REAL ESTATE

Gap opening outlet store in Italy

BY CSA STAFF

San Francisco — Gap will enter the Italian outlet center market, opening a namesale store at the Vicolungo Outlet Center near Milan, on June 2.

“Opening only six months after the successful launch of our first flagships in Italy, this new store represents the fastest execution of our international strategy to date; adding our Outlet channel where we have been in-market for a period of time,” said Stephen Sunnucks, president, International, Gap. “With such a strong initial response from our customers, we will continue to expand our presence in Italy with our first stores in Rome and two additional Gap stores in outlet centers later this year.”

Gap currently operates more than 370 stores through its Outlet channel. Over the last four years, Gap’s international outlet store base has increased over 500% across the United Kingdom, Canada and Japan. Gap plans to grow this channel further with about 25 additional international stores in 2011 and through new market entries, such as China in 2012.

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News

A familiar story on the pricing front

BY CSA STAFF

Target and Walmart remain in what is essentially a dead heat as far as prices on food and consumables are concerned, according to the most recent study of prices in Dallas and Chicago conducted by Credit Suisse. The firm looked at a basket of 60 items across the two markets, as it does every month, and in keeping with prior comparisons, the data for April showed Target lagged Walmart by 3.4% in Chicago and 4.6% in Dallas. Neither figure takes into account Target’s REDcard Rewards program, which shaves 5% off the price paid at Target and enables REDcard holders to pay less at Target than they would at Walmart.

It is a familiar pattern that has emerged since the introduction last fall of the 5% program, but what’s changed is Walmart’s more rational approach to pricing as it too is looking to pass through product cost inflation. In the past, Walmart was notorious for using pricing actions during periods of inflation to gain market share, reasoning that the increased sales volume generated would be enough to offset the margin impact. However, Walmart took its prices up in April, and the average gap with competitors in the survey narrowed to 16.8% from 17.8% the prior month. Credit Suisse also found that Walmart has been among the most aggressive in terms of passing through inflation to customers. During the past three months, Walmart’s prices on the 60 food, health and beauty and household items the firm tracks each month increased 2% during the past three months and over the past year prices have risen by 3.6%.

The firm noted that food inflation at all retailers was up 4.9% in April and was particularly pronounced at Walmart where it was up 6.6%.

As for food prices, that was the area where Target was most competitive. Its prices on food were within 2.8% of Walmart in Chicago, and its food prices in Dallas were 1.7% lower before factoring the REDcard 5% discount.

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FINANCE

Seattle’s Best objects to Borders’ request to end agreement

BY CSA STAFF

New York City — Seattle’s Best Coffee LLC, a division of Starbucks Corp., has asked a bankruptcy judge to reject Border Group’s request to end the companies’ licensing agreement.

Borders is not entitled to cancel the agreement and continue to use Seattle’s Best’s trademarks and products, the coffee company said today in a court filing. Seattle’s Best also disputed Borders’s claim that terms of the agreement are excessive.

Earlier this month. Border’s asked for permission to end the licensing agreement. The company said that operating its own cafes would reduce the company’s licensing fees, cut costs and boost profit at the sites.

Seattle’s Best had cafes in 225 of Borders’s stores that have closed in bankruptcy, Starbucks said in a regulatory filing, Bloomberg reported. Seattle’s Best is owed about $5 million in trade debt, according to a summary of Borders’s largest creditors, Bloomberg said.

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