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The Top Five Retail Stories of 2012

NEW YORK - It was a year of recovery for most retailers, but a rising tide did not lift all boats in the home department.
Rather, the heartiness of home sales remained uneven from retailer to retailer, with no clear trend line within channels.
     In March, Walmart reported its U.S. stores had recorded a positive comp in the home department during the fourth quarter for the first time in 2 ½ years. Target's home department comps were still trending down as 2012 dawned, but by the third quarter were leading the way among discretionary categories. Home remained strong at TJX Cos., as it had throughout the recession, but fell off at rival Ross Stores.
     Major brand rollouts this year in soft home included Sofia Vergara at Kmart, Threshold and Nate Berkus at Target, Royal Velvet at JCPenney, and in an interesting twist, Macy's Hotel Collection and Charter Club brands at ShopNBC.
     Looking back on the year, however, there is one clear standout as the most impactful - and evolving - retail story of 2012.

Top Five Retail Happenings of the Year

1. JCPenney's Transformation
     Nothing had a greater ripple effect across the industry in 2012 than JCPenney's January announcement of a wholesale overhaul of its

JCP ceo Ron JohnsonJCP ceo Ron Johnson announced the new strategy in late January.
format from a promotional department store to a concept store stocked with 100 branded shop-in-shops and community areas offering everything from coffee bars to crafts stations.
     The effort kicked off with the elimination of promotions and coupons in favor of everyday "Fair + Square" pricing on Feb. 1. Sales fell fast and kept falling, with first quarter comps off 18.9%, second quarter comps down 21.7% and third quarter comps tumbling 26.1%. The impact on home textiles vendors was particularly excrutiating as JCP began to set the stage for the spring 2013 makeover of the entire department. Orders in transit were cancelled. Worse, said vendors, buying decisions largely hit the wall. In early fall when other retailers had sewed up their spring orders, many manufacturers were still awaiting a final word from Penney.

2. The War for Martha
     JCPenney planned to anchor its new home department with a 20,000-square-foot Martha Stewart shop offering a comprehensive assortment of products. This news did not sit well with Macy's, whose

Martha StewartMartha Stewart at a Macy’s store appearances in happier days.
exclusive deal for Stewart home goods technically expires in early 2013, but included an option to re-up through January 2018.
     Macy's first sued Martha Stewart Living Omnimedia, then went after Penney. At last report, the court in the Penney case said it would not do anything to prevent the retailer from going about its business. However, the court in the Omnimedia case issued a temporary injunction and encouraged all parties to work out a solution.
     By July, Omnimedia and JCP amended their contract to broaden the number of product categories JCP will carry in its Martha Stewart home department shop-in-shops. The new agreement also added more categories of Stewart-branded products to the list of those that will be considered non-exclusive to JCPenney.
     As a result of the changes, JCPenney's minimum guarantee to MSLO rose $100.5 million to $282.9 million. The sum is to be paid over 10 years.
     Last month, JCPenney execs re-iterated the arrival of Martha merchandise in spring, but did not specify how much merchandise will carry the Stewart brand and exactly what categories of merchandise will carry the Martha label.

3. The Battle for the Middle
     No sooner had JCPenney's numbers started sinking than the great parlorgame began: Who was benefitting? One thing was quite clear - there was no decisive boon for rival Kohl's. In February, the month JCP debuted its stripped-down pricing strategy, Kohl's total comp actually fell by nearly 1%. Its monthly comp performance wobbled throughout the remaining months: up in March, July, August and October; down in April, May, June and September. Its best month: March, with comps up 3.6%. Its worst: May and June, each with a 4.2% comp decline.
     Which raises the question: If Penney's was stronger, would Kohl's be weaker? Macy's Inc., on the other hand, pocketed a 4.6% comp increase in February - and has consistently reported same-store gains in the eight months since. In the nine months report-since. In the nine months reported thus far since JCP changed its strategy, Macy's comps rose 4% or better in six of them.

4. Flash Sales Sites Dig In
     The newest channel in retailing showed some signs of maturing during 2012 by emulating, here and there, practices long standard in the brick-and-mortar sector of the business.
     In a few cases, sites began extending their sales windows beyondFlash Sales Sites Dig In the typical three-or fourday window. In June, ideeli said it would use a $30 million infusion of new funding to transform the business "beyond the flash sales model into the next generation of ecommerce." In April, the Foundary launched Specialty Shops, whose sales last from two weeks to 45 days, and One Kings Lane not long after introduced Vintage & Market Finds segment that offers five-day sales.
     Last month, Fab debuted a self-branded collection of sheets and bedding, and Gilt stepped into the private label business with the Gilt Home Collection, a group of furniture, rugs and decorative accessories designed by Tom Delavan, creative director for the company. OneKing-sLane had already begun curated collections of products under its name.
     According to online research marketing firm comScore, flash sale sites passed the $1 billion mark in 2010 and should hit $6 billion by 2015. New flash sale entries in the home space have fallen off in a crowded field, but the channel itself promises more changes in the future.

5. Bed Bath & Beyond's Smooth Transition
Bed Bath & Beyond’s Smooth Transition     The consolidation of Bed Bath & Beyond's Long Island-based merchandising operation into its New Jersey-based headquarters was feared to cause a tumult, but seems to have taken place fairly smoothly - at least as far as the outside world is concerned.
     While Macy's and Ross Stores were said to have been recruiting Long Islanders averse to relocation, BBB was also reported to be sifting through the waves of JCPenney employees who lost their jobs as part of the company's overhead reduction.
     Throughout the process, vendors told HTT they were experiencing no major hiccups because of the consolidation and said most of the senior merchandising staff remained on the job.
     In the end, it was the story that wasn't.


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