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BY CSA STAFF

Gift Cards Get Pretty Packages

When planning for the 2007 peak holiday season make sure to include all the trimmings, including pretty packages for gift cards. According to Seastone, a Provo, Utah-based provider of gift-card packaging, one out of every three consumers who purchases a gift card also purchases an enhanced gift-card package, such as custom-designed bags, envelopes, boxes and tins.

Last year, Seastone delivered more than 40 million gift-card packaging units and supplied a number of retailers including Cabela’s, The Home Depot, Kohl’s, Safeway, Staples, Walgreens and Wal-Mart. In a prepared statement, Staples acknowledged that gift-card packaging “delivered additional sales and margin to the category.”

The gift-card industry has emerged as a dominant choice among consumers across all retail types. Corporate Research International (CRI) of Findlay, Ohio, reported that during the 2006 holiday season 70% of U.S. consumers gave at least one gift card and more than 67% of people received at least one gift card. On average, CRI found each consumer gave four or more gift cards during the 2006 holiday season.

Environmentally Friendly Plastic Cards

The spotlight on sustainability has every retailer looking for ways to operate with more environmentally friendly processes and products. As a result, the Green Earth Card, a biodegradable plastic card that was introduced 10 years ago by Versatile Card Technology (VCT) of Downers Grove,Ill., has experienced renewed popularity.

A key ingredient in the Green Earth Card is corn starch, and its plastic core and overlay are completely biodegradable. VCT’s product portfolio spans a wide variety of cards including loyalty, membership, gift cards, SmartCards, access-control and contactless cards. The company is also a certified manufacturer of Discover, Visa and MasterCard.

Cashless- and Contactless-Vending Machines

Layovers at Atlanta’s Hartsfield-Jackson International Airport just got more interesting. Vending machines throughout the airport are equipped with an embedded RFID-reader technology that accepts cashless, contactless payment from consumers who have RFID-enabled credit and debit cards.

By waving their card within a few feet of the vending machine, consumers with RFID-enabled cards can literally grab a soda on the fly. The convenient and secure vending system is the result of a partnership between vending-management solutions provider Isochron (Austin, Texas) and SkyeTek (Westminster, Colo.), a provider of RFID-reader technology.

Advanced Universal Reader Architecture (AURA) provided by SkyeTek incorporates state-of-the art encryption and anti-cloning technology, and utilizes the same algorithms incorporated by the Department of Defense to offer the most secure contactless payment. It supports transactions with MasterCard Paypass, Visa Contactless, Amex ExpressPay and Discover Network.

Loyalty=Discounts + Rewards

Harps Food Stores, a regional grocery chain based in Springdale, Ark., and operating more than 50 stores in Arkansas, Oklahoma and Missouri, has debuted the Pay By Touch S&H greenpoints Reward Program in its stores located in six Arkansas markets. In addition to earning the typical discounts associated with loyalty-card programs, shoppers will also earn 10 greenpoints for every dollar spent at participating Harps Foods Markets. The green-points can be redeemed in-store, online or through a catalog.

The greenpoints Reward Program is the digital reinvention of the original loyalty marketing “Green Stamps” program introduced in 1896 by Sperry & Hutchinson Co. Additionally, Harps Foods adopted Pay By Touch’s real-time marketing solution that enables the retailer to deliver one-to-one shopper messages in-store through multiple platforms. Pay By Touch, a leader in biometric payments and personalized marketing, is based in San Francisco.

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Weekly Retail Fix

BY CSA STAFF

THE NEWS: SAM’S REALIGNS STORE-LEVEL MANAGEMENT

BENTONVILLE, ARK. Sam’s Club is changing the management structure in its stores. In the realignment, approximately 250 positions will be eliminated, Wal-Mart Stores announced last week. The company said it’s replacing five lower level management positions at each Sam’s Club location with three new higher level and higher paying assistant manager positions.

“This is not a cost cutting effort. We expect a slight increase in payroll upon completion of this change,” said Sharon Orlopp, senior vp of Sam’s people division.

THE FIX: Differentiation would better help Sam’s

Since Sam’s decided that its refocus on the business customer was too narrow, it has sought to find ways to make its clubs more attractive to primary shoppers, i.e., women. And that’s a pretty tough row to hoe, as Costco has done a pretty good job at satisfying the club customer in general and BJ’s has been going after female shoppers for several years now, with some success.

Having fewer managers with more direct responsibility could create a tighter knit club-level management and shorten lines of responsibility and accountability. Yet, without differentiating the offering, execution isn’t going to overcome all of Sam’s challenges.

That being said, a store-level management realignment might be overlooked at other retailers, but, this being Wal-Mart, everyone has to make a big deal about it. But that’s the price you pay as the big guy on the block.

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Weekly Retail Fix

BY CSA STAFF

THE NEWS: TOYS ‘R’ US EARNINGS GAIN 40.1%

WAYNE, N.J. Toys “R” Us today posted net earnings of $199 million for its critical fourth quarter, which meant it turned a profit for the fiscal year ended Feb. 3. But special charges and gains had an impact on its numbers.

Sales for the previous fiscal annum were $142 million, the difference translating into a net earnings increase of 40.1% year over year. For the last fiscal year, Toys “R” Us posted net earnings of $85 million versus a net loss of $384 million for the previous period.

Operating earnings in the fiscal 2006 fourth quarter gained 53.1% to $571 million versus $373 million for the fourth quarter of fiscal 2005. For the last fiscal year, operating earnings were $649 million versus an operating loss of $142 million for the previous period.

THE FIX: Improved shopper experience ups comps

Of course, any observer has to take into consideration special financial circumstances. Fiscal 2006 operating earnings were positively impacted by $96 million from gains on property sales, slightly offset by restructuring and other charges. In fiscal 2005, operating earnings were negatively impacted by $410 million in costs relating to the merger of the company, as well as $58 million of costs and charges relating to contract settlement fees, restructuring and other charges.

Still, sales were trending up at last year’s end. Net sales gained 15.8% to $5.7 billion. In the full fiscal year, net sales advanced to $13 billion, up 15.2%.

Comparable-store sales for the Toys “R” Us’ U.S. division gained 0.6% in fiscal 2006, and that represents the division’s first comps increase in six years. Comps at Babies “R” Us were up 4.8% and those at Toys “R” Us international were up 2.6% for the fiscal year.

Jerry Storch, chairman and ceo of Toys “R” Us, said the company is “pleased with the strides we made in fiscal 2006 to improve at all levels of the organization and reposition the company for profitable growth over the long term.”

He said the company’s new management team has been focusing on executing a strategy that would turn the retailer into a global toy and baby products authority.

“This translated into higher overall sales, positive comparable-store sales, improved gross margins and strong operating earnings growth for the 2006 fiscal year,” Storch asserted. “The key to our strategy has been improving the customer shopping experience in our stores. We are accomplishing this by delivering a more compelling merchandise selection, better service and a cleaner and more comfortable shopping environment.”

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