Organic Garage, Toronto
Organic Garage has opened an urban-inspired flagship that takes its design cues from the industrial surroundings and city streetscapes of its locale. Located in Toronto’s west-end Junction neighborhood, the 15,000-sq.-ft. grocery store incorporates murals and graffiti, street signs, pavement markings, guardrails, street lights, and building signs. To add to the authenticity, a local graffiti artist painted over brick walls giving a vibrant and urban feel to the space.
The store features one of the largest organic produce selections available in Toronto, more than 100 bulk options, and state of the art, environmentally friendly refrigeration and HVAC technologies.Organic Garage was designed by Tampa-based api(+), which also provided brand positioning and identity, signage/ graphics, and digital collateral design. Api(+) also designed Organic Garage’s new Kitchen Originals private label.
BDO: The top risk factors for retailers are….
Consumer confidence remains strong, but that's not stopping retailers from worrying about the economy.
General economic conditions ranked as a top risk factor for the 9th consecutive year in an annual ranking of the top 25 risk factors by retailers, cited by 100% of respondents. Cybersecurity and regulatory concerns shared the top spot with the economy.
That’s according to BDO USA’s 11th annual “Retail RiskFactor Report,” which examines the risk factors listed in the most recent SEC 10-K filings of the largest 100 public U.S. retailers. Other top risk factors include: industry competition and consolidation; natural disasters/terrorism/geo-political events; labor, litigation; implementation/maintenance of IT systems; and credit markets/availability of financing.
Retail space overcapacity is another pressing issue. As e-commerce continues to accelerate, retailers continue to reassess and optimize their real estate portfolios. Eighty-four percent of retailers cite impediments to U.S. expansion as a risk, and 69% reference risks associated with owning and leasing real estate, up from 54% last year.
In addition, failure to invest new capital in new stores or projects was cited by 63% this year. And 44% are concerned with risks associated with mall traffic and competition for prime real estate
“Retailers’ top risks show their eyes are wide open to the new wave of emerging and evolving risks, from widespread store closures and bankruptcies, to uncertain regulatory changes and mass digital disruption and its associated security threats,” said Jennifer Valdivia, partner in BDO’s Consumer Business practice. “While awareness is a key first step, retailers’ proactive responses to these vulnerabilities will ultimately determine their fate.”
In other key findings:
• Regulatory: Forty-four percent of retailers cite concerns around potential border tax, and 76% reference U.S. accounting rule changes, internal controls and financial reporting risks. Thirty-six percent list FCPA as a risk factor.
• Geopolitical: Whether by virtue of their physical store locations, supply chains or e-commerce sales, nearly all retail players are exposed to some degree of international risk. Eighty-nine percent cite international operations as a risk, up from 73% in 2016, and 41% reference impediments to international expansion, up from 30%. Twenty-two percent of retailers mention Brexit in their 10-Ks, 95% of which have U.K. operations
• Labor: Among the 98% of retailers who cite labor concerns as potential risks, 49% point to minimum wage increases, and 26% list pension costs. Eighty-five percent are concerned about the loss of key management or new leadership, up from 73% last year, and 58% cite healthcare reform and benefits risks.
• Cybersecurity: As companies grow more knowledgeable about their unique vulnerabilities and are increasingly held accountable for safeguarding sensitive data, they anticipate more cybersecurity guidance from regulators. Seventy-eight percent point to risks associated with data privacy and security regulations, and 30% name Payment Card Industry standards and EMV compliance as a concern.
To see a chart listing the top 20 risk factors in the report, click here.
L Brands starts summer on a down note
Victoria's Secret is casting a shadow on parent company L Brands.
L Brands said that net sales fell 6% to $1.21 billion for the five weeks ending period ending July 2. Total same-store sales fell 9%, worse than expected, dragged down by a 17% decline at Victoria's Secret. On the positive side, same-store sales rose 8% at Bath & Body Works.
The retailer attributed 10% of the decline at Victoria’s Secret to its decision last year to exit swimwear and apparel in order to focus on its core undergarment offerings. It was the brand's sixth straight double-digit monthly comparable-sales decline, according to Retail Metrics.
Victoria's Secret is beset with a number of challenges, from declining mall traffic to increased competition from online players and traditional retailers, such as American Eagle Outfitters. Its Aerie brand, whose natural-looking models are a far cry from Victoria's Secret super-sexy "angels," has turned into a big hit with younger shoppers.