FINANCE

Report: India eases investment for foreign retailers

BY Dan Berthiaume

New Delhi, India – The Indian government has eased its notoriously difficult restrictions on how foreign retailers must invest and source when doing business in the country. As reported by Reuters, foreign retailers will still have to source 30% of the products they sell locally, but now have five years to initially reach that goal and then have to meet it annually.

In addition, retailers will only have to put 50% of a mandatory initial $100 million investment into back-end infrastructure. Previously, foreign retailers had to put 50% of all money they invested in the country into back end infrastructure. Other rule changes make it easier for foreign retailers to select locations to do business and local suppliers.

The rule changes are primarily designed to attract foreign supermarket chains, who have been allowed to invest in India since September 2012 under strict and sometimes vague regulations. A Wal-Mart spokesperson told Reuters the company will study the new regulations. The report also indicates that national elections in May 2014 could elect a new government that would reverse the relaxed retail restrictions.

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FINANCE

Macy’s-J.C.Penney Martha Stewart suit nears end

BY Dan Berthiaume

New York – The long-running legal dispute over whether J.C. Penney has the right to sell Martha Stewart Living products appears to be nearing a conclusion. The Wall Street Journal reports that lawyers for Macy’s, which is suing Martha Stewart Living Omnimedia alleging a breach of contract giving Macy’s exclusive rights to sell Martha Stewart Living, Martha Stewart Living Omnimedia, and Penney, which may face fines and/or a ban on selling Martha Stewart Living products, all gave closing arguments in New York State Supreme Court yesterday.

The suit centers on whether Penney had the right to develop in-store Martha Stewart-branded boutiques it planned in 2011, but never built. Lawyers for Macy’s say the boutiques violated an exclusivity agreement, while layers for Martha Stewart Living and J.C. Penney say the contract Macy’s drafted for Martha Stewart Living was vague and poorly written, leaving room for other retailers to sell some products. New York State Supreme Court Justice Jeffrey Oing is expected to issue a decision soon.

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Brand Keys: Back-to-school sales to decline; Amazon and Wal-Mart strong

BY Dan Berthiaume

New York — Households with school-age children (pre-kindergarten through 12th grade) plan a big cut-back in back-to-school spending. Results of the 2013 Brand Keys Back to School Report Card show that there will be a year-over-year decrease of 10% in back-to-school spending, or an average spend this year of just more than $600 per household.

However, not every retailer will experience a decline in back-to-school profits. This year, the eight retailers showing the greatest increase in consumer intent-to-shop were:

1. Amazon
2. Wal-Mart
3. Target
4. Macy’s
5. Zappos
6. TJ Maxx / Kohl’s
7. Best Buy / Footlocker
8. Staples

Average anticipated spending in the major back-to-school categories are all down from last year. This includes:

  • Clothing: $301 (-29%)
  • Shoes: (athletic & dress) $110 (-23%)
  • Computers/Electronics/Tablets/Smartphones: $150 (-32%)
  • Supplies: $ 39 (-60%)
  • Books/Study Aids: $ 10 (-56%)

Looking at preferred retail categories for back-to-school spending, discount stores, online platforms and, secondarily, catalogs were the only categories to show any increase. Ninety-seven percent of households will shop at discount stores (up 4%), while 72% will shop online (up 34%), 28% will shop at department stores (down 44%), 25% will patronize office supply stores (down 55%), 30% will frequent specialty retailers (down 10%) and 35% will use catalogs (up 3%).

This year’s survey showed that 70% of consumers intend to wait until the middle-to-end of August period to shop just before schools open. The genesis of the shorter back-to-school purchase cycle is a consequence of increased levels of consumer expectations, according to Brand Keys analysis.

“Some of what we’re seeing reflects concerns of a slowing economic recovery, but the specific back-to-school figures also represent a shift in consumer buying habits,” said Robert Passikoff, Brand Keys founder and president. “Retailers may be running back-to-school ads right now, but they’ve been discounting and couponing for the past seven months. Educated consumers have already stockpiled supplies for the first day of school.”

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