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Survey: Consumers prefer traditional grocery stores

BY Dan Berthiaume

New York — More than eight in 10 (83%) consumers prefer shopping in traditional grocery stores. However, a new survey of more than 1,000 consumers from PwC, “Front of the Line: How Grocers Can Get Ahead for the Future,” indicates more than half of the shoppers surveyed complained of long lines and crowded stores.

Only 1% of survey respondents consider online shopping their primary way of getting groceries, though 92% reported having the option to online grocery shop. Based on survey results, PwC makes the following recommendations to grocery retailers:

  • Tailor brick-and-mortar stores. Understanding the needs of those closest to their stores, grocers can customize to customers’ current and future preferences, such as implementing wider aisles, additional parking, easy-to-reach products, and a smoother check-out process.
  • Personalize marketing strategies. Stores should act as gatekeepers for consumers, labeling products clearly with their sustainable qualities, allowing for a more intimate connection with the product. Additionally, consumers value community and expect their local grocer to participate in community events, support area businesses and help preserve the environment through sustainable business practices, all of which can be marketed throughout the store.
  • Empower staff. Ongoing staff training, including arming staff with in-depth product and-service knowledge is critical. Employees should be prepared to readily offer customers suggestions aligned to their lifestyles, budgets and health goals. This can differentiate a store as a source of knowledge and build more personal and profitable relationships with shoppers.
  • Transform technology. With smartphones on the rise among U.S. adults, grocery retailers should consider in-store information kiosks, in-aisle tablets and robust mobile applications for customers to readily access the information they need, from ingredients lists to food origins and nutritional facts.
  • Reinvent loyalty programs. Robust loyalty programs can help grocers keep future customers spending in their store. Also, offering customer loyalty points for purchasing promotional items and healthy foods in the store can help push new products at higher price points, increase sales and boost a store’s reputation as a health-conscious grocer.

“While online channels may not become a common way to buy groceries in the near future, technology will still play a major role in the evolving grocery experience,” said Sabina Saksena, managing director in PwC’s U.S. retail & consumer practice. “Shoppers expect information at their fingertips and, according to our survey, more than half of respondents want to integrate their mobile devices into their future grocery experience. Grocers that innovate and build on their digital channels to meet this demand will be most successful.”

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Off price is on target at Burlington

BY CSA STAFF

Burlington Stores president and CEO Tom Kingsbury has the operator of 523 stores headed in the right direction with an off-price model that is delivering results and poised for expansion.

The company plans to open 25 new stores during the remainder of the year after posting first quarter results that saw sales increase 5.9% to $1.13 billion and gross margins expanded to 38.1% of sales from 37.3% the prior year. The company reported profits adjusted to exclude some non-recurring expenses and benefits of $18.6 million, or 25 cents a share, during the quarter ended May 3, compared to $6.1 million, or eight cents a share the prior year.

“We are extremely pleased with our solid results in the first quarter as we continued to build upon our momentum from 2013 with both strong sales and bottom line performance,” Kingsbury said. “We achieved a comparable store sales increase of 2.7%, on top of a 3.4% increase last year, which we believe is a direct result of the continued improvement in the execution of our off-price model. We remain focused on delivering great value, brands and fresh product to our customers every day as well as executing our growth initiatives to improve comparable store sales, expand our retail store base and enhance our operating margins.”

The company opened two new stores during the quarter to end the period with 523 units. The addition of 25 more stores during the remainder of the year has the company expecting full year sales to increase between 5.8% and 6.8% and same store sales to grow between 2% and 3%.

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Francesca’s profit drops 21%, 85 new stores planned

BY Dan Berthiaume

Houston — Francesca’s Holdings Corp. on Tuesday reported a 21% drop in profit during the first quarter of fiscal 2014, to $8.6 million from $10.9 million. Harsh winter weather and higher expenses related to its boutique business contributed to the decline in net income. The company also reduced its annual outlook.

Francesca’s plans to open 85 new stores during fiscal 2014, including 16 in the second quarter.

Net sales rose 8% to $85.4 million from $79 million, spurred by the opening of 62 new stores. Same-store sales decreased 7%. Francesca’s plans to aggressively reduce slow-moving inventory during the fiscal year, which caused it to reduce its guidance for the second quarter and full year.

For the second quarter, net sales are expected to be between $98 million and $103 million assuming a mid to low single digit decrease in same-store sales, including the direct-to-consumer business. For the full year, net sales are now expected to be in the range of $387 million to $399 million assuming a low single digit decrease to flat change in same-store sales, including the direct-to-consumer business

"Total sales growth of 8% to $85.4 million was driven by the strength of our new and non-comparable boutique sales and direct-to-consumer initiatives, contributing to incremental year over year growth of 16%,” said Neill P. Davis, president and CEO of Francesca’s. “Our new boutiques continue to open strong and are meeting our expectations of payback periods of less than one year. Declining sales within our comparable boutiques partially offset these gains and were a reflection of decreases in boutique transactions, which has limited the effectiveness of our merchandise clearance strategies through existing channels."

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