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Perfumania files Chapter 11; to close more stores

BY Marianne Wilson

The nation's largest discount retailer of perfumes and specialty celebrity and designer fragrances has filed for bankruptcy protection with a goal of moving its business forward — and closing more stores.

Perfumania Holdings announced in a statement that it has initiated a recapitalization and filed for Chapter 11 bankruptcy protection to reduce its retail store count "to better align with current consumer shopping patterns." The company also said it planned to increase investments in its online business, and become a privately-held company.

“The company has been working diligently to amend its business model, reduce its cost structure, improve supply chain efficiency, optimize marketing, reduce expenses and improve operating results long-term,” stated president and CEO Michael Katz. “Today’s actions allow the company to expedite all of these initiatives to create a stronger company with the financial resources to invest in areas that will foster our long-term growth."

The Wall Street Journal reported that Perfumania plans to close 64 of its approximately 230 stores. The retailer noted it been reducing its retail portfolio by "accelerating the closure of under-performing stores and those stores in locations affected by declining mall traffic, as part of its strategy to maximize sales and improve store productivity and profitability."

Perfumania has a wholesale businesses, Parlux, which holds the exclusive distribution rights to President Trump’s fragrances Empire and Success, and Ivanka Trump’s fragrance. Parlux was not included in the filing. Neither was its Five Star Fragrance subsidiaries.

Perfumania employees will continue to receive salaries and benefits as normal, and the company's wholesale and retail customers will see no interruption in the flow of merchandise, according to the statement.

"There will be no changes to our license agreements and we will continue to uphold our obligations, and our valued vendors and suppliers will be paid in full,” stated Katz.

Perfumania's sales have been in decline. Revenue in the quarter ended April 29 fell 6.9% to $97.9 million, and its net loss widened to $9.7 million from $6.4 million a year earlier.

As of July 2017, Perfumania operated 230 corporate-owned retail stores as well as e-commerce, specializing in the sale of fragrances and related products across the United States, Puerto Rico, and the U.S. Virgin Islands.

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Trending Store: Lush, Vancouver

BY CSA STAFF

Other retailers may be going smaller, but Lush Cosmetics is bucking the trend.

Lush has unveiled its remodeled and expanded flagship in Vancouver. The 2,340-sq.-ft. store (1,000 sq. ft. larger than before) still retains Lush’ signature farmers’ market feel and has the same focus on fresh, handmade and all-natural products. But it now provide a more hands-on experience for customers. Among the features are a centrally-located skincare bar where customers can consult with store staff. A large sink for trying out such products as Lush’s famous bath bombs is located at the front of the store.

In line with Lush’s environmental commitment, the new space features reclaimed wood sourced from barns and industrial buildings across the Pacific Northwest. Eclectic one-of-a-kind vintage decor items, including lighting fixtures from a decommissioned freight ship, are featured throughout the store.

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Online or Offline? Report looks at future of 13 retail categories

BY Marianne Wilson

Restaurants, off-price retailers, dollar stores and furniture outlets are likely to remain firmly in the brick-and-mortar corner even with the continued rise of online shopping.

That is according to a new report by JLL, which explores the relationship between how shoppers value goods and the way 13 retail categories will be sold.

“We found that shoppers are motivated to go either in-store or shop online based on how much time they have, if they need to touch the goods and how much money are they willing to spend," said Naveen Jaggi, president of Retail Brokerage, JLL. "The varying degrees of these values against different product types will determine how resistant they are to consolidation and migration online.”

The report found that the strongest proponents for online shopping are time constraints and time savings, such as the ability to purchase 24/7 and avoid crowds and lines. Conversely, touch and the ability to see and try on items remains a key driver for in-store purchases.

JLL determined the future outlook for the following 13 retail product categories based on consumer opinion data, store closure statistics, same-store sales growth and e-commerce penetration.

Brick-and-Mortar

The future of these categories are likely to remain entrenched in brick-and-mortar due to their ability to create experiences and joy, or thin margins that can’t absorb shipping costs.

Restaurants: are fairly protected against e-commerce penetration. The social sharing and food experience diners crave will out-weigh the convenience.

Off-priced retailers: offer a treasure hunt to consumers who want heavily slashed prices, which is not easily replicated online. E-commerce penetration is less than one percent, while same-store sales growth was more than three percent.

Dollar stores: have universal attraction and are all about saving money across all income levels. E-commerce penetration is relatively non-existent, with only a few new online entrants like Brandless and Hollar, which offer flat-rate pricing. Dollar store same-store sales growth reached nearly 2%.

Furniture stores: let shoppers test out and visualize their merchandise before buying. While e-commerce penetration is nearly 20%, this category will straddle the line of online and in-store but remain heavily focused on brick-and-mortar showrooms.

Mixed Bag of Online + In-Store

Several categories will maintain a physical store presence, but up-scaled online offerings to cater to varied shopper needs.

Grocery: continues to inch into omnichannel with several players offering delivery and pick-up options. But, 93% of consumers still prefer to inspect their own produce. With fierce competition for market share we expect even more grocers to seamlessly integrate their offerings to meet the broadest swath of eaters.

Mass merchants: are popular among consumers due to their broad selection of goods, which kept same store sales neutral. E-commerce penetration is nearly five percent but set to grow as major players invest in their online platforms while maintaining their strong store presence.

Department stores: are feeling the heat from off-price and mass merchants, and are set to consolidate and shift sales online. E-commerce penetration reached more than 13 percent, but it’s likely that some players will maintain their vast portfolio of stores and up their game online.

Apparel concepts and fast fashion: represent a unique marketplace shift – there are many store closures due to bankruptcies, but conversely a growing number of openings. More than 75% of consumers prefer to buy their apparel in-store, but we expect that retailers will continue to sync their online and in-store experiences to provide a seamless experience for their shoppers.

Children’s goods and toy stores: saw a 16% jump in e-commerce sales as online retailers in this category offer huge time savings for parents. Sales in this category will increasingly shift online, but physical stores will be essential in crafting their brand experience.

Sporting goods: retailers have faced headwinds in the last year, with five top players filing for bankruptcy closing more than 200 locations. However, more than half of consumers still want to buy sporting goods in-store which will maintain the need for physical locations.

Bought and boxed online:

Consolidation and commoditization in these categories is migrating sales primarily online.

Office supply: retailers have consolidated due to competition both online and from mass merchant retailers. This sector is expected to continue moving sales online as physical stores offer minimal experience, time and savings.

Electronic stores: that don’t offer an experience or point of differentiation are having a rough time, as e-commerce penetration in this category is nearly 10%. Stores like Apple and Best Buy that have a high-touch consumer draw will remain the outliers moving forward.

Book stores: have moved online with the highest e-commerce penetration of any category reviewed, nearly 25%. Availability of books has become commoditized, yet there remains a few independent book stores who offer in-store experiences and food and beverage options, who will stay relevant.

“In the next three years, the retail categories to watch are the ones caught in the middle between having a physical space and shifting to e-commerce,” said James Cook, director of Retail Research, JLL. “Retailers in these five categories will have to both elevate their customer experiences in-store while also building a robust online strategy.”

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