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Helping the Most Vulnerable

BY By Deena M. Amato-McCoy

When the Retail Orphan Initiative (RetailROI) was launched three years ago, its goal was to raise awareness of — and develop solutions for — orphans and other vulnerable children around the globe. Fast forward to 2011, and the charitable foundation, which is made up of IT-focused retail executives, consultants and vendors, remains laser-focused on its mission. Leveraging the power and influence of retailers, RetailROI is changing for the better the lives of vulnerable children globally.


The program evolved during an informal meeting between the late Paul Singer, then senior VP and CIO of Supervalu, and Greg Buzek, founder and president, IHL Group. Singer shared his longtime work as an adoption advocate, while Buzek talked about his work to support orphan care. Their discussions and shared interests gave birth to RetailROI. 


Today, operating under the umbrella of The Giving Back Fund, and with the support of the retail industry, the organization provides grants to charities that provide hands-on efforts across a wide range of areas. These include orphan care (food, shelter, medical, clothing, education), child rescue from human trafficking, and life skills training for orphaned and vulnerable children.


“We laid the groundwork, and RetailROI continues to raise awareness for the 400 million vulnerable children worldwide,” said Buzek, who is the organization’s donor trustee. “In addition to raising funding for these children, we are also leveraging the core strengths of our members to aid adoption and foster-friendly environments.”


The group has raised just shy of $500,000 since its inception, and the members’ advocacy has become much more “hands-on.” Last winter, for example, a team of retailers and analysts that support RetailROI made two trips to Honduras in partnership with Lifesong for Orphans to help outfit and install a computer lab for a school of 500 children, more than half of which are orphans.


“This lab was funded by companies at the NRF Show, partnering with RetailROI, to drive traffic to their booths during the show,” Buzek explained. “They made a donation for every tour, visit, badge scan. That paid for 59 computers for the lab when combined with donations of software from Microsoft.” 


Honduras is just the latest example of the group’s efforts. A $5,000 grant, from a single sponsorship to the group’s SuperSaturday (see page 28) event, was used to help fund a border monitoring station between Nepal and India. 


“Because of that grant, 72 young girls were rescued out of human trafficking in one year, and six adults have been put in jail for 25 years,” Buzek said. 


At press time, Buzek was getting ready to leave for Marshall, Liberia, where RetailROI helped build a school in a community that had not had one for more than 14 years. The current student body is 60 children, a group that will soon expand to 84 kids. 


“Our trip will help us determine how else RetailROI can help,” Buzek said. “By allowing members to go on these trips, they are coming face-to-face with the kids, and are changing the world in ways they never imagined,” he said.


Other projects on the agenda for 2012 include:


• Teaching opportunities. RetailROI is encouraging members to visit Honduras for “career day”-style speeches. 


“It gives members the chance to discuss IT, sales, marketing and other skill sets and areas of interest,” > Buzek explained. “These kids are hungry for knowledge, and the more they learn about different careers, the more they see a ticket out of poverty.”


• Establishing more “Safe Families” programs in the United States. With the help of grants, these programs offer sanctuary for children of parents in financial, domestic or health crisis. 


“It is estimated that these programs will save 50% of children from going into foster care during a family crisis,” Buzek said. “It builds a safety net around the family and children, so the family can stay together and out of ‘the system,’ at the taxpayer’s expense. About one-third of our funds have been donated to expanding this domestic program.”


RAISING THE BAR: RetailROI’s charitable efforts are made possible and sustained by the involvement of retailers, technology partners and analysts alike. The group is always on the lookout for innovative ways to boost donations and participation.


In May 2011, in collaboration with IBM, it launched a national campaign designed to make it easy for retailers to raise money for charities at the point of sale. And in July, it launched an online charity “locator” to match up retail chains looking to donate overstocked merchandise with local charities, giving retailers the opportunity to receive a potential tax deduction for items that were not going to be selling at a profit.


“There are $65 billion worth of overstocks industry-wide,” Buzek reported. “Chains that mark down merchandise are eroding profit, and if they sell overstocks to liquidators, they can suffer a tremendous loss. RetailROI has a database of charities in key locales where retailers can donate this merchandise to kids in distress, which benefits the children and the retailer.”


RetailROI is eager for more members of the industry to get involved, even if just to help spread the word. Buzek continues to work to expand RetailROI, and his efforts have not gone unnoticed. In October, he was honored by the Congressional Coalition on Adoption Institute with the first annual Paul Singer Award. 


Buzek received the award, designed to recognize business and governmental leaders who have gone above and beyond their corporate roles to advocate for better adoption and foster care policies worldwide, at the 13th annual Angels in Adoption Congressional gala in Washington, D.C. 


“It was a great honor,” Buzek said, “and I was humbled to be named in the same sentence with Paul. We’ve accomplished a lot in three years. I hope this opens doors to other things and helps us make an even bigger difference.”


Going forward, RetailROI will be providing a lot more opportunities for folks in the industry to make a difference. 


“It could be teaching marketing or sales, sharing a career path, donating expertise to impact a child — anything that helps show them a path that is different than the poverty they have seen to date,” Buzek said. “Most of these children suffer not only from lack of parents, but a lack of hope or vision.”


To find out more about RetailROI and how you can get involved, visit retailroi.org/.


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Perfect Storm for Apparel Retailers

BY Craig R. Johnson

With gloomy consumer sentiment surveys reflecting dysfunction in both Wall Street and Washington, stagnant GDP growth, stubborn 9% unemployment and the ongoing housing slump, most experts are calling for a conservative holiday season.

But the American shopper? She begs to differ, at least when it comes to apparel, for herself and her family. Certainly, clothing was run through the wringer in the recession, as demand plunged 8% from its peak annual levels of 2007, bottoming in 2009. This year, apparel is suffering the further indignity of seeing the first cost inflation in decades, as cotton prices peaked at record levels in March.

Although apparel bounced off the bottom in 2010 with a 4% year-over-year rebound, sales still lagged pre-recession levels. But for the first nine months of 2011, apparel sales were up almost 6% over 2010, with little if any let-up during back-to-school. Although historically back-to-school is an imperfect predictor of holiday sales, full-year apparel sales in 2011 will, at the current pace, finally breach the sales levels achieved four years ago.

So despite the dour consensus outlook, apparel is on track for its best Christmas since 2006, if not ever. Five factors are driving apparel’s comeback:

• Pent-up demand

After four years of outfitting her kids but scrimping on herself, women are finally freshening their wardrobes — since you can accessorize that schmatta just so many times. 
Men, notorious for making that suit or sport coat last one more year, are returning to the haberdashery, with men’s clothing sales up about 9% year-over-year.

• Muted price elasticity

Although many retailers are now passing through most — but not all — of the cost increases, evidence to date shows little demand destruction. By Customer Growth Partners’ estimates, apparel price elasticity ranges from 0.6 to 0.8, indicating that average price increases of 10% will reduce demand by only 7%, netting a 3% revenue boost.

• Discretionary spending rotation

Through 2007, the twin drivers of discretionary retail spending were home improvement projects and consumer electronics. Both sectors remain about 11% below their 2006 to 2007 peaks, freeing up almost $50 billion in annualized demand that is being redeployed, largely at fashion or outlet malls instead of The Home Depot or Best Buy.

• New technology

Although not always visible on runways, apparel technologies have made great strides in recent years, from Lululemon’s nylon and no-sew seaming innovations to “heat-tech” styles from FAST’s Uniqlo. The advances have enabled higher price points and margins, and consumers have not objected — since the merchandise is a “materially” better value.

• Fashion excitement

Last but not least, fashion is, after all, a fashion business, and apparel has finally doffed recession-era boring basics to enter a new creative cycle. Consumers are seeing innovation in everything from beauty and fragrance to designer excitement at post-recession, savvy-shopper prices, in retail formats from fast fashion to once-dowdy department stores. Doubters need only witness Macy’s Lagerfeld collection full-price sell-through, Target’s website-crashing Missoni blow-out, or Kohl’s high-profile J.Lo and Marc Anthony launches, to understand that newness is back big time.

In short, well-managed apparel merchants will enjoy a positive perfect storm this holiday season. Continued pent-up demand, recession-originated cost controls, fashion innovation and moderate cost inflation — combined with modest price elasticity — augur for strong earnings leverage in the holiday quarter.

Craig R. Johnson is president of Customer Growth Partners (customergrowthpartners.com), a consulting and research firm serving the retail and consumer industries. Founded in 2001, CGP also conducts both proprietary and public forecasts of holiday, back-to-school and full-year retail sales.

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Focus on: E-commerce


BY By Samantha Murphy

Christmas may be right around the corner, but retailers can still do a lot in the final weeks leading up to the big day by making last-minute tweaks that can impact how and where consumers shop this season. Thanks to the flexibility of the Web, e-commerce, mobile and social networking channels are rich with opportunities for retailers to lure shoppers in and keep them coming back for more.


U.S. consumers are expected to be cautious with their holiday spending this year, as 72% expect their gift giving to be “controlled” in 2011, according to Accenture’s annual consumer holiday shopping study. Discounts, sales and prices are still top-of-mind this holiday season, with 40% of consumers saying an item being on sale is the single most important factor in their decision to purchase.


Lauren Freedman, president of Chicago-based the e-tailing group inc., said that companies can cash in on shoppers who are looking around for the best deals by making small additions to marketing strategies. For example, it’s key to reinforce value proposition through email campaigns. 


“Retailers should send emails to shoppers that promote value, such as touting 300 gifts for under $25,” Freedman said. “Make it very simple for budget-minded customers by packaging that information before they have a chance to navigate away.” 


Research shows that email marketing is still an effective way to drive traffic and sales to sites. According to data from a study conducted by Petaluma, Calif.-based e-commerce solutions provider MarketLive, shoppers are indeed receptive to receiving emails from retailers, with 39% wanting it weekly and 13% wanting it up to six times a week. In fact, 8% are open to daily emails from merchants.


Meanwhile, the majority of consumers said they are most likely to respond to emails this holiday season if they include free shipping offers (80%), sales and markdowns (79%), and coupons (73%). 


With many consumers reading email on mobile devices these days, Freedman noted that messages should be easy to read on smartphones and provide a direct link to a retailer’s mobile site. From a mobile site design perspective, retailers should display familiar logos that fit well on screens so shoppers know they’re on the right site. In addition, pages should be simple and uncluttered, allowing consumers to navigate through products and find the information they need. 


Finally, the mobile checkout process should have as few clicks as possible to make sure shoppers don’t get frustrated and navigate away. 


“There are still some big challenges for retailers in the mobile category,” Freedman said. “Smartphone usability isn’t always seamless, and shoppers need to feel comfortable when making a purchase. Make it easy on shoppers by keeping mobile sites simple and playing up the convenience factor.”


Once shoppers have made their way on to e-commerce and mobile sites, it’s the retailer’s duty to ensure they find what they need and get all of their questions answered. Even pages that retailers often overlook can be utilized during the holiday season to make a difference.


“The customer service page is often a place for missed opportunity,” Freedman said. “Take advantage of that real estate by touting gift cards, providing a calendar with shipping cut-off dates and always list contact information.”


Retailers also should be well aware of the major online shopping days of the season. Ranking second to Cyber Monday, “Green Monday” — the second Monday in December — is the most popular day for online shopping. The first Monday in December ranked third, followed by “Free Shipping Day,” which falls this year on Friday, Dec. 16.


“Those that offer free shipping — even if it’s just for a promotional period — should definitely get that information out as much as possible to target audiences,” Freedman said. “People love free shipping, and it helps retailers better compete during the holidays.”


Finally, consider two-dimensional quick response (QR), which gives consumers access to related digital information on the Web. When an image of a QR code is captured by a quick-response scanner or mobile phone camera, the user’s device is directed to a website where companies provide shoppers more information about products and services. 


“Retailers can use QR codes in stores by placing them next to products or tout them in catalogs and newspaper circulators,” said David Javitch, VP marketing for New York City-based Scanbuy. “It takes about a minute to create a QR code, so if merchants have content to link a code up to, it’s a no-brainer and very fast way to reach customers.”


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