Target bets on QR codes, exclusive toys this holiday

MINNEAPOLIS, Minn., Wed Oct 3, 2012 – Target Corp. hopes that letting shoppers scan, buy and ship a selection of toys while shopping in its stores and having hundreds of exclusive toys will help drive sales this holiday season, one of its executives told Reuters.

Starting Oct. 14, Target will feature 20 toys at the front of its aisles promoted with signs featuring QR codes. Shoppers with smart phones can scan the codes, those squares with dark boxes and lines, to buy any of those items and have them shipped free.

“Providing this convenience for mom is about ensuring that she’s able to shop the way that she wants to,” said Stephanie Lucy, Target’s vice president of toys and the mother of two who knows about not wanting to ruin the surprise of the holidays.

Giving shoppers this new way to buy merchandise could help differentiate Target from its rivals including: Toys R Us, Wal-Mart Stores Inc. and Inc.

The holiday season accounts for the bulk of toy sales at Target and other U.S. chains. Last year, Target’s toy sales were hurt by Walmart’s layaway push before Thanksgiving. Unlike some other major toy sellers, Target does not offer layaway, which gives shoppers the ability to put goods on hold and pay over time.

Instead, Target uses sales coupons, and free shipping and small discounts for its credit-card holders.

Target’s fourth-quarter sales rose 3.3 percent last year, with sales at stores open at least a year up 2.2 percent, down from a 2.4 percent rise during the year-earlier holiday season. The company has not yet given a forecast for the holiday season, and Lucy declined to give a projection for toy sales.

American Express: Retailers generally optimistic so far

NEW YORK ― Retailers are generally optimistic about their holiday performance so far, although shaky economic conditions could change things quickly, the chief executive officer of American Express Co. said on Tuesday.

Ken Chenault, in a speech at the Council on Foreign Relations in New York, said retailers were telling him the holiday had started better than they expected and that online sellers were feeling “very good” about their results.

But Chenault said unemployment and economic uncertainty were still very much a problem and could yet affect the holiday season.

“It won’t take a lot at all to throw things off-course,” he said.

The unemployment problem in the United States will not improve until squabbling politicians start to compromise more, Chenault added.

“In the Western world in general, part of what needs to happen is we need to have our leaders engaged in principled compromise,” he said.

Chenault, who sits on the President’s Council on Jobs and Competitiveness and is co-chairman of the Business Roundtable, gave the speech as part of a series the CFR hosts on business and foreign policy.

Chenault said the president’s council had made “real progress” in its work, but execution on that progress will ultimately be the key.

In the meantime, he said, there are solutions that could improve the unemployment situation without congressional intervention. Among the examples he highlighted were faster visa processing and faster permitting for construction projects.

“Every single regulation, every single action should be put through the prism of job creation,” Chenault said. “We really need more of a single-minded focus on what are we doing to create jobs.”

Uncertainty about the future of the euro zone has affected the economy of late, Chenault said, but he added that there was a “level of cautious optimism” that a deal would be reached.

“I would at least say the momentum is moving in a better direction,” he said.

Retail marketers keep holiday optimism in check, survey finds

NEW YORK ― Chief marketing officers at U.S. retailers are cautious heading into the holiday season, though those at larger chains are a bit more optimistic about their prospects, according to a survey conducted by BDO USA.

Chief marketing officers expect holiday sales to rise 2.9 percent this year, a less rosy view than the 3.5 percent rise a group of CMOs predicted during the firm’s 2010 survey.

“It kind of confirmed my belief that the holiday sales were going to be tepid – positive, but not very strong,” said Doug Hart, partner in BDO’s retail and consumer product practice.

Most retailers have kept their holiday season inventory purchases about the same as last year, as they attempt to anticipate how a high unemployment rate and other economic issues will affect spending.

Retailers do not want a repeat of the 2008 holiday season, when shoppers cut back and chains that ordered too many goods had to slash prices, hitting margins, to sell them.

Sixty-five percent said their chain’s inventory purchases have stayed about the same, up from 52 percent last year.

Inventory decisions were likely impacted by the weak consumer confidence numbers over the summer, which is when most chains have to make their final calls on holiday purchases to ensure they have time for goods to arrive from overseas.

Inventory levels are expected to be up by just 0.7 percent this holiday season, down from the 2.8 percent increase that was projected in 2010.

“They’re a little bit more cautious,” said Hart, noting that CMOs often have a brighter view than executives such as chief financial officers. “The fact that these guys are certainly not optimistic is a good benchmark for where the inventory purchases are going.”

Overall, 48 percent of those surveyed anticipate their holiday season sales will stay about the same, 41 percent expect their sales to rise and 11 percent see a decline.

Among CMOs from some of the biggest retailers, just 33 percent see their sales staying about the same, while 67 percent are calling for sales at their chains to rise. No CMOs from the large chains expect their sales to fall.

J.C. Penney bets on finer offerings for holiday season

NEW YORK ― J.C. Penney Co. Inc. is adding more expensive items to its holiday selection this year, betting its efforts to become a more fashionable retailer will bring in shoppers willing to spend more.

For instance, the retailer will offer its most expensive handbag yet under its exclusive Liz Claiborne brand and offer fancier watches made of rose gold.

Other new additions include national toy brands such as Mattel Inc’s. Barbie dolls for the first time in 20 years.

Analysts expect the battle to be fierce this holiday season among department stores that cater to middle class shoppers such as Macy’s Inc., Kohl’s Corp. and Penney, whose new CEO, former Apple Inc. executive Ron Johnson, takes the reins on Tuesday.

But shoppers are spending again, especially those with more discretionary cash, and Penney is wooing them.

One Liz Claiborne leather handbag was priced at $80, far pricier than the handbags the retailer has typically sold, said Lorraine Hitch, a Penney senior vice president, as she gave Reuters a tour of the chain’s Manhattan store last week.

“There are definitely some more luxury touches to items- customers are responding,” Hitch said.

In the last few years, Penney has sought to remake itself into a hipper retailer, able to draw younger, fashionable women willing to spend, and rely less on its traditional shopper, who is more vulnerable to the ups and downs of the economy.

Penney now operates some 300 Sephora cosmetic outlets within stores, with more to come, and is also opening more of the higher end Mango by MNG fast fashion stores within its doors.

It also recently bought the Liz Claiborne brand after being its exclusive department store retailer for just over a year.

But the chain’s transformation is still very much a work in progress, analysts said.

Penney’s October same-stores sales, to be reported on Thursday, are expected to rise, but lag those of Macy’s, Kohl’s and Dillard’s Inc., according to Thomson Reuters data.

“I don’t think they’ve really succeeded in changing over their customer — they’d love to have a slightly younger, more fashion forward customer,” said Paul Lejuez, a Nomura analyst. “That takes a long time.”

Penney’s same store sales rose 4.5 percent last holiday quarter and have continued to rise since. But on several occasions, it has missed monthly same-store sales forecasts after having to slash prices. In September, same-store sales unexpectedly fell.

Penney has also introduced a holiday store within a store called Wrapt and begun selling cookware by Calphalon, a Newell Rubbermaid Inc. brand. And it is giving prominent display space to Keurig single-serve coffee makers.

The idea, Hitch said, was for Penney to be the “one place you can shop for all your gift needs,” especially more expensive ones. Still, beyond the Claiborne items and its private label clothing, few items are exclusive to Penney.

And Penney remains a “promotional” chain, reliant on bargains.

That $80 Liz Claiborne bag Penney touted was regularly priced at $120. And many items in the Wrapt display were 30 to 40 percent off, even though the holiday shopping season has not started in earnest yet.”

The problem is that they still have a price sensitive customer,” said Morningstar analyst Paul Swinand.