Wal-Mart’s friendly face

By Chris Sorensen - Tuesday, September 27, 2011 at 10:10 AM - 0 Comments

Jin Lee/Bloomberg/Getty Images

As the world’s biggest retailer, Wal-Mart Stores, Inc. is no stranger to public scrutiny. And with sales slumping in its key U.S. market, the company has been keen to burnish its image on a wide range of social issues. Case in point: executives last week revealed they were going to double the amount of money Wal-Mart spends with women-owned businesses in the United States to about US$5 billion annually, by 2016. The changes come just as the U.S. Supreme Court threw out a big sex-discrimination lawsuit against the Bentonville, Ark.-based retailer, although suits from individual women could still be forthcoming. Wal-Mart has similarly worked with U.S. first lady Michelle Obama to try to promote healthier lifestyles among Americans by stocking more nutritious foods. Such efforts are no doubt made with Wal-Mart’s bottom line firmly in mind. But with annual sales greater than the GDP of 174 countries, there’s no question the rest of us benefit too.

Swedish for recession

By Chris Sorensen - Monday, September 26, 2011 at 10:00 AM - 0 Comments

Swedish home furnishing giant Ikea recently made waves when it redesigned its iconic Billy bookcase to make the shelves deeper. The Economist magazine was quick to declare the move an omen for traditional books, suggesting that Ikea expects Billy “customers will increasingly use them for ornaments, tchotchkes and the odd coffee-table tome—anything, that is, except books that are actually read.”

Perhaps. But keeping the Billy relevant is not just good news for consumers, but economists too. Three years ago, Bloomberg News unveiled its Ikea Index, which seeks to measure the purchasing power of consumers around the world by comparing the prices of the ubiquitous, flat-packed particleboard bookshelves in different countries—specifically the plain white model that measures 80 cm by 202 cm.

And, as one might expect, the most recent data shows a world in economic turmoil. The price of the shelving units fell 17 per cent over the past year to US$49.99 in the United States, which is still struggling with a weak housing market and soft consumer spending. Meanwhile, the lowest-priced Billy bookcases were found in Europe (a Billy unit cost just US$42.82 in the Netherlands), where the euro zone debt crisis continues to deepen. And China posted the biggest overall drop in prices, a full 27 per cent, as the country’s once blistering growth has slowed considerably. By contrast, the highest prices were found in the Dominican Republic (US$111.54) and Israel (US$96.87).

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Wal-Mart hits a wall

By Chris Sorensen - Tuesday, September 20, 2011 at 9:30 AM - 0 Comments

Joe Raedle/Getty Images

With more than 4,400 sprawling stores in the United States and its pledge to provide “everyday low prices,” retail giant Wal-Mart Stores Inc. would appear perfectly positioned to weather the tough economic times south of the border. Indeed, Wal-Mart has long been the destination for price-conscious shoppers searching for everything from US$3.50 packs of 16 “Frosted Blueberry” Pop Tarts to a US$119 flat-panel television.

But while the world’s biggest retailer is credited with single-handedly transforming the retail landscape by using its clout to demand low prices from suppliers, which are then passed along to customers, sales at U.S. stores have nevertheless slumped badly over the past few years. Meanwhile, some of its biggest competitors, including “cheap chic” rival Target Corp., have still managed to grow sales in the same tough environment.

Wal-Mart has placed most of the blame on a bad economy, which it argues has a disproportionate impact on its less affluent customers. But those outside the company are increasingly wondering whether there’s more to the story. Just as chains like McDonald’s and Starbucks were forced to retool after years of expansion, Wal-Mart appears to be heading toward a similar fate in the U.S. as its stores start to look increasingly bland compared to rivals. More importantly, it’s no longer clear whether Wal-Mart’s reputation for low prices continues to be a meaningful advantage in a world where everyone, from local supermarkets to daily deal websites like Groupon, are perceived to be offering huge savings—and without the need to drive to the outskirts of town and fight the crowds inside one of Wal-Mart’s blindingly-lit big box stores.

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Is Under Armour ready for the big leagues?

By Chris Sorensen - Wednesday, September 7, 2011 at 11:00 AM - 0 Comments

The Washington Post/Getty Images

Kevin Plank, the founder and CEO of sportswear apparel company Under Armour, has been a long-time supporter of the University of Maryland’s football team, the Terrapins, where he was once a special teams captain. But the relationship entered a new phase last week when the Terps’ new, Under Armour-made uniforms were unveiled for the upcoming season—all 32 variations of them.

The over-the-top, mix-and-match approach—there are four different colours of Terps jerseys, four different colours of pants, and two different colours of helmets—is all about marketing buzz and drew immediate comparisons to Nike’s efforts to use football players at the University of Oregon (Nike founder and chair Phil Knight is an alumni) as human billboards. “The sheer number of articles that have appeared last week about the Under Armour jerseys shows that it’s already been a successful marketing campaign,” says Matt Powell, an analyst at Sports­ONESource, which tracks sportswear sales in the United States.

It’s not the first time that Plank has challenged industry giant Nike on its own turf. On the eve of Under Armour’s entry into the Nike-dominated $2.5-billion U.S. basketball shoe market last year, Plank boasted that it was only a matter of time before he owned the category. “I’m 38,” he told Bloomberg news. “I’ve got a long time [to get there].” As for Nike, he said, “those guys are old.”

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Move over, Wal-Mart

By Erica Alini - Friday, August 26, 2011 at 1:21 PM - 2 Comments

Emmanuel Dunand/AFP/Getty Images

“Amazon,” one Morgan Stanley analyst proclaimed recently, “is the Wal-Mart of our era.” The Seattle-based e-commerce giant is expected to report revenues of US$49 billion this year, an eye-popping 43 per cent year-over-year increase that beats Wal-Mart’s memorable 1991 performance, when it registered $44 billion in revenues and a 35 per cent increase over the previous year.

The world’s largest online retailer has also managed gargantuan growth without the bad publicity that earned its bricks-and-mortar cousin the epithet of “evil empire.” But try to get between Amazon and its bottom line, and you’ll see the company’s Darth Vader side. Governments and competitors who’ve tried to out-muscle it recently are finding a surprisingly feisty, shrewd business with a special knack for getting what it wants.
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The long and short of it

By Cathy Gulli - Thursday, July 28, 2011 at 3:35 PM - 1 Comment

Andreas Rentz/Getty Images

When Richard Larson’s son turned five, the Massachusetts Institute of Technology professor decided it was time to get him a bike. One evening, the family drove to a Sears in Boston. Within a few minutes, Larson selected a red one, paid, and walked to the warehouse for pickup. Then Larson waited 40 minutes in a disorganized line for it to arrive. “This was supposed to be fast. I was so angry by the time the [bike] finally surfaced that I said, ‘That box will never be opened! I’m returning it,’ ” recalls Larson, 26 years later. “I’ve never been back to that specific store. And it took 10 years to go to any Sears.”

Despite advances in retail design and technology, no company has figured out how to eliminate the worst part of shopping: lineups. So stupefying is this fact that Larson has devoted his career to “queue theory,” or the science of waiting. (The bike fiasco prompted him to write a proposal for research funding, which he received.) “Speed is king. People don’t want to be delayed in anything they view as a chore or errand,” says Larson. And in today’s globalized market, where products are less and less differential across stores, the checkout experience is critical, he continues. In fact, in recent years lineups have become one of the most analyzed and controversial aspects of retail.

Since the late 1990s, retailers have been installing self-checkouts as a way of appeasing patrons who want more control over how long it takes to pay and get out. In 2008, there were 74,000 self-checkout units across North America, according to a Retail Banking Research report, and by 2014 that number should grow 20 per cent. But whether or not self-checkout actually improves wait times is contentious; it may just give that impression—a phenomenon known as “wait warping.” Consumers trade standing in a long line for taking a long time to put through their own items.

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The rising price of DVDs

By Jaime Weinman - Thursday, July 28, 2011 at 10:00 AM - 0 Comments

Has Netflix declared war on physical media? The movie rental behemoth announced last week that instead of giving its U.S. customers both DVD rentals and unlimited online streaming for $10 a month, it will be offering streaming and DVDs for $7.99 each—a 60 per cent price increase for customers who want to keep both services.

This price hike could help wean customers off DVDs and get them to embrace a streaming-only service, which is already the only option the company provides in Canada. Dan Primack of Fortune explained that Netflix last year “spent between $500 million and $600 million on DVD postage,” and the company’s future business strategy mostly depends on avoiding the mail.

So the people who still want to rent physical media will have to pay a lot of extra money for it, or else switch to the new digital era. There’s just one problem, though: even in America, where Netflix streams considerably more content than it does in Canada, most movies and TV shows are not available outside of the DVD format. Unless studios start licensing more of their content to Netflix, we could be looking at a future where customers have to choose between a big snail-mail selection and a tiny online one.

Aritzia joins fashion's big leagues

By Cigdem Iltan - Friday, June 17, 2011 at 11:10 AM - 0 Comments

Courtesy of Aritzia

It’s been three years since Vancouver’s Aritzia LP took its repertoire of feminine, fashion-forward wares south, but next week’s opening of its flagship store in New York marks the boutique’s official coming out to the U.S. market. The successful execution of the clothing retailer’s 50th location is crucial, given its plans for a wider expansion in the U.S. Hot on the heels of the June 15 opening is another store launch in August in neighbouring New Jersey.

The two-storey New York store’s prominent corner location at Broadway and Spring Street in fashion haven SoHo has Aritzia rubbing shoulders with some of the biggest names in the industry, from J.Crew to Prada. It’s a move that puts the firm in a better position to attract attention from prospective landlords, fashion media and tastemakers, says retail analyst and DIG360 Consulting principal David Ian Gray. “There are lots of retailers seeking prime spots in prime locations, and because Aritzia is coming in as an unknown entity, they’re having to fight that fight much like they did when they started out in Canada.”

But the company has little reason to be intimidated: Aritzia boasts some of the highest average sales per square foot amongst retailers in North America. And while it doesn’t reveal specific sales numbers, the private company earns somewhere between $200 million to $300 million each year, says Aritzia’s vice-president of marketing Sally Parrott.

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Retail Activist

By Mike Doherty - Tuesday, May 17, 2011 at 9:30 AM - 0 Comments

Photographs by Zoe Norfolk

The signs on the doors of Selfridges’ flagship department store on Oxford Street in London promote giving “the gift of self-indulgence.” Having sold an £85 sandwich, a £1,000 Swarovski-encrusted water bottle, an £1,800 Spanish ham, and a £10,000 children’s electric car, Selfridges is not exactly known for preaching restraint. And yet, in launching Project Ocean, its creative director, Alannah Weston, is doing just that.

“Just because you sell beautiful things doesn’t mean you shouldn’t do the right thing,” says Weston, perched over a cup of tea in the downstairs restaurant of the 650,000-sq.-foot store owned by her father, billionaire Galen Weston. Project Ocean, which she has organized with Jonathan Baillie (a childhood friend, and director of conservation for the Zoological Society of London), promises nothing less than “retail activism”: it’s a multi-pronged attempt to save the world’s fisheries from collapse, starting by providing only sustainably sourced fish at Selfridges.

It’s also a transformation of the store itself, with commissioned artwork both madcap and meditative, a sea-themed fashion exhibit including Lady Gaga’s silver lobster hat, well-known chefs in the food hall teaching customers how to cook unpopular seafood, frogmen marching around the aisles, and cheeky but stark messages in the store’s iconic window displays about the depletion of fish stocks.

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An eye for sales

By Jason Kirby - Monday, May 2, 2011 at 9:00 AM - 10 Comments

Photographs by Brian Howell

Each day, online retailer Coastal Contacts of Vancouver ships 6,000 orders of eyeglasses and contact lenses to customers around the world. It’s no surprise, then, that Roger Hardy, the company’s founder and CEO, keeps bumping into Coastal’s patrons. Just two weeks ago when Hardy’s wife was in hospital to give birth, the attending physician learned where Hardy worked and said he now buys all his contact lenses through the site. “It was great to hear that kind of customer testimonial from someone in the medical profession,” says Hardy, “though the whole time my wife was there in very intense labour.”

Hardy had best get used to the attention. Coastal, which operates several vision-care websites, including Clearlycontacts.ca in Canada and Coastalcontacts.com in the U.S., has quickly emerged as the dominant force in the niche business of selling optical products online. With annual revenue last year of $153 million, Coastal sells more glasses and contacts over the Internet than anyone else, and already ranks as one of the 10 largest optical retailers in North America. According to a ranking by Internet Retailer magazine, Coastal is now the largest Canadian-based online retailer when measured by sales.

Yet Coastal has achieved all this while flying largely below the radar. Though it’s been one of the hottest stocks on the TSX since January, up more than 60 per cent, few analysts cover the company. Nor is Coastal a widely recognized name in corporate Canada. The question is, for how long? Not only is Coastal growing fast, but as online giants like Amazon try to become the Walmarts of the Internet, any company that carves a market for itself in the online-consumer sector is a potential takeover target.

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Return of the Crocs

By Erica Alini - Wednesday, March 30, 2011 at 12:00 PM - 3 Comments

Jenna Marie Wakani

Remember Crocs? The maker of stubby foam sandals is bouncing back from the fashion abyss. To investors, Crocs’ recent climb from penny-stock territory, where it dipped in 2008, to the roughly $16 a share it trades at today, is a true miracle resurrection. To fashionistas, on the other hand, the revamp of Crocs—after the fad for its plastic sandals finally died out 3½ years ago­—probably sounds like the footwear equivalent of a zombie attack.

It was only five years ago that the company’s famous clogs could be spotted virtually anywhere, from suburban shopping malls through Hollywood circles to the White House, as even then-president George W. Bush was seen donning the ultimate fashion aberration: Crocs with socks. Crocs debuted as a public company in 2006, raising US$223 million, at about $14 a share. By mid-2007, it hit US$75 a share. But that was the peak—and then came the crash.

By 2009 the obituaries were being penned. The fad had faded; the stock plummeted to a low of US$0.79 a share, and the company was drowning in high inventories and debt. There was talk of bankruptcy, and investors wrote off Crocs as another one-hit wonder, like mood rings and those children’s shoes with built-in wheels.

A couple of years later, though, the shoemaker has not only survived, it is thriving. “This is not the same business that was out there in 2007,” says Brian Sozzi, an analyst at Wall Street Strategies, a stock market research company. Key to the rebirth, says Sozzi, was diversification. The company is going strong in both Europe and Asia, which now account for 36 per cent of revenues. Crocs has also stepped up direct sales to consumers, shifting the focus from mall kiosks to online sales and stand-alone stores. And, crucially, it has moved beyond the clogs.

“Crocs at one point was synonymous with one specific style of shoe,” says Doug Hayes, vice-president and general manager of Americas at Crocs. It now boasts over 250 new styles, from sneakers to winter boots and even women’s flats. That has also allowed the company to broaden its pricing range, says Hayes—Crocs boat shoes, for example, sell for US$89.99 on the Internet, compared to US$29.99 for a pair of classic Crocs.

The non-clog models still incorporate the company’s trademark material: Croslite, a proprietary resin that absorbs odours and adapts to the shape of feet. The rubber was patented by Foam Creations, a Quebec company that Crocs bought in 2004. The difference now is that Crocs shoes are “a little bit more fashion-centric rather than eccentric,” says Marshal Cohen, chief industry analyst at NPD, a retail market research group. It’s part of a three-pronged approach, he explains. The Colorado-based shoemaker, he says, is using its new styles to offer more variety to Crocs fans, and woo the holdouts who shunned it at first. But Crocs will also continue to rely on its traditional sandals, which are popular among kids, and professionals like chefs and nurses who spend the day on their feet. The plastic sandals market, says Hayes, remains “very, very healthy.” Despite the new look, it seems, there will never be a Crocs without clogs.

Of books and borders

By Jason Kirby - Monday, February 28, 2011 at 9:17 AM - 0 Comments

Michael Falco/The New York Times/Redux

The collapse of U.S. bookstore chain Borders was largely ignored in Canada. Things might have been much different. Almost 15 years to the day before the chain fell into bankruptcy protection—and before the current debate over Canadian protectionism—then-Liberal industry minister John Manley barred Borders from expanding into Canada. The company had signed a deal with Toronto financier Heather Reisman to open a massive store in Toronto, but Manley feared “Canadian stories, Canadian books, Canadian authors” would lose their voice. Instead, Reisman formed Indigo. The move gave her a near monopoly on readers’ wallets, and, arguably, contributed to the higher book prices Canadians have paid in the absence of any real competition. It’s worked well for Indigo. Last quarter, Indigo sales were $387 million, or 80 per cent of what Borders took in during all of last year. Protectionism pays, for some.

Jysk: the poor man's Ikea

By Jason Kirby - Monday, February 7, 2011 at 2:53 PM - 5 Comments

Photograph by Andrew Tolson

The iconic Billy bookcase from Ikea helped transform the Swedish retailer into a global giant, cemented its reputation as the go-to source for stylish, inexpensive knock-down furniture, and made Ikea’s Scandinavian founder Ingvar Kamprad a billionaire.

Billy, meet Danny. In the Jysk Bed Bath Home store in Surrey, B.C., the Danny bookcase stands amid oddly familiar looking futons, desks and chairs. Never heard of Jysk (pronounced Yisk)? It’s a Danish retailer that’s emerged as a global giant, is known for inexpensive knock-down furniture, and has made its Scandinavian founder Lars Larsen a billionaire. Oh, and with the exact same dimensions and style as Billy, Danny just happens to be 15 per cent cheaper, too.

Jysk: the poor man’s Ikea.

Over the past 15 years, Jysk has plotted one of the stealthiest, albeit quirky, retail invasions in Canada. From its Canadian head office near Vancouver, the discount chain operates 40 stores from coast to coast, yet has almost no national brand recognition. Now, while the retail world is abuzz over Target’s impending arrival from the U.S. in 2013, the Danes are plotting a hyper-expansion of their own here. Jysk is set to open at least 20 new stores a year over the next three years in a bid to make Jysk a household name. “We’ve survived and thrived for 15 years by offering Canadians quality for the lowest price,” says Ludvik Kristjansson, the CEO of Jysk’s Canadian operations. “I see no limit to how much we can grow.”

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Wine snobs beware

By Chris Sorensen - Thursday, January 13, 2011 at 2:00 PM - 2 Comments

Michael Owen Baker/Keystone Press

With its artisanal cheeses, savoury prepared foods and pricey organic produce, Whole Foods isn’t exactly known as a value proposition among grocery shoppers. But when it comes to wine, the successful high-end supermarket chain has decided to dip a toe down-market, at least in its U.S. stores. It recently rolled out a handful of California wines called Three Wishes that cost under US$2, and is asking customers to “chuck the Chuck,” a reference to the US$1.99 Charles Shaw wines (“Two-buck Chuck”) sold at Trader Joe’s grocery stores in the United States. “We saw our customers looking for lower-priced offerings in the wine category, so we went looking,” explains Doug Bell, a global wine buyer for Whole Foods Market. But how do they taste? The reviews range from surprisingly drinkable to, in the words of wine reviewer Brant Foehl on his SF Weekly blog, “I’d rather just chew the two dollar bills directly.”

Recovery? You bet.

By Jason Kirby - Thursday, December 23, 2010 at 12:40 PM - 32 Comments

Over the Thanksgiving weekend in the United States, retailers experienced their best sales gains in four years, surprising many analysts | Adam Hunger/Reuters

With the flood of facts and figures that rush by every day, it’s easy to lose sight of the bigger picture when it comes to the American economic machine. For every batch of positive news confirming a recovery, it takes just one bad jobs report or trigger-happy dictator in North Korea to plunge us back into doom and gloom. But Lakshman Achuthan, managing director of the Economic Cycle Research Institute, and someone who studied recessions and recoveries for two decades, has a message for anyone with an interest in seeing the U.S. economy get back on its feet. “The revival is right in front of us,” he says. “Overall economic growth is about to accelerate.”

Signs of America’s resurgence abound. Shoppers surprised analysts during the Thanksgiving weekend—they helped drive retailers to their best sales gains in four years. They’ve also begun to indulge again, driving strong revenues at companies like Starbucks and cosmetics giant Estée Lauder. At the same time, manufacturers have enjoyed a resurgence of late. Sales and exports are both up. It’s all helped boost America’s top line. In November, third-quarter GDP was revised up to 2.5 per cent from two per cent—the fastest growth rate the U.S. has seen since the end of 2006.

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Shopping goes XXS

By Jason Kirby - Thursday, November 25, 2010 at 11:40 AM - 0 Comments

Jack Atley/Bloomberg News/Getty Images

Megamalls, superstores, big box—for years retail has been dominated by the mantra that bigger is better. But some retailers are experimenting with a new way to earn outsized profits: smaller stores. Several U.S. chains have begun shrinking the floor space and amount of inventory in their stores, and shoppers appear to love it. In one case, the clothing chain Anchor Blue has put in walls to shrink some of its stores by half. The result has been a 23 per cent increase in sales, despite fewer clothing options. Meanwhile, Bloomingdales’ new store in Santa Monica is just one-eighth the size of its Manhattan flagship location.

There are two benefits to the strategy, Paco Underhill, a retail consultant, told the New York Times. Smaller stores keep costs down by reducing rents and culling inventory levels. More importantly, given fewer choices, customers actually tend to buy more. “We have reached the apogee of the big box,” says Underhill.

Mailman turned salesman

By Cathy Gulli - Wednesday, November 24, 2010 at 1:20 PM - 5 Comments

There was a time when shopping at the post office amounted to choosing between a stamp featuring a native flower, the national flag, or some other patriotic and decidedly non-commercial emblem: the white-tailed deer, Oscar Peterson, or “masterpieces of Canadian art.”

Now, Canada Post, a Crown corporation, is fast becoming the country’s leading online retailer—hawking everything from sweaters, shoes and treadmills to coffee machines, cologne and computers. Last month, in an effort to boost its parcel shipping business (as letter mail sales continue to plummet), the company unveiled the Canada Post Comparison Shopper website, which allows consumers to find, rank and buy their choice of five million products from 500 North American retailers, including Canadian Tire and Sears. Since then, 30,000 Canadians have taken to scrolling through the offerings every day—making it the most visited comparison shopping website in the country, almost instantly.

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Wal-Mart's star

By Erica Alini - Thursday, November 18, 2010 at 4:00 PM - 1 Comment

Michael Tran/FilmMagic/Getty Images

How to prop up Christmas shopping at a time of stubbornly low retail sales? At Wal-Mart this holiday season, the stimulus is called Justin Bieber. The retail giant is betting on the teenage Canadian pop superstar to help lure customers (especially young, female ones) with a host of exclusive Bieber products. That includes “My World,” a new unisex fragrance named after the title of Bieber’s debut release. The perfume comes in four scents, priced at $14 each, as well as scented wristbands and dog tags. Another perk for fans will be a line of Bieber-designed Nicole by OPI nail polish. Both products will be available in the next few weeks—and will hit Wal-Mart shelves first. In another exclusive deal with the retailer, Bieber told followers on Twitter (they number 5.6 million) to look for his new acoustic album at Wal-Mart on Nov. 22, a day ahead of the general release.

Italy meets starbucks

By Erica Alini - Thursday, October 28, 2010 at 1:20 PM - 0 Comments

Getty Images

Roughly three decades after Italy’s espresso bars inspired Starbucks founder and CEO Howard Schultz to reinvent American coffee, Frappuccino look-alikes—renamed Frappuccios—are venturing into Italian territory and onto Italian palates.

The country hails espresso as something of a national symbol and has so far eschewed penetration by global coffee titans like Starbucks Corp. Yet Arnold Coffee, a Milan-based start-up, opened its doors a year and a half ago and has been offering caramel mochas, chai lattes and filtered coffee, along with donuts and free Wi-Fi. It has since added two more stores and plans to open a third café in Milan by late October. “We want to be an American-style coffee bar,” said co-owner and founder Andrea Comelli.

But in a country with nearly 136,000 espresso bars (over eight times the roughly 16,700 Starbucks stores in the world), the task isn’t easy. Still, Arnold’s coffee shops are crowded. Some customers love holding onto a big, steaming hot, to-go cup rather than the typical small ceramic espresso cup. Others embrace with gusto the complicated coffee brews. For others still, the lure lies in the comfy armchairs. (In most Italian coffee bars customers are expected to clear the spot after gulping down a few millilitres of espresso.)

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Spinning a toy story

By Cameron Ainsworth-Vincze - Thursday, October 14, 2010 at 9:20 AM - 0 Comments

Getty Images

For the second time in three years, the world’s largest toy maker has had to issue a massive recall for some products over safety concerns. Fisher-Price, a subsidiary of Mattel Inc., said last week that more than 11 million children’s toys and accessories were being recalled. The list includes high chairs and toy cars, along with seven million tricycles equipped with a protruding plastic “ignition key” that can cause “serious injury, including genital bleeding” when sat upon improperly, according to the Consumer Product Safety Commission (CPSC).

In 2007, Mattel recalled millions of toys with paint containing elevated levels of lead (for which it was later fined US$2.3 million by the CPSC), or small magnets that could be swallowed. Yet the latest recall may prove to be less serious, especially given the company’s careful and quick response. “They’re doing this as a precautionary measure,” says Niraj Dawar, a marketing communications expert at the University of Western Ontario. Many of the toys are no longer in circulation (the tricycles were sold as early as 1997) and Fisher Price says they can still be used with “simple fixes.” “The recall is a notice to consumers to be careful,” adds Dawar, “and shouldn’t have much of an impact on Fisher-Price.”

J. Crew and the mail-order makeover

By Julia Belluz - Tuesday, September 21, 2010 at 3:33 PM - 0 Comments

FRANK OUDEMAN

Mickey Drexler, known as “the Steve Jobs of retail,” once had a reputation for breakneck retail expansion. Before the native New Yorker took the helm of J. Crew in 2003, he steered the Gap through its heyday in the 1990s, helping the company grow from 450 stores to more than 2,000. The Gap, he once said, should be as ubiquitous as Coca-Cola. But this overreaching contributed to Drexler’s downfall: the Gap’s growth stalled, and after a series of bad decisions, its stock plummeted. In 2002, Drexler was fired.

At J. Crew, Drexler has taken an altogether different approach, and the company has been on a hot streak for the last few years. Between 2003 and 2008 revenues rose 107 per cent, and in 2009, after both Oprah and the first family expressed their ardour for the label, revenues rang in at US$1.57 billion, outstripping pre-recession levels. But Drexler has not responded with aggressive expansion. Instead, the CEO squeezed growth out of the existing footprint of the business (just 321 stores) through a mix of retailing strategies that have transformed the brand. Once synonymous with preppy clothes and mail-order catalogues, Drexler’s J. Crew is now one of the most creative and fashionable retailers in North America.

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Investor spy games

By Jason Kirby - Thursday, September 9, 2010 at 12:20 PM - 0 Comments

ERIK SIMONSEN/GETTY IMAGES

Last year, Wal-Mart tried to thwart analysts from focusing on its short-term performance by ending the practice of reporting monthly same-store sales. No matter. Analysts simply turned to military-style satellite surveillance to grasp what’s going on in the aisles. Before the retailer released its second quarter results, UBS Investment Research issued a preview based on analysis of the number of cars coming and going from its parking lots, as captured in satellite photos.

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Discount chart-topper

By Stephanie Findlay - Thursday, August 26, 2010 at 3:00 PM - 0 Comments

Chris McKay/Wireimages/Getty Images

How do you score the top-selling new album in America? Montreal’s the Arcade Fire did it with a little help from one of the world’s largest online retailers. Amazon sold digital downloads of the album, The Suburbs, for US$3.99, compared to US$9.99 on Apple’s iTunes, dramatically boosting sales. Amazon still pays the band’s label the requisite US$7, but then offers the album to fans at a loss. Executives at music labels say that Amazon will occasionally promote an album like this in a gambit to attract new consumers and build its brand, reports the New York Times.

Apple is by far the dominant online music retailer, with an estimated 70 per cent of the market. Amazon, despite its considerable online presence, has just 12 per cent. But it appears that the stunt is worth the expense. While Apple’s share of digital music sales has flatlined, Amazon’s has grown four per cent over the last year, according to Soundscan, an official music-sales tracking system.

Outlet Malls go online

By Chris Sorensen - Thursday, June 24, 2010 at 2:00 PM - 2 Comments

Getty Images

Originally conceived as a way to off-load discontinued, overstocked and defective merchandise, outlet stores and outlet malls have become a key retail channel over the past decade as consumers chase big discounts on name-brand items. But a growing number of investors believe the future of outlet shopping doesn’t involve cluttered big box stores on the outskirts of town—it’s online.

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