Earlier this year, yoga-wear company Lululemon had to initiate a massive recall of its popular luon yoga pants, which failed to fulfill one of the main duties of pants: opacity. The see-through-pants debacle cost the Vancouver-based firm an estimated $67 million in sales, and gave the press enough material for headline puns to last a lifetime. So when it was announced Monday that Lululemon CEO Christine Day would be stepping down from the top job, many assumed that it was a result of the costly recall. Despite protestations from the company, news outlets from CNN to the Consumerist linked the departure to the see-through-pants fiasco. But investors were telling a different story, as Lululemon shares fell 12% in after-hours trading following the news. In fact, for many observers, the recall episode just reinforced Day’s competence. After the news of the malfunction spread, Day moved quickly to recall product and fired the companies Chief Product Officer Sheree Waterson. As retail analyst Patty Edwards of Trutina Financial told Forbes, “They handled the whole situation incredibly well.” (MORE: Lululemon Yoga Pants Return to the Market After Recall) So if Day wasn’t forced out because of the recall, why is she leaving? Few companies in the world have succeeded as well as Lululemon has during Day’s five-and-a-half-year tenure. The company’s stock has risen in value from under $4 per share in March of 2009 to a high of more than $80 before Day’s resignation. At the same time, Lululemon was able to aggressively grow its total number of stores, which according to Morningstar sat at 186 by the end of 2012, up from a single outlet ten years before. And while much of Lululemon’s revenue growth has come from this rapid expansion of stores, its not been a slouch when it comes same-stores sales, which have grown at a double-digit pace for much of Day’s tenure. With this kind of track record it would seem very odd if Day is leaving under anything but her own accord. (It should be noted that a CEO jumping ship when things
Tag Archives: retail
Microsoft and Best Buy to create 600 stores-in-stores by September
Like the standalone Microsoft stores, there will apparently be wooden floors.
Microsoft
Microsoft has announced new plans to extend its retail reach by partnering with Best Buy to create more than 600 stores-within-stores across the US and Canada.
The companies plan 500 stores in the US, with an additional 105 in Canada split between the Best Buy and Future Shop brands. The first stores will open later this month, and the roll-out is expected to be completed by September.
These will not merely be an aisle or two with a Microsoft banner: they will average 1,900 square feet, making them a substantial presence. Microsoft will also be training 1,200 Best Buy blue-shirts to provide guidance to customers. The two companies even plan on joint marketing efforts.
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One Way Tebow Will Definitely Help the Patriots
A third-string quarterback with zero Pro Bowl appearances and highly criticized throwing mechanics—who was recently dumped by his team from last year, and who many football analysts predicted wouldn’t be in the NFL this year—will have one of the league’s hottest-selling jerseys. Immediately after the New England Patriots announced that Tim Tebow had signed a contract with the team, speculation has surged as to why the Patriots did it, and how the unconventional, polarizing quarterback might be used. He could come into the game on short yardage plays or to occasionally run an option-style offense. Perhaps he might line up as a tight end, wide receiver, or somewhere in the backfield from time to time. Some have mused that maybe the Patriots signed Tebow as a way to prepare the team’s defense to play against mobile quarterbacks like the 49ers Colin Kaepernick and Redskins Robert Griffin III. (Both of whom, by the way, can brag that their jerseys are top sellers.) One thing that almost everyone can agree on is that Tebow will have an outsized impact on the Patriots in one department: merchandise sales. Within hours of Tebow signing a contract with the team, the Patriots pro shop sent an e-mail to fans notifying them that pre-orders of Tebow’s new Patriots jersey were being accepted for $99.95 (free shipping included!). The message circulated even before Tebow officially had a jersey number. (It’s since been announced as #5.) (MORE: Boston Evangelicals React to Tim Tebow Signing) Patriots management had good reason to get started early pushing Tebow gear. This is a player, after all, who had a top-selling jersey and an entire line of T-shirts devoted to him before he’d ever played a game in the NFL. Last summer, Tebow’s Jets jersey ranked third in sales, behind only RGIII and Peyton Manning. By the end of last season, Tebow’s jersey had fallen to thirteenth place in sales, though that’s still quite astounding considering that he didn’t started all year and threw only a handful of passes for the Jets. Tebow
Why Dads Get Short Shrift on Father’s Day – And Dads Are OK with It
When it comes to their respective days of honor, why do dads get funny ties and moms get diamond heart necklaces? Why do we spend 40% more on Mother’s Day than Father’s Day? Some seemingly ungrateful children (and a few dads) offer explanations. Every year since the National Retail Federation has been keep track, the amount consumers spend on Father’s Day gifts has been significantly less than the average spent on Mother’s Day. This year, average Father’s Day spending is expected to be around $120, compared with $169 for moms. To get to the bottom of this apparent inequity, I interviewed scores of dads and kids about Father’s Day. Here’s what they had to say about why dads get less: They Don’t Speak Up The provider role that’s central to many fathers’ identities doesn’t really jibe well with having their kids provide them with stuff. Either that or many dads just don’t know what they want. In any event, it’s commonplace for kids to have no clue what to buy. Here are a few of the quotes from children that tell the story: “Mom always gives us hints, we know what she wants. Dad? He always says the same thing, ‘I don’t want anything.’ I have no idea what to get him so I usually just get him a card or something small.” — Mylene, 13 (MORE: Is Retail Therapy for Real? 5 Ways Shopping Is Actually Good for You) “My dad always says he doesn’t need anything. Probably true but not helpful.” — Jacob, 16 “I always got my mom bubble bath and she’d alway get so excited. I thought it was perfect and she looked forward to it every year. Then I was looking for Q-Tips and I found like five bottles of it under the sink. At least with dad he’s honest about it. There isn’t really anything I can get him that he wouldn’t get for himself already. He always says, ‘Don’t waste your money.’ So I don’t.” — Andrea, 25 They Have Expensive Tastes Boxer
Amazon’s New Grocery Service: For $299, You Never Have to Leave the House Again
Would you pay $299 annually if it meant never having to go to the supermarket? Amazon.com is testing a service with that idea in mind. And that’s on top of Amazon’s other services that already eliminate the need to go to the mall. Amazon Prime, the $79-per-year membership program that includes free two-day shipping on most Amazon purchases, has been enormously successful. The number of subscribers easily doubled over the past two years, and analysts expect Prime membership to triple over the next five years. One of the most interesting effects of having a Prime membership is that the subscriber tends to make more and more purchases at Amazon. Members assume—with good reason—that Amazon’s prices are competitive on just about anything they might purchase, and shipping is free thanks to the $79 they’ve paid for Prime, so subscribers increasingly turn to Amazon in kneejerk fashion, often without bothering to shop around. And because there’s no minimum purchase requirement, subscribers have found themselves using Amazon as a substitute for all sorts of small everyday shopping errands, so long as the items aren’t needed right away. Batteries, coffee beans, extension cords: These and many other goods are a quick one-click purchase away at Amazon, saving you the trip to the drugstore, supermarket, home improvement store, Walmart, or wherever. (MORE: Amazon Prime: Bigger, More Powerful, More Profitable Than Anyone Imagined) While there has been plenty of skepticism as to whether online grocery shopping can be a viable business, Amazon has been experimenting with its service, called AmazonFresh, in the Seattle area for years. As Reuters reported, Amazon is now pushing Fresh into the Los Angeles area, with a special twist: A “Prime Fresh” membership is being offered to existing Prime members, who will get free same-day or overnight delivery of grocery orders over $35. Prime members in L.A. get a free 90-day trial of the service. After that, they’re on the hook for $299 per year for Prime Fresh, unless they choose to cancel the service. The original Prime helped subscribers eliminate many
Jos. A. Bank and JC Penney: When Retailers Try to ‘Retrain the Customer’
Retailers love the idea that consumers can be trained to view certain price points and markdowns as terrific deals. Just tweak the prices and wait for shoppers to bite. And when consumers get to the point that they can see through the manipulative promotions? Then it’s time to retrain them. Menswear specialist Jos. A. Bank has enjoyed strong sales and rapid expansion in the post-recession era largely thanks to its steady stream of sales and promotions. Virtually all stores have sales, but Jos. A. Bank is known for going over the top, with deals like “buy one, get two free” and 70% off becoming commonplace. The retailer even got sued last summer by customers who contend that Jos. A. Bank’s pricing strategies amount to “deceptive marketing” because no one ever pays the original prices listed on merchandise. Even without the lawsuit, Jos. A. Bank would probably have been rethinking its never-ending deep discounting over the last several months. In a recent conference call with analysts, company CEO R. Neal Black announced that first quarter profits were down sharply. Stores open at least a year saw an 8% drop in total sales, and this comes on the heels of what Black called a “weak trend in the fourth quarter.” Black admitted that the big markdowns and promotions that worked in years past just aren’t as effective as they used to be in driving sales. It looks like shoppers are ignoring Jos. A. Bank’s promotions as the store has turned into something like The Boy Who Cried Sale. People have been getting less excited by the retailer’s BIG SALE! promotions because, by now, they realize that everything is always on sale. There’s not much sense of urgency to take advantage of a sale when you know that another deal is guaranteed to pop up as soon as the current one ends. (MORE: Gimme a Price Already! Edmunds Tries to End the Most Aggravating Part of Car Shopping) Jos. A. Bank isn’t giving up entirely on sales and markdowns, but after a brutal
The Rise of the Swanky No-Name Brand
The generic “store brand” label has been losing its stigma for years. Now, Target is attempting to further dispel the notion that an in-house brand equates to low quality with the launch of an organic, upscale food line. The new brand, Simply Balanced, made its debut at Target over the weekend, according to the Associated Press. This isn’t Target’s first venture into in-house food brands. Target introduced the Archer Farms Simply Balanced brand in 2010 as a “budget friendly” collection of healthier foods that promised no artificial flavors, artificial sweeteners, or trans fats. (Remember when everyone was talking about trans fats?) Now, Target is rolling out Simply Balanced as its own brand—a (mostly) organic line that will start out with drinks and snacks and expand to 250 products by the end of the year. What’s more, by the end of 2014, Target promises that all Simply Balanced foods will have no genetically modified ingredients. [UPDATE: Target reached out to TIME and clarified that "approximately 40 percent of the Simply Balanced products are USDA certified organic, and the vast majority of products are made without genetically modified organisms (GMOs). As part of Target’s commitment to wellness, the Simply Balanced collection will eliminate all GMO ingredients by the end of 2014 and Target has set a goal to increase organic food offerings by 25 percent by end of fiscal year 2017."] As the AP noted, Simply Balanced and Archer Farms are supposed to compete head-to-head with the biggest brands going. Quality-wise, these Target branded foods are expected to be at least as good, and sometimes “better than those made by companies such as Kraft Foods and General Mills.” Such a concept marks a departure from the long-standing assumption that store brands were essentially for people who pinched pennies and didn’t care much about quality. For quite a while now, many shoppers have known this assumption is outdated and often flat-out wrong. A wide variety of consumer survey data indicates that fewer and fewer shoppers automatically perceive national brands as higher quality. Many
The Straight Poop on Dollar Shave Club’s Wet Wipes For Guys
The Dollar Shave Club guys are back, and this time they’re knocking on the back door. “I’m talking about poop,” CEO Michael Dubin announces in another self-consciously edgy (not to say “cheeky”) YouTube video shilling his company’s newest product: wet wipes for grown men. In the blogosphere, the question of whether or not adults should use what are essentially baby wipes in conjunction with toilet paper has grown nearly as contentious as the debate over the “right” way to hang toilet paper. Do we need both products for good hygiene? Or is this just another case of Madison Avenue exploiting our bodily insecurities? Who really cleans up here: wipers, or the companies making the wipes? If you’ve never thought about what you flush beyond one-ply versus two-ply, you might be surprised to find out wet wipes for adults in general and men in particular is a growing category. Market research firm Smithers Apex estimates that the global market for consumer wipes will grow by a little over 5% a year, becoming a $12.6 billion industry by 2017. (This category also includes baby wipes, along with wipes you wouldn’t want to put anywhere near your sensitive parts, like bleach-soaked wipes for disinfecting your countertop.) And Dubin’s ”One Wipe Charlies,” which will sell for $4 for a pack of 40, aren’t the only product trying to, uh, crack the market. A product called Dude Wipes, individually-wrapped wet wipes targeted at men, won an innovation award at an industry conference, and gender-neutral products from brands like Cottonelle and Charmin have been on store shelves for some time now. But in the U.S., adults associate wipes with babies and toddlers, says Ian Bell, head of tissue and hygiene research at market research firm Euromonitor. (MORE: Does Kmart’s Hilarious New Ad Acknowledge That Kmart Stores Are Hopeless?) For the Dollar Shave Club guys, that’s the bad news. The good news is that this is a potentially big untapped market, and the giants in the industry are eager to grow it because it doesn’t cannibalize sales of regular TP. “We found that once