Staples does Marketing

BrandWeek tells us that Staples is putting a heavy focus on in-store marketing in the USA next year. It has entered into a multi-year deal with News America Marketing. This follows the announcement earlier in the month that Staples unveiled its first-ever holiday window display - created entirely out of office products - in New York City.

The in-store marketing initiatives start with the SmartSource Coupon Machine - a coupon dispenser located in the store, at the shelf, and the SmartSource Shelfvision Video - an in-store video advert player that can deliver up to half a minute of television-type advertising.

Kesa Down

Kesa Electricals has just published its Statement of Results for the six months to 31st October 2008, and, as expected, it's all a bit grim.

Jean-Noel Labroue said that: "The economic climate across Europe has created very tough trading conditions" for all Kesa's businesses, especially in the UK and Spain. However, he goes on to say, "Darty in France, and our established businesses in Holland, Belgium and the Czech Republic, have demonstrated good resilience, and our start-up operations in Italy and Turkey continued to make further progress".

In the UK, Comet's revenues fell by 7.9 per cent compared with the same period last year, while its retail profits fell from a £10.6mn profit to a loss of £8.1mn.

In Spain, last year's acquisition of Menaje Del Hogar was once described as a "a platform to build a differentiated business" in the Iberian peninsula. But, Kesa's latest statement says that: "The current market conditions are extremely weak, much worse than anticipated, and we do not forsee any improvement in the short term".

Kesa will publish its next trading statement on 20th January 2009.

DSGi in 2012

John Browett, CEO of DSGi, briefed his firm's employees after publishing DSG's half year results on 27th November. It's been reported that he said: "In 2009, we will be in recession for the whole year, and if we're lucky, we will come out of recession in 2010. From the point at which the recession ends, it takes 18 months to the business back to where we started". So that means it won't be until 2012 before DSGi will be back in good shape.

Office Depot Cuts

Office Depot has announced that it is closing 112 'under-performing' retail stores in the USA and a further 12 stores will be closed in 2009 as their leases expire. New store openings for 2009 have been cut in half, down from 40 to 20. Office Depot also plans to close 6 of its 33 distribution centres in the USA.

About 30 per cent of Office Depot's revenues come from outside the USA, so perhaps we will soon hear of further cuts elsewhere in the world...

Apple Store Paris

AppleInsider reports that work may soon start on the first Apple Store in France, close by I. M. Pei's Pyramide du Louvre in Paris. Yet another design statement from Mr Jobs.

Multichannel Tesco

The UK's largest grocer, Tesco, is planning to instal a number of Tesco Direct desks in its Tesco Metro stores, according to a report in Retail Week. It already has over 200 Tesco Direct desks in its larger stores. Tesco also has catalogue stands for its Autumn/Winter catalogues in several of its smaller Express convenience stores.

Tesco has four different store formats in the UK. Express Stores [up to 30,000 sq ft] carry up to 7,000 SKUs. Metro Stores [7,000 - 15,000 sq ft] are town and city centre based. Then there are Superstores [20,000 - 50,000 sq ft], and the Extra format [60,000 sq ft and above]. Tesco also has a trial format called Homeplus [35,000 - 50,000 sq ft]. These are dedicated to non-food lines, including clothing.

Specialists v Generalists #2

And now we learn that Apple's iPhone will be available in Wal-Mart stores before the end of the year...

Specialists v Generalists #1

A recent post from Pali Research gives a good example of what we've known for some time - the generalists will ultimately win over the specialists. Stacey Widlitz at Pali published a note [registration required] last Thursday saying that their No. 1 concern for Best Buy, beyond the macro environment, 'was the potential for share loss to the discounters'. 'Over Thanksgiving weekend', the note goes on to say, 'we noticed both stronger traffic and conversion in Wal-Mart electronics departments relative to the Best Buy stores we visited'.

Apple Store Munich

Germany's first Apple Store opens in Munich on Saturday at 10.00 CET. The AppleInsider site includes pictures of the yet to be unveiled store with a 'wrapper' presumably chosen to mirror the ever-present Bavarian flag...

Attach Rates

HP's Social Computing Lab has found an internal customer. Amongst other things, their research has found that the lengthy lists of accessories that often appear close to the check-out on eCommerce sites aren't performing. Web shoppers simply stop paying attention over time.

So, earlier this year, HP ditched its long lists of add-ons, replacing them with more precise recommendations based on the models created by the Social Computing Lab. According to a recent article in Business Week, the result has been a 30% increase in customers who paired products when they checked out of HP's 'Home and Home Office' web shop.

The American Consumer

Black Friday is the day after Thanksgiving Day when US retailers supposedly move from being 'in the red' to being 'in the black'. Chicago-based ShopperTrak tells us that Black Friday 2008 produced retail sales some 3% higher than in 2007, which in turn was 8% higher than 2006.

ShopperTrak warned that while 'Black Friday isn't always the best indicator for holiday season performance, retailers should be cautiously optimistic as deep discounts drove consumers en masse to various retail locations to spend - despite myriad economic pressures over the last two months'.

As some commentators warn, though, this unexpected rise in revenues will almost certainly have come at the expense of profits.

Discounters Rule

ChangeWave tells us that consumer electronics is one of the weakest spending categories in the US in the run up to the Thanksgiving holiday period. This will be no surprise to most of us, but the dramatic change from previous years just might be.

One of the charts used by ChangeWave is based on answers to a simple question: 'Will you be spending more or less money on consumer electronics over the next 90 days?'.

- In November 2006, the answer was 52% said 'spending more', while 24% said 'spending less';

- In November 2007, the answer was 39% said 'spending more', while 23% said 'spending less';

- In November 2008, the answer was 19% said 'spending more', while 43% said 'spending less'.

And for those who are going to spend their hard earned cash, "people are favouring stores such as Wal-Mart and Costco for electronics ", says a Bloomerg article, and not the likes of Best Buy or Circuit City.

DSGi's Death Spiral

An article in the UK broadsheet, The Guardian, notes that DSGi's current share price makes its market capitalisation equal to just 10 day's sales - that's about £275mn, or roughly €330mn, or $425mn. The title of The Guardian's article says it all: Bloodbath on the High Street.

In a similarly downbeat article in The Times, Neil Saunders, a Director at specialist retail consultancy, Verdict, said that: "Electricals is one of the sectors that bears the brunt of the slowdown when it gets serious because most people can defer purchases". As far as DSGi is concerned, Saunders said that the retailer: "...isn't optimally positioned, with store standards quite low and service not as good as it could be".

And in The Independent, DSGi's house broker Citigroup is reported as saying that as one of the most operationally and financially leveraged business under its coverage, DSGi: "...is very materially impacted by the current cyclical slowdown/recession. In addition, the business continues to suffer from the structural over-capacity and deflationary trends that have crushed [margins on earnings before interest and tax] over the past ten years."

DSGi will doubtless update the market next Thursday when it announces its half-yearly Interim Statement.

Seismic Changes

Just two days after Circuit City accepted the inevitable - seeking protection via Chapter 11 - Best Buy now tells us that it's all going pear shaped. Earlier today, Brad Anderson, Best Buy's CEO, said that: "Since mid-September, rapid, seismic changes in consumer behaviour have created the most difficult climate we've ever seen. Best Buy simply can't adjust fast enough to maintain earnings momentum for this year."

COO Brad Dunn said that: "In 42 years of retailing, we've never seen such difficult times for the consumer. People are making dramatic changes in how much they spend, and we're not immune from those forces."

CFO Jim Muehlbauer said that: "We now plan to finish the fiscal third quarter with inventory levels, short-term borrowings and accounts payable higher than previously projected. These increases are the result of the rapid downturn in consumer spending. However, we expect year-over-year domestic inventory to be flat by the fiscal year end."

Chapter 11

The largest retail casualty this year [says the Financial Times - registration required] is Circuit City which filed a voluntary petition for reorganisation relief under Chapter 11 of the US Bankruptcy Code earlier today.

Local Insight

The national and international press reports on most of the big news stories from the major channels players in the high technology market, especially if they are quoted firms. But the local press - that is, local to the head office of these same channel players - often has a unique insight into the 'story behind the story'.

Circuit City is almost sixty years old, and its head office is still to be found in its home town - Richmond, Virginia. As such, the Richmond Times-Dispatch is able to cover the latest upheavals at Circuit City with a very local perspective that stretches back through time. So, for a dispiriting and downbeat analysis of Circuit City's plight, see this article.

Dell Cuts

The New York Times reports that Dell has instituted a global hiring freeze and is also asking staff to take unpaid leave. We should expect similar announcements from HP and others over the coming weeks. This is going to get ugly.

Blue Label

Best Buy has just announced the launch of a line of 'exclusives' that it is co-developing [or specifying] with major OEMs. It first two products in this new line are laptops - one from HP and the other from Toshiba.

Fanciful

According to an article in The Independent, a recent report from HSBC described speculation that Best Buy is interested in bidding for either DSGi or Kesa as 'fanciful', and that the recent gains in the share price of both UK companies looked like 'madness'.

Comet Cuts

An article in today's edition of The Independent says that 100 store staff - mostly, Store Deputy Managers - will lose their jobs at Kesa's UK chain, Comet.

DSGi Med End?

An article in The Sunday Telegraph says that DSGi has instructed Citigroup to undertake a strategic review of its Italian and Spanish outlets. Now that's not much of a surprise...

CityPulse

Circuit City has announced that it will be working with Pulse LLC to launch what it calls a 'unified community and social network' site, while the platform is described as a 'Retail Social Commerce' system. It seems to be some combination of an online Learning Management System, which acts as a portal for manufacturers to upload online learning modules, plus various associated Web 2.0 capabilities. With the staff turnover rate so high in many electronics retailers, finding an economic way of training transient store staff has been one of the many problems bedevilling this sector.

AppleShack

Seems as if RadioShack is going to be the first electronics retailer to try copying the Apple Store format. Forbes suggests that Radio Shack will be testing a small number of new concept stores in the last quarter of 2008.

Solution Stations

Wal-Mart is testing a number of 'Solution Stations' in its stores in the Dallas area. These stations will be managed by Dell. And there are suggestions, elsewhere, that Dell might be resurrecting its own retail formats, using modified concepts from a Texas-based consultancy - Thinq Design & Interactive.

Pomegranate

Apple will open its first store in China on Saturday. It will be Apple's 219th store worldwide. And Ron Johnson, Apple's Retail SVP, says that there are plans for other store openings in China.

Is Circuit City in Play?

Blockbuster has announced that it will not be proceeding with its acquisition plans for Circuit City. Circuit City, not surprisingly, has said that it is still exploring 'strategic alternatives' to 'enhance shareholder value' - something which should be a big part of any management team's endeavours. But, what could the strategic alternatives be? They have a 'shelf registration' ready for any short term funding needs - whatever they might be. But do they have any natural suitors? Not too sure about that one now that Staples has acquired Corporate Express...

Apple Opens in Oz

Thanks to a recent interview with Apple's Ron Johnson, The Sydney Morning Herald revealed that Apple will open its first store in Australia late next week. This flagship store - one of the biggest so far for Apple - is opening in Sydney's CBD [Central Business District], but later in the year it is understood that two smaller stores will open, one in the North Sydney suburb of Chatswood, and the other in Melbourne.

Wal-Mart Redesign

Earlier in the month, Wal-Mart announced that it had completed a redesign of its consumer electronics department. In the computer area, this includes a new display centre, showcasing the right equipment for the right application - in Wal-Mart's case, that means home, school or entertainment. Good to see a mass merchandiser acknowledge differences in consumers' needs beyond just the price point.

That Was Easy

So, Staples has finally, and predictably, won its battle to buy Corporate Express. Today, Staples increased its offer from €9.15 per share to €9.25 per share. It's first offer back in February was €7.25 per share. Peter Ventress and his team at CXP have clearly done a good job of extracting a good offer for their shareholders. At the same time, he has helped create an office products monster, with a combined turnover of some $27bn, bigger than Office Depot and OfficeMax combined. Lyreco, meanwhile, has received a 'break-up fee' of some €30mn as a reward for trying, and failing, to merge with Corporate Express.

Dell Down Under

Yesterday, Dell announced that it has struck as deal with Officeworks, selling product though its 104 store network which is spread across Australia. Officeworks will stock ten configurations which it claims will not be available elsewhere in the country. It will also be possible for customers to order bespoke specifications of Dell product within the store.

MSH Spin-off?

A little over a week ago, the FT published extracts of an interview with Echhard Cordes, the CEO of Metro AG, owner of Media Saturn Holdings [MSH]. Cordes said that Metro was considering a partial spin-off of MSH [Media Markt and Saturn], saying that this would "create more strategic manoeuvrability", implying that such a move would make MSH a predator in Europe. The FT suggested that at the top of the list of potential acquisitions would be DSGi. Then yesterday, Metro published its results for Q1 2008. MSH grew by more than 10 per cent over Q1 2007, with much of the growth coming from Eastern Europe, and Russia in particular. Overall, MSH grew faster than Metro AG's other business units - Metro Cash & Carry, Real and Galeria Kaufhof.

DSGi's Italian Adventure

According to Reuters, DSGi looks set to shut around 40 of its stores in Italy. In its latest interim statement, published in late November last year, DSGi said that UniEuro - the second largest electronics retailer in Italy - 'remains disappointing', and that they were 'making progress with recruiting a new Managing Director for Italy'. UniEuro was acquired by DSGi in 2001.

Retail Gloom

The 2008 World Retail Congress opened in Barcelona today. A lunchtime briefing on branding was delivered by two members of Interbrand, the branding consultancy, and Jose Luis Duran, CEO of Carrefour. Duran said that the retail sector is facing its toughest challenge for a generation.

Apple Shops

The Apple shop-in-shop concept, called Apple Shops [not to be confused with Apple Stores - Apple's own retail outlets], is growing strongly around much of Europe. Right now, the number seems to be about 75. Going by Apple's various country web sites, there are four Apple Shops in Austria, three in MSH group stores, and one in a Cosmos store; there are two Apple Shops in Denmark; there are eighteen Apple Shops in France, all in FNAC stores; there are twelve Apple Shops in Germany, all in MSH group stores; there are eight Apple Shops in Italy; there are four Apple Shops in The Netherlands; there are nine Apple shops in Spain, six in El Corte Inglés stores, and three in FNAC stores; there are two Apple Shops in Sweden; and there are sixteen Apple Shops in the UK, all in PC World stores.

Indian Dell

Infiniti Retail is a subsidiary of Tata Sons, part of The Tata Group, one of India's largest conglomerates. Croma is a national chain of consumer electronics retail outlets, launched by Inifiniti Retail some 18 months ago [in partnership with Australia's Woolworths]. About a week ago, Dell announced that it is planning to sell its laptops and desk tops through Croma. This is similar to the arrangement that Dell set up some six months ago in China with Gome, the country's biggest electronics retailer. This follows on from Dell's recent adventures in retail in the US and in Europe.

Apple Stores in Europe

Apple's largest retail store in the world is in London. This month, Apple opened two more stores in the UK - one in Milton Keynes, and another in Cambridge. But what about Continental Europe? About one year ago, Apple opened a store in Rome, but so far that's it. The UK's 15 stores, plus this one store in Italy are the sum total of Apple's retail store interests throughout Europe. There are, however, rumours of new store openings later in the year in Munich, Geneva and Zurich. But as the company only publicises new store openings a couple of weeks before they actually happen, we'll just have to wait and see.

SPLS bids for CXP #2

One month on from their initial offer, Staples has reiterated its desire to acquire Corporate Express. And Corporate Express has once again rejected their offer. This means that Staples is expected to follow Dutch law formalities and submit an 'offer memorandum' to the AFM [Autoriteit Financiele Markten] by mid-May, while completing whatever competition law regulatory filings are deemed necessary.

Office Depot Revolt

Back in 1996, Office Depot was the largest office superstore chain in the US with sales of around $6.1bn, while Staples was No.2 with sales of around $4bn. In 1997, Staples attempted to acquire Office Depot, but this was challenged by the FTC, and eventually Staples' bid was thwarted. Since then, Office Depot has been on something of a roller-coaster ride, which, for a while, seemed to be in safe hands when Steve Odland was appointed CEO some three years ago [arriving after some success running US auto parts retailer, AutoZone]. Now, it would seem, there are those who would like Mr Odland's head, suggesting that under his leadership, Office Depot had lost its vision and competitive standing...

FNAC in the UK?

PPR's FNAC chain is supposedly looking for any entry point into the UK market. More news and opinion on this soon...

Apple Stores

Apple Store: One Stockton Street, San Francisco

About one year ago, Fortune described Apple as the best retailer in America. Has anything changed since then? No...

SPLS bids for CXP #1

On 19th February 2008, Staples made an unsolicited bid for Corporate Express - a bid which was swiftly rejected by Corporate Express' management. Rumours have persisted about the possible hook-up between these two companies for several months, so it is no surprise that despite this initial rebuff, analysts are now merely talking about the price that Staples will eventually have to pay if it is to succeed.

Best Buy in Europe?

Best Buy is the world's largest retailer of consumer electronics, with projected revenues for fiscal 2008 expected to come just a little short of USD40bn. Best Buy generates most of its revenues in the US, but it also operates stores in Canada and China. Back in September 2006, Best Buy and Europe's The Carphone Warehouse announced two joint venture initiatives: a stand alone mobile retail business in the US, operating mostly as a shop-in-shop format under the Best Buy Mobile brand; and a home computing customer service business [initially in the UK] under the Geek Squad brand. Then, in September 2007, Best Buy announced that it had taken an almost 3 per cent stake in The Carphone Warehouse, prompting some observers to predict an eventual merger. Having signalled its intentions to look across the pond, and with DSGi floundering a little, now would seem a good time for Best Buy to make a bold move into Europe. But that doesn't quite tally with their recent SEC filing which says that their long-announced back-door entry into Europe via Turkey won't now happen until Fiscal 2010. Is some larger strategy playing out that will surprise us all in the coming months?

Dell's Retail Push

During the fourth quarter of 2007, Dell announced deals with five substantial retailers of desk tops and note books. On 22nd October it was Staples. On 27th November, it was Carrefour. On 6th December, it was Best Buy. On 13th December, it was DSGi. And on 21st December, Dell announced a deal with Tesco. Deals were announced earlier in 2007 with a number of other retailers, particularly in the Asia-Pacific region. Over the years, Dell has blown hot and cold with the channel, and anyone who can reach back to the mid-1990s will know that commitment to the channel has not been one of Dell's fortes in the past. Now, though, with HP securing and retaining the No.1 slot globally for the past year or so, Dell realises that retail channels are a necessary route to market if it is to gain market share in the fast-growth consumer segment.

Handset Flagships: London

It seems to have become fashionable for the world's leading mobile handset manufacturers to launch a Flagship Store in London. Back in November 2004, and way before the launch of the iPhone, Apple opened its first UK store in London, and its first store outside of the US. In November 2006, Sony Ericsson launched a Flagship Store in Kensington High Street, London [although this is operated and managed by The Carphone Warehouse]. One year later, in November 2007, Samsung launched a Flagship Store in Tottenham Court Road [owned and operated by Shasonic]. And now, in February 2008, Nokia has launched a Flagship Store just across the road from Apple in London's Regent Street. So we're missing one major handset manufacturer - Motorola. In July 2006, Motorola launched its first Global Flagship Store, in Shanghai. Then in October 2006, it launched its second Global Flagship Store, in Moscow. Since then, we've seen and heard nothing about Flagship Stores from Motorola. Anyone out there know why?

Apple Conflict

In August 2007, Apple opened it's tenth store in the UK, and its first in Scotland. The store in Buchanan Street, Glasgow has clearly been a success.  So much so, that the local independent store in Glasgow, run by Scotsys, part of the Adventi Group, was closed just six months later.