Retail Sales For June Provide An Early Boost, But Bond Yields Mostly Calling The Shots

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The first week of earnings season wraps up with major indices closely tracking the bond market in Wall Street’s version of “follow the leader.” Earnings absolutely matter, but right now the Fed’s policies are maybe a bigger influence. In the short-term the Fed is still the girl everyone wants to dance with.

Lately, you can almost guess where stocks are going just by checking the 10-year Treasury yield, which often moves on perceptions of what the Fed might have up its sleeve. The yield bounced back from lows this morning to around 1.32%, and stock indices climbed a bit in pre-market trading. That was a switch from yesterday when yields fell and stocks followed suit. Still, yields are down about six basis points since Monday, and stocks are also facing a losing week.

It’s unclear how long this close tracking of yields might last, but maybe a big flood of earnings due next week could give stocks a chance to act more on fundamental corporate news instead of the back and forth in fixed income. Meanwhile, retail sales for June this morning basically blew Wall Street’s conservative estimates out of the water, and stock indices edged up in pre-market trading after the data.

Headline retail sales rose 0.6% compared with the consensus expectation for a 0.6% decline, and with automobiles stripped out, the report looked even stronger, up 1.3% vs. expectations for 0.3%. Those numbers are incredibly strong and show the difficulty analysts are having in this market. The estimates missed consumer strength by a long shot. However, it’s also possible this is a blip in the data that might get smoothed out with July’s numbers. We’ll have to wait and see.

Caution Flag Keeps Waving

Yesterday continued what feels like a “risk-off” pattern that began taking hold earlier in the week, but this time Tech got caught up in the selling, too. In fact, Tech was the second-worst performing sector of the day behind Energy, which continues to tank on ideas more crude could flow soon thanks to OPEC’s agreement.

We already saw investors embracing fixed income and “defensive” sectors starting Tuesday, and Thursday continued the trend. When your leading sectors are Utilities, Staples, Real Estate, the way they were yesterday, that really suggests the surging bond market’s message to stocks is getting read loudly and clearly.

This week’s decline in rates also isn’t necessarily happy news for Financial companies. That being said, the Financials fared pretty well yesterday, with some of them coming back after an early drop. It was an impressive performance and we’ll see if it can spill over into Friday.

Energy helped fuel the rally earlier this year, but it’s struggling under the weight of falling crude prices. Softness in crude isn’t guaranteed to last—and prices of $70 a barrel aren’t historically cheap—but crude’s inability to consistently hold $75 speaks a lot. Technically, the strength just seems to fade up there. Crude is up slightly this morning but still below $72 a barrel.

Losing Steam?

All of the FAANGs lost ground yesterday after a nice rally earlier in the week. Another key Tech name, chipmaker Nvidia (NVDA), got taken to the cleaners with a 4.4% decline despite a major analyst price target increase to $900. NVDA has been on an incredible roll most of the year.

This week’s unexpectedly strong June inflation readings might be sending some investors into “flight for safety” mode, though no investment is ever truly “safe.” Fed Chairman Jerome Powell sounded dovish in his congressional testimony Wednesday and Thursday, but even Powell admitted he hadn’t expected to see inflation move this much above the Fed’s 2% target.

Keeping things in perspective, consider that the S&P 500 Index (SPX) did power back late Thursday to close well off its lows. That’s often a sign of people “buying the dip,” as the saying goes. Dip-buying has been a feature all year, and with bond yields so low and the money supply so huge, it’s hard to argue that cash on the sidelines won’t keep being injected if stocks decline.

Two popular stocks that data show have been popular with TD Ameritrade clients are Apple (AAPL) and Microsoft (MSFT), and both of them have regularly benefited from this “dip buying” trend. Neither lost much ground yesterday, so if they start to rise today, consider whether it reflects a broader move where investors come back in after weakness. However, one day is never a trend.

Reopening stocks (the ones tied closely to the economy’s reopening like airlines and restaurants) are doing a bit better in pre-market trading today after getting hit hard yesterday.

In other corporate news today, vaccine stocks climbed after Moderna (MRNA) was added to the S&P 500. BioNTech (BNTX), which is Pfizer’s (PFE) vaccine partner, is also higher. MRNA rose 7% in pre-market trading.

Strap In: Big Earnings Week Ahead

Earnings action dies down a bit here before getting back to full speed next week. Netflix (NFLX), American Express (AXP), Johnson & Johnson (JNJ), United Airlines (UAL), AT&T (T), Verizon (VZ), American Airlines (AAL) and Coca-Cola (KO) are high-profile companies expected to open their books in the week ahead.

It could be interesting to hear from the airlines about how the global reopening is going. Delta (DAL) surprised with an earnings beat this week, but also expressed concerns about high fuel prices. While vaccine rollouts in the U.S. have helped open travel back up, other parts of the globe aren’t faring as well. And worries about the Delta variant of Covid don’t seem to be helping things.

Beyond the numbers that UAL and AAL report next week, the market may be looking for guidance from their executives about the state of global travel as a proxy for economic health. DAL said travel seems to be coming back faster than expected. Will other airlines see it the same way? Earnings are one way to possibly find out.Even with the Delta variant of Covid gaining steam, there’s no doubt that at least in the U.S, the crowds are back for sporting events.

For example, the baseball All-Star Game this week was packed. Big events like that could be good news for KO when it reports earnings. PepsiCo (PEP) already reported a nice quarter. We’ll see if KO can follow up, and whether its executives will say anything about rising producer prices nipping at the heels of consumer products companies.

Confidence Game: The 10-year Treasury yield sank below 1.3% for a while Thursday but popped back to that level by the end of the day. It’s now down sharply from highs earlier this week. Strength in fixed income—yields fall as Treasury prices climb—often suggests lack of confidence in economic growth.

Why are people apparently hesitant at this juncture? It could be as simple as a lack of catalysts with the market now at record highs. Yes, bank earnings were mostly strong, but Financial stocks were already one of the best sectors year-to-date, so good earnings might have become an excuse for some investors to take profit. Also, with earnings expectations so high in general, it takes a really big beat for a company to impress.

Covid Conundrum: Anyone watching the news lately probably sees numerous reports about how the Delta variant of Covid has taken off in the U.S. and case counts are up across almost every state. While the human toll of this virus surge is certainly nothing to dismiss, for the market it seems like a bit of an afterthought, at least so far. It could be because so many of the new cases are in less populated parts of the country, which can make it seem like a faraway issue for those of us in big cities. Or it could be because so many of us are vaccinated and feel like we have some protection.

But the other factor is numbers-related. When you hear reports on the news about Covid cases rising 50%, consider what that means. To use a baseball analogy, if a hitter raises his batting average from .050 to .100, he’s still not going to get into the lineup regularly because his average is just too low. Covid cases sank to incredibly light levels in June down near 11,000 a day, which means a 50% rise isn’t really too huge in terms of raw numbers and is less than 10% of the peaks from last winter. We’ll be keeping an eye on Covid, especially as overseas economies continue to be on lockdowns and variants could cause more problems even here. But at least for now, the market doesn’t seem too concerned.

Dull Roar: Most jobs that put you regularly on live television in front of millions of viewers require you to be entertaining. One exception to that rule is the position held by Fed Chairman Jerome Powell. It’s actually his job to be uninteresting, and he’s arguably very good at it. His testimony in front of the Senate Banking Committee on Thursday was another example, with the Fed chair staying collected even as senators from both sides of the aisle gave him their opinions on what the Fed should or shouldn’t do. The closely monitored 10-year Treasury yield stayed anchored near 1.33% as he spoke.

Even if Powell keeps up the dovishness, you can’t rule out Treasury yields perhaps starting to rise in coming months if inflation readings continue hot and investors start to lose faith in the Fed making the right call at the right time. Eventually people might start to demand higher premiums for taking on the risk of buying bonds. The Fed itself, however, could have something to say about that.

It’s been sopping up so much of the paper lately that market demand doesn’t give you the same kind of impact it might have once had. That’s an argument for bond prices continuing to show firmness and yields to stay under pressure, as we’ve seen the last few months. Powell, for his part, showed no signs of being in a hurry yesterday to lift any of the stimulus.

TD Ameritrade® commentary for educational purposes only. Member SIPC.

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I am Chief Market Strategist for TD Ameritrade and began my career as a Chicago Board Options Exchange market maker, trading primarily in the S&P 100 and S&P 500 pits. I’ve also worked for ING Bank, Blue Capital and was Managing Director of Option Trading for Van Der Moolen, USA. In 2006, I joined the thinkorswim Group, which was eventually acquired by TD Ameritrade. I am a 30-year trading veteran and a regular CNBC guest, as well as a member of the Board of Directors at NYSE ARCA and a member of the Arbitration Committee at the CBOE. My licenses include the 3, 4, 7, 24 and 66.

Source: Retail Sales For June Provide An Early Boost, But Bond Yields Mostly Calling The Shots

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Critics:

Retail is the process of selling consumer goods or services to customers through multiple channels of distribution to earn a profit. Retailers satisfy demand identified through a supply chain. The term “retailer” is typically applied where a service provider fills the small orders of many individuals, who are end-users, rather than large orders of a small number of wholesale, corporate or government clientele. Shopping generally refers to the act of buying products.

Sometimes this is done to obtain final goods, including necessities such as food and clothing; sometimes it takes place as a recreational activity. Recreational shopping often involves window shopping and browsing: it does not always result in a purchase.

Most modern retailers typically make a variety of strategic level decisions including the type of store, the market to be served, the optimal product assortment, customer service, supporting services and the store’s overall market positioning. Once the strategic retail plan is in place, retailers devise the retail mix which includes product, price, place, promotion, personnel, and presentation.

In the digital age, an increasing number of retailers are seeking to reach broader markets by selling through multiple channels, including both bricks and mortar and online retailing. Digital technologies are also changing the way that consumers pay for goods and services. Retailing support services may also include the provision of credit, delivery services, advisory services, stylist services and a range of other supporting services.

Retail shops occur in a diverse range of types of and in many different contexts – from strip shopping centres in residential streets through to large, indoor shopping malls. Shopping streets may restrict traffic to pedestrians only. Sometimes a shopping street has a partial or full roof to create a more comfortable shopping environment – protecting customers from various types of weather conditions such as extreme temperatures, winds or precipitation. Forms of non-shop retailing include online retailing (a type of electronic-commerce used for business-to-consumer (B2C) transactions) and mail order

2 Specialty Retail Stocks To Add To Your Shopping List

2 Specialty Retail Stocks to Add to Your Shopping List

Let’s face it – retail is one of the most competitive industries out there. Consumer preferences are constantly changing and it takes a lot for these types of businesses to earn shoppers’ hard-earned cash. That’s one of the reasons why investing in specialty retail stocks can be a great long-term strategy if you choose wisely. Since specialty retailers focus on specific product categories, like office supplies, furniture, or men’s or women’s clothing, they are oftentimes able to carve out a unique niche and stand out among their competitors.

Thanks to all of the stimulus that has been added to the economy over the last year and the fact that a newly vaccinated population is getting back to shopping in person, we could see some strong sales coming out of the specialty retail space in the coming months. There are 2 specialty retail stocks that stand out as potential buys at this time given their unique brands and impressive earnings reports. Let’s take a further look at these intriguing stocks below.

RH (NYSE:RH)

RH, formerly known as Restoration Hardware, is a great specialty retail stock because it is doing something that is completely unique. While there are plenty of home furnishings stores out there, RH is distinctive in that it specializes in ultra-high-end luxury home goods and creating a unique shopping experience at every single store. Homeowners can find upscale products including furniture, lighting, bathware, outdoor & garden, tableware textiles, and décor at RH, and each one of the company’s showrooms offers an original and aesthetically pleasing experience.

The company counts Warren Buffett’s Berkshire Hathaway among its investors and is undoubtedly benefitting from a hot residential real estate market. With that said, RH has upside potential regardless of what’s going on in the economy, as the company doesn’t have exposure to seasonal inventory and caters to wealthy consumers that spend big year-round. The stock has been pulling back in recent months after a rally from $70 to $700 a share, but after the company’s latest earnings report it could be gearing up for more gains.

RH saw its Q1 revenues up 78% year-over-year to $860.8 million and delivered Q1 adjusted diluted earnings per share increase by 285% year-over-year to $4.89 per share. Other positives from the stellar report included an increased fiscal 2021 outlook and the fact that the company expects to be net debt-free by the end of the fiscal year. The bottom line here is that RH is a specialty retail company that is executing at a very high level, which is evident in both the earnings results and stock price.

Lovesac (NASDAQ:LOVE)

There’s a lot to love about this specialty retailer, which designs and manufactures modular couches and beanbags. What really stands out about Lovesac is how it has created a brand and product lines that have quickly become the favorite furniture of an entire generation. Millennials are among Lovesac’s most frequent customers, as they love the idea of the company’s flagship product, a unique modular furniture piece known as a “sactional”.

These are couches that are easily assembled and disassembled in order to meet the needs of the consumer. There are literally dozens of different ways that sactionals can be rearranged to fit in someone’s home, and the fact that customers can continue adding on pieces and accessories over time is perfect for creating repeat buyers.

While the company has 91 retail showrooms across the United States, investors should be impressed with the progress that it has made over the last year developing its digital sales channels. E-commerce sales were up over 250% in 2020 and although the company might not be able to keep up that torrid pace, Lovesac has proved it is more than capable of finding buyers online. Also, keep in mind that those showrooms are going to see foot traffic pick up as the pandemic winds down.

Lovesac just reported very strong Q1 2022 earnings results including net sales growth of 52.5% and diluted EPS of $0.13, up 122.1% year-over-year. Analysts also love the stock, as Lovesac recently got a price target increase from Craig Hallum on Thursday. Pandemic tailwinds are continuing to help this specialty retailer grow, and that narrative should remain in place for the foreseeable future. These are all great reasons why Lovesac is a great stock to consider adding to your shopping list.

By:

Source: 2 Specialty Retail Stocks to Add to Your Shopping List

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Critics:

A stock derivative is any financial instrument for which the underlying asset is the price of an equity. Futures and options are the main types of derivatives on stocks. The underlying security may be a stock index or an individual firm’s stock, e.g. single-stock futures.

Stock futures are contracts where the buyer is long, i.e., takes on the obligation to buy on the contract maturity date, and the seller is short, i.e., takes on the obligation to sell. Stock index futures are generally delivered by cash settlement.

A stock option is a class of option. Specifically, a call option is the right (not obligation) to buy stock in the future at a fixed price and a put option is the right (not obligation) to sell stock in the future at a fixed price. Thus, the value of a stock option changes in reaction to the underlying stock of which it is a derivative. The most popular method of valuing stock options is the Black–Scholes model. Apart from call options granted to employees, most stock options are transferable.

Stock price fluctuations

The price of a stock fluctuates fundamentally due to the theory of supply and demand. Like all commodities in the market, the price of a stock is sensitive to demand. However, there are many factors that influence the demand for a particular stock. The fields of fundamental analysis and technical analysis attempt to understand market conditions that lead to price changes, or even predict future price levels.

A recent study shows that customer satisfaction, as measured by the American Customer Satisfaction Index (ACSI), is significantly correlated to the market value of a stock.Stock price may be influenced by analysts’ business forecast for the company and outlooks for the company’s general market segment. Stocks can also fluctuate greatly due to pump and dump scams.

See also

How Sales Enablement Can Drive Revenue Growth in 2021

How did your leadership priorities change in 2020? If you started paying more attention to the sales enablement needs of your organization, you’re not alone.

According to recent HubSpot research, 65% of sales leaders who outperformed revenue targets in 2020 reported having a dedicated person or team working on sales enablement efforts instead of making it an initiative someone works on off the side of their desk.

[New Data] The 2021 Sales Enablement Report

For sales organizations that have been waiting to implement dedicated sales enablement measures — the time is now. With 2021 right around the corner, intentional sales enablement is a must-have for organizations that want to remain competitive in the future.

HubSpot recently sat down with Chris Pope, Director of Sales at Crayon, to discuss how companies can implement sales enablement strategies that can move the needle and drive revenue growth.

“Crayon defines sales enablement as providing our account executives with the resources and content they need to win more deals. Closing deals is more important than ever, especially in today’s competitive market where there are fewer deals to close,” he says.

In 2020, Crayon placed even greater emphasis on sales enablement to support their sales force. “We’ve put even more effort into making sure that our sales teams have the resources they need, simply because every deal matters more than ever,” says Pope.

How to Improve Sales Enablement for Your Team

1. Use data to inform your sales enablement content.

Crayon uses data to inform sales enablement decisions. According to Pope, his team relies on “velocity reports” to determine what areas of the sales process reps need the most support with.

“Velocity reports tell us what our reps conversion rates are at every stage of the sales funnel. How many opportunities are turning into discovery calls? How many discovery calls are turning into demos? How many demos are turning into proposals? And how many proposals do we send out that turn into closed business?” says Pope.

“We leverage that data to inform us where each individual rep needs to spend the most time, and where managers need to spend time training individual contributors.”

From an organizational level, this approach helps sales leaders know how to support sales managers and reps, and provides valuable insight into the type of training and content would be most effective.

Two examples of enablement content Crayon leadership has provided to their sales team include:

Call Recordings

“We love call recordings. We not only have call recordings of what the perfect call sounds like, we also have recordings of ideal discovery calls, effective demos, and successful closing calls. We share these recordings with reps who may need help in those areas, and we share them broadly across the organization so everyone is on the same page,” Pope says.

Battle Cards

Battle cards are a valuable tool for preparing reps to speak to features and objections related to your product. Crayon relies heavily on battle cards to ensure sales reps understand what they’re selling inside and out.

“We use our own product to make sure that our individual contributors have the most up to date messaging on how we position against our competition. This knowledge has been crucial not only for our organization, but for our customers as well,” says Pope.

2. Focus on sales team culture.

Chances are, you’re familiar with the term “company culture” — the idea that a company should have a shared set of beliefs, values, and practices. But when was the last time you assessed the culture of your sales team?

Sales teams are often dynamic organizations with motivated team members whose ability to sell is critical to the health of a company. Building strong rapport among members of the sales team and having a culture of open communication, especially in a remote environment, is an effective way to support sales enablement.

Feeling supported and included while selling remotely can be challenging for reps. For Crayon, sales team cohesion is a high priority.

“We’ve done our best to create a team atmosphere. We have daily calls where the entire sales team is on together, we have a peer program where our more experienced reps are paired with less experienced reps to offer coaching and mentorship, and we’re creating cross-functional opportunities for our pipeline generation team to work closer with our closing team,” says Pope.

These activities build trust across the team, and strengthen communication among sales managers and reps, creating a better environment to tackle sales enablement issues as they arise.

3. Prioritize sales enablement at each level of the organization.

At Crayon, sales enablement is an all-hands-on-deck initiative from the top down.

“Sales enablement is a team effort at Crayon. It starts at the top with our Senior Vice President of Sales, who delivers insight on broad topics and training related to overarching sales themes such as a demo workflow, or how to run a closing call,” says Pope.

“The managers and directors are responsible for individual training tailored to the needs of their reps. This can include listening in on at least a few calls for each individual contributor weekly, and providing regular feedback.”

In addition to the sales enablement work of leadership, Crayon focuses heavily on team selling to get everyone involved.

“If one of our reps is great at positioning our product against a competitor’s or they’re strong at demoing a certain aspect of our platform, we’ll invite their team members to tune into their sales calls so they can learn from them.”

Everybody within the organization plays a role in our sales enablement.

In 2020, sales managers at Crayon took a hands-on approach to coaching reps who had opportunities for improvement.

“We’ve really made it a focus to make sure managers are involved in more calls. Managers are putting time aside to give individual contributors and feedback that they need after calls, and benchmarking performance after every stage of the sales cycle,” says Pope.

According to Pope, if a rep is struggling with a specific part of the sales process, Crayon’s team will “focus our training on the specific aspect of the process they’re struggling with to help them improve and get their overall win rate up.”

4. Don’t wait to give feedback.

When sales managers and seasoned team members are coaching reps, the Crayon team makes it a point to provide feedback quickly.

For example, if Pope were to listen in to a rep’s sales call with a prospect, he would schedule 15 minutes with the rep right after the call to deliver feedback on how it went.

“When you let time pass, the call is not as fresh in the rep’s mind, and your feedback is not going to be as direct as it would be if you delivered it right away.”

5. Make sure sales managers feel supported.

Sales managers often have a lot on their plate. They are responsible for coaching and leading their reps to success, and are accountable for their team’s performance to leadership. For growing companies, relieving pressure from sales managers is crucial for a healthy organization.

“As you continue to scale your teams you don’t want your managers to feel overwhelmed. You want to make sure they have enough time in the day to give every individual contributor the attention that they need to to perform their best.” says Pope.

Pope says Crayon focuses on conscious staffing and resourcing to avoid sales manager burnout:

“If we know we’re going to hire a new group of sales reps, we make sure we already have enough managers in place who have the bandwidth to lead.

So when those people start we don’t have a new manager meeting new reps, we have experienced managers working with new reps, and we make sure that team members have the data they need to understand what their path to success will be as an individual contributor.”

Improving Team Morale in 2021

Per HubSpot’s 2021 Sales Enablement Report, 40% of sales leaders expected to miss their revenue targets this year. That means sales enablement efforts are not only necessary for growth — they are critical for survival.

In a competitive landscape where sales teams are working with volatile markets and buyer uncertainty, keeping morale high is more challenging than ever. Pope shares why communication is Crayon’s greatest tool for keeping employees engaged.

“Morale has been all over the map for different members of the team. At Crayon, we never go a day without checking in on our reps,” he says. “I try to at least have two times a day where I’m asking them how their days are going, what they’ve been working on, what calls have gone well, what calls haven’t gone well, and asking how can I continue to support them.”

This approach to communication happens at the organizational level as well.

“Crayon has done a really great job of communicating, being honest about when we might go back into the office, and making sure we’re meeting with folks who are concerned about not having an office atmosphere to make sure that they’re comfortable with their remote work setup,” says Pope.

If you’re looking for more advice on boosting sales rep productivity and morale, check out this post for advice from an Aircall sales leader on navigating employee fatigue.

By: Lestraundra Alfred @writerlest

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HubSpot

Learn more about Sales Enablement: Why You Need Sales Enablement: https://clickhubspot.com/Sales-Enable… The Sales Enablement Certification will teach you how to develop a marketing-driven sales enablement strategy. This course was designed with marketing managers in mind, but other marketers, as well as sales leaders, can benefit from learning the principles involved in this approach to sales enablement.

This course is made up of 12 classes and a 60-question exam. Completing this course will help you: 1. Align your marketing and sales teams around business-level goals 2. Define your target customer using buyer personas and Jobs to Be Done 3. Implement marketing processes that will provide your sales team with a steady flow of qualified leads 📔 Grow Your Career and Business with HubSpot Academy: https://clickhubspot.com/Popular-Courses 📔 Favorite Free Certification Courses: • Social Media Marketing Course: https://clickhubspot.com/Social-Media… • SEO Training Course: https://clickhubspot.com/SEO-Training… • Inbound Course: https://clickhubspot.com/Inbound-Cert… • Inbound Marketing Course: https://clickhubspot.com/Inbound-Mark… • Email Marketing Course: https://clickhubspot.com/Email-Market… • Inbound Sales Course: https://clickhubspot.com/Inbound-Sale… • Taking your Business Online Course: https://clickhubspot.com/Business-Online

A Scary Number of Retail Companies are Facing Bankruptcy Amid the Coronavirus Pandemic

The sign outside the J.C. Penney store is seen in Westminster, Colorado February 20, 2009. Department store operator J.C. Penney Co Inc posted a 51 percent drop in fourth quarter profit on Friday, and said its loss in the current quarter would be deeper than Wall Street estimates as shoppers hold off on spending. REUTERS/Rick Wilking (UNITED STATES) – GM1E52L0AQI01

The retail death march persists. Somewhat under-the-radar, Italian luxury goods retailer Furla filed for Chapter 11 on Friday after being hit hard from the COVID-19 pandemic. The company is looking to close stores and cut debt as part of the reorganization. The retailer, founded in 1927, plans to emerge from bankruptcy with a greater focus on e-commerce.

Furla joins a long list of well-known retailers that have buckled during the health crisis.

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New York City-based department store chain Century 21 filed for bankruptcy in September and said that it will shut 13 locations that for years served up deep discounts on designer wares. The company pinned the blame on the COVID-19 pandemic and uncooperative insurers who were supposed to help provide the company with fiscal support during tough times.

Bankrupt J.C. Penney, meanwhile, received a bailout in September from landlords Simon Property Group and Brookfield. The consortium valued the century old department store — which went bust back in May — at some $1.75 billion. A total of 650 stores will stay open, down from the more than 1,000 pre-pandemic.

“It takes a long time to kill a retailer,” Forrester retail analyst Sucharita Kodali told Yahoo Finance Live “So as long as they are able to pay their bills, which if they have an owner they will — they can absolutely be around. But that doesn’t mean death for J.C. Penney is totally off the table.”

Kodali added that J.C. Penney “may not be a great customer experience, but at least it’s alive and open. They can figure out what the plan B over five to ten years could be for that space.”

‘That’s a scary number’

States have allowed malls and retailers to reopen, but the situation remains precarious as COVID-19 infections are now back on the rise. Consequently, it’s reasonable to expect malls and stores are shutdown — or shopping times restricted —again before year end. That will raise the prospect of a fresh wave of bankruptcies in early 2021 after what could be a lackluster holiday shopping season.

“I think many of these companies will file [for bankruptcy], and it’s not a handful. It’s several dozen. And that’s a scary number,” Stifel managing director Michael Kollender, who leads the consumer and retail investment banking group for the firm, told Yahoo Finance. “It’s far more than we have seen over the last several years combined.”

Kollender and his colleague James Doak at Miller Buckfire — Stifel’s restructuring arm, where Doak is co-head — have worked on dozens of consumer and retail bankruptcies in recent years, including Aeropostale, Gymboree and Things Remembered.

“We will see some major chains go away and not come back,” Kollender added. “These are chains that were struggling before the situation. COVID-19 will put them over the ledge.”

The pandemic has toppled several household names this year. Stein Mart, a 112-year-old discounter, filed for bankruptcy in early August and will look to close most of its nearly 300 stores. The company cited significant financial stress brought on by the COVID-19 pandemic for its decision.

August also saw Lord & Taylor — the oldest U.S. department store founded in 1826 — file for Chapter 11 bankruptcy protection after being crippled by COVID-19 store closures. The company was purchased for $100 million from Hudson’s Bay by fashion startup Le Tote in 2019. Le Tote also filed for Chapter 11.

Men’s Wearhouse-owned Tailored Brands also filed for Chapter 11 in August, too. The company said it had received $500 million in debtor-in-possession financing from existing lenders.

Meantime, Ascena Retail Group, the owner of Ann Taylor and Lane Bryant, finally filed for bankruptcy protection in late July. The company, which has been circling the bowl for years, will look to the courts to help it shave $1 billion in debt. But it’s likely the retailer will be far slimmer post bankruptcy than its current 2,800 store count.

AdChoices

Regional retailer Paper Store filed for Chapter 11 in July as well. The operator of 86 stationary and card stores in the Northeast said it’s looking for a buyer.

New York & Co. parent company RTW Retailwinds also filed for Chapter 11 bankruptcy protection in July after years of growing irrelevance in malls. The women’s apparel company — which changed its name to the bizarre RTW Retailwinds as part of a rebranding in 2018 — operates 378 outlet and and mall-based stores across 32 states. It may close all of its stores as part of the filing.

“The combined effects of a challenging retail environment coupled with the impact of the Coronavirus (COVID-19) pandemic have caused significant financial distress on our business, and we expect it to continue to do so in the future. As a result, we believe that a restructuring of our liabilities and a potential sale of the business or portions of the business is the best path forward to unlock value. I would like to thank all of our associates, customers, and business partners for their dedication and continued support through these unprecedented times,” said RTW Retailwinds CEO Sheamus Toal in a statement.

And the list of now defunct retailers is almost endless.

Brooks Brothers filed for bankruptcy in July. It has been dealt a twin blow to its finance from closed malls and a shift away from preppy clothing. The company would up being sold to the duo of Authentic Brands Group and Simon Property Group for $325 million.

GNC has walked through death’s door after knocking on it for years. The 85-year-old vitamin seller filed for bankruptcy in late June after years of battling waning sales and a debt load north of $1 billion. GNC plans to shutter up to 1,200 stores across the U.S. The company operates more than 5,800 stores.

NEW YORK, NEW YORK - AUGUST 07:  A person wears a protective face mask outside the GNC store as the city continues Phase 4 of re-opening following restrictions imposed to slow the spread of coronavirus on August 7, 2020 in New York City. The fourth phase allows outdoor arts and entertainment, sporting events without fans and media production. (Photo by Noam Galai/Getty Images)
A person wears a protective face mask outside the GNC store as the city continues Phase 4 of re-opening following restrictions imposed to slow the spread of coronavirus on August 7, 2020 in New York City. (Photo: Noam Galai/Getty Images)

“Some companies are just not going to survive this,” says McGrail, who is the COO of one of the world’s largest asset disposition and valuation firms, Tiger Capital Group. Its McGrail’s team — which often includes store associates of a stricken retailer — that hangs the “Everything must go” signs and works to fetch top dollar on fixtures and other inventory.

Such is the current life for McGrail and others in the retail bankruptcy and restructuring fields. In talking to a host of experts, one thing is abundantly clear: more retail bankruptcies are very likely over the next twelve months.

Even for those retailers emerging from bankruptcy, vendors are likely to be tepid to ship them product while at the same time tightening payment terms as the pandemic rages on.

That one-two punch usually kills a wounded retailer for good.

Then there is the general uncertainty on how people will view going back to the mall in the new normal of social distancing. That fog of war is poised to persist well beyond the coming holiday season.

“We are in a retail tsunami,” Kollender said.

This story was originally published on June 24, 2020, and has been updated.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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Covid Boosted Retail Subscriptions Up To 145%: The New Retail Therapy?

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Subscriptions is now perhaps the default way we consume music and premium video content. Is it possible that will happen for retail as well? “It’s not just media and entertainment that seems to be surging,” Recurly CEO Dan Burkhart told me recently on the TechFirst podcast. “The highest growth was actually counterintuitive … curiously, the subscription commerce category really took off.”

That’s not what I expected to hear.In a crisis, many tend to get conservative. If a global pandemic is threatening our income, we shut down unnecessary expenses, trim luxuries, batten down the hatches, and prepare to ride out the storm in as strong a financial position as possible. And that’s in fact what happened — at least for richer people — near the beginning of Coronavirus.But not for subscription retail.

bestmining3Growth in subscription retail actually outpaced multiple other categories. Recurly manages subscription programs for about 700 companies including Amazon-owned Twitch, Asana, CBS, Starz, AMC, Barkbox, and more, and released a report on the impact of Covid-19 on different verticals:

 

  • Streaming: Growth up to 89.8%
  • Education: Growth up to 60%
  • SaaS/Cloud: Growth up to 51%

Consumer goods actually dipped early in the pandemic, only to rise in March through May, peaking at 145% growth. In contrast streaming media, with superstars like Netflix and the new Disney+, peaked at just under 90%. Also high, but not nearly as impressive.

What’s going on? Perhaps some good old-fashioned retail therapy, with a side-helping of surprise.

“I think there could be a little bit of a guilty pleasure in that it’s a bit of a decadent affordance to have something come to your home that you anticipate,” Burkhart told me. “That anticipation provides a little bit of a self-gifting twang, I think, that perhaps individuals were craving a bit.”

And, of course, there’s the convenience factor. Which Covid-19, of course, has dialed up to 11: masking up to go to a physical store isn’t super-fun for even the most pro-mask crowd.

“The cost and friction of actually going to a store even for simple groceries is something that I know in our family we’re talking about, and we might do a rock paper scissors to see who goes to the grocery store this time,” Burkhart says.

The education category was also up, with boosts of up to 73.2% in free trials, subsiding as schools closed. And, as we’ve seen, cloud and software-as-a-service tools are up as well.

Of course, subscriptions were up in general even before Covid-19. Burkhart says that’s in part due to risk-aversion: buying access to a service is relatively cheap and easy to cancel, whereas a one-time purchase of a commodity can be more irrevocable and seemingly wasteful. You bought the movie, it sucks, and you’re stuck with it, versus you subscribed to a streaming service, and you’ve got multiple options to try. If you don’t like any of them, you can always cancel.

One challenge: subscribing to many, and having multiple small holes in your bank account, draining money almost invisibly. Which, of course, forces subscription companies to continue to deliver value:

“Companies really need to shoulder the burden of making sure that they are continuing to deliver value in whatever it is they’re selling by way of a subscription model, in order to achieve that long term benefit,” Burkhart says.

There’s always going to be one-off purchases that we need to shop for intentionally But it’s possible, given the trend, that many of our recurring retail and grocery purchases could move to a subscription model.

Milk, toilet paper, shampoo, butter … once you have your favorite brand and you trust a provider to know the schedule at which you need replenishment, moving to subscription isn’t that big of a stretch, perhaps.

Even after Covid-19.

Get the full transcript of our conversation here.

Follow me on Twitter or LinkedIn. Check out my website or some of my other work here.

I forecast and analyze trends affecting the mobile ecosystem. I’ve been a journalist, analyst, and corporate executive, and have chronicled the rise of the mobile economy. I built the VB Insight research team at VentureBeat and managed teams creating software for partners like Intel and Disney. In addition, I’ve led technical teams, built social sites and mobile apps, and consulted on mobile, social, and IoT. In 2014, I was named to Folio’s top 100 of the media industry’s “most innovative entrepreneurs and market shaker-uppers.” I live in Vancouver, Canada with my family, where I coach baseball and hockey, though not at the same time.

Source: https://www.forbes.com

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How Macy’s And Wanamaker’s Dealt With Two Pandemics, 102 Years Apart

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Will the reopening of Macy’s bring a sense of normalcy back to America’s retail scene? Department stores, formerly regarded as America’s temples of commerce, survived the 1918 pandemic. Can they survive the current one?

There was a time when department stores anchored cities and towns of all sizes. But today they are smaller, fewer and weaker. When governors initially released their individual stay-at-home orders, most retail stores were ordered to close. Businesses that carried health, food and home improvement items were deemed “essential.” Most department stores dropped those lines at least 30 years ago.

On Monday, 68 Macy’s stores, largely located in southern states, opened for the first time in six weeks. The Shops at Willow Bend Macy’s, located in Plano, Texas, was one of those locations. But when the doors were unlocked on Monday, there were no lines. By mid-afternoon, only about 10 shoppers walked the aisles. Registers were quiet and fitting rooms were empty. As some customers chose curbside pickup and others avoided leaving their homes for shirts and sauce pans, Macy’s reopening didn’t appear essential.

Department stores used to be essential. Most merchandise was traditionally available at department stores. Even televisions and washing machines debuted at department stores. Cities couldn’t survive without their stores or their civic leadership. John Wanamaker, one of America’s greatest merchant prices, operated his great emporium right in the heart of Center City Philadelphia. He was a community leader and joined the U.S. fight for victory during World War I.

On September 28, 1918, Wanamaker, along with other dignitaries, threw a huge parade down Broad Street. The goal was to encourage patriotic pride and sell Liberty Loans. Wanamaker planned an American sing-along concert right in his store’s signature Grand Court to kick off the day. Wanamaker even engaged bandmaster John Philip Sousa to lead the program. Wanamaker helped design a memorable event that children would ask for years to come, “Do you remember that day, daddy?”

It was an infamous day. Philadelphia turned the other cheek as over 600 sailors fell victim to the “Spanish Flu” that made its way around the Naval Yard. Even as the influenza became a global crisis, local health officials downplayed any concerns about the Wanamaker-led celebration. Unfortunately, three days later, 117 Philadelphians had died from the influenza and every hospital bed was taken. This severe and sudden flu had the ability to take its victims within a matter of days, even hours. By early November, the figure surpassed 12,000.

None of the department stores closed during the 1918 pandemic. The city shut schools, churches, pool halls, but not the department stores. Wanamaker kept pushing the Liberty Loan Drive and made no public reference to the sickness ravaging Philadelphia. Strawbridge & Clothier, a major Wanamaker competitor, did turn its telephone order room to the Philadelphia Council of National Defense. If anybody felt ill or had concerns, they could dial Filbert 100 and say “Strawbridge & Clothier. Influenza.” They usually were referred to their local fire station for help.

Other cities saw what happened in Philadelphia and grew wary of large spaces, such as department stores. Health departments ordered store operators to provide masks for employees, keep an eye on illness within the store, and maintain clean buildings. Some cities required businesses to wash their sidewalks frequently throughout the day.

Today, as restrictions are relaxed and stores gradually reopen, there are some similarities between 1918 and 2020. Shoppers will likely find store employees wearing masks. They will find buildings that are thoroughly and frequently cleaned. And as stated on Macy’s own website, store employees will have to complete wellness checks before each shift. The immediate death toll after Philadelphia’s 1918 Liberty Loan Parade proved that crowds, whether assembled in Wanamaker’s Grand Court or along Philadelphia’s Broad Street, could create a catastrophe.

Ultimately, the biggest difference between 1918 and 2020 is the role of the department store. Unless department stores can turn the tide and once again become essential to customers and their communities, the COVID-19 pandemic death count will include many familiar retail names.

I’ve been cited in media publications as a department store “historian,” “lecturer,” “expert,” “guru,” “aficionado,” “junkie,” and “maven.” I am an oboist with the Baltimore Symphony Orchestra and grew up in the Philadelphia area. My mother went shopping every day and I fell in love with road trips and department stores, two of her favorite passions. Back in 2009, I took on a personal challenge and wrote a book about Hutzler’s in Baltimore. It went through six printings in six weeks. I have authored nine additional department store history books and lectured at locations such as the New York Public Library, Boston Public Library, New York Fashion Week, the Wanamaker centennial celebration, and the Historical Society of Washington DC. I have contributed to the New York Times, Wall Street Journal, Fortune, and Southern Living. I love telling stories and I stand by my research. I’m also at www.departmentstorehistory.net.

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Cowen’s Oliver Chen on Macy’s decision to raise debt. With CNBC’s Melissa Lee and the Fast Money traders, Guy Adami, Tim Seymour, Brian Kelly and Steve Grasso. For more coronavirus live updates: https://www.cnbc.com/2020/04/16/coron… For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2JdMwO7 » Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision » Subscribe to CNBC: https://cnb.cx/SubscribeCNBC » Subscribe to CNBC Classic: https://cnb.cx/SubscribeCNBCclassic

A Debt-Free J.Crew Is Reborn. Finding A New Life Will Be A Challenge.

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One of the most debt-laden retailers in America is getting a second shot. J.Crew laid out a plan for bankruptcy on Monday in which it will eliminate virtually all $1.7 billion of its leveraged buyout debt, freeing the preppy chain up from $150 million in annual interest payments and putting it under the control of its lenders.

The plan will allow the chain of more than 450 stores, which has delivered losses for six consecutive years, to invest more heavily in things like e-commerce, marketing and store upgrades.

“What you have now is a debt-free J.Crew,” says Moody’s analyst Raya Sokolyanska. “That frees up a lot of money to invest in the business.”

J.Crew’s debt woes began in 2011, when it was acquired by private equity firms TPG Capital and Leonard Green & Partners for $3 billion. In the last several years, the company has struggled to win over shoppers in the face of increasing competition from online and fast-fashion brands like H&M and Zara, crushing sales and sending executives packing.

The company had planned to raise cash to pay down its loans by spinning off Madewell, its fast-growing women’s brand, as a separate publicly-traded company late last year. However, the IPO was shelved amid market turmoil. That forced it to look into other options, with the due date on its loans set for early 2021.

This week’s agreement puts the two PE firms in the back seat after nearly a decade of control, as lenders including hedge funds Anchorage Capital Group, GSO Capital Partners and Davidson Kempner Capital Management take over.

“When a lender takes equity, most of the time it is because they don’t have a better option,” says Jeffrey Reisner, a partner at McDermott Will & Emery who specializes in restructuring and bankruptcy. “It also usually means the original investors were unwilling to put in more dollars.”

J.Crew — which has 181 namesake stores, 140 Madewell stores and 170 outlet stores — will likely seek to close stores or renegotiate leases as part of its bankruptcy proceedings. It has secured $400 million in debtor-in-possession financing to fund operations during the restructuring process. In the meantime, it will continue to fulfill online orders and begin the process of reopening stores.

Deleveraging the balance sheet and continuing to invest in e-commerce “will position the company for future success,” said Kevin Ulrich, head of distressed investment firm Anchorage, in a statement.

However, it has its work cut out for it. “The J.Crew brand had become quite tarnished, boring and was not standing out well in the market,” says Neil Saunders, managing director at GlobalData Retail. In 2019, sales for the J.Crew brand fell 4%, which was only partially offset by a 14% rise in sales from Madewell. “The biggest challenge is going to be reinventing themselves in a period of muted demand.”

The retail industry is grappling with the fallout from the coronavirus pandemic, which has resulted in prolonged store closures and a pullback in consumer spending. In March, sales of clothing and accessories fell by more than 50%, according to the Department of Commerce. Those figures are expected to be worse in April, because many stores remained open for part of March. It will also likely require chains to offer promotions that eat into margins in order to move mountains of unsold inventory, much of which is no longer in season.

J.Crew is the first major retailer to file for bankruptcy during the pandemic, but is unlikely to be the last. Neiman Marcus and JCPenney, similarly crippled by billions of dollars in debt, are reportedly exploring bankruptcy filings. Brooks Brothers is also reportedly exploring selling itself.

 

Follow me on Twitter. Send me a secure tip.

I am a staff writer at Forbes covering retail. I’m particularly interested in entrepreneurs who are finding success in a tough and changing landscape. I have been at Forbes since 2013, first on the markets and investing team and most recently on the billionaires team. In the course of my reporting, I have interviewed the father of Indian gambling, the first female billionaire to enter the space race and the immigrant founder of one of the nation’s most secretive financial upstarts. My work has also appeared in Money Magazine and CNNMoney.com. Tips or story ideas? Email me at ldebter@forbes.com.

Source: https://www.forbes.com

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CNBC’s Courtney Reagan reports on the fall of J. Crew after the company filed for bankruptcy. She also reports on who else is facing issues. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2JdMwO7 » Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision » Subscribe to CNBC: https://cnb.cx/SubscribeCNBC » Subscribe to CNBC Classic: https://cnb.cx/SubscribeCNBCclassic

U.S. Retail Sales Plunged a Record 16% in April As Coronavirus Swept the Country

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(Baltimore) — U.S. retail sales tumbled by a record 16.4% from March to April as business shutdowns caused by the coronavirus kept shoppers away, threatened the viability of stores across the country and further weighed down a sinking economy.

The Commerce Department’s report Friday on retail purchases showed a sector that has collapsed so fast that sales over the past 12 months are down a crippling 21.6%. The severity of the decline is unrivaled for retail figures that date back to 1992. The monthly decline in April nearly doubled the previous record drop of 8.3% — set just one month earlier.

“It’s like a hurricane came and leveled the entire economy, and now we’re trying to get it back up and running,” said Joshua Shapiro, chief U.S. economist for the consultancy Maria Fiorini Ramirez.

Shapiro said he thinks retail sales should rebound somewhat as states and localities reopen their economies. But he said overall sales would remain depressed “because there is going to be a big chunk of the lost jobs that don’t come back.”

The sharpest declines from March to April were at clothing, electronics and furniture stores. A long-standing migration of consumers toward online purchases is accelerating, with that segment posting a 8.4% monthly gain. Measured year over year, online sales surged 21.6%.

Other than online, not a single retail category was spared in April. Auto dealers suffered a monthly drop of 13%. Furniture stores absorbed a 59% plunge. Electronics and appliance stores were down over 60%. Retailers that sell building materials posted a drop of roughly 3%. After panic buying in March, grocery sales fell 13%.

Clothing-store sales tumbled 79%, department stores 29%. Restaurants, some of which are already starting to close permanently, endured a nearly 30% decline despite shifting aggressively to takeout and delivery orders.

For a retail sector that had already been reeling, a back-to-back free-fall in spending poses a grave risk. Department stores, restaurants and auto dealerships are in danger. Nearly $1 of every $5 spent at retailers last month went to non-store retailers, evidence that the pandemic has accelerated the shift toward online shopping.

In the past two weeks, J.Crew, Neiman Marcus and Stage Stores have filed for bankruptcy protection. J.C. Penney appears on the verge of following them. UBS estimates that roughly 100,000 stores could shutter over the next five years.

“The whole economic model is unraveling,” Neil Saunders, managing director of GlobalData Retail. “This is going to be very painful. For some, it’s going to be fatal.”

Retailers are being imperiled not only by business shutdowns mandated by states and localities but also by a record loss of 36 million jobs over the past two months. The unemployed typically pull back sharply on retail purchases.

An April analysis by a group of academic economists found that a one-month closure could wipe out 31% of non-grocer retailers. A four-month closure could force 65% to close.

The plunge in retail spending is a key reason why the U.S. economy is contracting. Retail sales account for roughly half of all consumer spending, which fuels about 70% of economic activity. The rest of consumer spending includes services such as cellphone and internet contracts, gym memberships and child care.

With few Americans shopping, traveling, eating out or otherwise spending normally, economists are projecting that the gross domestic product — the broadest gauge of economic activity — is shrinking in the April-June quarter at a roughly 40% annual rate. That would be the deepest quarterly drop on record.

The pandemic is not only depressing overall retail sales but also forcing shifts in what people do buy as they adjust to working at home. CSolutions, which monitors sales of packaged goods, has noted a shift to comfort and convenience. Sales of baking flour, tomato sauces, ice cream, premixed cocktails and breakfast sausages have surged from a year ago.

Pajama-buying rocketed 143% from March to April, according to Adobe Analytics, which monitors online retailers. By contrast, sales of pants, jackets and bras have declined.

Spending tracked by Opportunity Insights suggests that consumer spending might have bottomed out around mid-April before beginning to tick up slightly, at least in the clothing and general merchandise categories. But spending on transportation, restaurants, hotels and arts and entertainment remains severely depressed.

Credit card purchases tracked by JPMorgan Chase found that spending on such necessities as groceries, fuel, phone service and auto repair declined 20% on a year-over-year basis. By contrast, spending on “non-essentials,” such as meals out, airfare and personal services like salons or yoga classes, plummeted by a much worse 50%.

By Josh Boak and Anne D’innocenzio

Source:https://time.com

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US retail sales suffered a record drop in March as mandatory business closures to control the spread of the novel coronavirus outbreak depressed demand for a range of goods, setting up consumer spending for its worst decline in decades. ——————– SUBSCRIBE ➤ http://bit.ly/FollowST ——————– WEBSITE ➤ http://www.straitstimes.com TWITTER ➤ https://www.twitter.com/STcom FACEBOOK ➤ https://www.facebook.com/TheStraitsTimes INSTAGRAM ➤ https://www.instagram.com/straits_times PODCASTS ➤ https://omny.fm/shows/st-bt/playlists The Straits Times, the English flagship daily of SPH, has been serving readers for more than a century. Launched on July 15, 1845, its comprehensive coverage of world news, East Asian news, Southeast Asian news, home news, sports news, financial news and lifestyle updates makes The Straits Times the most-read newspaper in Singapore.

Retail Workers Are Trying to Escape the ‘Merry-Go-Round’

February 17, 2019 – Orlando, Florida, United States – A Payless ShoeSource store is seen in Orlando, Florida on February 17, 2019, the first day of the firm’s liquidation sale after confirming on February 15, 2019 that it will close its 2,100 stores in the U.S. and Puerto Rico. The company filed bankruptcy in 2017 and closed 673 stores. (Photo by Paul Hennessy/NurPhoto via Getty Images)

Sue Reich worked for 27 years at Shopko, a Midwest retailer that sold clothing, shoes, housewares, and electronics, until, one day, her employer didn’t exist anymore. Shopko, which employed 14,000 people across 26 states, filed for bankruptcy last year and closed all its stores last summer after it couldn’t find a buyer.

The same story is happening across the country as the retail apocalypse continues. In 2019, retailers including Payless ShoeSource, Dress Barn, and Barney’s closed 9,200 stores; Payless alone cut 16,000 jobs. Already this year, chains including Macy’s, Pier 1, and Fairway have announced closures and layoffs. Employment in retail in January was down 8 percent from the same time last year, according to new Bureau of Labor Statistics (BLS) data released Friday morning, at the same time, jobs in transportation and warehousing, industries critical for e-commerce, were up 28 percent. Department stores have shed 241,000 employees in the last five years, according to BLS data, and clothing stores cut 67,000 jobs.

But there is no national outcry as workers like Reich lose their jobs, no movement to protect the people being thrust out of work, calling for an end to store closures, or to find funding to ensure these workers end up in better jobs. Sure, there was a @SaveBarneys campaign, but it traded on nostalgia, featuring vintage TV spots and magazine ads, rather than on concern for workers, and it failed. The high-end retailer, which filed for bankruptcy last year, was sold to Authentic Brands Group, which started closing and liquidating stores in November.

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Compare this with the commotions that have surrounded smaller job losses in industries such as manufacturing or mining. When Carrier, an air-conditioning company, said it was moving 1,400 jobs to Mexico, then-candidate Donald J. Trump seized on the issue in his stump speech and eventually struck a deal to keep some of the jobs in Indiana. “We hear politicians talk about the loss of factories and manufacturing and mining, but there has not been the same level of outcry around the loss of retail jobs,” says Nicole Mason, the president of the Institute for Women’s Policy Research, a think tank based in Washington, D.C..

“I would conjecture that one of the reasons we’re not talking about it is that it impacts predominantly women.” Nearly 80 percent of cashiers were women in 2018, according to IWPR data. As online shopping grows, and employment in warehouses grows, retail jobs for women are shrinking, while men’s jobs are growing — an IWPR analysis found that the retail industry lost 54,300 jobs between 2016 and 2017; over that time, women lost 160,300 jobs while men gained 106,000.

In the past, when factories shut down or jobs moved overseas, the government stepped in to protect workers who lost their jobs. The federal Trade Adjustment Assistance (TAA) program, first authorized in 1962 and expanded in 1974, 2002, and 2009, assists workers whose jobs have been displaced because of trade; it offers training subsidies and a weekly income for people who have run out of unemployment benefits.

Workers over 50 who find new jobs at a lower wage than they’d been making can also receive money from a wage insurance program to supplement their new income. But those funds aren’t available to retail workers. “Because they weren’t trade-affected, they can’t get that monthly stipend,” says Liz Skenandore, a career services specialist at Great Lakes Training and Development in Wisconsin, who deals with a steady flow of laid-off retail workers. “It would be ideal, if there was a ‘you were affected due to the internet’ category.”

Similarly, in the 1980s, after a series of factory shutdowns in the Rust Belt, a group of Ohio legislators pushed for the WARN Act, which required employers to give advance notice of mass layoffs and plant closings and to pay back wages if they did not provide that warning. Around the same time, under pressure from unions, Congress created Manufacturing Extension Partnership programs, which use federal, state, and private dollars to retrain displaced manufacturing workers for jobs in high-demand fields.

Another thing Sue Reich didn’t receive when she was laid off from Shopko: severance pay. She spent decades working for the company, and says she was told that if she worked through the store’s liquidation, she’d receive severance. But Shopko never paid Reich or workers like her anything beyond a small sum for vacation days they hadn’t taken. “It’s been challenging every month,” says Reich, who scrambled to find another job and now works part-time at a credit union, though it has not turned into full-time work as she had hoped.

Her husband, a saw operator at a factory, is working overtime so the family can pay its bills. In contrast, the thousands of workers who have lost jobs at places such as General Motors and Ford over the past year have received months of severance pay based on the amount of time they had worked at the companies. Sun Capital, a private equity firm that owned Shopko, did not respond to TIME’s request for comment.

It’s no accident that there are government policies protecting workers in industries such as manufacturing. These are industries that have long been unionized, and in the 1980s and 1990s, as the United States negotiated trade deals such as NAFTA, unions worked with elected officials from districts that were in danger of losing factories, says Kate Bronfenbrenner, a professor at Cornell University’s School of Industrial and Labor Relations. They made sure that any trade deal included programs to help workers who would be displaced. To sell the trade deal, Congress had to agree to fund worker retraining and subsidy programs. Lawrence Katz, a Harvard economist who served in the Labor Department under President Clinton, says the administration tried to introduce a universal dislocated worker training program in the 1990s that would have helped retrain any displaced worker, but couldn’t get widespread support.

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But retail is disappearing not because of a trade deal, but because the way consumers buy things is changing. Tech companies like Amazon didn’t have to negotiate with Congress to be able to sell things online; they could just start doing it. That’s meant that there is no constituency that must make sure retail workers end up on their feet in order to get a bill passed. “When people lose their jobs in the service sector and retail sector, those are women and people of color, and there is no Congressional constituent for them like the ones that were negotiating the trade bill,” Bronfenbrenner says.

Factory shutdowns are visually jarring; hulking. Abandoned factories dot landscapes across the United States; in Detroit, entrepreneurs made a business out of giving tours of the ruin. Retail’s meltdown is also visually jarring, but is hidden inside America’s malls. TIME recently walked through a mall in Green Bay, Wisconsin that had lost a Shopko and Payless store, and there were twice as many vacant stores as operating ones. The lights were off in large sections of the mall that were blocked off with crime tape, and the only foot traffic was women in workout clothes walking the long, wide corridors for exercise in the cold winter months.

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As more sudden retail layoffs happen, Jack Raisner, a professor of law at St. John’s University, says he sees an opening for states or the federal government to pass more protections for retail workers. He recently helped New Jersey pass a bill that updates the WARN Act to apply to more retail workers, which he hopes will inspire similar bills in other states. The New Jersey bill, which was signed into law last month, was a response to mass layoffs that left hundreds of Toys “R” US workers who had worked through the holidays with the promise of severance without any such pay, he says. It says that any company that employees at least 50 people in the state is required to give 90 days notice of a mass layoff; without such notice, it must pay all laid-off workers at least four weeks of back pay.

If they don’t give 90 days notice, employers must also pay terminated employees one week’s pay for every year they’ve worked there. “Putting people out on the street after years of service without anything is a horror and a tax on the public,” says Raisner. He also worked with Senators Sherrod Brown of Ohio and Chuck Schumer of New York to craft the Fair Warning Act of 2019, which would update the WARN Act nationally. The bill was introduced in November. “The anxiety over these layoffs is unabated despite what everyone says about this economy,” Raisner says. “I think there’s a real grassroots movement interested in something happening about this.”

Though business owners in New Jersey say that the state’s new law will deter companies from coming to the state, broader protections for retail workers in the form of retraining or re-education programs could be good for the larger economy. As technology changes the nature of work, people who get more education or increase their skills are best positioned to do the types of jobs that computers and robots can’t yet do. This in turn grows the nation’s productivity rate, and its economy. Now, technological change is happening faster than ever before; McKinsey estimates that by 2030, growing automation will mean that as many as 375 million workers (14 percent of the global workforce) will need to switch occupational categories.

In retail, where the average hourly wage for people who aren’t managers is just $16.86, laid-off workers don’t have the resources to stop working for six months or two years to get a certification or degree in another industry. “For the most part, these workers are living paycheck to paycheck, and the idea of being without a job is scary,” says Anthony Snyder, the chief executive officer of the Fox Valley Workforce Development Board in Northeast Wisconsin, which helps laid-off workers find new jobs. That’s why many retail workers are on what Snyder calls the “retail merry-go-round,” where their employer dissolves or closes down, they find another retail-related job, and then get laid off from it, too.

Amanda Padgett has been on this merry-go-round for years. Padgett, a 36-year-old mother of two, was laid off from Shopko last year. Before that, she worked at an ice cream store and a call center for a national retail chain that laid off all its employees. With each layoff, she has wanted to go back to school and get a degree in something that would get her out of retail—maybe learning to become a medical coder or a radiology tech. But as long as she needs to pay the rent, put food on the table and take care of her kids, she needs to bring in a paycheck, so she finds herself in another low-wage job, making minimum wage, until it, too ends. When she heard the rumblings last year that Shopko was closing, Padgett says, “all I could think was, ‘here we go again.’”

The United States has systematically disinvested in resources that would help low-wage workers without a big financial cushion go back to school. Federal investments in workforce training have fallen 40 percent over the past 15 years, when adjusted for inflation, according to the National Skills Coalition, a group that advocates for worker training. This means many federally funded job centers only offer perfunctory classes such as building a resume or using a computer, rather than the type of longer-term interventions that typically help people switch careers, says Amanda Bergson-Shilcock, a senior fellow at the National Skills Coalition.

“You have a lot of workforce boards trying to figure out what interventions they can provide that are meaningful to the lives of workers and responsive to the needs of the industry,” says Bergson-Shilcock. “But at the same time, they’re doing it with less and less money from the federal level.”

There are some scattershot examples of states trying to help retail workers specifically. In Wisconsin, a grant for laid-off retail workers will pay for tuition for retraining in high-demand fields as well as help with mortgage payments and cover books, transportation, and child-care. It’s helped people like Ginger Gillis, 42, who did data entry for Shopko for 14 years until the company closed. Gillis always wanted to go back to school but never could make the financials work; she’s now getting an associate’s degree in Architectural Technology from Northeast Wisconsin Technical College. But Gillis has an advantage: her husband has a good job, which means she doesn’t have to worry about having an income while she’s going back to school. Many retail workers “don’t have a nest egg, so they run into the next retail job before we can even talk to them,” says Snyder, of the Fox Valley Workforce Development Board. Only 27 of the 400 dislocated retail workers in his district have taken advantage of the grant, and even then, he’s run out of money to give out. “There is not enough money to serve everyone we’d like to serve with the greatest investment,” he says.

Other countries have much more robust safety nets for laid-off workers, whether in retail or other fields. In Canada, workers whose jobs are eliminated in mass layoffs are guaranteed termination pay if their employer doesn’t give at least eight weeks’ notice, and severance pay if they have worked for an employer for five or more years. In European countries like Sweden, laid-off workers receive financial support, a job counselor, and money for retraining, provided they are members of a union, which about 70 percent of Sweden’s workers are.

In the United States, those types of strong supports are almost only available to workers in a union, which is a shrinking share of the workforce (just 10.3 percent of American workers were members of a union in 2019.) But those unionized workers are reaping the benefits. Some partnerships between labor and management have started training low-wage workers for new positions before they even lose their jobs. In the Building Skills Partnership in California, a local union struck a deal with dozens of businesses, agreeing that the businesses could take a small amount out of workers’ paychecks to fund retraining efforts. UNITE-HERE, a union that represents service workers in Las Vegas, bargained with casinos such as MGM Resorts International to require that they alert the union to new technology being used and guarantee job training for all displaced workers.

The question now is whether the government will step in to protect retail workers as it did manufacturing workers, even though retail is not unionized. Economists largely agree that retail is about to go through what manufacturing did, says Anthony Carnevale, the director of Georgetown’s Center on Education and the Workforce. Manufacturing was once one-third of the workforce; now it’s eight percent. “There’s no question,” he says, “that retail is up next.”

By Alana Semuels February 7, 2020

Source: Retail Workers Are Trying to Escape the ‘Merry-Go-Round’

19.8M subscribers
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Five Reasons Why Legacy Retail Won’t Survive This Decade

Does legacy retail have a future in the age of digital?

It’s that time of year. No, I’m not thinking of Veganuary (I can’t even pronounce the word), no, I’m thinking of that time of year when most retailers declare their Christmas trading figures…..kind of. Because as we know, reporting periods are massaged and margin and returns are never disclosed.

However, although we may have to reach for a rather large pinch of salt, the annual list of Christmas winners and losers still gives a good indication of the relative state of the market.

A quick look at the Retail Week Golden Quarter league table for Christmas 2019 trading is at once both revealing, and depressingly predictable.

The Liverpool of the retail industry? Boohoo, who else? Closely followed by ASOS. Meanwhile, a scan further down the table shows the Norwich City’s of the retail world have one thing in common: a) they are older more established businesses who b) have their heritage grounded firmly in bricks and mortar retailing.

As with everything, there are some notable exceptions such as Fortnum & Mason, Primark and Pets at Home, however these are businesses who have a very clear sense of their purpose and brand identity and largely succeed because of that.

The remainder sit firmly within a retail category which is increasingly being polarized, differentiating itself by being average, uninspiring and mediocre. To what am I referring? Legacy retail.

Earlier this month, I was in New York for the annual retail festival otherwise known as NRF. And NRF 2020 will go down as something of a watershed conference for retail. Why? Because, the world is changing, consumer attitudes are changing and the conference reflected this shift towards a more human-centric, planet first, sustainable agenda.

Perhaps for the first time, the nature of the purpose of retail and of retail businesses is being openly questioned and challenged. To earn a profit for their shareholders or to do good for the planet. Or both? How retail businesses will be measured in the future as we move through this decade will be very different from today.


And in the twenties, this will have profound implications for legacy retail which will continue its, inexorable and predictable slide into oblivion. Here are five reasons why.

1.Ways Of Working

Silo’ed, vertical, hierarchical, top-down, command and control – sounds familiar? Virtually every retail business would say that they are customer focused, however the way they are organised is totally the opposite.

Instead of putting an emphasis on working as one business, powerful fiefdoms emerge, competing for resources in ways which ultimately may benefit them but not the holistic enterprise.

It’s typical of legacy retail, it’s damaging and it’s ultimately destructive. Never mind inappropriate touching or egotistical leaders and owners, this behavior is endemic. Legacy retail will always be legacy retail while this structure exists.

2.Metrics

While many traditional metrics, which have served retail for decades, are still entirely appropriate, there are others which have no place in new retail. They no longer reflect the changing landscape of retail and the new ways in which success and the path to growth should be measured.

Legacy retail still clings to a sales first business model where everything revolves around the Monday morning sales meeting. Let’s be honest, many still have difficulty in sales attribution in an online world. Listen to a newer start-up retailer and they simply refer to sales, they don’t differentiate between online and physical because it’s all one entity.

For those still measuring sales per square foot, see you later.

3.Digital Skills

It’s all very well having clever, digital natives in your marketing, merchandising, IT and commercial departments but if the very top of the business isn’t on the same wavelength, you’re wasting your time.

Sadly, the board of most legacy retailers is anything but digitally savvy. This is important for two very good reasons. Investment decisions abound and there will always be a list longer than the budget allows.

But sometimes, instinct rather than hurdle rate, needs to take precedence. This is where a digitally enabled board can make the difference between success and failure.

4.Social

Spoiler alert: we’re still only scraping the surface of the potential for social engagement and social selling in retail. Legacy retail doesn’t really do social. It should, it really should. According to Maybe* the average social user spends two hours twenty two minutes each day scrolling through their social media feed.

Which is where they would see all that wonderful engagement from legacy retail. Except they don’t. Because for legacy retail, the priority is on measuring footfall, sales per employee and other meaningless metrics.

Ever asked yourself, how is my customer feeling? Give it a try, it just might surprise you.

5.Perfect Storm

Perhaps I’m being a little harsh on legacy retail? After all, aren’t they caught in a perfect storm, the like of which has never before been experienced? What were those reasons for poor performance again? Let’s see if I can remember them, in no particular order:

  1. Rising costs
  2. The weather
  3. Online
  4. Brexit
  5. Low consumer confidence

But you don’t hear new retail bleating about external factors. That’s because they have a clear sense of purpose, a laser focus on their brand and what it stands for and above all they know and engage with their customers.


Thankfully, there will always be those who come along to take the place of legacy retailers – on the high street and on our smartphones. And there will always be glorious exceptions to the rule where a sense of brand, authenticity, artisan, inspiration and excitement abound within their DNA.

But sadly, for many, the new rules of retail coupled with the new consumer, and an inability to reinvent, will mean only one thing. But as has always been the case, retail is an abundantly resilient industry and what we will witness this decade will be the rejuvenation of retail.

And for that reason alone, we have cause for optimism.

Follow me on Twitter. Check out my website.

For this, my 100th post for Forbes, I asked my Twitter audience what subject they most wanted me to write about. Legacy retail emerged an overwhelming favorite

I am a retail analyst, writer, and keynote speaker on retail challenges and trends with a focus on consumer behavior, customer experience, and technology disruption. Prior to founding Retail Reflections, during my 20-year retail career, I held senior positions at Kingfisher and Superdrug and have worked with many of the UK’s leading retailers. I’ve been named a top retail influencer by several publications and my observations on the High Street and many aspects of retail regularly appear in the press.

Source: Five Reasons Why Legacy Retail Won’t Survive This Decade

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