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Roundup on Retail

December 27, 2008 by Charlie

As projected, the media is focusing on the depressed holiday sales this year (see links below). I have talked with a couple of garden centers who indicated their holiday sales were strong. However, they happened to be located in areas where the downturn has been buffered somewhat (see previous post here).

• Retailers Brace for Major Change
WSJ, DECEMBER 27, 2008

• Bargain-Hunting Shoppers Turn Up Noses at Post-Christmas Sales
Bloomberg, Dec. 27 2008

• Amazon Claims ‘Best Ever’ Christmas (Whatever That Means)
NYT Bits, December 26, 2008

• For stores, a very un-merry holiday
CNN/Money.com, December 26, 2008

• Retail stocks suffer, some defy dismal sales data
Reuters, Dec 26, 2008

• Christmas Aftermath: Navigating the Gift Return
WSJ, Holiday Sales Blog

• Holiday Sales Tumble as U.S. Consumers Cut Spending
Bloomberg, Dec. 26 2008

• US-Holiday sales may be down 4 pct -SpendingPulse
UK Reuters, Dec 26, 2008 2:12pm GMT

• Amazon says 2008 holiday season was ‘best ever’
AP, Dec 26, 2008

• Fresh survey shows gloomy U.S. retail sales: report
MarketWatch, Dec. 26, 2008

• Amazon Lauds Its Holiday Sales
WSJ, DECEMBER 26, 2008, 9:41 A.M. ET

• Retail sales dismal in United States and Britain
International Herald Tribune, December 25, 2008

• Retailers slash prices to entice holiday shoppers
AP, Dec 26, 2008

• After-holiday prices reach ‘rock bottom’
THE TENNESSEAN, DECEMBER 26, 2008

• Visits to U.S. Retailers Fell 24% on Weekend Before Christmas
Bloomberg, Dec. 25 2008

• Retail Sales Plummet
WSJ, DECEMBER 25, 2008

• Early Reports Confirm Weak Holiday Shopping
NYT, December 24, 2008

Filed Under: News Tagged With: retail sector

White Christmas

December 25, 2008 by Charlie

Merry Christmas to all and best wishes for a prosperous 2009! Enjoy this rendition of one of our classic Christmas ballads!

[youtube=http://www.youtube.com/watch?v=Ooc5eJc5SHA]

Filed Under: News Tagged With: economic forecasts

Michael Porter on Charlie Rose

December 19, 2008 by Charlie

Michael Porter’s talk with Charlie Rose on the U.S. economy is getting a lot of buzz online right now. In the 25-minute interview, Porter restates his case from Business Week for why we need an economic strategy and talks about the systemic issues America faces, and its core strengths.

Some highlights: Porter says he’s excited by the potential for this administration to put together an overarching strategy that might address our problems in

  • Public k-12 education;
  • energy
  • high cost of doing business
  • lack of a safety net for workers during job transitions (healthcare security, training, pensions).

Porter says we have some strengths to reinvest in:

  • our science technology system. investment rate has slowed.
  • our belief in competition. We have in the last few years become more protectionist

The silver lining of the crisis is we might get an America:

  • that saves again
  • with a new sense of community responsibility
  • and prudence in business

Porter says this crisis will cause others to doubt this system. This is best system we know for creating economic opportunity. this does not help the cause of capitalism in Latin America.

All in all, a good lunch-time listen. Or better yet, read his piece in Business Week, linked above. It’s a more cohesive argument and it won’t take you 25 minutes. Plus you’ll see some of his underlying logic, and learn interesting facts.

Filed Under: News Tagged With: strategy, trends

Put Your Best Foot Forward

December 18, 2008 by Charlie

Here is my latest column in the December issue of Today’s Garden Center regarding the holiday retail outlook and strategies. Click here.

Filed Under: News Tagged With: retail sector, strategy

New landscape services report available

December 18, 2008 by Charlie

“Landscape Services Market in the U.S.” is a new report just released by leading industrial market research publisher SBI, providing an in-depth treatment of this under-investigated market. Drawing from nearly two dozen sources, data is presented for the following categories: Market Size and Value 2004-2008; Professional Standing: Education, Certification, Employment; Major Trends Driving Industry Growth; International Aspects; Projected Market Forecast 2009-2013; and End-User Demographics. Click here to view other details.

Warning — it’s expensive!

Filed Under: News Tagged With: landscape firms

Creative Destruction

December 15, 2008 by Charlie

The economist Joseph Schumpeter popularized and used the term creative destruction to describe the process of transformation that accompanies radical innovation. In Schumpeter’s vision of capitalism, innovative entry by entrepreneurs was the force that sustained long-term economic growth, even as it destroyed the value of established companies that enjoyed some degree of monopoly power (Wikipedia).

More than 500 American automobile manufacturers failed over the last 100 years for one reason or another, or were acquired, primarily due to the Schumpeterian forces of “creative destruction.” As far I know, not a single one of those auto manufacturers asked for, or was granted, government assistance, or received a government (aka taxpayer) bailout. Should there now be an exception for GM, Ford or Chrysler to get bailed out when none of the 548 defunct companies received assistance?

Filed Under: News Tagged With: recession, trends

Graphically speaking…

December 14, 2008 by Charlie

The latest from Bill Conerly (click on each graph below to enlarge):

Filed Under: News Tagged With: economic forecasts, financial markets

Getting it to market will be tougher

December 8, 2008 by Charlie

Trucking firms are downsizing rapidly. More than 130,000 big rigs (over 7%) have been pulled off the road already, and the figure will keep growing as the recession takes a toll. Many trucking firms will be forced out of business entirely and that will generate a huge shortage when the economy recovers. Demand will ramp up faster than capacity, so rates for moving freight will spike. Figure on paying about 10% more when the economic recovery is in full swing. Consider locking in a rate now. Offer to guarantee a minimum level of business in exchange for guaranteed service and limited price hikes.

Filed Under: News Tagged With: recession

Discounting can be dangerous!

December 8, 2008 by Charlie

During tough economic times, companies often rush to reduce prices on their products and services. That seems like common sense: People can’t afford to spend as much, so charge less to keep them buying. But discounting has its perils.

To be sure, discounting is effective when done wisely and strategically. It can get consumers excited about a product, encourage them to buy more, and help your short-term bottom line. However, whether the purchase is a hot dog, a handbag, or a stay at a five-star hotel, customers want good value for their hard-earned money. The price of something is often an important determinant of its perceived value, as Dan Ariely points out in Predictably Irrational. Often, the more consumers pay, the more value they ascribe to a purchase. If you discount prices purely to boost sales, buyers may begin to question that value.

Consider Abercrombie & Fitch, which lowered prices by roughly 15% during the 2000–2002 downturn. When the dust cleared, the company realized that it had sacrificed much of its brand’s cachet and lost significant market share. A&F; didn’t recover until 2004—and then only after returning to higher prices. In August 2008, having learned its lesson, the company announced that it was considering another price increase, despite a decline in second-quarter profits. The goal: to enhance what the CEO called the “iconic status” of the brand.

But discounting is so easy that some companies simply can’t resist. Starbucks, which posted its first-ever earnings loss in July, has begun to offer lower-priced options, such as a cup of coffee for $1, with free refills. This strategy may boost sales in the short term, but we suspect that, as with A&F;, it will hurt the Starbucks brand in the long term.

Discounting is not always a bad idea, though—there are safe ways to lower prices. Earlier this year, Chrysler discounted something that does not affect its core brand: gasoline. It guaranteed to purchasers of new cars a price of no more than $2.99 per gallon of gas for three years. The idea was to subsidize the fuel that a new car uses, not the car itself. It’s similar to what GM did in 2001 by discounting its financing rather than its cars. Obviously, the auto industry has more problems than brand deterioration. Nonetheless, this is smart marketing during a downturn: It couples the appeal of a discount with an implicit message about the value of the core product.

So if you’re eyeing a simple, traditional discount strategy during the present slowdown, first consider the potential for damage to your brand and then evaluate the brand insurance that a more nuanced approach may offer. If you inadvertently shatter your brand’s mystique, reestablishing the value proposition to consumers may be tougher than you expect.

Jeffrey M. Stibel and Peter Delgrosso in the latest Harvard Business Review.

Filed Under: News Tagged With: pricing, strategy

Latest unemployment report not a good one

December 6, 2008 by Charlie


According to the BLS report yesterday, the latest job market numbers show a recession that’s deepening. A total of 1.9 million jobs have been lost so far this year, with two-thirds of that in the past three months.

The Labor Department’s jobs data showed that the economy shed 533,000 jobs in November, the worst one month decline since December 1974 (though the number in 1974 represented a greater percentage of total workers, so the impact isn’t directly comparable). However, the composition of the declines was very different in the two periods. In December 1974, the drop in employment was almost two-thirds concentrated in the manufacturing sector, and less than a quarter in the services industry. The economy has changed drastically since then. Last month’s decline was less than a sixth in manufacturing, and more than two-thirds in services.

A loss this year of about 2.3 million looks likely, and losses in 2009 could total 3 million. The unemployment rate, which rose in November to 6.7% from 6.5% the previous month, is headed close to 9% in 2009. The losses are widespread, with gains only in education, health care and government.

As layoffs increase, incomes shrink and so does consumer spending, inducing firms to continue cutting payrolls. Making conditions worse are tighter lending standards by banks that hurt companies and their customers. While the rising unemployment rate is disturbing, it’s still nearly four percentage points below the 10.8% peak hit at the end of the 1981-82 recession.

Expect the economy to possibly show some signs of improvement by summer of 2009, but remember that job losses typically continue for a while after a recession ends.

Filed Under: News Tagged With: labor, recession

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