Survey Shows Huge Fraudster E-Commerce Gains in 2007
Mountain View, Calif., According to the ninth-annual CyberSource survey of e-commerce fraud, merchants are spending more to contain fraud, and dollar losses from e-commerce fraud are continuing to grow. Fraudsters will divert approximately $3.6 billion from U.S. e-commerce in 2007, a 20% increase over 2006, said the report.
The findings also revealed that the percent of revenue merchants say they will lose to fraud remained stable over 2006 and 2007 (1.4% both years), but because e-commerce sales continue to grow, dollar losses to U.S. e-commerce grow proportionately.
“E-commerce in the U.S. today is a highly rewarding channel that is showing vigorous growth,” said Doug Schwegman, CyberSource director of customer and market intelligence. “But it’s also a channel with meaningful challenges posed by systematic fraud. Merchants did see their online sales grow approximately 20%, but the costs of managing fraud grew a nearly identical amount. The picture is one of merchants swimming harder against an accelerating current.”
Pottery Barn threading the needle between kids’ rooms and closets
SAN FRANCISCO —Browsing through the merchandise at Threads, one may think of a ‘shop around the corner’ children’s wear boutique. A closer look at the signage, however, reveals that the silk checkered dress and the cotton cashmere sweater are products of Pottery Barn Kids.
The Williams-Sonoma company has added yet another name to its repertoire in order to cushion the furniture segment. “My guess is that they are looking at this as an opportunity to branch out beyond home goods,” said Mary Brett Whitfield, senior vp of TNS Retail Forward, a retail consulting firm. “As we all know, home goods have come across some pretty hard times. Pottery Barn has capabilities in textiles that can be leveraged in apparel.”
The first Threads store opened this October, only a few doors down from Pottery Barn Kids, at Bellevue Square in Bellevue, Wash., a suburb of Seattle. Inside, apparel and some accessories for children 36 month and younger are set up in a space that gently reminds customers of an elegant children’s bedroom.
Picture frames adorn the walls and tables. Some actually match a collection of dresses. Baby shoes and teddy bears are among other items placed around the store. For a touch of individualization, the store offers a monogramming section.
A month later, on Nov.3, the store popped up on 76th Street and 2nd Avenue in New York City—the Upper East Side is also home to a Pottery Barn Kids. With 1,500 square feet to showcase the merchandise, Threads is bound to make an impression in the neighborhood. However, items like a wool coat with a velveteen collar and a christening dress, retailing at $88 and $128 respectively, are for well-endowed wallets. Most items run in the $30 to $60 range.
Clearly, Threads caters to a parent who believes that style starts very early in life. “There is a very different mentality of couples who are having kids today,” said Craig Johnson, president of Customer Growth Partners, retail and consumer consulting firm. “Now, parents are professionals who have delayed having kids until they are older and much higher up on the income curb. They have a BMW and they don’t want to buy stuff for their kid clipping coupons. They want more top of the line, spare no expense [items].”
Although the Threads stores are a new concept, Potterybarnkids.com and Pottery Barn Kids have been offering a limited selection of the merchandise found in the stores. Based on comments sited in previously published reports, the two venues are referred to as laboratory stores.
Although a few stores in the infant category is not going to offset difficulties faced in the home goods department, retailers are thinking more broadly about non-linear growth opportunities, added Whitfield.
Pottery Barn Kids, declined to comment on the strategy behind the Threads brand.
Meijer redefines upscale mass
GRAND RAPIDS, MICH. —Meijer’s foray into upscale food and beverages seems to be going well as the retailer develops a new experimental format that takes both assortment and merchandising to a new level. Meijer’s Cascade store, located in Grand Rapids near the company’s headquarters, recently opened after a refurbishing that provided a new European look and a fresh setting for gourmet edibles among other high-end consumables.
Cascade was once used as a test site when the supercenter chain was developing prototype ideas that lead to the establishment of Meijer’s company-standard Rockford, Mich., unit. Once again, it is the site of an experiment, the ends of which haven’t yet been determined. Meijer spokeswoman Stacie Behler said the work done on the Cascade unit has allowed Meijer to test a variety of ideas that could be applicable as the company expands in its market area, which consists of Michigan, Ohio, Indiana, Illinois and Kentucky.
Just a few months ago, Meijer did a remodel of the company’s Alpine store, also in the Grand Rapids area. That store, too, was a format used to evaluate new merchandising ideas in preparation for the opening of the Rockford prototype. In the Alpine case, however, the store design developed for Rockford has been updated to create a new standard for Meijer remodels going forward. As Rockford became the standard for new stores, Alpine became the standard for new remodels with an emphasis on ease of shopping, lower gondolas, clearer sight lines and simpler signage.
Cascade, though, was a different case. Meijer determined that the Cascade neighborhood market area demanded a more sophisticated merchandising approach and the remodel provided an opportunity to see where the company could take its selling strategy at a time when food retailers are exploring just how upscale consumers want their shopping experience to become.
“What we did at Meijer Cascade is create a new offering for our customers,” Behler said. “Both Alpine and Cascade were major remodels, but with different key objectives. Meijer Cascade is everything shoppers have been getting at Meijer Alpine, but also what they haven’t been able to get at Meijer before, such as expanded prime meat, new types of deli offerings, a patisserie and a wine steward on staff.”
Among the vehicles Meijer used to promote the Cascade store—and alert consumers market-wide about what it might have in store for them—was the company’s weekly e-mail newsletter. In it, Meijer presented the store as the product of travels across the United States and Europe “to find the best of the best in fresh and grocery,” which it brought back for use in the Cascade unit. The e-mail added, “Now more than ever, the real thrill in shopping Meijer is the food selection! We’ve drastically expanded the areas of produce, meat, seafood and deli to accommodate healthier lifestyles and organic food choices.” It further stated that new cheese, wine and beer selections are among the largest in the state of Michigan.
Another element unique to Meijer Cascade is the new cooking demonstration center. Located between the produce and deli departments, the center features cooking showcases, cuisine tips and tricks developed by culinary experts, as well as extolling the proper use of international spices and unique items carried in the store. Recipes are designed for modern lifestyles, so they are “quick and easy, yet use gourmet fresh and wholesome ingredients,” Meijer stated.
As in Meijer stores of the past, food occupies one wing of the store, but the design includes elements that demonstrate it is in the forefront of the company’s design thinking. Shoppers enter the food wing on an angle to find produce on the left along the wall, with meat, dairy, beverage and beer and liquor departments following along the perimeter of the store from front to rear. To the right as shoppers enter—and toward the store’s center—is bakery and deli surrounding a central meals-to-go department. Bread, cheese, sweets and Purple Cow eateries are located just behind. Frozen foods and grocery follow. Adjacent to the main food sections, from the back wall through the strip of departments just across the aisle, are household cleaners, pets, kitchenware and the baby center. Also further to the front, but still across the aisle from food, are candy and floral. Starbucks stands at the food-wing entrance.
Behler said Meijer has no definite plans yet for exactly what it will do with the new ideas being tried out in the Cascade store. “We’re going to watch now and see how it goes,” she said. “We’ll get feedback, take learnings and then take the next step.”
After all, Meijer always seems to have new ideas it is anxious to evaluate.