IBM analytics forecast: Jewelry sales to bring holiday cheer to retailers
Armonk, N.Y. — Jewelry will be one of the brightest categories for U.S. retailers this holiday season, according to a new analytics-based forecast by IBM. Jewelry sales are set to hit $2.6 billion In November, up 7.7% over the year-ago period, IBM reported, and $5.4 billion in December, up 4% over last year.
The forecast is produced by IBM retail analytics leader Dr. Michael Haydock, who noted that 2011 U.S. jewelry sales have been highly correlated to the CBOE Volatility Index (VIX), also called the “Fear Index,” which measures the volatility of the S&P 500 stock index.
The increase in the VIX has been accompanied by an increase in jewerly sales two months later. This relationship is somewhat counterintuitive as one would typically expect a volatile stock market to increase fear and dampen demand for luxury goods.
“The correlation — jewelry sales rising two months after big stock swings — is highly unusual and bears watching,” Haydock said. “If the trend continues, it could enhance the work we do in helping clients improve the efficiency and impact of their marketing and advertising programs.”
International growth dependant on EDLP acceptance
Saving people money so they can live better is Walmart’s mission globally, now the company just has to convince shoppers worldwide that shopping at stores that offer an every day low price value proposition is the key to their prosperity.
Leading the charge as the most articulate advocate of the EDLP business model is Walmart International president and CEO Doug McMillon. In presentations to investors, he spends a large amount of time offering a remedial education on the finer points of every day low prices and the expense control mentality that underpins and perpetuates the pricing philosophy.
“I am very confident that EDLP will work everywhere,” McMillon said.
It certainly worked in the United States for a long time before Walmart got sidetracked domestically and it has worked in such international markets as Canada and Mexico where Walmart has operated the longest. But Walmart doesn’t operate under the EDLP/EDLC approached everywhere and doing so eventually is the key to improving returns in the international division, was the overriding theme of McMillon’s presentation to financial analysts on Wednesday.
“We’ve got a great opportunity because customers today and tomorrow are going to be even more price sensitive,” McMillon said.
Heightened price sensitivity can cause shoppers to seek out deals and makes them receptive to promotional efforts by competitors, which is why it can take a long time to implement EDLP in countries where shoppers are accustomed to extensive promotional efforts. It took 18 months to convert to EDLP in Mexico in the late 90s, according to McMillon. Currently, countries where Walmart has yet to implement EDLP or the process is underway include China, South Africa, India, Argentina, Chile and Brazil.
As EDLP gains traction in more places it will drive improved same-store sales with is a dominant pillar of growth for the international group. Beyond that, McMillon noted that new store expansion, the development of ecommerce and multi-channel capabilities and store acquisitions would fuel growth.
Walmart marketing to reach unprecedented level this Christmas
There will be no escaping the long arm of Walmart’s marketing efforts this holiday season as the retail reminds shoppers it has the lowest prices on the broadest assortment of merchandise. Chief merchandising office Duncan Mac Naughton is making sure of that, and on Wednesday he outlined all of the ways the company plans to communicate with shoppers in the months ahead.
The onslaught has already begun with spots running for the company’s reinstated layaway program which begins Oct. 17. The ads (Click hereand hereto watch) position the program as shopper solution and are designed to build early season holiday traffic by reminding shoppers about a program that was popular with them before it was eliminated five years ago.
According to Mac Naughton, the layaway ads are one component of an aggressive television ad campaign that will see the company double its share of voice this season. In fact, he told those at the meeting if they don’t see Walmart commercials this season it will be because they aren’t watching television.
In addition to TV, the company plans seven tab advertisements, 10 free-standing inserts, a toy catalog, a holiday entertaining guide and apparel guide that will be distributed in stores.
“We are very excited and very well prepared,” Mac Naugton said in reference to the holidays. “Our marketing plan for the holidays is quite significant.”
Preparations have been underway for the past year as Mac Naughton, in his current role since January, and a restructured merchandising group restored 10,000 items to the product assortment, renewed the emphasis on in-store promotional displays so that shoppers who return to Walmart this holiday season will find compelling values on an expanded assortment. And if they like what they see but lack the funds to complete the transaction the convenience of layaway is available.