansion in existing markets, to provide customers with greater convenience as well as to leverage distribution and the supply chain, and gain economies of scale in advertising. "For example, with only one store in Cincinnati, we are already distributing to that store, our regional folks were already having to travel out there to the store, and we were already advertising to that market," says Tuitele. "If we have three or four stores in the area, we are able to leverage that spend across all of them."

The Cincinnati store will be 28,000 square feet, which will be the size of most of their new prototype stores, said Tuitele, as it offers customers what they're looking for in terms of natural and organic products, in a friendly, community-market-style store.

One new feature will be a Holistic Health Center, a store-within-a-store format where vitamins, supplements, and body care products are to be sold. The concept was first tested in Wild Oats' flagship store in May and, counting the new location, will be in three stores.

"In our older stores these products were in the center of the store, because our founders came out of that industry," said Tuitele. "Through our research we found that it was a bit intimidating for our customers. In the new concept the shelving is lower, so it fosters better customer service; it is more inviting, kind of like a little boutique which offers the natural personal care items, and body care and vitamins and supplements. There are interactive screens where you can look up information; all the employees have been trained fairly extensively on product knowledge, so they are really armed to serve our customers better."

For future stores Wild Oats plans to seek out areas where the demographics consist of college-educated consumers; following this, level of income is the next big factor in choosing its locations, though, as Tuitele pointed out, this is becoming increasingly less important.

"Typically what follows education is income, and those are people who can afford to shop natural and organic foods," she said. "But here the price differential is coming down when you shop in-season or when you shop the bulk department; you are finding prices that are very competitive to what you find in a conventional store. Plus our high-touch customer service and high level of employee training help to keep customers coming back. It is an experience they don't find elsewhere.

"It definitely helps us differentiate ourselves from other stores," Tuitele added. "Especially if the conventional stores are worried about Wal-Mart and worried about lowering their prices, it gives us a positioning in the marketplace that is very unique."
Write; by Joseph Tarnowski, July 04

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FOOD SECTOR – RETAIL

Grist Mill Granola Bars and Muesli Cereals Recalled
Grist Mill Co., based here, is voluntarily recalling Fruit & Nut Trail Mix Granola Bars and Muesli Cereals, sold under retailer brand names, because they are potentially contaminated with salmonella.

"Although we have had no reported incidents of salmonella poisoning from these products, the company is just being overly cautious," FDA spokeswoman Kay Carpenter told Progressive Grocer.

The Fruit & Nut Trail Mix Granola Bars are packaged in 7.4-ounce boxes with expiration dates between June 6, 2004 (JUN0604) and Dec. 31, 2004 (DEC3104). The Muesli Cereals are packaged in a 15.3-ounce box with the expiration dates between Sept. 10, 2004 (SEP1004) and Dec. 10, 2004 (DEC1004).

The Fruit & Nut Trail Mix Granola Bars were distributed nationwide to retail chains and are sold under their brand names: Acme, Albertsons, BiLo, Food Club, Food Lion, Fred Meyer, Giant, Giant Eagle, Great Value, Hill Country Fare, Hy-vee, Jewel, Kroger, Laura Lynn, Meijer, Millville, Our Family, Price Chopper, Ralph's, Roundy's, Stater Brothers, Stop & Shop, Sunny Select, Tops and Weis. The Muesli Cereals were distributed nationwide to retail chains and are sold under their brand names: Acme, Albertsons, Archer Farm, Best Choice, Central Market, Flavorite, Fred Meyer, Harris Teeter, Hy-vee, Jewel, Kroger, Ralph's, Safeway, Select Healthy Advantage, Shaw's, and Shop & Save.

"All of these stores have been notified by phone, letter, and e-mail, with plenty of follow-ups, to make sure that the message doesn't slip by," Carpenter noted.

Almonds received by Grist Mill were randomly tested for the presence of salmonella. This ingredient testing did not reveal a presence of salmonella in raw almonds before the ingredient was used to manufacture the subject products, and there are no reported illnesses associated with these products. However, the company is working with the FDA to assure the quality and safety of the food supply.

This recall is in response to a voluntary recall by Paramount Farms of California of whole and diced raw almonds, based on over 20 possible illnesses associated with the almonds nationwide.
Source; FDA, local media. July 04
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CORPORATE – MARKETING STRATEGIES

P&G Rewrites The Marketing Book
Procter & Gamble, the company credited by many with writing the book on brand management, is adding a new chapter on marketing to African-American consumers.
The company announced last week it had signed a multi-million dollar agreement with radio personality Tom Joyner and his company, Reach Media.
The deal is important for a number of reasons, not the least being it represents a fundamental shift in how P&G communicates with consumers in the African-American community.
The consumer brands giant is taking its message to the audience through radio, the medium that helped put it and its iconic brands on the map. P&G will air commercials on the "Tom Joyner Morning Show," which is syndicated in 115 markets across the U.S. Mr. Joyner's show has an estimated audience of eight million listeners.
P&G's deal, however, is a lot more than just running spots on the radio.
The company's brands will also sponsor features like "Thursday Morning Mom," a salute to moms, and "It's Your World," a daily soap opera.
Mr. Joyner and his on-air crew will interact with P&G products on the air, what the company calls "endorsement radio."
P&G will also support organizations, including the Tom Joyner Foundation, which assist students at historically black colleges.
Source; P&G, July 04
Link; Procter & Gamble and REACH Media's Tom Joyner Morning Show Sign Broad-Ranging Sponsorship Agreement - PR Newswire

Comment;
Does P&G's deal with Tom Joyner and those by it and other large companies represent a shift towards more targeted, grassroots marketing approaches? Will it pay off?
First, it should be noted that Procter and Gamble is no neophyte to the African-American market. They have two agencies with an African-American specialization, Williams Advertising and Burrell, and P&G has also been a big sponsor of organizations like the National Underground Railroad Freedom Center, the United Negro College Fund, the BET College Tour and others.
To answer our own question, P&G is apparently asking itself if more targeted, grassroots marketing is the key to success in modern brand management.
According to an article in the New York Times, Procter will be conducting a study to measure the value of this new partnership. Said P&G's Susan Mboya, "Because it's becoming more and more difficult to reach consumers," we must "understand better the return we're getting on every marketing investment."

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RETAIL EUROPE – TECHNOLOGY

Polish Retailer Deploys New Technology to Support European Expansion
LPP S.A. is a rapidly growing fashion retailer based in Poland. From its headquarters in Gdansk, the company designs clothing that it distributes throughout Europe. Production process takes place in the Far East by the same manufacturers that work for other well-known fashion houses throughout the world.
Building on recent success that saw consolidated sales revenue in May 2004 exceed 39 million Polish Zloty (PLN), a 27 percent increase from the same period in 2003, LPP has partnered with Accenture and Retek to implement new merchandising, forecasting and planning systems. The new technology provides the infrastructure required to support LPP's ambitious expansion strategy across Eastern and Western Europe.
To expedite the implementation, LPP elected to deploy the Retek merchandising system with virtually no modifications aided by Accenture, who is involved in 90 percent of Retek implementations. Although typical enterprise merchandising implementations can take up to 24 months, the LPP rollout took just 10 months.
The Retek Merchandising System (RMS) records and controls virtually all data in the retail enterprise and ensures data integrity. The solution helps users improve merchandising activities and better achieve sales and profit targets. LLP will use the new system to reduce inventory and markdown costs as well as increase sales.
In addition, LPP is using Retek Demand Forecasting to produce highly accurate forecasts at store, SKU and day levels. This capability, in conjunction with the Retek Merchandise Financial Planning application that provides improved product, channel and location planning, is enabling LLP to better match supply with demand and optimize inventory performance.
Retailers of all sizes and categories need toolsets to help them focus on strategic efforts to grow their business. By integrating the Retek products into its operations quickly and at low cost, LPP will be better equipped to make insightful, fact-based decisions, enhance its overall business performance and strengthen and expand its market position.
Write; LuisB, July 04

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INDUSTRY – INDIA

Adidas To Expand In India Under New MD
Andreas Gellner, soon to take over German sports manufacturer Adidas’ Indian operations, hopes to bring the Indian segment up to par with others in Asia.
Gellner, who is presently the managing director of Adidas Malaysia, aims to expand the company’s Indian sector by opening 30-60 stores over the next couple of years.
He has suggested that India, which is currently one of the company’s smallest markets in the region, may be integrated with neighbouring markets – for example Bangladesh and Nepal – in the future.
Gellner said: "India is a high potential market. In fact, it has the capability of becoming the third-largest market for us in Asia, after Japan and China. At present, it is a very small market for us. We have plans to invest significantly in India in manpower and systems."
Another likely area to undergo expansion is the apparel segment:
"The apparel market in India is very big. Also, apparel is priced very competitively, more so because 99 per cent of the manufacturing for apparel is done locally."
Source; Adidas, July 04

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CORPORATE – FINANCE

Levi Strauss & Co. Announces Second-Quarter 2004 Financial Results
Levi Strauss & Co. today announced financial results for the second quarter ended May 30, 2004 and filed its second-quarter 2004 Form 10-Q with the Securities and Exchange Commission. Results for the quarter, as compared to the same quarter in the prior year, reflected improved gross margins; lower selling, general and administrative expenses; higher operating income; higher net income; and lower net debt.
Second-quarter 2004 net sales were $959 million compared to $932 million for the second quarter of 2003, representing an increase of 3 percent on a reported basis and a decline of 1 percent on a constant-currency basis. The sales performance reflected the continued growth of the company's Asia Pacific business and worldwide rollout of the Levi Strauss Signature(TM) brand. Net sales declined in LS&CO.'s U.S. and European Levi's® and Dockers® businesses. Key factors contributing to sales decreases of the U.S. Levi's® and Dockers® brands compared to the second quarter of 2003 included:
- the impact of wholesale price reductions taken in mid-2003 for both brands;
- a planned reduction in sales of Levi's® product to warehouse, club and off-price retail channels in 2004; and,
- substantial volume shipments in the second quarter of 2003 to fill retail shelves in conjunction with upgrading two major core Dockers® programs.
"So far, so good," said Phil Marineau, chief executive officer. "Overall, I'm pleased with our second-quarter performance, which delivered on our goal of improving our profitability this year. We still have a lot of work to do, but I'm encouraged by the progress we're making in all our businesses."
Source; Levi Strauss &Co. July 04

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INDUSTRY – OPTICAL

Oakley Says Lagging Demand Takes Shine Off 2004 Earnings
Sunglass maker Oakley Inc. on Monday cut its earnings forecast for 2004 and said it expected to report second-quarter sales below analysts' forecasts after customer demand for its products waned.
Sales in the second quarter were about $152 million, the Foothill Ranch-based company said.
The sales estimate is about 8% less than the $164.5 million expected by analysts, according to Thomson First Call. The company had sales of $143.8 million a year earlier. Oakley plans to report second-quarter results July 21.
Production shortfalls of the company's two most popular new sunglasses - the Dartboard and the Why 8 - led to fewer sales at a time when demand for other sunglass styles waned.

International demand for Oakley sunglasses fell, sales of prescription eyewear failed to meet company expectations, and online and direct sales were soft, the company said.
As a result, Oakley cut its earning forecast for the year. The company expects to earn 60 cents to 65 cents a share on revenue of $575 million to $585 million.
In April, the retailer said it would earn 65 cents a share on sales of about $585 million. Analysts polled by Thomson had expected Oakley to earn, on average, 67 cents a share on sales of $585.8 million. The company's shares fell as low as $11.50 in after-hours trading. The stock was down 37 cents at $12.54 in regular trading on the New York Stock Exchange.
Write; by LuisB, July 04

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E-RETAIL – US STATISTICS

Online retail spending grows 25% in the first six months
With online consumer retail spending that reached $1.02 billion for the week ending June 27, online sales in the first six months of this year reached $27.8 billion, up 25.27% from $22.2 billion in last year’s first half. The numbers are based on weekly reports from comScore Networks Inc. Sales for the week ending June 27 were up 31% from the corresponding week a year ago.
Total retail sales for the week ending June 26 were up 11.3% from the same week a year ago, according to ShopperTrak’s National Retail Sales Estimate.
Online travel sales the week ending June 27 were up 2% to $792 million from $780 million in the same week a year ago, comScore reports.
Source; ComScore, July 04
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RETAIL – UK MARKET

IKEA future looking gloomy
Flat sales, falling profits, stiffer competition and an ageing customer base mean that the future may not be so bright for IKEA. The retailer's latest accounts for its UK division for the year to August 2003 show turnover of £882m, barely up on the previous year. Pre-tax profits slumped from £154m to £133m. In the accounts, the directors say that 'limited growth' was 'mainly due to poor trading conditions'. They add that 'poor sales performance was observed during the first half of the year due to the geopolitical climate'.

However, trading did improve significantly in the second half of the year, but not fast enough to prevent the profits setback. Though Ikea is still gaining market share, the rate of growth is stalling. According to retail research group Verdict, Ikea's growth in market share has slowed dramatically in recent years. Between 1997 and 1998, market share jumped from 2.6% to 3.3%. That had increased to an impressive 4.5% by 2000. But last year, Ikea's share of the market edged up by only 0.1 of a percentage point to 4.8%.
Write; by LuisB, July 04

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FOCUS

ICELAND – RETAIL MARKET

Further sales slide at Iceland
Big Food Group pushing ahead with store revamps
Like-for-like sales at food chain Iceland continued to slide in the 13 weeks to July 2, as owner Big Food Group pushed ahead with it programme of store refits.
With total group like-for-likes down by 0.5 per cent across the quarter, the company said that in continued tough trading environment "strategic developments across all business units have been progressed" including the acceleration of the Iceland refit programme, and increased penetration of the convenience store sector by the Booker cash-and-carry business through its Premier.Big Food warned that price competition has increased in the industry over recent months and it "expects the more competitive environment to continue for the foreseeable future".

Iceland like-for-like sales declined by 1.7 per cent across the quarter. Forty more store refits were completed and three new stores opened, bringing the number trading in the new format to 185.

New Iceland managing director Andy Clarke "is now concentrating on the sales performance of Iceland through a combination of measures to improve customer service standards", said the company.

At Booker, like-for-likes declined by 1.1 per cent, with non-tobacco sales down by 1.8 per cent. However, like-for-like sales to the Premier retailers by around 7 per cent, with another 131 retailers joining the badged group to bring the total to 1,586.

Chief executive Bill Grimsey said: "Against tougher market conditions, our priority is to accelerate our strategic initiatives, particularly the Iceland refit programme, the roll-out of Premier and our drive into the delivered foodservice market through Woodward."
Write; LuisB, July 04

Picture; Iceland: Store refits stepped up in tough market