Retail Resale Trend Growth Tests Reselling Boundaries - Google, Tesla and TheRealReal Redefine Reselling and the Recycling of Retail Goods

Adapted from About.com

Retail resale is one of the fastest growing trends in the industry and the boundaries of reselling have been rigorously tested, defined, and redefined this month by the retailers that are working hard to carve out their own retail resale niche. The growth of retail resale is a real and present threat to the retailers of any kind of new merchandise as consumers are becoming more willing to forego the purchase of new products to participate instead in a retail reduce, reuse, and recycle program.
Not all members of the U.S. retail industry view the growing retail resale trend as a threat, though. Innovative members of the retail industry are finding ways to fashion new retail businesses around resale transactions, and in the process, are redefining what retail resales are and what they will be in the future.

Will Google Glass Resale Restrictions Lead to a Retail Resale Court Battle?
The right to resell seems like one of those free enterprise inalienable rights that should be protected by the U.S. constitution - life, liberty, and the pursuit of buyers for our unwanted stuff. So it was big news this month when the first generation of Google Glass started shipped to the software developer "Glass Explorers" - a/k/a unpaid Google invention beta testers - along with a threat issued from Google to its Glass guineas. No lending, no gifting, no sharing , and absolutely, positively, without exception no reselling of the limited edition of Google Glass will be permitted under penalty of deactivation death.

Plug in, Google Borg. Resistance is futile.

Given the "first-sale doctrine" that exists in the U.S., it doesn't seem that Google has the legal right to make any kind of demands about what Google Glass owners do with their $1500 toys once they've been delivered. Undoubtedly the Google legal team defined their resale loophole before the Google Glass user terms were drafted. But we won't really be surprised when we read the headlines that this Google retail resale restriction is being challenged in court, will we?

Retail Resale Ruling for Digital Products
And speaking of testing the boundaries of retail resale in court, a major case did just that this month.
The retail resale of books, CDs and DVDs was happening long before Amazon.com was a twinkle in Jeff Bezos' eye. So it seems only logical that as the delivery format of these media has shifted from physical to digital that the retail resale would shift as well. Not so, according to a Manhattan judge who ruled this month that the resale of digital files involves making a new copy, which is a clear violation of U.S. copyright law.

Redigi.com is the brave company that is willing to try and change the rules about the retail resale of digital products. But it is unlikely that the shift will occur until one of the heavyweight rule breakers - Amazon or Apple - engages in the battle.

So now that the courts have ruled (once again) that digital retail resale is an illegal and punishable offense, the question remains... Why is there still such a thing as Bit Torrents?

Fourteen Million Reasons Why TheRealReal is a Retail Resale Real Deal
TheRealReal.com carved out a bigger niche for itself in the luxury fashion resale market after it secured $14 million in funding this month for technology and infrastructure expansion. Reportedly TheRealReal has 750,000 members who are buying and selling authenticated luxury designer merchandise in numbers that are good enough to attract a $14 million investment.

The RealReal has challenged the hands-off buyer-beware free-for-all knockoff resale platform that eBay operates by taking possession of the luxury items that members want to sell so that each item can be authenticated and appraised. Merchandise returns and customer service reps are two more features of TheRealReal resale experience that shoppers can't get from the eBay corporation, and can only hope they get from eBay sellers.

If you believe the criteria that's used to compile the annual Best Internet Shopping Customer Satisfaction list, then it's obvious that the changes to luxury fashion retail resales made by the leaders of TheRealReal are the real deal.

Tesla's Redefinition of Retail Resale Causes Car-Buying Customers to Question Everything
In addition to shaking up the auto dealership franchise laws in the U.S., the upstart CEO of Tesla is also rocking the retail auto industry with its guaranteed resale value program. As part of a financing deal with Wells Fargo and U.S. Bank, Tesla announced this month that it is guaranteeing the resale value of a 36-month old Tesla Model S, to be calculated as a percentage of the original purchase price. Tesla's guaranteed resale strategy is just one more reason that Elon Musk probably has very few friends in Detroit or Japan.

Inherent in the Tesla guaranteed resale value strategy is a strong belief about how the Model S will stand the test of time. Considering that the first retail sale of a Tesla Model S was less than a year ago, this says a lot about how Tesla leaders view their own engineering. Which leaves consumers wondering if the lack of a guaranteed resale program from other carmakers says a lot about how those companies view their own engineering.

On the other hand, conservative legacy auto-making companies may just be unwilling to take a resale risk in a volatile foreign oil-dependent U.S. economy. Fair enough. But the question-everything business tactics of Tesla will no doubt lead consumers to do more of the same - question everything. And once customers start asking questions, auto retailers are going to have to come up with satisfying answers pretty quickly.

My prediction is that it will be less than a year before Tesla's influence transforms retail auto sales in the same way that Apple transformed retail in-store sales. And that won't be a bad thing for anybody except the old school guardians of status quo who just refuse to see the new retail world order through Google-colored glasses.

What's Up Doc? Wal-Mart and Warner Brothers Strike Up Rare Relationship

NEW YORK (AP) - Wal-Mart Stores Inc. has teamed up with Warner Bros. to give its customers first dibs at seeing the movie studio's "Man of Steel" in certain theaters across the country - before the official release.

Tickets for the movie, which stars Henry Cavill in the role of Clark Kent and Superman, will go on sale in more than 3,700 of the 4,000-plus Walmart stores starting at 8 a.m. May 18. Customers will be able to buy up to four tickets per visit and have the option to choose between 2D or 3D showings. The advance screening will take place in selected local theaters nationwide at 7 p.m. June 13, the day before the official release.

Both Wal-Mart and Warner Bros. say that this is the first time that a studio has teamed up with a retailer to offer this type of incentive.

About 1 million tickets for "Man of Steel" will be available at Wal-Mart stores. Nearly 2,400 theaters are participating in the advance screening for customers who purchase the tickets at the discounter.

Warner Bros. and the theaters, both of which will be getting the proceeds from the ticket sales, are hoping to capitalize on the millions of customers who shop at Wal-Mart each week. The world's largest retailer, based in Bentonville, Ark., is counting on the promotion to get shoppers into its stores and while there, pick up some of the "Man of Steel" themed merchandise like toys.

Chris Nagelson, vice president of entertainment merchandising at Walmart's U.S. stores, says that the discounter is trying to find "new and innovative ways" to team up with studios.

Dan Fellman, president of domestic distribution at Warner Bros. Pictures, noted the partnership could be the start of something new.

Wal-Mart has long been embracing various partnerships with movie studios.

Last year, Wal-Mart worked closely with Sony Pictures, Home Entertainment and Marvel Entertainment in promoting "The Amazing Spider-Man Unmasked." As part of the program, Wal-Mart had trucks outside of about 1,000 of its stores featuring merchandise and displaying a demo of the film.

Copyright 2013 The Associated Press. All rights reserved.

Walmart CEO's Pay Jumps 14.1 Percent To $20.7 Million

(Reuters) - Wal-Mart Stores Inc said on Monday that members of its board's audit committee were paid more for the latest year due to extra work they had to take on to handle an ongoing investigation into alleged foreign bribery.

The world's largest retailer also said in its annual proxy, filed with U.S. regulators late on Monday, that three board members would not stand for re-election at the company's June 7 annual meeting, and that Chief Executive Mike Duke and some other executives were paid more as sales and profit grew.

Back in November 2011, Wal-Mart began its own probe into matters including alleged violations of the U.S. Foreign Corrupt Practices Act, and whether such matters were appropriately handled by the company.
The issue was brought into the public spotlight one year ago, when the New York Times published a report that described how Wal-Mart had intentionally stifled an early internal probe into allegations that Wal-Mart de Mexico officials had paid bribes to help build stores in Mexico.

During fiscal 2013, which ended in January, the audit committee met 15 times while other committees met five times or seven times, and the full board met six times, Wal-Mart said.

Members of the audit committee were paid an additional $60,000 fee, while the committee's chairman, Christopher Williams, received an $85,000 fee, the company said.

Wal-Mart said that due to the audit committee's extra work, it decided to double the cash portion of the annual retainer for audit committee members, and doubled the chair fee for the chair of the audit committee.

Williams earned $189,000 in fees for fiscal 2013, the most of any of the 15 board members who are not part of Wal-Mart's management team. Williams, who is chairman and CEO of investment bank Williams Capital Group, has been on Wal-Mart's board since 2004. In last year's board elections, when some shareholders voted against certain board members due to the foreign bribery allegation issue, 13.3 percent of votes were cast against him.

Wal-Mart spent $157 million last year on its probe of alleged bribery allegations in Mexico, Brazil, China and India, and on improvements to its compliance programs.

SORENSON, OTHERS LEAVING BOARD
The company said that James Breyer, the board's presiding director, and M. Michele Burns are each leaving the board after more than 10 years of service. Meanwhile, Arne Sorenson has decided to focus on his role as chief executive of Marriott International Inc . Sorenson is one of the members of the audit committee.
CEO Mike Duke earned $20.7 million last year, up from $18.1 million a year earlier, as the retailer continued to grow despite a sluggish U.S. economy and concerns over the alleged international bribery. Wal-Mart noted that Duke will earn a significant majority of his overall compensation only if the company meets certain performance goals.

Wal-Mart's total sales rose 5 percent to $466.11 billion in the fiscal year that ended in January, while earnings per share rose 10.6 percent to $5.02 per share. Sales at Walmart U.S., the company's largest unit, rose 3.9 percent to $264.19 billion.

Meanwhile, groups that often complain about Wal-Mart's business practices on Monday asked for the removal of Duke and Chairman Rob Walton, a son of deceased founder Sam Walton, from the board. The United Food and Commercial Workers International Union and its OUR Walmart subsidiary said that letters were sent to Wal-Mart's global ethics office calling for Wal-Mart's board to remove Duke and Rob Walton "for their failure in leadership in preventing the alleged bribery, trying to cover it up" and not taking meaningful action to fix internal problems.

The letters were dated April 22, which coincided with the anniversary of the publication of the New York Times report. The story was published online on April 21, 2012, and appeared in the April 22, 2012, print edition of the newspaper.

Shares of Wal-Mart slipped 0.4 percent to $77.97 on Monday and reached an all-time high of $79.28 one week ago.

(Reporting by Jessica Wohl in Chicago; editing by Gary Hill and Matthew Lewis)

From AdAge by Lainie Petersen

Walmart is revving up its "content engine," and it wants brand marketers to supply the fuel, though it can also come from consumers or even the Defense Department.

Recent Walmart ad featuring Blake Shelton took four days from brief to air.

In particular, earth's biggest retailer is preparing an enhanced "Print Plus" program pairing digital "liquid content" from brands with its 80-million-circulation weekly circular. Brands will supply such things as recipes and how-to videos customers will see as they pass their smart phones over the print ads.

Walmart executives made the pitch at the Path To Purchase Institute's Shopper Marketing Summit in Schaumburg, Ill.
As he detailed how Walmart churns out more content in an April 9 presentation, Clint McClain, senior director-marketing communications platforms at Walmart, said, "I'd be surprised if 15% of the content comes from us," adding that he expects supplier will furnish "at least 90%."

Ken Mantel, senior director-marketing at Walmart, didn't divulge exactly when Print Plus will roll out, other than "soon." But Walmart's plan to enhance rather than scrap print is good news for beleaguered print and newspaper industries, given recent speculation by Safeway that it may end its print circulars by year end.

Print and TV continue to work well for Walmart, said Senior VP-Marketing Tony Rogers in an April 10 panel discussion. And while search and Facebook marketing have also worked, he expressed doubts about digital and mobile display, citing his own experience being re-targeted the past two years by display ads for Chicago Cubs gear because he once bought Cubs merchandise for a Little League team he coached.

And he made an even more direct plea for brand content. "We have a good marketing department, but it's not that big. So we need your help," Mr. Rogers said. "I bet you're sitting on content that together we can take and put in front of the right customers."

In particular, he cited multicultural marketing, one of Walmart's top priorities and one where he said the retailer could give marketer's content scale and reach.

Mr. McClain cited the example of customers scanning a Ragu ad in a Walmart circular and getting four recipe choices, which when clicked could populate a digital shopping list with ingredients.
Walmart executives didn't divulge exactly what scanning technology Walmart will use, but said the retailer already has had 7 million downloads of its smartphone app.

The same Ragu scenario could play out at store shelves, Mr. McClain said. "Somebody asked me the other day, will anybody actually scan something at a shelf and watch a video and get a recipe?" he said. "My answer was, 'Not a lot of them, but out of 140 million people [Walmart's weekly customer count] you don't have to have a huge percentage to make a difference.'"

Suppliers aren't the only ones fueling the retailer's content engine. For an upcoming ad touting its pledge to hire any honorably discharged veteran starting Memorial Day, Walmart relied mainly on emotional homecoming footage supplied by the Defense Department.

"We didn't shoot it. We curated it," Mr. McClain said. "Instead of spending a million dollars on a big epic shoot with jets flying over, we just simply got the content people loved and put it together."Walmart the curator, he said, also adds value to brand content by giving it third-party credibility. Of course, curation also helps Walmart save money and time. "We don't want our agencies to think we're painting the Sistine Chapel," Mr. McClain said, "because that's expensive."

As it expands real-time marketing, including shooting 30 ads each Monday that run in local markets by week's end, Walmart is learning to work faster. In the airport while on vacation recently, Mr. McClain got a call about a chance to have Blake Shelton in an ad for a new CD. He wrote the brief in the airport, and the ad was shot and aired within four days.

 

Sam's Club is again the Top Retailer in Positive Customer Experience

Taken from Businessweek.com, written by Bruce Temkin

We recently released the 2013 Temkin Experience Ratings that ranks the customer experience of 246 companies across 19 industries based on a survey of 10,000 U.S. consumers. Here are highlights from the retail industry:

• The average industry rating increased from 71% in 2012 to 74% in 2013.
• Sixteen of the 24 retailers that were in both the 2012 and 2013 ratings showed improvement.
• Three of the top 10 companies across all industries are retailers: Amazon.com and Sam’s Club (tied for #5 overall), and Ace Hardware (#7 overall). Sam’s Club was the leader in 2012 Temkin Experience Ratings and Amazon.com led in 2011.
• Radio Shack is the lowest-rated retailer for the third consecutive year and 191^st overall in 2013. The retailer is also the lowest scoring across all three underlying components, functional, accessible, and emotional.
• Amazon.com and Costco are the top rated in the functional component, Ace Hardware is the top rated in the accessible component, and Nordstrom is the top in the emotional component.
• Office Depot (increase of 11 percentage points) and Barnes & Noble (increase of eight percentage points) made the largest improvements in the industry from 2012.
• JCPenney (decrease of six percentage points), Sam’s Club (decrease of four percentage points), and Lowe’s (decrease of four percentage points) had the largest declines from 2012.
• Here’s a link to industry results from the 2012 ratings.

About Bruce Temkin
Bruce is  a customer experience transformist, helping large organizations improve business results by changing how they deal with customers. As part of this focus, he examines strategy, marketing, interaction design, customer service, and leadership practices. His “title” is Managing Partner of the Temkin Group, a customer experience research and consulting firm that helps organizations become more customer-centric. Their goal is simple: accelerate the path to delighting customers.

Wal-Mart Canada Introduces "Live Better" Magazine

We’ll take your flyer, Target, and raise you a glossy Walmart magazine.
The battle of the popular-priced retailers heated up Monday with the launch of a free glossy 100-page publication, Walmart Live Better magazine.

Susan Schutta, senior director of corporate affairs for Walmart Canada says the timing of the magazine’s launch so soon after Target’s Canadian retail debut is “coincidental,” adding the magazine has been in the works for months. The creation of the magazine was announced in December 2012.

Produced for Walmart by Rogers Media’s Custom Content division, Walmart Live Better will appear six times a year at Walmart Supercentres in English Canada, as well as through online platforms with regularly updated content. With a press run of 1 million copies per issue, it automatically becomes Canada’s largest-circulation magazine, according to Rogers.

Target launched its inaugural 28-page flyer Friday to showcase deals in recently opened 24 Canadian stores, including several Toronto and GTA locations. By the end of the year, 100 more stores are set to open in Canada.

Walmart Live Better features typical lifestyle departments including home, fashion, food and health and beauty — including a makeover with Katie Schulz, Walmart’s Mom of the Year. Of course, all featured produces are stocked on Walmart shelves.

Schutta added notoriously flyer-loving Canadian consumers will still get that fix with flyers continuing to go out to 9 million households across the country.

The Profits and Perils of Bring a Wal-Mart Vendor

When Taunya Painter worked as a senior corporate counsel for Wal-Mart ( (WMT)), she noticed that many of the small suppliers that wanted contracts with the known for pressuring suppliers to cut prices, hadn't done all their homework. Few fully understood what they would be signing and few took advantage of Wal-Mart's supplier development team, a free resource designed to help less-experienced suppliers forge enduring relationships with managers and buyers. (Other large retailers, including Home Depot ( (HD)), Best Buy ( (BBY)), and have in-house teams meant to serve similar purposes.) Painter, who worked for the mega-retailer from 2002 to 2007, says more of the entrepreneurs she dealt with might have managed to secure and renew contracts if they had familiarized themselves with these two pieces of the supplier-retailer puzzle. While there are more pieces to the puzzle, by taking the time at first to understand what the contract entails, a potential supplier can determine whether or not it even makes sense to try to become one of Wal-Mart's 57,000 U.S. suppliers. The contract, commonly known as the vendor agreement, outlines the mechanics of how the supplier and retailer will work together. The agreement generally addresses sales and delivery timeframe, arbitration, and termination rights, and liability. As a rule, Wal-Mart uses a non-negotiable boilerplate. Charley Moore, CEO and founder of legal service .com, says this means potential suppliers can study similar contracts online before meeting with the buyer. Wal-Mart generally starts out smaller suppliers in a local market, delivering goods to up to 50 stores, as a test run. If the supplier provides a high-selling product and proves reliable, it might be considered for national distribution. Bruce Zutler, CEO and co-founder of MCI Products Group, a New York-based company that specializes in new product development and overseas sourcing, recommends small suppliers think of the test-run as the time to prove they are capable. "If you have a good product and you strengthen their sales, then the buyer will stay with you," says Zutler.Broad Customer Base a Must But suppliers should know that Wal-Mart will only work with suppliers that can prove three-quarters of their business comes from entities other than Wal-Mart, per Wal-Mart policy. After proving that, the key to impressing a buyer is to show understanding of the potential market, says Theresa Barrera, vice-president of supplier diversity for Wal-Mart. "What sets some of these smaller suppliers apart is being innovative and knowing what sells in their regions." It is also up to suppliers to understand the impact of national trends on Wal-Mart and be prepared to adapt, says Excell La Fayette, director of supplier development. He, too, urges suppliers to do their research before they call. "A lot of people think Wal-Mart is kind of a free-for-all; that if they come in we'll buy anything." cooks, packages, and ships the meat for Wal-Mart's Great Value brand breakfast sausage to more than 50 stores in different regions across the country. Michael Thompson, president and CEO of the Pleasant Prairie(Wis.)-based company, says the key to landing a deal and getting the contract renewed over the companies' ongoing five-year relationship was conveying an understanding of growth opportunities and explaining what his 300-person company could do to meet Wal-Mart's needs. Beyond that, he says it is important for hopeful suppliers to remain persistent, be patient, and bring their "A-game" to the meeting with the buyer.Liable for Chargebacks Of course, even if a supplier does manage to convince Wal-Mart to sign a supplier agreement, it almost never obligates the retailer to buy anything. "I tell people not to pop the cork when the contract is signed, but pop it when the purchase order comes in," says Painter, who now runs her own law firm in Texas, specializing in domestic and international business litigation. Wal-Mart says its payment cycles vary by category, but that most suppliers are paid within 30 to 45 days. And suppliers looking to sign should also know that even if everything is done right, the state of the economy could derail chances that the relationship is profitable, at least in the short term. Nina Kaufman, a business attorney in New York who posts frequently on her blog, AskTheBusinessLawyer.com, says suppliers should be aware of how large retailers like Wal-Mart manage low sales that result in surplus inventory. Those designated "guaranteed suppliers" guarantee that their product will sell. If they don't, a provision in the contract makes them liable for chargebacks. Ultimately, understanding all aspects of the is key to landing—and renewing—a deal with Wal-Mart. Painter says getting an experienced supplier to serve as a mentor can also be invaluable. "I always suggest tapping into resources the retailer has other than the buyer," says Painter "It's important to know who are your allies in the organization."

How Wal-Mart Can Offer Made In USA At Such Low Prices.

FREDERIC J. BROWN / AFP / Getty Images

Police man the front of a Walmart store amid heightened Black Friday security in Paramount, Calif., on Nov. 23, 2012

From Time Magazine

 

Walmart doesn’t make anything. But the giant retailer could play a part in the manufacturing rebound that is taking place in the U.S. with its promise to buy $50 billion more U.S. made goods over the next decade for its Walmart and Sam’s Club stores. It’s a bit ironic, given Walmart’s vast global sourcing organization. But the same forces that are making the U.S. a more hospitable place for manufacturing —higher shipping costs and wage rates overseas among them—have prompted the company to reevaluate its sourcing on a variety of products. “This is a commitment around manufacturing and more economic renewal. We see it as a critical issue for us in the American economy,” says Duncan Mac Naughton chief merchandising and marketing officer for Walmart U.S.

 

What Walmart sees is a way to lower costs while smoothing its supply cycle by looking more broadly at its distribution system. Although the company may be able to buy an item cheaper from China, the price it pays per piece doesn’t always reflect what it spends to get the product to the shelves. “When we buy from overseas, we may buy more than we need to fill the container,” says Mac Naughton. “We’re looking at carrying costs through the system in addition to landed costs.” (Walmart has recently been criticized for being out of stock on items, due to a lack of store employees, but the company says its in-stock position is at record levels and that it hasn’t cut employee hours.)

Walmart is also hitting some unexpected supply snags as local demand increases in the developing countries where it buys goods. Recently, it found itself short of memory foam for mattress toppers and had to add a U.S. supplier, Sleep Studio, to augment its foreign source. That need to increase capacity can only increase as the middle class grows in India, China and elsewhere. The company will still likely rely on foreign suppliers for those products, such as cut-and-sew garments, that have a very high labor input. But given the more robust regulatory environment in the U.S., domestic suppliers are far less likely to run shoddy plants that endanger workers, as some of Walmart’s overseas subcontracters have been accused of doing.

Which suppliers stand to benefit from Walmart’s strategy? The company says that products with a “high cube” (supply-chain speak for big and/or bulky, such as furniture) are candidates. So are products that have more highly-automated production, meaning lower direct labor, or products that have a less predictable sales curves and might have to be produced quickly to meet a sharp rise in demand. The company says items such as sporting goods, storage products, games and paper products are likely categories.

One of the first companies to benefit is 1888 Mills in Griffin, Georgia, which makes better-quality towels. Walmart’s version will be labeled “Made Here.” 1888 Mills had some spare manufacturing capacity, but since the size of Walmart’s orders can distort any vendor’s production, 1888 Mills needed a longer-term deal to be able to make the investment required to produce the needed quantities. “We made a commitment that was longer term than we would normally do. There’s transparency on the part of both parties: we worked with collaboratively with them,” says Michelle Gloeckler, Walmart’s senior vice president of home.

Camping and outdoor goods company Coleman is another participant. The firm, owned by Jarden Corp. is manufacturing its hard-sided coolers and personal flotation devices in the U.S., adding 160 jobs according to Walmart. Jarden, whose brands range from Quickie mops to K2 skis, has been ahead of Walmart on domestic manufacturing. Jarden has been on a reshoring kick for about two years.

Some of Walmart’s vendors will get a chuckle out of the idea that Walmart is willing to become more transparent. Walmart has a reputation for getting vendors into its buying rooms and beating the hell out of them on price, essentially leaving them with little margin. But Mac Naughton says that Walmart has to start thinking longer term, rather than season-to-season and that this kind of collaboration will reduce costs for both parties over time, paving the way for lower prices for consumers. For instance, a U.S. manufacturer can bypass Walmart’s distribution centers and deliver directly to stores, so-called “no touch” distribution.

Although $50 billion is a lot of goods, it’s about 10% of what Walmart will sell this year at retail. The company says the $50 billion is just a starting point, and that if other retailers joined the party the figure could be much, much higher, perhaps $500 billion. Walmart’s U.S. president, Bill Simon, suggested in a speech to fellow retailers that the power of their order books can help reshore U.S. production in textiles, furniture, pet supplies, some outdoor categories, and higher end appliances.
This isn’t Walmart’s first crack at a Made in America program. An earlier one fizzled, amid some bad publicity, because Walmart couldn’t get enough low-priced merchandise to sell. Americans may love their country, but they will buy Chinese if the price differential is too high. This time Walmart says consumers won’t have to pay up to buy domestic. “I hope the American consumer values this and we’ll make it easy for them,” says Mac Naughton. If not, consumers won’t make it easy for Walmart.

Read more: http://business.time.com/2013/04/12/how-walmart-plans-to-bring-back-made-in-america/#ixzz2QdYh03Ku

Wal-Mart Tightens Its Off-Shore Manufacturing Policies After Bangledesh Inferno.

By Jessica Wohl

April 9 (Reuters) - Wal-Mart Stores Inc, the world's largest retailer, is making its biggest push yet to try to improve conditions at factories that produce its clothing after a fire at a Bangladesh factory killed 112 people last year.

The company also said Tuesday it would donate $1.6 million to help start a new Bangladesh training academy, and outlined its efforts to regain control over the complex and far-flung web of factories that make its products.

"With the focus that is there at the moment on fire safety, everyone is keen to make sure that they get the right level of controls in place to protect the workers," Rajan Kamalanathan, Wal-Mart's vice president of ethical sourcing, said in an interview. "There is a need for that."

Wal-Mart says it was unaware that its private label clothing was being made in the Tazreen Fashions factory that went up in flames in November, killing 112 people and injuring at least 150. Bangladeshi authorities said the facility was not safe for use, and Wal-Mart said it had not authorized anyone to make its garments there.

The fire gave rise to criticism that Wal-Mart should have been more aware of its supply chain. Since the fire, Wal-Mart has been taking a harder look at what it can do to monitor safety at the low-cost factories that produce its goods.

While products for other companies, such as Sears Holdings Corp and Walt Disney Co, were also being made at Tazreen, the biggest spotlight has been on Wal-Mart to push for safety improvements.

Wal-Mart sent a 10-page letter to suppliers in January to lay out its policies. Since then, it has held meetings with them in Bentonville, Arkansas, where it is based; in Bangkok; and elsewhere.

The company has given its suppliers until April 15 to disclose which factories they work with, and says it will sever ties with those that subcontract work without telling Wal-Mart.

Along with the donation to the Institute for Sustainable Communities (ISC), Wal-Mart last month started to have Bureau Veritas, a European testing and inspection company, assess factories and train workers on its behalf in Bangladesh.

ISC plans to set up an Environmental, Health and Safety Academy in Bangladesh with the $1.6 million in funding from Wal-Mart and $2 million from Sida, the Swedish International Development Agency.

Wal-Mart's New Advertising Campaign Focuses on Low Prices With a Local Theme.

From Adage.com Written by Jack Neff

Once it became a true national retail presence in the late 1990s, Walmart had a big advantage over regional competitors: It could buy national TV, and they couldn't.

Now Walmart is giving up some of that edge as it plows a growing portion of its TV budget into spot, rolling out price-comparison ads against local retailers in 60 markets this year, up from 50 last year. It's part of a plan that will see Walmart produce an eye-popping 1,500 TV ads in 2013. That's more than double the 615-plus it ran in all of 2012, which itself was up substantially from a year earlier, when new local ads up 79%, according to Advertising Benchmark Index, which tracks consumer response to most new ads in the U.S.

It's all part of Walmart's effort to apply the real-time marketing popular in social media to TV, said people familiar with the campaign, though that does come at considerable cost in terms of production and spot media buys.

"We're still running a number of national ads and still feel that's playing an important role," a Walmart representative said. "But we also know grocery is a local business, and it's important to have that local voice out there."

The price comparisons already have raised hackles of competitors, who started complaining to state attorneys general last year but have so far not prompted any formal investigations, another Walmart spokesman said.

And it comes as independent analyses reach varying conclusions on how much better Walmart's prices really are vs. the competition. A study on 70 items in January and February by Consumer Edge Research found Walmart beat Kroger and Safeway most of the time on prices, though Kroger beat Walmart on beverages and Safeway tied Walmart on dairy.

While Safeway's prices were 19% higher than Walmart's overall, Dollar General actually beat Walmart in the study, while Family Dollar, Kroger and Target were all within 2% to 3% of Walmart's prices. Target beat Walmart for people using its RedCard and getting 5% savings.
A Kantar Retail survey found Walmart prices to be on average 4% lower than Target's in January, with edible grocery 14% lower than Target nationally. That was Walmart's best performance on those metrics since the survey began in 2009 -- though RedCard users still would have spent slightly less on the items than at Walmart.

The thrust of Walmart's local TV ads is comparing the cash-register receipts of consumers who shopped at a competitor to what they would have paid at Walmart (rather than looking at some artificially concocted market basket). And according to Advertising Benchmark Index consumer panels, the ads work. Walmart's local price-comparison ads average around 130 on the index, which factors in such things as likability and purchase intent, or around 30% above average for industry ads.
The sheer logistics of producing so many ads is daunting, though. Walmart is using a combination of in-house resources and outside agencies to shoulder the burden, the spokeswoman said. Walmart's primary creative agency, the Martin Agency, Richmond, Va., is doing some of the work, she said, but other agencies she declined to specify are pitching in. Andy Johnson, Walmart's senior director-advertising and production, plans to talk about how Walmart does "better, faster, cheaper production" at the Association of National Advertisers Financial Management Conference in Scottsdale, Ariz., next month.

The price-focused ads probably help with some Walmart shoppers, but surprisingly not much with the most price-focused ones, said Consumer Edge analyst Stacie Rabinowitz. Her company's monthly tracking survey of more than 2,000 U.S. consumers found Walmart's most price-sensitive shoppers, who also tend to be lower income, are the most likely to shop around at dollar stores and a variety of other retailers as they cherry-pick the best deals at each

Wal-Mart and Target Similarly Priced in Canada New Study Finds

Excerpted from Retailing Today

A March 2013 study by Kantar Retail indicates that Walmart Canada and Target Canada are very competitively positioned from a basket price perspective.

The firm looked at basket of 29 items at one of Walmart’s Canada stores in Toronto and one of Target’s newly opened locations. Based on results from the comparison, Kantar Retail believes that Target’s "Pay Less" consumables prices will stack up well against its Canadian competition and that the retailer will prove to be a formidable challenge to Walmart Canada’s price position in the market.
"The retailers’ baskets were very competitive," said Robin Sherk, director of retail insights and contributor to the study.　 "We found that the price of Target Canada’s overall basket was within 25 cents of Walmart’s."

However, with Target’s 5% Rewards program its basket would have been 4.8% less expensive.
Among the other findings, Kantar indicated that Walmart’s edible basket drove its position, whereas Target’s was less expensive in non-edible grocery and health and beauty.

At the item level, more than half of the items were priced within 3% of each other.　However, there were sizable price differentials on select items at both stores
"Looking ahead, we expect price competition between these two retailers to sharpen as the two retailers compete head-on for the same shoppers," Sherk said. "As Target expands its presence in the Canadian market, we expect Walmart to hone its focus to respond to Target’s aggressive position on certain items."

This may become particularly heated given that 2012 TNS Canada survey data found that 52% of Walmart Canada shoppers are interested in shopping at Target Canada for groceries and HBA items. We also expect Target to further hone its price positioning as it continues its store rollouts and matures in the Canadian marketplace.

Is Wal-Mart Alienating Their Upper Class Shoppers?

From YAHOO! News.

NEW YORK (AP) -- One analyst says that some of Wal-Mart's higher-income customers aren't as happy as they used to be.
                

Cowen's Faye Landes cited the firm's own survey in a client note Thursday. She said it showed that from December to March, higher- and middle-income shoppers became slightly less satisfied with customer services, prices and product selection.

                
Landes believes this may be due in part to there being fewer employees at each U.S. store. The analyst said that the number of workers per U.S. store went from 325 in 2010's fourth quarter to 289 in 2013's fourth quarter.
                
"Reduced store labor, despite the company's best efforts, likely results in some diminishment of customer service, which consumers may notice over time," she said.
                
Landes terms higher-income shoppers as those from households that make more than $100,000 per year. She says that three-quarters of those consumers shop at Wal-Mart at least once per month.
The average household incomes for Wal-Mart customers range from $30,000 to $60,000.
Fewer higher-income shoppers at Wal-Mart could hurt the chain's U.S. sales. The company is already dealing with the hit of higher payroll taxes and rising gas taxes on the poor and middle-class Americans who are its core customers. In late February, it forecast profit for this year that fell below expectations of Wall Street analysts at the time.
                
"We survey 500,000 customers per month who continue to tell us they have had a positive shopping experience. These customer satisfaction numbers have trended upward over the past two years. In this economy, we are continuing to see higher-income customers trade in to Walmart to take advantage of our everyday low prices," said spokeswoman Brooke Buchanan in an emailed statement.
Wal-Mart stock added 34 cents to $76.34 in afternoon trading.

From Time Magazine - Written by Christofer Matthews

Last Monday, Dollar General, the U.S.’s largest dollar-store chain, posted better-than-expected profits, helping boost the company’s stock, which is up 15% year to date. And earlier this year, it announced plans to open its 11,000th store by the end of the 2013 — an impressive figure for a discount retailer. The only other companies to boast store counts that high are fast-food chains like McDonald’s and Subway.

And Dollar General isn’t the only dollar chain to have had success in recent years. Competitors Dollar Tree and Family Dollar have also experienced significant growth in revenue since the 2008 recession, when many consumers began shopping at discount chains for everyday items like cleaning supplies, toiletries and groceries. Another boon to these sorts of discount chains has been government safety-net programs like food stamps, which prevented those already shopping at dollar stores from being shut out altogether from being able to afford necessities. According to Morningstar analyst Michael Keara, 40% of dollar-store-sector customers rely on some form of government assistance.


Meanwhile, Walmart — America’s biggest and most successful discount retailer — has not been performing as well since the recession, and is off to a slow start in 2013. So why have dollar stores been able to capitalize on the weak economy while Walmart hasn’t? There are a few reasons:

1. Walmart was already starting from a position of dominance. When you’re the biggest retailer in the U.S., it’s much more difficult to achieve steady sales growth than if you’re an outfit like Dollar General, which was losing money as recently as 2007.
2. Dollar stores had the inside track in the race for urban shoppers. Walmart’s bread and butter are rural and ex-urban shoppers who can access its massive supercenters with relative ease. Penetrating the urban market has proved more difficult for the simple reason that the supercenter model cannot easily be reproduced in places with less space. Walmart is trying to remedy this with its push to open more smaller “neighborhood centers,” but it has some catching up to do in order to reach the sort of urban penetration that dollar stores have.
3. Dollar stores are getting away with higher prices. Though dollar stores are known to sell off-brand items at low prices, overall dollar stores are selling their merchandise at higher margins than Walmart. That means that either dollar stores are buying their goods for less than Walmart, or that dollar stores are getting away with higher prices on a pound-for-pound basis. And given Walmart’s legendary purchasing power and supply-chain management, it’s highly unlikely that any of the major dollar-stores chains can consistently source their merchandise more cheaply. What’s more likely is that dollar stores have successfully masked their higher prices by selling items in smaller portions and by strategically discounting certain items.

With these factors in mind, it’s difficult to see dollar stores maintaining their current growth rates for much longer. Walmart recently announced a plan to ramp up its efforts to build smaller Neighborhood Market outlets, which will be on average about one-third the size of its traditional supercenters. These stores will be better positioned to attract customers in urban centers where Walmart has lagged the competition. The retail giant has also said it will be instituting $6 billion in price cuts over the next several years, which will make it more difficult for dollar chains to maintain their market share and high margins at the same time.

Walmart has also made several unforced errors in the past couple of years, from limiting its product selection to allegedly understaffing many of its supercenters. But it’s hard to imagine that a company with Walmart’s track record will continue to flounder for very long. Dollar stores have exposed and capitalized on some chinks in Walmart’s armor over the past few years, but the world’s biggest retailer has begun to address those weaknesses, and will no longer be taking the fight lying down.

Read more: http://business.time.com/2013/04/01/will-dollar-stores-rule-the-retail-world/#ixzz2PyPK9FBS

Wal-Mart's New Business Model Set For Expansion

By Sheldon Cwinn

In the what to expect next category, the following is Wal-Mart's new strategy for rapid expansion.

College students will soon have a different late night joint from which to buy cheap pizza and soft drinks. Only now they’ll be able to purchase school supplies and their basic household needs in the same place they get their pizza, as Wal-Mart (NYSE:WMT) announced it will be opening two more college campus locations.

In 2011, Wal-Mart opened its first college campus location at the University of Arkansas at Fayetteville, reports Inside Higher Ed. A 5,000 square feet facility is scheduled to open at Arizona State University in May, with a location on Georgia Tech’s campus scheduled to open sometime next year

A Wal-Mart spokeswoman, Delia Garcia, said that the university stores would be “tailored to the on-campus customer, providing general merchandise, convenience items [and] pharmacy services.” Garcia was also adamant about the fact that the company is still testing this business model, and that no new locations are scheduled beyond Georgia Tech.

One item that Wal-Mart will refrain from providing is school textbooks. Charles Schmidt of the National Association of College Stores believes college bookstores need not be afraid of the company.

“Students already are going to big-box discounters, but at least if they’re in the same vicinity as your store, they are more liable to come in and give you the chance to ‘show them what you’ve got,’” Schmidt said. “Kind of a ‘mall’ effect”…

So far Wal-Mart's "experiment" has been met with great success.

Wal-Mart Likely to Incur Losses Due To Bribery Scandal

From dailyfinance.com

NEW YORK -- Wal-Mart Stores Inc. (WMT) said it is 'probable' that the world's largest retailer will incur a loss due to ongoing bribery investigations by itself and government agencies, but it says it is too early to speculate on the size of the damage.

The company said it does not currently expect the loss to be material. The statements came in a filing with the Securities and Exchange Commission filing late Tuesday.

Wal-Mart Stores has been dealing with allegations that surfaced last April that it failed to notify law enforcement that company officials authorized millions of dollars in payments in Mexico to speed up getting building permits and gain other favors. The Foreign Corrupt Practices Act forbids American companies from bribing foreign officials.

The company has launched its own investigation and is working with government officials in the U.S. and Mexico. In November, the retailer said in a filing with the Securities and Exchange Commission that it was looking into potential U.S. bribery law violations in Brazil, China and India.

In another filing Tuesday with the SEC, Wal-Mart Stores said that it expects to incur costs above the $157 million it spent on the probes in fiscal 2013 because of its ongoing review and other investigations as well as shareholder lawsuits.

It also said it is "probable" that it will incur a loss from the matters, but did not give an estimate on how much.

"Given the on-going nature and complexity of the review, inquiries and investigations, we cannot reasonably estimate any loss or range of loss that may arise from these matters," Bentonville, Ark.-based Wal-Mart said in the filing.

The company said it does not currently think the lawsuits will have a "material adverse effect" on its business but said it is possible that could change in the future.

"This is clearly a bad action, if found guilty, but we believe these issues and penalties will not dramatically impair their balance sheet and its ongoing business model," especially in the U.S., Janney Capital Markets analyst David Strasser said in a note to investors.

He cited other cases where companies have been penalized for violating the FCPA. The biggest was Siemens, which paid $800 million to U.S. authorities and $800 million to German authorities in 2008. Even if Wal-Mart paid that, Strasser said, it would still be able to absorb the costs without significant problems.

On the positive side, Strasser said the company has slowed growth and capital spending internationally, which should help its balance sheet.

He kept his "Buy" rating on the stock.

Wal-Mart Reaches Out To Small Businesses Run By Women.

(Reuters) - Wal-Mart Stores Inc (WMT.N) on Thursday will launch a line of products from small, women-owned businesses on its website, its latest push to position itself as a leader in women's economic empowerment.

More than 200 items, from jewelry and iPad cases to coffee beans and apparel, will be sold on the "Empowering Women Together" section of Walmart.com, the world's largest retailer said on Thursday, a day before International Women's Day.

The products currently come from nine countries including Cambodia, Haiti and the United States and include a $9.88 Women's Bean Project soup mix and cornbread mix gift set and a $20 dress from the Rwandan women's company Gahaya Links.

Wal-Mart continues to work on transforming its image from a corporation that critics say underpays workers and does harm with its large stores into an outspoken corporate citizen that hires more veterans, reduces its impact on the environment and works with local suppliers.

The women's items will be part of the "Store for Good," a project Walmart.com is working on for products that do good for others, for consumers or for the environment. Future goods may include eco-friendly items and healthier food, it said.

Walmart.com will highlight the new section of its site on its main page. For now, the goods will only be sold online, not in Walmart stores.

In September 2011, three months after the U.S. Supreme Court threw out women's massive class-action sex-discrimination lawsuit against Wal-Mart, the retailer laid out broad plans for women's economic empowerment.

Wal-Mart's goals include spending $20 billion over five years through 2016 with women's businesses that provide goods for the company's U.S. business, up from about $2.5 billion a year previously. It also aims to double sourcing from international suppliers run by women.

 

Wal-Mart's partners in the Empowering Women Together project include Full Circle Exchange and Global Goods Partners, non-profit organizations that sell products made by women.
(Reporting by Jessica Wohl in Chicago; Editing by Alden Bentley)

Is your merchandise sitting in the store's back room? Here is a simple method to tell.

 

By Sheldon Cwinn

 

How to make sure your inventory is getting to the shelf.

 

Selling to Wal-Mart is unlike selling to any other retailer because it is really selling on consignment. You receive an advance on your merchandise sitting in the stores, but that is all it is an "advance". If you analyze the situation closely, you come to realise that your actual customer is each individual store, and the most successful Wal-Mart vendors have relationships with their top stores.

 

Because your merchandise is at Wal-Mart on consignment, a key factor in succeeding is making sure that your merchandise is actually on store shelves.

 

The traditional way of "seeing" whether or not your inventory is on the shelf is to look at the "store on hand" on a Store Detail Sales Report produced by Retail Link. Another way to double check is to see what merchandise has shipped out of the Distribution Center(s) and to which stores it is shipped. But the question is .... is your merchandise really making it to the store shelf ?

 

A great way to find out if the merchandise is actually on the floor is to check for phantom inventory. To do this you average each store's sales for the last 6 - 8 weeks. Then you look for stores that have below a certain sales threshold last week (often times zero) depending on the nature of your product. Next look at the "on hand qty". If there is quantity on hand and suddenly the store is not producing sales chances are that store has phantom inventory.

 

Resolving the phatom inventory issue is easy. Simply present that store manager with the facts in a friendly phone call. It is in his interest to place the merchandise on the shelf where it belongs!

Lowering the High Cost of Selling to Wal-Mart.

By Sheldon Cwinn

Walmart is a very expensive customer to have, often requiring armies of people to manage and service their vendor managed inventory model. There are new ways of lowering those costs through automation.

“Wal-Mart is not only the world’s largest company but also one of the world’s most demanding customers,” said Sheldon Cwinn, vice president of Wisdom Analytics. “In our recent survey, 92% of vendors contacted maintain that Wal-Mart is the most expensive retailer to sell to. Wisdom Analytics automates many of the repetitive tasks that take time and effort and cost vendors money. Order scripting, demand planning, spotting POS exceptions and finding opportunities at store level, category management, improving instocks, and maximizing sell thru% are all benefits derived from Wisdom Analytics. Best of all, Wisdom Analytics is software that can be afforded by any vendor. It is intuitive to use, and easy to learn.”
 

Wisdom Analytics today announced the availability of Version 4.0 of its award winning software focused on driving the cost of doing business with Wal-Mart down. Wisdom Analytics has rapidly become the most adopted software solution for vendors selling to Wal-Mart.
 

“Wisdom has many of the features of its competitors but at a fraction of the price,” says Dan Batson president of the North West Arkansas Retail Link User Group and a Wisdom Analytics user at Fuji Film. “It helps to lower the cost of selling to Wal-Mart.”
 

“I remember the day one of our Retail Link analysts left us,” says Ronnie Kornbluth, president of UFO Jeansware. “The workload became staggering for all concerned. We never wanted to be in that position again. So we skeptically at first adopted Wisdom Analytics to help us out. Now we accomplish more than ever because Wisdom has made us so much more productive and we have watched our business with Wal-Mart steadily grow. We now have a better understanding of our POS position. Wisdom is a great tool and I would highly recommend it.”
 

Wisdom Analytics 4.0 new features include order scripts that can optionally be varied by long-range weather forecasts provided for every Wal-Mart store in North America. Advanced demographics that can show you who is purchasing your products at point of sale. Wisdom Analytics 4.0 also includes new and improved facilities for order scripting, demand planning, category management, and replenishment. Wisdom Analytics includes the 18 core reports and analytics framework that has traditionally made the software so powerful and easy to use. Wisdom Analytics turns Retail Link reporting into a real time online environment. MS Excel and continually printing dozens of multi-page reports every week is a thing of the past.
 

Wisdom Analytics is sold by annual subscription that includes upgrades and support. Subscriptions start at $5,000 a year. For more information call me - Sheldon Cwinn 514-341-5000 or email me sheldon@wisdomanalytics.ca.

Inside Wal-Mart's $50 Billion Buy American Campaign

Story by Sheldon Cwinn


Michelle Gloecker, SVP Home, leads the
New Initiateive.

Bill Simon, Wal-Mart's President of U.S. operations, laid out the vision in a recent speech at the National Retail Association's annual meeting. In order to stimulate the economy, and increase consumer spending, Wal-Mart will increase domestic purchases by $50 billion a year within the next 10 years. That is quite a lofty objective. Let's see how this initiative will impact not only Wal-Mart, but also the U.S. economy.

Wal-Mart already purchases two thirds of its products in the United States, so the $50 billion is already on top of that. So what the initiative actually amounts to, allowing for Wal-Mart's growth is a staggering $500 billion of domestic purchases a year.

The initiative will create jobs in areas such as manufacturing, industrial engineering, shipping and transportation, management, accounting, large equipment maintenance, and additional spin-off jobs in ancillary services such as restaurants and medical services. Products will be made closer to the point of purchase which will allow for additional flexibility because of reduced lead times and reduced transportation times. The cost recovery to Wal-Mart in warehousing and shipping will combine with multiple ripples in the supply chain, making the supply chain even more efficient than it already is. So there is a solid business case for the new initiative.

Which categories will be effected? Wal-Mart intends to grow U.S. manufactured merchandise on two fronts. By increasing what they already purchase domestically in categories such as sporting goods, apparel basics, storage products, games and paper products. And, helping create new U.S. manufacturing opportunities in categories such as textiles, furniture, pet supplies, some outdoor categories, and higher end appliances.

The 10-year lead time will allow Wal-Mart to adapt many of its existing suppliers back to domestic manufacturing. How will this work? Let's say Wal-Mart has a supplier for towels that currently come from factories off-shore. It is easy to figure out that with a few committments from Wal-Mart, an idol U.S. towel factory can be re-started and be back online, to make the merchandise domestically again. In fact, many off-shore manufacturers that used to be domestic suppliers,in many cases, still have equipment and production facilities that have sat empty, but remain in-place. Only Wal-Mart has the volumes that would make the numbers work to return to U.S. based manufacturing again.

The economics of manufacturing have changed rapidly. Previously investments went to Asia where wages were lower. The price of oil and transport was low. New Asian factories sprung up literally over night.Today some of these investments are nearing the end of their useful life. The equation is changing. There are tipping points in each product category where it is no longer profitable to manufacture merchandise off-shore.Through Wal-Mart's shear buying power, they can foster large enough orders to eclipse those tipping points and make it profitable to manufacture domesticly again.

By using new supply chain initiatives such as CPFR, Wal-Mart can collaborate with manufacturers and provide them with much more reliable and long-range forecasts, thereby allowing Wal-Mart to make long-range production committments which in turn will help new factories control their costs, expenses, and growth.