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Study: Dollar stores may benefit from increased payroll tax

BY Katherine Boccaccio

Chicago — A new Symphony Consulting survey found that the new 2% increase in payroll tax is causing a major shopping behavioral change among lower-income families.

A division of SymphonyIRI Group, Symphony Consulting revealed Monday that dollar stores may be the biggest winners in the battle for the lower-income spenders’ purchasing power.

“To date, shifts in shopper behavior are subtle, but patterns are emerging that deserve close and ongoing scrutiny,” said managing director of Symphony Consulting, Dr. Krishnakumar Davey. “Our initial analysis offers highly current data on shopper behavior that will form the basis for ongoing research into the impact of the payroll tax increase.”

The study found that while total dollar sales in food and beverages were nearly the same from the end of 2012 to the start of 2013, discretionary spending was down, private label spending was up and dollar stores were gaining a greater share of consumer spend, all possible outcomes of the higher tax.

The growth rate among middle-income shoppers decreased slightly (40 basis points). There was no significant change among high-income shoppers. Contradicting expectations, dollar sales growth among low-income shoppers increased, albeit by a small percentage (50 basis points). This could be attributed to increased in-home consumption versus eating out.

Dollar sales growth of several categories exhibited declines, including in snacks (down 230 basis points) and beverages, such as coffee and tea (2-110 basis points). Cooking ingredients and beverages, such as juices and drinks, on the other hand, showed growth. Despite across-the-board over-performance in the first four weeks of 2013, discretionary categories lagged total food and beverage in the last week of January 2013, with dollar sales growth of 1.9% compared with 2.5% for the category as a whole in the same period. This could be due to the end of month effect when households optimized their grocery spending as a result of shrinking wallets.

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Amazon, QVC, Apple lead in mobile satisfaction; Target among most improved

BY Katherine Boccaccio

Ann Arbor, Mich. — Amazon has extended its domination of e-retail into the mobile platform, according to the ForeSee Mobile Satisfaction Index: Holiday Retail Edition, released on Tuesday by ForeSee.

In a survey of more than 6,200 consumers collected during the peak holiday shopping season between Thanksgiving and Christmas, Amazon scored highest among 25 of the top mobile commerce companies.

On the 100-point scale, Amazon topped the list at 85, with Apple (83), and QVC (83) close behind. Rounding out the top five are NewEgg (80) and Victoria’s Secret (80). The retailers with the biggest improvements over time include Target (+5), Victoria’s Secret (+5), and Barnes & Noble (+4).

"The mobile platform is maturing much faster than the PC platform,” said Larry Freed, president and CEO, ForeSee. “We see it in the rate of consumer adoption, and fortunately we are seeing it in how well the top retailers are adapting to multichannel consumers who are embracing yet another powerful tool.”

The study investigated the role and impact of mobile on showrooming, revealing that while nearly 70% of survey respondents reported using a mobile phone while in a retail store during the 2012 holiday season, most of those consumers (62%) accessed that store’s site or app.

But the competitive threat of showrooming still exists, as 37% reported accessing a competitor’s site or app.

Other key findings include:

  • At the aggregate level, customers rate their traditional web experiences (79) very similarly to their mobile experiences (78). But at the individual company level, satisfaction varies between retailers’ websites and mobile sites.
  • More than half of respondents visited the company’s website as their first step in shopping experience (57%) and were highly satisfied with that interaction (80).
  • Only 6% reported visiting the company’s website, mobile site, or app via mobile phone as their first step while shopping, but they are a very satisfied group (80).
  • Customers are more satisfied with their mobile experience for retailers than with financial services. In a similar study of financial services mobile experience conducted in November, the average satisfaction score for the largest financial services companies’ mobile sites and apps scored 77, trailing retailers, which scored 78 in this report.

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S.Hance says:
Mar-12-2013 06:11 am

Apple will always be a great brand in terms of moobile phones and ipads,tablets and etc. They still got the heart of the other people to stick on their brand. - Peter F. Spittler

S.Hance says:
Mar-12-2013 06:11 am

Apple will always be a great brand in terms of moobile phones and ipads,tablets and etc. They still got the heart of the other people to stick on their brand. - Peter F. Spittler

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OfficeMax gets $129M in proceeds from investment

BY Staff Writer

Naperville, Ill. — OfficeMax has received approximately $129 million in cash proceeds related to its October 2004 investment in Boise Cascade Holdings, LLC. Since 2004, OfficeMax has held two classes of securities in BCH, non-voting equity securities ("Series A Units") and voting equity securities ("Series B Units").

BCH will redeem all of the Series A Units held by OfficeMax for $112 million, equal to the original investment amount of $66 million plus $46 million of total accrued dividends. As previously disclosed, OfficeMax had been recording income earned from the 8% annual dividend yield on the Series A Units as a reduction of operating, selling and general and administrative expenses in its Corporate & Other segment. This dividend income ceased upon completion of the redemption of the Series A Units on Feb. 12.

OfficeMax also continues to hold a 20.4% ownership interest in the Series B Units of BCH, which do not accrue any dividend. OfficeMax has accounted for the Series B Units under the cost method as a $109 million investment on its consolidated balance sheet since October 2004. BCH has declared a distribution of approximately $85 million payable on Feb. 12 to the holders of its Series B Units, of which OfficeMax’s share of proceeds is approximately $17 million. This distribution on the Series B Units will be recognized as income by OfficeMax and will not reduce the $109 million investment amount.

Ravi Saligram, president and CEO of OfficeMax said, "We’re very pleased to have monetized a portion of this non-core Boise asset. Together with the removal of the Lehman-backed timber notes and reducing the unfunded pension liability, we have made great strides in optimizing our balance sheet over the past several months. We are considering the best way to utilize these proceeds to maximize shareholder value."

Following the redemption of the Series A Units and the distribution on the Series B Units, BCH will continue to hold approximately $28 million of cash and own 29,700,000 common shares of Boise Cascade Company (BCC), which completed its initial public stock offering today.

Bruce Besanko, EVP, CFO and chief administrative officer of OfficeMax said, "Following the receipt of these proceeds, we’ll retain our BCH Series B Units which represent an indirect ownership interest of approximately 6 million shares or approximately 14% of the common equity of Boise Cascade Company."

OfficeMax has carried a $180 million deferred book gain on its consolidated balance sheet related to its investment in BCH in October 2004. The redemption of the Series A Units is expected to trigger recognition of a pre-tax operating gain of approximately $68 million representing the portion of the deferred gain attributable to the Series A Units. The remaining $112 million of deferred gain attributable to the Series B Units will remain on OfficeMax’s consolidated balance sheet until such time as the Series B Units are sold or redeemed. OfficeMax does not expect it will be required to pay any cash taxes as a result of the redemption of the Series A Units and the distribution on the Series B Units.

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