Monthly Archives: February 2017

Shopping binge brings Black Friday hangover

Eager to entice cautious consumers, especially with six fewer shopping days this year than in 2012, many retailers launched sales on Thursday’s U.S. holiday, traditionally a day for family, friends and football games. Even Macy’s Inc’s flagship store in New York City opened then for the first time in its 155-year history, at 8 p.m.

Some U.S. shoppers played along, hitting the Internet and stores on Thanksgiving. But by late Friday morning, foot traffic looked a lot more like on a regular Saturday than the typical Black Friday frenzy that kicks off the holiday season.

“It’s a lot less than I thought,” said Alison Goodwin, from Horsham, Pennsylvania, who ventured to an area mall on Friday seeking gifts and maybe something for herself.

“It’s like any weekend in December,” Goodwin said.

While mall traffic appeared slower than last year, overall Black Friday online sales as of noon EST were up more than 7 percent from a year ago, according to IBM Digital Analytics Benchmark. That came on top of the 19.7 percent increase on Thanksgiving Day, the firm said.

Wal-Mart Stores Inc U.S. Chief Executive Bill Simon said Thanksgiving visits to stores of the largest U.S. retailer surpassed last year’s 22 million mark, and a swarm of online shoppers temporarily crashed its online site.

David Berman, founder of Durban Capital, a New York hedge fund that specializes in retail and consumer stocks, said U.S. shopping habits have permanently shifted with the exponential rise in online shopping, thanks largely to smart devices, notably Apple Inc’s top-selling iPad.

Sales of big-ticket items like smartphones have helped mask weaknesses in traditional retail, he noted.

“By our calculations, half of U.S. publicly held retailer sales growth is coming from SAA (Samsung, Apple and Amazon),” said Berman.

TOOTH AND NAIL

Retailers often record the majority of their annual sales during the end-of-year holiday shopping season, and rely on discounts and marketing blitzes to try and grab a slice of spending estimated at some $600 billion annually.

The battle for the consumer dollar has been particularly intense in a year when taxes have increased, unemployment has remained stubbornly high, and confidence has taken a hit from a recent government shutdown and uncertainty over the introduction of President Barack Obama’s healthcare reforms.

Offsetting those negatives has been the wealth impact of a rise in home prices and a rallying stock market, though those are more likely to help the luxury end of retailing.

Even Apple is not immune to this year’s heightened competition.

A new Ipsos/Reuters poll found that, among consumers thinking of buying a tablet, 21 percent favored Amazon Inc’s Kindle Fire, followed by 19 percent for Apple’s iPad and 17 percent for Samsung Electronics Co Ltd’s Galaxy.

In a rare gesture from the iPad-maker and a nod to intense competition from Samsung, tech giants like Microsoft Corp and Google Inc, and online retailer Amazon, Apple is offering gift cards worth up to $75 for every purchase on its website.

Shoppers lured to a Target store in Bensalem, Pennsylvania, by an even better iPad Air deal (a $100 Target gift card along with the $479 device) arrived too late on Friday morning, as the store had sold out.

Reuters reporters in several U.S. cities found shoppers cherry-picking discounted flat-screen televisions and other door busters without adding higher-margin items to their purchases – behavior that could bite into retail profits.

Overall, Berman said, “sales will eventually be OK but margins won’t.”

EBay Inc was the second best performer in the Standard & Poor’s 500 index on Friday, gaining 2.5 percent, and Best Buy was third, rising 2.4 percent. Apple and Amazon were also in the top 10 on Friday, when trading closed early.

Kohl’s Corp and Nordstrom Inc fell 1.1 percent and 0.8 percent, respectively.

Shopping Blackhawks

A short time after the Stars acquired Jason Spezza in a blockbuster trade Tuesday, the Blues opened their pocketbook to sign the coveted Paul Stastny to a huge contract and the Avalanchescooped up veteran sniper Jarome Iginla. The Wild followed by bringing Thomas Vanek into the fold and the Jets even got into the act when they added Mathieu Perreault to bolster their center position.

All the while, the Hawks were relatively quiet, only re-signing veteran center Peter Regin to a one-year, $650,000 contract.

Just when it seemed the Hawks would be content entering the 2014-15 season with Andrew Shaw, who is better suited as a winger, or unproven prospect Teuvo Teravainen as their second-line center, general manager Stan Bowman landed a bigger fish with a late-afternoon signing of veteran Brad Richards to a one-year, $2 million contract.

Just like that, the Hawks had a legitimate No. 2 center.

“It’s a big moment for us to be able to add someone of (Richards’) caliber as a hockey player and as an individual,” Bowman said. “He brings so many things to the table for us. There are a lot of options for our coaching staff now. We’ve certainly been searching for someone that is an experienced center in the NHL. He’s played a lot of years and done a lot of incredible things.”

Richards, 34, was a key member of the Rangers team that reached the Stanley Cup Final with 20 goals and 31 assists in 82 regular-season games. New York used its final compliance buyout on the remainder of Richards’ nine-year, $60 million contract signed in ’11 to make him an unrestricted free agent, and the Hawks pounced though they were offering only a one-year, cut-rate deal.

“If I was going to go to Chicago, we had to work out something in this fashion,” Richards said. “I was very flexible. I’m coming in because I’m pretty confident that I can still play a lot of hockey in this league. I saw a great opportunity to play on a great team and fill a role. If it’s one year, that’s fine. Hopefully, we make it work and who knows what can happen down the road?”

Joining a Hawks team loaded with offensive talent and a chance to center a line with Patrick Kane was a big lure for Richards.

“When you look at the opportunity to play here it’s pretty exciting because you know that if you’re playing center on the top two lines you’re playing with a great player — probably two great players,” Richards said. “Patrick Kane is one of the most explosive players in the league. When you get a chance to maybe team up with one of those players on a line … it makes you feel pretty excited. I can’t wait to get to work and try to make it a great experience for everybody.”

The deal appears to be a bargain for the Hawks, and that’s the only way they were going to bring in a player who can assume a big role. Factoring in Teravainen making the roster after a summer spent in Finland developing, the Richards signing puts the Hawks about $2.2 million over the NHL’s $69 million upper limit to the salary cap. Bowman will be forced to make a move at some point to clear cap space, but he said that is not a concern.

Business for Indiana fireworks shops

In the week before the nation’s birthday, Panos worked 8 a.m. to midnight, subsisting on Aurelio’s Pizza ordered via speed dial. As manager, she oversees 15 workers who help customers pick from a selection that ranges from a $6 box of bottle rockets to the $700, 6-foot-tall “Godfather” combo pack. Every other day, a distributor stopped by to replenish supplies.

“People say, ‘You don’t get to do fireworks?’ No, this is my fireworks,” Panos said, gesturing toward the shop full of customers and colorful bundles of explosives.

Uncle Sam is one of about a dozen fireworks shops packed along Indiana’s border like a football team’s offensive line. In the weeks before July 4, they compete for the business of hordes of Chicagoland residents driving across the state line to escape Illinois’ ban on consumer fireworks.

The stakes are high. Greg Kaplan, owner of Krazy Kaplan’s Fireworks, said about 75 percent of his sales come from Illinois.

And a huge portion of the stores’ revenues come from sales leading up to July 4. Uncle Sam makes 85 percent of its sales from Memorial Day to July 4, Panos said, while Krazy Kaplan’s takes in 93 to 95 percent in that time. During the Fourth of July season, Kaplan supplements his year-round staff of about 15 full-time workers with about 250 part-timers.

Indiana’s fireworks stores got a boost in 2006 when the state loosened regulations, Panos said. Until then, customers could only shop at the stores if they showed an Indiana driver’s license and signed a contract saying they wouldn’t explode the devices in the state.

The looser laws have caused a proliferation of fireworks stores in recent years. The increasing popularity of fireworks also has helped. From 1998 to 2013, sales of consumer fireworks nationwide rose to $662 million from $284 million, according to the American Pyrotechnics Association.

Julie Heckman, the association’s executive director, attributed the growth to several factors, including a rise in patriotism after the Sept. 11 attacks and the recession, which led families to put on backyard fireworks displays rather than go on expensive trips.

With more stores, there’s more competition and slimmer profit margins, Kaplan said. At a maximum, he sells his products at two or three times the price he paid for them, and he has a lot of overhead from his buildings and staff, he said.

To catch Illinoisans’ business, store owners say it’s crucial to be as close to the border as possible. Uncle Sam sits in a former railroad station about 20 feet from the state line, but it’s not as close as nearby Discount Fireworks, on State Line Road. Kaplan’s main store is 3 miles from the border but visible from Interstate 94

“It’s location, location, location,” said Kaplan, who started selling fireworks from his basement in 1985 and now has seven Krazy Kaplan’s locations. “The closer to the state line, the better your business is going to be.”

Kaplan spends 6 to 10 percent of his store’s budget on advertising, including more than 250 billboards featuring a dynamite-holding, straitjacket-wearing mascot he drew himself 25 years ago.

Khaled Kiswani, who owns a small fireworks shop, American Independence Fireworks, in Hammond, said larger rivals have squeezed sales. When he opened 12 years ago, his fireworks sales were about four or five times what they are now, he said. He’s coped by diversifying — he also services computers and sells insurance and cigarettes. Fireworks are less than 10 percent of his sales.

“We do whatever it takes,” Kiswani said.

Illinois bans nearly all consumer fireworks, except small “novelty items.”

Meanwhile, 42 states allow all consumer fireworks permitted under federal law, including bottle rockets and Roman candles, according to the pyrotechnics association. Seven have loosened their laws since 2010, in large part to increase tax revenue, Heckman said.

“It’s really difficult and challenging to enforce this, and a lot of states saw how their neighboring states were generating a lot of tax revenue,” she said. “They were tired of seeing the money cross state lines.”

Queen Sister, who is from Chicago and bought $100 worth of fireworks Wednesday at Uncle Sam, said she would set them off at a campground near Indianapolis.

“I think it’s sad that during this celebration of independence we have to cross the state line to feel free,” said Sister, who said she has shopped at Uncle Sam for about 20 years.

Daniel Paz said he planned to take the Roman candles he bought Wednesday at Krazy Kaplan’s back to his Chicago neighborhood of Brighton Park. He said he plans to detonate them in an alley behind his house. To prevent fires, he’ll spray the alley with a hose beforehand.

Still, accidents happen. The U.S. Consumer Product Safety Commission estimates that 8,700 injuries caused by fireworks were treated in emergency rooms in 2012, and the National Fire Protection Association estimates that 17,800 fires were caused by fireworks in 2011. During last year’s Fourth of July, a Chicago woman lost part of her leg to stray illegal fireworks in West Lawn Park.

Though they come to northwest Indiana seeking fireworks, Illinois residents sometimes linger for a burger. Tom Markovich, who owns Schoop’s Hamburgers in Whiting, said his sales go up 15 to 18 percent in the weeks before July 4, as customers from a nearby Krazy Kaplan’s come into his store for a meal.

There are downsides, though: Last year, someone tried to set off fireworks in the parking lot behind the restaurant.

 

Shop at work

It’s this kind of negative attitude that Daniel Wiebracht thrives on. Wiebracht is a “professional clothier” who counts Bentler among his devoted clients.

Wiebracht’s job is to keep you out of stores. He is the store. Wiebracht comes to your office, assesses your needs, shows you the stuff, takes your measurements, orders the clothes — down to the socks and boxer shorts if that’s what you want — and then delivers it all, waits for you to try it on and will take it back for further alterations if you don’t like the fit. “It’s the best deal ever,” said Bentler.

I’d always assumed that this was the kind of service that Michael Jordan, Donald Trump and Tom Cruise employ to outfit themselves for their busy lives as zillionaires. Many menswear shops will offer personal service if you spend a great deal of money at their stores.

But I’ve recently learned that the same thing is available to regular people with less astronomical incomes, retailphobics who just want to avoid shopping in stores but either don’t trust their own judgment or want the personal attention you can’t get shopping online.

“Our ready-made suits start at $359 and you get the same service as someone who is spending $4,000 on a suit,” said Wiebracht, a personable, well-dressed 23-year-old salesman. He works for a company called Tom James, a privately owned firm founded in Nashville in 1966 that does not advertise and relies on word of mouth to acquire its clients. (The company also does women’s business suits, but the vast majority of its clients are male.)

With 23 sales employees, the Tom James Chicago office is the largest of the firm’s 182 worldwide offices, a strong indicator that Chicago men are busier, lazier, more store averse — or all three — than their counterparts in other big cities.

The company makes many of its own fabrics and manufactures suits for its label as well as for many department store labels, claiming the title of “the world’s largest manufacturer and retailer of custom clothing.”

I met Dan Wiebracht and his supervisor, Eric Kean, 29, in the lobby of the Loop office building at 70 W. Madison St. where they were about to deliver a charcoal suit to Bentler — his first custom-made garment. When we arrived at the front desk of Smith Barney on the 51st floor, Wiebracht seemed to know everyone, even though he has only worked for the company since January. “Hi Emma,” he greeted the receptionist. “How you doing?”

Tom James sales territory is divvied up by building, which is why so many of the Smith Barney guys are Wiebracht clients. “Ryan, looking great!” Wiebracht greeted one man in shirt sleeves. “That’s one of my shirts,” Wiebracht boasted. “And my ties.

“The idea is to keep our client out of the stores,” explained Kean. This is why Tom James will even alter old suits bought somewhere else, just to prevent a client from the temptation of spending money in a store.

“If he goes to Brooks Brothers to tailor a suit, he might pick up a couple shirts — and we don’t want that,” said Kean. “The idea is to be a full-service clothier.”

In fact, that’s almost — but not entirely — true. You can’t buy exercise clothing or gym shoes from Tom James, and if you want underwear, it will cost you: boxers start at $19.75; T-shirts are $48 and boxer-briefs go for $42.

But custom-made suits start at $599 (and can cost as much as $13,999) with more than 500 fabrics to chose from. Custom shirts (250 fabrics) start at $79 (minimum of four) with ready-made starting at $59. Various sales can lower those prices.

“It’s really easy,” said Bentler. “They helped me catalog what I have and what I needed and basically fill holes in my wardrobe.”

On this visit, Bentler first tried on an old Brooks Brothers suit. Wiebracht charged $75 to alter it after Bentler lost 60 pounds (“I rediscovered exercise”) and dropped 10 inches off his waist. Then came the custom suit. “Great, great job,” said Bentler, buttoning up his new jacket.

That settled, Wiebracht pulled out a handful of handsome ties to go with the new suit. Bentler chose two (at $65 per) and declined the pitch for some custom shirts although he did seek some shirt advice. “What’s the deal with striping?” he asked.

Answer: Kean said striped suits are fine with both a striped shirt and a striped tie as long as the stripes in all three are different widths.

After a first visit that can last an hour (wardrobe evaluation is free and they’ll even come to your house if you want), most subsequent meetings take less than 15 minutes. “I’ve got clients who are, ‘All right, you’ve got two minutes!'” said Kean.