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May 2007

An Important Shift!

In the late 1990s, the business of retailing enjoyed a period of unprecedented prosperity. The tragic events of 9/11 changed all that. While most of us agree the economy has rebounded from those dark days, retailers still begin each year with some trepidation as to whether consumers spending will continue at a healthy rate.

The run-up in gasoline prices certainly is a concern, but retail sales overall have enjoyed steady, if not spectacular, growth. With the war in Iraq, trying to speculate what the Fed is going to do next, the slow down in housing, and now a presidential election looming, I don't know a single retailer who's feeling any real confidence in the prospect of business growth over the next couple of years.

The bright spot in all this economic news is the job situation. Our unemployment rate remains consistently low. When Americans are working and confident they will keep their jobs, they aren't afraid to buy the things they want and need. But, there's another cloud on the horizon that could very well impact unemployment rates in a wide variety of industries. That cloud is the new minimum wage rate passed by Congress and signed by the President.

The first increase goes into effect near the end of July bumping the minimum up to $5.85 an hour. The second increase, effective a year later, will take the rate to $6.55. And in 2009, the rate will go up to $7.25 an hour.

For companies that already pay more than the minimum rate, this may not seem important. Based on estimates by the Bureau of Labor Statistics, in 2006 only 1.7 million workers earned $5.15 an hour or less. Nearly every economist who has evaluated the long-term effects of a minimum wage increase believes wages of other workers at the lower end of the scale will be pushed up as well. These increases inevitably will cause some companies to operate their businesses with fewer minimum-wage employees.

Another factor likely to unfavorably affect the unemployment rate is the growing number of states attempting to mandate healthcare programs for all workers. If the proposal currently being debated here in California gets through the legislature, the cost of doing business in this state could increase significantly, negatively impacting job growth.

Granted some of these economic shifts are big "ifs," but there are enough already in effect to challenge retailers over the next couple of years. If you are doing business in a state that is working on new company paid healthcare programs, pay attention. These kinds of programs could have a real impact on your business.

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M&M's World, Orlando, Florida

How about a 17,000-square-foot retail emporium all built around a small, round, colorful, and perpetually popular piece of candy! Last year, Orlando's Mall of Florida added an amazing M&M's World, one of three such stores in the U.S., the other two of which are in New York City and Las Vegas. Designed by the well-respected Chute Gerdman firm in Columbus, Ohio, Orlando's M&M's World was named "2006 Store of the Year" by the Institute of Store Planners and VM&SD Magazine.

During a recent trip to Orlando, I spent time exploring the store and taking pictures. It is indeed a delight and about the best branding tool from a major consumer products company I've seen anywhere in my travels. While showcase stores have been done by other consumer products companies such as Nike and Coca Cola, the challenge for Mars Retail Group, owners of the M&M's stores, was to create a spectacular, visually dynamic retail environment.

In addition to the massive display of M&M's in 22 plain colors, 22 peanut colors, and custom colors for the various seasons, the selection of M&M's merchandise is impressive. There is a wide variety of plush M&M's characters; tee shirts and other apparel; toys of every kind; household items like cups, mugs, and other glassware; and collectible gifts. It is a fun place to shop built around a product that's been on the market for 65 years.

In last month's newsletter, I wrote about scent and how it is being used to enhance the experience in many kinds of retail stores. In a smaller space, the scent of the candy itself might be enough, but in this store the chocolate scent is pushed out toward the front of the store to gently pull mall customers in as they walk by.

Last fall in an Orlando Sentinel interview, John Haugh, the president of the Mars Retail Group, commented, "Obviously, Orlando is a great spot. There are other cities that will make sense as well. You're not going to find 400 of these things out there."

For the last several years we've talked a great deal about creating great customer experiences in stores. The folks at M&M's World in Orlando certainly have achieved that goal. If you get to Orlando this is a must-see destination.

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THE NEWSPAPER PROBLEM

The nation's newspapers have experienced a steady decline in readership over the last several years. The problem seems to be widespread affecting even the biggest newspapers like USA Today and The Wall Street Journal. Yet advertising rates continue to rise.

In her recent speech to the Newspaper Association of America's annual conference, Macy's Chief Marketing Officer, Anne McDonald, urged newspapers to find ways to engage women between the ages of 18 and 54. With Macy's moving more and more of its advertising dollars from newspapers to other media, I hope these folks paid attention. Macy's isn't the only retailer in America troubled by the diminishing readership and rise in rates.

INDEPENDENT RETAILERS ARE ALIVE AND WELL IN SAN FRANCISCO!

In a 2007 analysis of the San Francisco area retail marketplace, it was found that independent bookstores not only are thriving but in fact dominate the city's book market. This is good news, considering the dwindling number of independent bookstores across the country and their ongoing struggle against larger national chains.

HERE WE GO AGAIN!

Back in the heady days of explosive growth in the dot com community, several members of Congress decided it would be prudent to exempt online retailers from collecting sales tax. The reasoning behind this nonsense was that requiring online retailers to collect and pay sales tax might somehow stifle growth in the new online marketplace.

Well, the law that mandated this online tax collecting exemption is about to expire, and Congress is going to reevaluate who should be charging sales tax. On Thursday, May 24, Senator Michael Enzi (R-WY) introduced the Sales Tax Fairness and Simplification Act of 2007. Since 2005 many states agreed to simplify sales tax regulations so online and catalog merchants could collect sales taxes from that state's consumers without creating a bookkeeping nightmare. The legislation proposed by Senator Enzi is designed to enable tax collection by state and local governments on all retail sales conducted in that area of the country. Online and catalog merchants doing less than $5 million annually will be exempt.

It's about time. Every merchant, whether store-based, catalog, or online, should be required to comply with the same tax laws. If you agree, it's time to let your senator and representative know that it's time to level the playing field.

Until next month...

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Into the Future: Powerful Trends Shaping the Future of Retailing

Understanding retail and consumer trends gives retailers the tools they need to prepare for the future. It gives them an upper hand to make sure they are in the right place at the right time with the right merchandise. Success doesn't come by chance.You have to make it happen. And in the retail industry, it means satisfying the wants and needs of consumers. But what they want today is not necessarily what they'll want tomorrow. With an awareness of marketplace and consumer trends, retailers can plan for tomorrow before it's too late.

After extensive research, George Whalin has compiled his findings and put together an energetic, enlightening, and entertaining keynote presentation entitled "Into the Future: Powerful Trends Shaping the Future of Retailing." Some of the trends are real eye-openers, some are even shocking. All of them give retailers the insight needed to attack the future and win!

Time is of the essence. Put this on the agenda of your next convention, conference, trade show, or expo.

For details on this and other convention and trade show topics, go to our web site or call 800-766-1908.

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Seminars and Training Programs for Managers and Associates

Delivering performance-enhancing speeches and seminars for retailers since 1987, George jam-packs his presentations with practical, real-world information. His seminars for managers and associates teach store management skills, customer service improvement, and sales techniques. If you want to improve store productivity and profitability in 2007, we encourage you to call George Whalin. Don't wait, his calendar fills up quickly.

Topics for managers' meetings and corporate conferences:
(Click on a topic for details)

Great Store Managers Make Great Stores!

How to Find an Eagle in a Flock of Turkeys! Finding, Hiring, and Keeping the BEST Retail Employees

Customer Focused Selling

Every Customer Every Day!

For more information go to our web site or call 800-766-1908.

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Resources for Retailers

George Whalin's book RETAIL SUCCESS! is now in its eighth printing. A number of consumer products manufacturers have purchased the book for their retailer customers. Retailers have provided copies for their managers who regularly refer to portions of the book in their managers' meetings. And managers are referring to the book in their daily store meetings. If you haven't purchased a copy yet, what are you waiting for? For multiple copies, call us for volume pricing. For individual copies, there are also some very good deals to be had at amazon.

Go to our web site today where you'll find several other books in addition to RETAIL SUCCESS that George recommends. Check it out often, he keeps adding to the list.

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After a slow start, I am now updating my blog on a regular basis. If you have an opinion or thoughts about any of the topics, I invite you to post your comments at retailerblog.com It's easy to do. And if you have a topic you would like to see addressed and discussed on the blog, send me an e-mail at george@whalinonretail.com.

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In addition to speeches and seminars, George also consults with retailers helping them improve the operation of their businesses. His consulting services include helping retailers with strategic planning issues, marketplace positioning, merchandising and store layouts, developing results-driven marketing and advertising programs, personnel management, and improving store performance. If you need solid, practical, proven insights and ideas to grow and improve your business, call us toll-free at (800) 766-1908.

We encourage you to pass this publication along to your associates and colleagues. If all or any portion of this newsletter is reproduced in another publication, attribution should read as follows: Copyright 2007. Reprinted with permission from George Whalin's Retail Management E-Letter. To occasionally reprint portions of this newsletter one time, no express permission is required. To reprint in more than one venue or multiple articles, please contact us at 800-766-1908 or info@whalinonretail.com.

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