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Top Five Retail Stories of 2011

Price increases top the list

Jennifer Marks, Courtney Mueller -- Home Textiles Today, January 24, 2012

Top Five RetailNEW YORK - It might not have been the most robust year for sales, but many retailers pushed ahead with brand-building and store expansion efforts.
     A number of retailers pushed forward internationally. More than two decades after rival Wal-Mart Stores moved out of the United States, Target this year ventured over the border to Canada, acquiring the majority of Zeller's units. Big Lots also headed north, acquiring Liquidation World, which will be converted to the Big Lots format.
     Macy.com expanded into international ecommerce at mid-year - as did several Williams-Sonoma nameplates and Crate & Barrel.
     Manhattan became home to two more home furnishings flagships as Marrimeko opened its first U.S. store and CB2 opened its first unit outside of Chicagoland.
     As we close out a year that offered more than a few surprises (see the story to your left), HTT's editors settled on the five most interesting and/or potentially impactful stories of the year.

Top 5 Retail Happenings of the Year

1. Price Increases: Pay More, Get Less

As the year began, the topic of conversation was cotton, cotton and cotton. Soaring prices - and how to work around them - became an obsession.Price Increases:
     After idling in the range of 49 to 52 cents per pound, prices began exploding in the second half of 2009. By the time the industry rang in 2011, prices had pushed past a dollar - and would keep climbing ever higher until they hit peak in early March around the $2.40 mark.
     Some blamed speculators. Others pointed to lower global production, and still others cited the panic that ensued when China realized it didn't have enough cotton on hand to keep its looms churning.
     Synthetic prices were soaring as well, leaving manufacturers and retailers no way out of their cotton conundrum.
Quotes on programs began changing from day to day, then from hour to hour. At certain points, business virtually stopped altogether.
     By spring, all-poly and poly-rich products began appearing in the market - despeced from the all-cotton glory days and carrying higher price tags. The most expensively produced goods came ashore during the third quarter. By then, cotton prices were cooling off and at year-end seemed to be settling in the $1 range.
     And that sets the stage for the next great question: Will retailers and suppliers hold pricing and salve the gouges of 2011 with better margins in 2012? Don't bet on it.

2. JCP Leadership Change: Taking a bite of Apple

JCPenney's decision in July to appoint as its ceo the creator of Apple Corp.'s sleek and uniquely designed retail operation was hailed as a master stroke.
     The assignment was not as wildly out of the box as it appeared at first blush. Before his 11-year stint at Apple, Johnson helped create Target's cheap chic mystique as he moved through several merchandising posts. But for a century-old, middle-market department store, it was pretty sexy.
     Shortly thereafter, Penney bellied up to the bar for a couple more slices of Apple as Johnson hired former Apple colleagues for key management posts.

Ron JohnsonRon JohnsonMike KramerMike KramerMike FrancisMike Francis

     New JCP chief operating officer Michael Kramer was most recently ceo of apparel supplier Kellwood Co. and was cfo of Apple's retail operation for five years, reporting directly to Johnson. The retailer's new HR head, chief talent officer Daniel Walker, held the same position under Johnson at Apple.
     The company decided to grab a little more Target DNA as well, naming Target chief marketing officer Michael Francis president of the JCP operation.
     All of them officially took up their new posts in recent weeks and were no sooner on the scene than Penney announced it was putting its chips on Martha Stewart's home and lifestyle prowess for in-store shops and a joint ecommerce site - to the apparent chagrin of current Martha home goods distributor Macy's.
     Johnson promises to outline the new vision for the company next month at JCP's analyst confab in Manhattan. But he has already staked out bold territory, announcing in November: "I am not here to improve. I am here to transform."

3. Lord & Taylor Home: The Next LNT?

Well over a decade after abandoning the home segment in its traditional department stores, Lord & Taylor stepped back into the category in late summer, opening two free-standing home furnishings stores in New Jersey. A mere test, the company said, but could bigger plans lie ahead?
     The Paramus and Shrewsbury stores had been in operation not more than three moLord & Taylor Homenths before the chairman of Lord & Taylor parent Hudson's Bay Co. mused publicly about a larger operation. "If we get this right," said Richard Baker, "we could have a $1 billion opportunity."
     L&T Home is merchandised by the Canadian-based Home Outfitters unit of Hudson's Bay - which also carries Linens 'n Things merchandise under license, currently a house brand for Home Outfitters and Lord & Taylor Home.
     The LNT (as in Linens 'n Things) echo doesn't end there. In fact, stepping into a Lord & Taylor Home store for the first time, one is struck by the similarity in layout. The fixtures are finer, and cozy vignettes of furniture groupings announce a departure in merchandising strategy. Nonetheless, the resemblance is striking.
     Lord & Taylor Home is the old LNT's dream of itself on its finest day - topped with a dollop of Home-Place finesse. Is it a billion-dollar formula? A lot of suppliers are hoping so.

4. News Flash: A New Channel Arises

The rising crop of flash retail sites could be seen as the logical outgrowth of an era that has spawned flash mobs, pop-up shops and non-stop social media interaction. Enough of them have arrived on the scene to represent a specifically formatted market segment unto itself.
     It began with the discreet arrival of Gilt in 2007 followed by the rather exclusive Rue La La site in 2008. The channel has since morphed into a field of online retailers offering short runs (72 hours or so) on discounted merchandise that tends to be both designoriented and upscale.News Flash
     This year saw the arrivals of Froogal and Fab.com (which as of this month is already selling $200,000 of merchandise a day). Gilt launched a dedicated home store. Mertado and MyHabitat (Amazon's membershiponly fashion site) expanded into home textiles. Homeoriented One King's Lane surpassed $100 million in revenue. HauteLook, which passed $100 million in sales in 2010, was acquired by Nordstom in March and said it expected sales to rise 50% to 60% this year.
     All of which could lead to the ultimate retail reversal - turning clicks into bricks. It's not out of the realm of possibility that one or more of these retailers will test pop-up stores or shop-in-shops in the physical world. Stay tuned.

5. Bloomies Blossoms on 59th Street

It's one department in one store in one city, but Bloomingdale's fall revamp of the bedding floor in its Manhattan flagship store exemplifies what a luxury department store bedding shop should look like in the 21st Century.Bloomies Blossoms
     All the big names are attentively given their due: DVF by Diane Von Furnstenberg, Vera Wang, Donna Karan, Ralph, Calvin, Tommy, Frette, Sferra, Pratesi, Barbara Barry.
     Each inhabits its own environmental cocoon, supplemented in crevasses here and there with a smattering of other upmarket brands. It's not a throwback to the days of white glove service for la grand dame de la maison, but Bloomingdale's bedding department stands as a modern interpretation of an emporium for people of taste.
     And most importantly for the little cousin of Herald Square, it resolutely proclaims: This. Is. Not. Macy's.

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