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 PLUNKETT’S
RETAIL INDUSTRY
TRENDS & STATISTICS
2009

(Summary)

Jack W. Plunkett

Published by:
Plunkett Research, Ltd., Houston, Texas
www.plunkettresearch.com
Copyright © 2008 by Plunkett Research, Ltd.

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 PLUNKETT'S
RETAIL INDUSTRY TRENDS & STATISTICS
2009
CONTENTS
Chapter 1: Major Trends Affecting the Retail Industry 1
1) Introduction to the Retail Industry 1
2) Wal-Mart Dominates as the World’s Biggest Retailer (and now America’s Biggest Grocer) 3
3) Department Stores have Evolved into Giant Apparel, Cosmetics and Accessories Stores 5
4) Name Changes, Buyouts and Consolidation Alter the Department Store Landscape 7
5) Discounting and Discount Stores Evolve 8
6) Category-Killers and Big Box Retailers Struggle to Keep Up With Discounters 9
7) Sophistication and Success for Direct Marketers 10
8) Rise of Showcase Stores and Super-Merchandisers 13
9) Bricks, Clicks and Catalogs Create Synergies While Online Sales Growth Slows 14
10) Location Based Services (LBS) and Advertising on Cellphones Take Hold 15
11) Retail Technologies Leap Ahead 17
12) RFID Drives Inventory Management Evolution 18
13) Self Service Retail and Travel Technologies Take Off 20
14) Retailers Find New Markets in China While India’s Retail Industry Sees Lukewarm Growth/Russia
Attracts Retail Interest 21
15) Lifestyle Centers and Super-Regional Malls Falter/Mall Glut Anticipated 23
16) Entertainment-Based Retailing, including Power Towns 25
17) Shopping Center Tenants Face Slow Sales/Store Closings force Landlords to Become Creative 25
18) Malls Morph to Stay Afloat 26
19) Luxury Item Sales Slow 27
20) LOHAS- Socially Conscious Consumers Create Challenges and Opportunities for Advertisers and
Marketers 27
21) How to Interpret Reports of Retail Sales 28
Chapter 2: Retail Industry Statistics 30
U.S. Retail Industry Overview 31
Exports, General Imports & Trade Balance in Goods, U.S.: 1980-2nd Quarter 2008 32
Total U.S. Retail Sales & Annual Percent Change: 1992-2008 33
Retail & Food Services Sales by Kind of Business, U.S.: 2002-August 2008 34
Retail & Food Services Sales by Kind of Business, U.S.: Monthly, through August 2008 36
Estimated Quarterly U.S. Retail Sales, Total & E-Commerce: 1st Quarter 2001-2nd Quarter 2008 38
Total U.S. Disposable Income, Expenditures & Gross Domestic & National Product Per Capita:
1960-2008 39
Average Annual U.S. Household Expenditures: 2001-2007 40
Distribution of Total U.S. Annual Household Expenditures, by Major Category: 2008 (Estimates) 41
Resident Population Estimates by Age, U.S.: 2001-2010 42
Twenty Largest Shopping Centers, U.S.: November 2007 43
Top 20 Websites, U.S.: October 2008 44
Top 20 Retail Websites, U.S.: November 1, 2008 45
Employment in the Retail Industry, U.S.: 2002-September 2008 46
Plunkett Research, Ltd.
Chapter 1
MAJOR TRENDS AFFECTING
THE RETAIL INDUSTRY
Major Trends Affecting the Retail Industry
1) Introduction to the Retail Industry
2) Wal-Mart Dominates as the World’s Biggest
Retailer (and now America’s Biggest Grocer)
3) Department Stores have Evolved into Giant
Apparel, Cosmetics and Accessories Stores
4) Name Changes, Buyouts and Consolidation
Alter the Department Store Landscape
5) Discounting and Discount Stores Evolve
6) Category-Killers and Big Box Retailers
Struggle to Keep Up With Discounters
7) Sophistication and Success for Direct
Marketers
8) Rise of Showcase Stores and Super-
Merchandisers
9) Bricks, Clicks and Catalogs Create Synergies
While Online Sales Growth Slows
10) Location Based Services (LBS) and
Advertising on Cellphones Take Hold
11) Retail Technologies Leap Ahead
12) RFID Drives Inventory Management
Evolution
13) Self Service Retail and Travel Technologies
Take Off
14) Retailers Find New Markets in China While
India’s Retail Industry Sees Lukewarm
Growth/Russia Attracts Retail Interest
15) Lifestyle Centers and Super-Regional Malls
Falter/Mall Glut Anticipated
16) Entertainment-Based Retailing, including
Power Towns
www.plunkettresearch.com
17) Shopping Center Tenants Face Slow
Sales/Store Closings force Landlords to
Become Creative
18) Malls Morph to Stay Afloat
19) Luxury Item Sales Slow
20) LOHAS- Socially Conscious Consumers
Create Challenges and Opportunities for
Advertisers and Marketers
21) How to Interpret Reports of Retail Sales
1) Introduction to the Retail Industry
Retail, with more than 15 million employees in
America alone, is one of the largest industries in the
world by number of businesses and number of
employees. Retail sales in the U.S. (total retail sales
include the categories of gasoline, automobiles, and
food service, as well as merchandise) will show a
slight decrease in 2008, totaling about $4.400 trillion
according to Plunkett Research estimates. Sales were
$4.482 trillion in 2007, up from $4.307 in 2006.
Retails sales in 2007-2008 were driven partly by
higher gasoline costs as well as by deep price
discounting during the holiday seasons by mass
merchandisers. Meanwhile, automobile sales saw a
disastrous drop off in 2008, with total sales of cars
and light trucks for the year at about 13.2 million,
down from about 16.5 million in 2007 and 17.5
million at the peak in 2005. Car sales in 2009 could
decline further.
Retail sales in 2007-2008 were affected by
several factors:
1) Sales of both new and existing homes slowed
dramatically. While homes themselves are not
counted in retail sales figures, buyers of these
Plunkett Research, Ltd.
homes are a significant force at retail stores
where they purchase furniture, appliances, linens,
consumer electronics and garden supplies to fill
up their new residences. Likewise, builders and
remodelers are a strong factor in retail sales,
when they purchase supplies, materials,
appliances, etc. at retail outlets. The slowdown
in building and remodeling led to reduced sales at
home centers such as Home Depot.
2) Another factor was home mortgages: From 1998
through part of 2006, Americans were
refinancing their existing home mortgages in
record-setting numbers. In doing so, they took
advantage of very low mortgage interest rates
and very easy lending requirements. Many
homeowners also increased the balance on their
mortgages, taking advantage of rapidly rising
home values that increased their borrowing
power. Borrowing against home equity lines of
credit was also high, and much of that money
went to retail purchases. Homeowners were
spending this cash windfall freely, driving up
retail sales in many categories. However, by late
2006, the slowing real estate market, followed by
tougher lending standards, meant that the party
was over. This definitely had a negative effect
on retail sales.
3) Another major negative impact was the growing
number of homes going into foreclosure as their
owners were unable or unwilling to meet
monthly payments. Many of these foreclosed
homes are part of the subprime mortgage fiasco
that is rocking financial markets, where
borrowers have poor credit or inadequate income.
Also, a large portion of foreclosed homes are
those subject to rising monthly payments due to
adjustable rate mortgages.
4) The sale of gasoline at the pump is included in
retail sales figures. Extremely high prices per
gallon for gasoline have shown up as growth of
total retail sales in America. At the same time,
consumers have been forced to allocate a larger
portion of their household budgets for gasoline,
electricity and heating oil, leaving fewer dollars
left over for discretionary retail spending.
Unfortunately, consumers were forced to retrench
in 2008, and that trend will accelerate in 2009.
Current economic trends will be tough on retail
customers. They will have fewer discretionary
dollars left in their budgets after they face the
challenges of high prices for energy, health care,
www.plunkettresearch.com
food, insurance and mortgages. Meanwhile, job
security is declining.
Negative factors that will impact the retail sector
in 2009:
• Extremely high consumer debt levels
• Higher health care costs for consumers
• Global terrorism, tension and uncertainty
• Consumers burdened with high energy costs for
such items as gasoline, home heating fuel, natural
gas and electricity
• A continuation of depressed conditions in the
housing market
• Rising home mortgage foreclosures (including
large numbers of adjustable rate mortgages,
“ARMS,” scheduled to reset to higher rates in
2009)
• Layoffs and falling profits in a wide variety of
business sectors
• Rising unemployment levels
• Tightened lending standards that will make it
more difficult for consumers to obtain credit,
including a pull back in lines of credit available
on credit cards and home equity loans
• Extremely low consumer confidence
• Consumer tastes and expenditures influenced to a
growing extent by LOHAS, a trend toward
purchases that support “Lifestyles of Health and
Sustainability.” Consumers will be more
conservative going forward, saving more while
spending less. When they do spend, they will be
focusing to a growing extent on high-value items
with long life, low impact on the environment
and low energy consumption. Items that promote
a healthy lifestyle will receive a growing focus.
Meanwhile, competition among retailers has
never been tougher. A retailer without a significant
competitive advantage doesn’t stand a chance.
Superstores are battling each other on every major
corner while direct marketers (including catalogs and
online sites) are stealing customers from stores.
Online selling at deep discounts is even making
immense inroads into major consumer purchases
such as jewelry. Many retailers have been driven
into bankruptcy recently, including Sharper Image,
Linens ‘n Things, Bombay Co., and mail order firm
Lillian Vernon, and more will follow.
Direct selling through online retailers, catalog
companies and home-shopping television channels
continues to be popular. However, the 2008
slowdown in consumer spending has put the brakes
Plunkett Research, Ltd.
on online retail sales growth. Analysts at eMarketer
project 2008 online sales to be $136.8 billion, up only
7.2% over the previous year (not including travel
sales). This is a letdown from the 19.8% growth rate
of 2007. They further predict a very low 4.1%
growth rate in 2009, to $142.4 billion.
Growth in online shopping has been driven by
two factors. First, the number of fast Internet
connections in U.S. homes and businesses leapt to
about 100 million by early 2008. These connections
make buying online faster and more interactive.
Next, there’s the savvy marketing of online giants
like Amazon.com (with more than $14.8 billion in
2007 revenues, up dramatically from $10.7 billion in
the previous year), as well as the e-commerce efforts
of traditional retailers such as Home Depot and Wal-
Mart. These fast Internet connections are extremely
important, even at the office, since a large number of
U.S. workers take time out to shop online from their
desktops.
The two most closely-watched retail days of the
year are the Friday after Thanksgiving (referred to as
“Black Friday”) and the Monday after Thanksgiving
(known as “Cyber Monday”). This particular
Monday is now important since online retail sites
show very strong holiday sales on this day, much of it
by people shopping from their desks at work. Cyber
Monday 2008 enjoyed 84.6 million consumers
shopping online from home or the office, according
to a Shop.org survey, up from 72.0 million in 2006
and 60.7 million in 2005. Black Friday 2008 was
relatively strong compared to 2007, but only because
retailers pulled out all the stops, spending vast sums
on advertising to lure shoppers into buying at huge
price reductions. The strategy worked, but it likely
had the effect of leaving consumers with fewer
dollars to spend on shopping during December.
All current trends point to a tough time for
retailing. Profits at retailers for 2008-2009 are going
to be low. Sales in October 2008 dropped a record
2.8% over the previous month. Sales of cars and
luxury items are dismal. Many firms will post losses,
and an unusually high number will take bankruptcy.
Among the rare bright spots are Wal-Mart and
Costco, where consumers know they can find
everyday low prices on high quality merchandise.
www.plunkettresearch.com
Internet Research Tip:
The National Retail Federation (www.nrf.com) offers
a wealth of information regarding the U.S. retail
industry.
The International Council of Shopping Centers
(www.icsc.org) offers the latest information on
shopping centers, malls and retail trends.
Retail Traffic magazine’s web site,
retailtrafficmag.com, is an excellent place to read
about retailers’ expansion plans, new mall
developments, retail technologies and much more.
2) Wal-Mart Dominates as the World’s Biggest
Retailer (and now America’s Biggest Grocer)
Wal-Mart is the world’s largest non-oil company,
based on revenue ($374.5 billion during 2008), and is
the largest corporate employer in the U.S. with 2.1
million total global employees. In addition, as of the
end of 2008 the company showed growth in same-
store sales while almost all other retailers posted
losses. Wal-Mart operated approximately 4,490
stores throughout America in late 2008. In terms of
U.S.-based firms, Wal-Mart is second only to
ExxonMobil in annual revenues. Outside America,
Wal-Mart had 2,900 stores by the end of 2008, with a
strong presence in such nations as Mexico, Canada,
and the U.K.
Wal-Mart achieved its astounding success
through deep discounts, high volume purchasing and
cutting-edge technology that raised the chain’s
distribution and inventory control systems to the
pinnacle of efficiency. Costs are cut to the bone
while customers flock to the stores in droves.
One way in which the company has expanded
dramatically is through its revolutionary entry into
the grocery business. It is rapidly adding new Wal-
Mart Supercenters to its chain, which have immense,
well-stocked, supermarket-like grocery departments
that work on lower profit margins than those of
traditional supermarkets. Shoppers who bypass the
neighborhood supermarket to go to a Wal-Mart
Supercenter know that they will save substantially.
At the same time, Wal-Mart’s non-grocery
departments benefit when these grocery shoppers
pick up items elsewhere in the store. Wal-Mart
management knows that the average shopper makes
several grocery-shopping trips weekly. These
Supercenters have been designed to sell top-quality
groceries at bargain prices in order to bring those
frequent shoppers into Wal-Mart’s total shopping
environment—thus driving up average sales.
The success of the grocery venture is fueling
significant expansion for Wal-Mart. Supercenters
Plunkett Research, Ltd.
now number about 2,447 in the U.S. In 2008,
grocery, candy and tobacco sales amounted to about
$153.5 billion, or 41% of Wal-Mart’s total revenues,
by far its largest product category.
Wal-Mart is testing a significant departure from
its giant 200,000 square foot store size with the
opening of four 15,000 square foot stores called
Marketside in Arizona. The stores test an urban
convenience concept, selling groceries geared toward
more affluent tastes. The stores stock prepared meals
in addition to fresh produce, meats, dairy and bakery
items and are designed for fast, easy shopping. This
is clearly a plan to compete with Tesco’s
neighborhood markets which opened in Southern
California in late 2007, and numbered more than 60
stores by late 2008.
Wal-Mart is also scaling back its new store
openings from 2008 through 2010, to about 170 new
Supercenters yearly. Perhaps more than any other
retailer, Wal-Mart saw the writing on the wall
regarding a looming global recession. As early as
2006 it began cutting inventories and rethinking its
expansion plans.
Another small store concept will offer health
services and products as part of Wal-Mart’s overall
plan to become a major health care company in
addition to the world’s largest retailer. (Already the
firm has slashed health care costs for many customers
by offering $4 prescriptions for more than 360
generic drugs, along with low-cost prescription
eyeglasses.) By late 2008, Wal-Mart had in-store
clinics in a few dozen stores nationwide, and hopes to
find them successful enough to rollout the concept on
a wide basis. The clinics offer quick and inexpensive
visits for such needs as school physicals and
treatment for minor infections. In the same way that
grocery customers drive sales in other Wal-Mart
departments, these health care customers are likely to
make purchases elsewhere in the store as long as they
are already in a Wal-Mart.
Wal-Mart has significant influence on food
companies, the products they produce and the way in
which they package and distribute those products.
Coca-Cola, for example, planned to introduce a diet
soft drink called Coke Zero in early 2006. Wal-Mart
executives wanted a drink sweetened with Splenda,
an artificial sweetener that sells well to Wal-Mart
customers, but the new Coke Zero was to be
sweetened with aspartame. At the retailer’s urging,
Coca-Cola released Diet Coke with Splenda first, and
later introduced Coke Zero. Likewise, PepsiCo,
which attributes 11% of its North American sales to
products sold by Wal-Mart, created a diet soft drink
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called Slice One at the retailer’s request. On the
distribution end, Wal-Mart has an agreement with
Coca-Cola and Coca-Cola Enterprises (Coke’s largest
bottler) to deliver Powerade brand sports drinks
directly to Wal-Mart warehouses, thereby bypassing
other bottlers.
As of late 2008, grocery shoppers were looking
for consistently low prices more than convenience,
wide selections or gourmet items. According to retail
consultant TNS Retail Forward, at least one-fifth of
consumers have switched their shopping to
discounters for food and household staples.
Mainstream grocers such as Safeway, SuperValu and
Kroger have to shift their focus to house brands, and
to price reductions on must-haves such as milk, eggs
and laundry detergents. Meanwhile, stores such as
Whole Foods Market, which has long served
shoppers who are willing to spend more for organic
or gourmet items, are seeing profits decline as much
as 30% while sales were slowing considerably as of
late 2008.
Another relatively new focus for Wal-Mart in a
large number of its stores is on the sale of liquor.
Although beer, wine and spirits have been sold by
Wal-Mart in areas where liquor sales are permitted
by state law for years, alcoholic beverage sales made
up a relatively small portion of revenues. This is
expected to change, however, as the company re-
evaluates alcohol as part of its customers’ shopping
needs. In its efforts to provide its customers with true
one-stop shopping, Wal-Mart must beef up its
selection, especially of hard liquor, which is growing
in popularity in the U.S. The Sam’s Club unit has
long done a booming business in wine sales.
Wal-Mart, although still required by law to buy
alcoholic beverages through distributors, has a
relationship with Diageo PLC, one of the largest
liquor companies in the world based on sales, in
which the two companies work together to develop
brands and merchandising schemes. Even with the
stipulation of working through distributors (which
Wal-Mart eschews in most other merchandise
categories), the company can sell at lower prices than
independent liquor stores due to high volume
purchasing. Each of these initiatives is not without
its difficulties. When selling their wares to Wal-Mart
at its Arkansas headquarters, which is situated in a
dry county, liquor companies are often pushing
products that are never sampled.
Although there is no question as to Wal-Mart’s
dominance in the U.S. retail market, it is not
impervious to the marketing efforts of other grocery
chains. Firms such as Kroger Co. and SuperValu,
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Inc. are redesigning stores to offer shoppers more
relaxed, neighborhood shopping experiences in
addition to stocking higher-end breads, meats and
wine not carried by Wal-Mart.
Spotlight: Tesco plc
Tesco plc is the largest retailer in the U.K., and
one of the largest retail firms in the world. The
company operates 3,956 supermarkets, superstores
and convenience stores in 14 countries. Tesco
operates six main store formats: Tesco Express,
combination convenience stores and gasoline
retailers; Tesco Metro, small urban stores designed to
meet the needs of the local community; Tesco Extra,
hypermarkets located primarily in Asia; Tesco
Homeplus, offering clothing and other non-food
items; Tesco OneStop; and Tesco Superstores, which
provide traditional grocery items as well as other
non-food products and services. The firm also
operates non-food retailer Tesco Direct, with a 7,000-
item catalog and 11,000 products on its web site.
Tesco Personal Finance, Ltd., with over 5 million
customer accounts, offers financial services such as
savings accounts, online banking and insurance
policies. Tesco Mobile, a joint venture with O2,
offers telecommunications services.
In 2007, the company began running a dedicated
green rail line between Scotland and the Midlands to
improve its supply chain.
During 2008, the company opened 508 new
stores, including 350 stores outside the U.K. In
November 2007, Tesco opened its first Fresh & Easy
Neighborhood Market convenience stores in the Los
Angeles area. As of mid-2008, the concept had
grown to over 60 stores in the U.S. In May 2008,
Tesco acquired 36 Homever stores in South Korea
from the E-Land Group. The firm recently
announced plans to develop a cash-and-carry
business in India. Also, the company sold four
properties and signed lease agreements to continue
operations at the sites. These transactions are part of
Tesco’s ongoing strategy to move from owning to
leasing property.
3) Department Stores have Evolved into Giant
Apparel, Cosmetics and Accessories Stores
Even before the global economic crisis of 2008,
major department store chains were compelled to
evolve in an effort to arrest their falling sales. From
1999 through 2005, sales at department stores overall
slipped 14% to $86.7 billion (meanwhile, sales in
warehouse chains and membership clubs skyrocketed
128% and clothing stores 31% during the same
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period). By 2006, a combination of better
merchandising and increased marketing focus began
to stem the tide at some major chains. While select,
upper-end chains, including Neiman Marcus and
Nordstrom, enjoyed strong sales through 2007, most
chains serving middle-income consumers suffered.
For example, Dillard’s saw chain-wide sales decline
from $8.15 billion in fiscal 2002 to $7.56 billion in
2006. During the same period, Nordstrom enjoyed
an increase in sales from $5.6 billion to $7.7 billion.
By 2008, visits to department stores were down
6% from the previous year, according to Nielsen
North America. In response to falling home values,
growing job insecurity and the stock market freefall,
shoppers were keeping their wallets in the pockets
and purses and staying home. Even previously-
booming Saks, Neiman Marcus and Nordstrom were
suffering sales declines in late 2008.
In order to better understand what is happening in
the department store sector, a bit of history is in
order. Can you remember Sears Roebuck’s “Sears
has everything” line? Or do you remember going
into Saks Fifth Avenue’s flagship store in Manhattan
and finding everything from haute couture to a travel
agency to a restaurant, plus a hair salon, a toy
department and a fine jewelry department—all at full
price? Things are quite different now.
The department store industry has evolved and
generally suffered in recent decades. Originally, the
department store was developed and enhanced by
retail pioneers in France and America from the 1850s
through the early 1900s. The department store was
envisioned as an antidote to shopping at endless
blocks full of small, mom-and-pop specialty shops
such as hat stores, furniture stores, hardware stores
and shoe stores. Marshall Field in Chicago
(operating ever-larger downtown stores beginning in
1865), John Wannamaker in Philadelphia (using
advanced advertising techniques to launch a giant
department store by 1878) and Aristide Boucicaut in
Paris (his Bon Marche became the first true
department store by 1852) figured out that
housewives would prefer to find everything under
one roof—in “departments” that varied from
hardware to books to housewares to food items to
furniture to clothing. These department stores were
located in the heart of the downtown area within
major cities. Shopping at them was an all-day affair,
eagerly looked forward to by many consumers. A
mid-day break for lunch or tea was often taken in the
stores’ restaurants. In 1902, R. H. Macy opened what
was billed as “the largest store on Earth” in
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Manhattan. The store featured nine stories, 33
elevators and several escalators.
Through the decades, tastes and consumer needs
evolved. Downtown shopping fell out of favor,
starting in the 1960s. The growing popularity of life
in the suburbs, encouraging the creation of the
enclosed mall, dictated a new role for department
stores as “anchors” of malls—a role that became less
successful as time passed. Consumers became
accustomed to shopping near where they lived, not at
old-fashioned downtown stores. While malls sprang
up like wildflowers in suburban fields, big box stores,
discount stores and power centers began competing
for consumers’ dollars.
Today, most “department” stores are actually
mall-based apparel, accessories and cosmetics stores,
with a few also offering a reasonable depth of
housewares. If they offer any other types of
merchandise, such as furniture or electronics, they are
often in small, under-stocked sections that don’t
compete well against big box specialty stores such as
Best Buy. The highest volume in the store on a per
foot basis is typically done in the cosmetics
department, and cosmetics generally aren’t on sale.
That’s why the first thing you see when you walk in
the door is cosmetics.
The majority of the balance of the store is
apparel—mostly women’s, along with shoes, purses
and other accessories. “Department store” is a
misnomer at this point. Department stores dug
themselves a hole by encouraging shoppers to buy
during frequent “sale” events. The newest
merchandise and styles are priced at full amount for a
short time, and then prices decrease quickly through
bigger and bigger markdowns. (Apparel
manufacturers cover some of the cost of these
markdowns.) Shoppers have been trained to wait for
items to go on sale. Department store execs have
tried to fight back by making more and more of their
merchandise private-label “house brands” (with
higher profit margins) instead of designer brands.
However, consumers generally want things to be on
sale.
Aggressive advertising and frequent promotions
help to move the merchandise. Customer service has
been deemphasized. Due to ever-changing fashions
and fickle consumer tastes, merchandising expertise
is critical.
Major department store chains went broke by the
score in the 1980s. Companies like Allied and
Federated had to alter their methods, reposition
themselves and seek new financial resources in order
to survive. (Some had to overcome financial pressure
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caused by excessive leverage or overly aggressive
expansion). They needed to learn to utilize advanced
information systems and inventory methods. In
addition, they had to learn to offer better value.
As recently as 2007, consumers complained that
department stores were hard to access, since most are
anchor tenants in large malls. In many cases, it’s
necessary for customers to park their cars in remote
lots, walk a long way to enter the department store
and then navigate even further to find the
merchandise area they need. Once there, sales clerks
are often hard to find and registers are decentralized,
which can make paying for merchandise more
complicated than it should be. Add to that the higher
prices charged by department stores as opposed to
discount stores, and the shopping experience
becomes a chore instead of a pleasure.
Another problem plaguing department stores is
one brought on by large-scale consolidation. For
example, Federated Department Stores, Inc. acquired
May Department Stores in 2005, merging Federated’s
chains (Macy’s and Bloomingdale’s) with May’s
(Marshall Field’s, among others). As stores merge,
becoming major regional or national chains, buyers
and merchandisers may lose touch with the needs and
wants of their customers on a local level. By
focusing on the mass market, exclusivity is
compromised.
Several chain operators are attempting to address
these problems. Nordstrom is perhaps the best
example of a department store company that is
stemming the retail tide of discount stores and
membership clubs. At about 150,000 square feet,
recently opened Nordstrom stores are smaller than
Nordstrom’s average store of 190,000 square feet,
and thus take smaller investments. The company is
concentrating on new locations with easy-to-use
parking and access that does not force people to go
through malls. The smaller size should also make
stores easier for consumers to navigate and less
costly to operate.
Continuously successful department stores are
those on the leading edge of modern retailing.
Nordstrom, for example, offers the utmost in personal
service combined with unique and high-quality
merchandise that offers high value. Nordstrom sales
personnel receive above-average commission rates,
and top sales people can earn $100,000 or more
yearly.
Generally, stores focusing strictly on high-priced
luxury merchandise, such as Neiman Marcus, were
enjoying success before the economic crisis of 2008.
On the luxury end of the spectrum, Neiman-Marcus
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opened a handful of “Cusp” stores targeting the
younger generation with hip merchandise and kicky
décor that sets it apart of the understated elegance of
the Neiman-Marcus brand. The stores, located in
Tyson’s Corner in McLean, Virginia; Century City in
Los Angeles, California; Georgetown, Virginia;
Chestnut Hill, Massachusetts; Northbrook Court and
Chicago, Illinois; carry clothing, accessories, books
and CDs. A new store was opened in November
2008 at the Water Tower Place in downtown
Chicago. Cusp competes with Co-op, a new concept
from Barney’s. There were 11 of Barney’s Co-op
stores by the end of 2008, down from 15 in 2007.
As of late 2008, department stores as well as
retailers of all types were facing serious losses in
revenue, especially luxury stores. In October, same
store sales for Saks, Inc. (owner of Saks Fifth Avenue
and Saks Off 5th stores) fell 16.6% from October
2007. In September 2008, Neiman Marcus Group,
Inc. reported a 12.9% drop in same store sales from
September 2007. Nordstrom saw a 9.6% drop for the
same period. At Macy’s, October same store sales
fell 6.3% and a double-digit percentage decrease was
expected for November.
Falling revenues are curtailing expansion plans
both in the U.S. and abroad. In 2006 through 2007,
many U.S. department store chains were hoping to
expand internationally in response to softening sales
and a weak dollar. Saks, Inc., for example, planned
to open its first store in Shanghai in time for the
Summer Olympics. As of late 2008, plans for the
new store were on hold. In addition to difficulties in
securing funding due to the global credit crisis,
designers who supply U.S. stores with apparel and
accessories are wary of competing in international
markets where they have established stand alone
stores under their own names. Italian menswear
designer Ermenegildo Zegna for one already has
stores in 31 Chinese cities and is forcing Saks to
negotiate about selling its line in the proposed
Shanghai store.
4) Name Changes, Buyouts and Consolidation
Alter the Department Store Landscape
Big changes in ownership are occurring in the
department store field as owners and investors try to
keep their heads above water. From 2005 through
2007, a number of private equity firms bought retail
chains, including department stores. Private equity
fund managers tend to acquire existing companies
with the goal of improving management, creating
efficiencies and boosting profits. The end goal is to
own a company with a much higher value than it had
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when first acquired. Consequently, the reinvigorated
company can have a public offering (IPO) or be sold
off at a great profit. One of America’s leading luxury
department store chains, Neiman Marcus, was
acquired in October 2005 by two private investment
firms in this manner.
Next, Federated Department Stores, Inc.
repositioned most of its stores to the Macy’s name,
including the contentious rebranding of such famous
names as Marshall Field’s. Federated’s history is
dotted with such incidents—after merging with
competitor Campeau/Allied in 1988, going bankrupt
in 1990 and emerging from bankruptcy in 1992,
Federated ranked as America’s leading operator of
mid- to upper-end department stores. By 1994, the
firm had acquired R. H. Macy & Co. In August
2005, the company leapt forward again by acquiring
competitor May Department Stores, adding 491
stores including such brands as Marshall Field’s. By
the end of 2006, Macy’s re-branded nearly all of the
department stores, as well as the bridal and
formalwear stores, that it had acquired from May’s
Department Stores, including Foley’s, Kaufmann’s,
Hecht’s, Marshall Field’s, Strawbridge’s and Meier
& Frank, to either Macy’s or Bloomingdale’s. In
June 2007, Federated changed its name to Macy’s,
Inc. Now, the company is attempting to boost results
by using the Macy’s name on nearly all of its stores
in the first truly nationwide department store chain in
the mid- to upper-tier. It is retaining Bloomingdale’s
as a separate brand, covering 40 stores. (The Lord &
Taylor stores acquired in the May Department Stores
deal were promptly sold off to private equity
investors.)
Federated’s widespread change to the Macy’s
name was a significant move. To begin with, it gave
up store names that have been regional or local icons
for decades. Next, it is managing operations under
seven regional divisions based in Atlanta, Miami, St.
Louis, Minneapolis, New York, San Francisco and
Seattle. By using regional management, the firm
hopes to retain a unique flavor of merchandising that
will suit local consumers’ needs. The question is
whether the merchandising will be localized enough
through this arrangement. Now that Macy’s has
grown to 856 stores, thanks to the May Department
Store acquisition, operating efficiencies may result
from the firm’s massive buying power, advertising
power and new clout in leasing store locations.
Management’s plan for the future includes boosting
private-label brands, simplifying pricing and
enhancing the in-store experience through
improvements such as wider aisles and better
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dressing rooms. Nonetheless, competition from
discount stores and specialty stores for consumer
dollars is fierce, and creating better profits through
such changes will be a significant challenge.
Meanwhile, industry watchers wait to see how
consumers will react.
Macy’s is suffering from the economic crisis.
Same store sales were off 3.5% for the first 9 months
of 2008 compared to the same period in 2007. Its
operating profits (excluding special items) declined
by 29% during the same period compared to 2007.
As the retail industry weathers the global
economic crisis of 2008, watch for additional
mergers and acquisitions. Consolidated operations
may have efficiencies great enough to keep stores
open.
SPOTLIGHT: Ikea
Ask consumers around the world what their
favorite home furnishings store is, and the likely
answer will be “Ikea.” Inter IKEA International is a
multinational home furnishings company based in
Sweden. Thanks to astonishingly steady growth, it
had 287 stores in 36 countries and territories as of
2008. It has an extensive mail-order catalog and also
does business online. The firm’s focus is on giant
stores (300,000 square feet and up) stocked to the
ceiling with trendy, value-priced goods. The
company designs and sells a wide range of furniture
products, including beds, bookcases, chairs, lamps,
rugs, desks, sofas and tables, as well as various
accessories for bathrooms, kitchens and offices,
amounting to a total product line of approximately
9,500 distinctive items. Constantly cutting prices, the
company strives to provide affordable home
furnishings. Ikea has over 565 million shoppers
visiting its stores yearly, and it prints 198 million
catalogs per year. The firm continues to grow,
opening approximately 20 new stores each year. Its
fastest-growing areas have been the U.S., Russia and
China, and it entered Japan for the first time in 2006.
Its long-term goal is in the U.S. is 50 stores by 2010,
by opening five new stores yearly. The firm’s vast
supply chain includes more than 1,300 suppliers in 54
nations, with a significant amount of merchandise
manufactured in China. In order to maintain its
trendy and unique styles, an in-house design staff
plus dozens of freelance consultants constantly create
and evolve the merchandise. Consideration is given
to local tastes and trends.
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5) Discounting and Discount Stores Evolve
Wal-Mart might as well be the first mentioned in
this category. Since its founding in 1962, Wal-Mart
has flourished to become the nation’s top retailer (a
bragging right that Sears Roebuck & Co. claimed for
decades). How does the Wal-Mart method work?
Primarily, it meets the simple needs of average
consumers by using money-back guarantees,
everyday low prices, merchandise that is rarely out of
stock, ease of access and floor help trained to offer
assistance. Interestingly, Wal-Mart was first
conceptualized as a rural store—a modern general
store if you will—located in smaller communities
that lacked much in the way of local shopping
facilities. However, once it conquered hundreds of
small towns, Wal-Mart branched out into major
metro areas with astonishing success. Obviously,
urban shoppers need the same services and low prices
as rural consumers. What Wal-Mart, Costco and
other discount stores lack in profit margin, they gain
exponentially in volume. Many of these stores
operate around the clock.
With or without groceries, discount stores are
taking customers and therefore profits from
traditional department and specialty stores—today
more than ever before. In general, discount stores are
able to offer the convenience that department stores
lack, while offering everyday low prices. Wal-Mart
and its competitors offer plenty of parking by the
door, fast centralized checkout, easy returns and
quality inventory that includes broad categories of
name-brand merchandise.
Another interesting point is that discount stores
attract a broad customer demographic. People of all
ages and incomes are shopping there. It’s become
commonplace to see luxury vehicles in Wal-Mart,
Target and Kohl’s parking lots alongside practical
compacts and trucks. Convenience, value and
practicality are key motivators for shoppers.
Discount stores are superbly positioned to take
advantage of this climate, especially in difficult
economic times.
Meanwhile, discount stores are offering more and
more products that are private label. Instead of being
limited to selling branded products from major
manufacturers like Proctor & Gamble, discount stores
have been contracting for the manufacture of store-
branded merchandise. Such is the case with Wal-
Mart and its Ol’ Roy dog food, the George line of
apparel, or the Sam’s Choice products found in its
Sam’s Club stores. Half of the goods sold at Target
stores are now privately branded. Costco’s Kirkland
Signature brand is on everything from cookware to
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paper goods to food items. Although this method has
long been used by department store chains and a
handful of specialty store chains, few have picked it
up with as much enthusiasm or effectiveness as the
discount retailers.
Sales of private-label items are generally growing
at a faster rate than those of name brands. At least
part of this trend is attributable to the difficulty and
costs that manufacturers have in reaching the
consumer through mass advertising. As an
alternative, some manufacturers have been turning to
in-store promotions. Whereas manufacturers
previously spent as much as 65% of their advertising
budget on media outlets such as television,
newspapers and magazines, they now put as much as
60% towards special shelf placement fees (fees
charged to the manufacturers by store management
for giving merchandise greater prominence on
shelves) and promotional offers in the stores where
their products are sold. This is a dangerous
proposition when those same stores are promoting
their own private-label products. Many major brand
manufacturers such as Kraft, Heinz and Kimberly-
Clark have begun accepting contracts to make
products under store names.
As an alternative to going through the painful
process of establishing their own brands, discount
stores have also been picking up brands that have
been left by the wayside. Taking brand names that
were abandoned by their original manufacturers, or
ones whose trademarks have expired, the retailer then
releases the product afresh, relying on the fond
memories of its customers to inspire confidence and
sell the product. A prime, and somewhat ironic,
example of this is White Cloud toilet paper, which
was originally made by Proctor & Gamble. After
P&G dropped the brand, it was picked up by Wal-
Mart. Taking advantage of a once well-recognized
brand name, Wal-Mart put its White Cloud private
brand toilet paper on all its shelves and saw sales
skyrocket as customers remembered an old favorite.
Sitting next to it on the shelves, at a slightly higher
price, was Charmin, the toilet paper currently made
by Proctor & Gamble.
Another interesting trend in brands is the
development of discount-priced designer lines.
Haute couture designer Isaac Mizrahi has been
working exclusively with Target, creating an
inexpensive line of sophisticated clothing for women
as well as trendy home décor items such as furniture,
bedding and dinnerware. Other designers have
jumped on board the exclusive discount bandwagon,
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including Jaclyn Smith and Martha Stewart at K-Mart
and Vera Wang at Kohl’s.
Costco has long enjoyed success selling high-end
items at discount prices, such as fine diamond
jewelry and fine wines.
Operating a discount chain is not a guarantee of
easy profits. While Costco and Wal-Mart were
enjoying sales growth in 2008, Target suffered a
small drop in same stores sales through its fiscal third
quarter, which ended November 1, 2008.
Discount Giants
(With approximate store count at 1/1/2007)
Wal-Mart: (year ended 1/31/08)
Fiscal 2007 Revenues $374.5 billion
Employees 2,100,000
Stores 7,390*
Costco: (year ended 8/31/08)
Fiscal 2008 Revenues $70.9 billion
Employees 137,000
Stores 543
Target: (year ended 2/2/08)
Fiscal 2007 Revenues $63.3 billion
Employees 366,000
Stores 1,591**
* Includes International and U.S. stores, Supercenters, Sam's
Clubs and Neighborhood Markets.
** Includes Targets and SuperTargets.
6) Category-Killers and Big Box Retailers
Struggle to Keep Up With Discounters
Home Depot is widely accepted as the most
recognized category-killer. It is constructed like a
warehouse store, roughly two acres in size, and
stacked to the ceiling with every conceivable type of
appliance, tool and home construction/improvement
item. Other category-killers include Best Buy, along
with Lowe’s, which is a major competitor to Home
Depot.
Special types of shopping centers, known as
“power centers,” were invented to house these
superstores. Some stores opened in massive,
freestanding buildings on major roads, referred to by
real estate professionals as “white boxes.”
Today, category-killers like OfficeMax, Bed
Bath & Beyond and Staples are ubiquitous, dominant
retailers in dozens of segments. All have tremendous
buying and advertising power. All offer significantly
lower prices than do traditional retailers, while at the
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same time offering a fantastic depth of merchandise
from which to choose.
In spite of these benefits, it is possible to have
too much of a good thing in retailing, and there may
be too many superstore chains in some categories.
Mergers and failures have already begun, such as the
closure of the Incredible Universe computer and
electronics stores and the Just for Feet shoe stores in
recent years.
More recently, Circuit City (Best Buy’s major
competitor) and Linens ‘n Things (which was Bed
Bath & Beyond’s major competitor) each took
bankruptcy during 2008. As of the end of 2008,
Circuit City hoped to restructure successfully after
closing 155 stores. Linens ‘n Things was liquidating
and closing its business entirely.
Competition from discount stores and online sites
is daunting. Sales growth at many big box chains has
slowed, and profit margins are under pressure. Toys
‘R’ Us is under intense pressure from competition at
Wal-Mart, where toys are being sold at deep
discounts. The discount giant has overtaken the
coveted position of number one toy retailer in the
U.S., previously held by Toys ‘R’ Us. In 2005, Toys
‘R’ Us was acquired by two private equity firms,
Global Toys Acquisition, LLC and Global Toys
Acquisition Merger Sub. Both of these companies
are, respectively, directly and indirectly owned by
Bain Capital and Kohlberg Kravis Roberts and Co.,
Vornado Realty Trust and Gordon Brothers Group
LLC.
Likewise, big box retailer consumer electronics
Circuit City went through difficult times in 2003 and
2004, thanks to competition from Best Buy and Wal-
Mart, among others. The company bounced back to
some extent starting in 2005, but was forced into
bankruptcy in late 2008.
Meanwhile, growing competition from discount
Internet-based sellers can be extremely hard on big
box stores. For example, Amazon.com offers
convenient, low-priced channels for the online
purchase of everything from housewares (competing,
for example, with Bed, Bath & Beyond) and
consumer electronics (competing with Best Buy and
Circuit City).
7) Sophistication and Success for Direct
Marketers
Several decades ago, non-store retailing consisted
only of catalogs (such as those from Sears Roebuck
& Co.), mail-order ads in magazines or newspapers
and door-to-door peddlers of such items as Watkin’s
Vanilla Extract, Fuller Brushes and Kirby Vacuums.
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Slowly, non-store retailing evolved. By the 1970s,
upscale catalogs such as the Horchow Collection had
emerged in large number, catering to the growing
base of affluent households where women were
holding demanding, well-paying jobs and had less
time or inclination for traditional shopping. At the
same time, multi-level marketing was booming, and
scores of new companies copied the methods of
leaders like Avon, Amway and Mary Kay in selling
cosmetics and other personal-care items through
legions of independent representatives. Business-to-
business catalogs of such items as office supplies also
saw rapid growth. By the late 1980s, mail-order sales
of personal computers and related accessories soared,
as early leaders like Gateway and Dell Computer
found success via aggressive advertising in computer
magazines. Television shopping became
sophisticated as the advent of new, niche cable TV
channels created additional sales venues.
Today, non-store selling (sometimes called
“direct selling”) is giving traditional retail selling a
run for its money. It has steadily chipped away at the
market share of stores. The Direct Marketing
Association projected that in 2008, commercial and
nonprofit direct marketers would spend $183.1
billion on advertising in the U.S. The group
projected that direct marketing would generate
revenues totaling $2.158 trillion in 2008 when all
business sectors are included, such as financial
services and transportation, as well as retailing.
Direct selling involves both old-fashioned
methods and state-of-the-art technologies. The
direct-marketing and direct-response industry
includes thousands of companies offering unique
niche catalogs; television home-shopping programs;
millions of independent sales representatives selling
everything from lingerie to cookware through
personal calls and party-like events in the home;
telemarketers; Internet-based retail sites; and firms
using additional, innovative non-store methods.
The non-store category of retailing is comprised
of the following sectors:
• Catalogs, direct mail and mail-order advertising
• Television home-shopping programs and
infomercials, along with direct-sales offers
broadcast by radio
• Merchandise or services offers via interactive
television programming
• Internet-based retail sites (also see Plunkett’s E-
Commerce and Internet Business Almanac)
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• Direct sales offers advertised online and via e-
mail
• Door-to-door and “party” selling
• Telemarketing
Note: Many sophisticated non-store retailers use
combinations of these methods
Extremely sophisticated database software now
enables direct marketers to mail, e-mail or telephone
their offerings to well-targeted groups. For example,
matching such data as home value, occupation, credit
rating and automobile type owned against a database
of residents in a particular city may identify those
most likely to purchase a particular item or line of
merchandise.
It is important to note that there are several
purposes for direct marketing. For example, in the
case of a catalog mailed to the home by a seller that
does not operate any stores at all, the intent is to close
the sale through direct contact with the consumer.
This is more precisely defined as the “direct-response
advertising” segment of direct marketing.
More broadly, direct marketing can have other
purposes, including the generation of sales leads or
the creation of a level of interest in the consumer that
will generate store traffic. In instances where a
retailer has both stores and catalog operations, direct
marketing serves multiple functions. Neiman-
Marcus’ marketing synergism, delivered by its stores,
catalogs and online site, is a good example. Pottery
Barn and Victoria’s Secret also are leaders in this
type of multi-faceted retail marketing. Consequently,
modern retailing, advertising and marketing methods
have blurred the distinctions between mass-media
marketing and direct marketing. For example, is a
banner ad on a web site a direct-marketing effort or is
it mass-media advertising? If you simply look at the
banner without clicking on it, and the meaning of the
ad or the name of the retailer registers with you, then
the ad may be a mass-media branding success. On
the other hand, if you click on the ad, and eventually
make an online purchase rather than go to a retailer’s
store, then the ad is a direct-response advertising
success.
With regard to telephone orders, today’s so-
called “telephone centers” are staffed with well-
trained order-takers and customer service
representatives at both traditional and non-store
retailing firms. Many of these call centers are
outsourced to foreign countries where labor is
cheaper than in the U.S. Consumer calls are routed
to these centers, where operators use the latest in
database and telecommunications technology to
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expertly answer questions, take orders and suggest
high-profit-margin upgrades to those orders. Special
software in the call centers keeps track of a
customer’s questions, complaints, purchases and
needs. In seconds, an operator can see a customer’s
complete, long-term history of purchases and other
activities with a simple keystroke on the computer.
This not only provides faster and more thorough
customer service, it may also give the customer a
false sense of a personal relationship.
Catalogs and Direct-Mail Offerings
Catalog retailing remains an immense business.
About 20 billion print catalogs were mailed to U.S.
households in 2006, in addition to billions of direct-
mail offerings via letters, brochures, flyers and
postcards. (This vast use of printing paper is
irritating to some conservationists; one group has
used full-page ads in the New York Times to skewer
Victoria’s Secret for its continuous, massive mailouts
that consume immense amounts of paper.) L.L. Bean
mails about 250 million catalogs yearly; Victoria’s
Secret mails about 390 million. Catalog shopping
can offer great convenience and frequently offers
better prices than shopping in stores. Catalogs also
remain a popular venue for items we may not want
our neighbors to see us buying in a store. However,
for 2009 and beyond, watch for direct mail budgets to
be cut. Retailers will analyze their lists more
carefully in an effort to drop addresses that are less
likely to respond.
Television-Based Shopping, Cable Systems and
Interactive TV
Television shopping shows were an instant hit.
For example, QVC, Inc., a subsidiary of the Liberty
Media Corporation, is a televised shopping network
based in West Chester, Pennsylvania that broadcasts
internationally with locations in Germany, Japan and
the United Kingdom. The company racked up $7.4
billion in sales during 2007, up from $7.0 billion in
2006. “QVC” stands for quality, value and
convenience. In the U.S. market, it reaches more
than 87 million households, accessing 96% of all
U.S. homes with cable service. The network
broadcasts themed shopping programming 24 hours a
day, 365 days a year, with operators continuously
available to take calls and process orders.
Interactive television services are growing
rapidly, leading to new opportunities for direct
selling via TV. With interactive cable TV services,
subscribers can order movies on demand and other
unique services. They also have the ability to
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respond to direct sales offers via their cable systems.
For example, viewers watching a pay-per-view music
concert may be able to order souvenirs such as t-
shirts via the cable system. Cable TV offers another
unique advantage to direct sellers and other
advertisers. Since the cable system knows the
address of the cable subscriber, that address
information can be matched against demographic
databases to create a unique profile of the subscriber
based on likely household income, value and size of
the home and other data. Ads displayed by the cable
system can then be custom tailored to match the
viewer’s profile.
Independent Representatives, Party-Based Selling
and Other Personal Direct Selling Methods
While this type of non-store retailing has been
with us for a long time, the growing struggle of
middle-class families to become stable, two-income
households has added greatly to the popularity of a
sideline career as an “independent consultant” for
companies like Mary Kay, Avon and Amway. In
addition to companies that engage in direct selling as
their primary line of business, many manufacturers
and retailers have found great success with direct
marketing, such as the Pampered Chef unit of
Berkshire Hathaway.
Using individual reps as sales agents has grown
very rapidly outside the United States. Firms like
Avon have found tremendous success in nations such
as China using this business model.
Representative selling has often been looked on
with scorn, mostly because of the so-called “pyramid
schemes” that often left recruits indebted to the
company, trying to sell goods that no one wanted.
Today’s practices are very different, especially in
legitimate businesses that look for long-term returns
and loyalty from both customers and recruits.
Companies like Avon have taken great pains to make
a functional recruiting and selling structure, and have
come up with multi-level pay packages that can yield
marketers a satisfying return and encourage “group
leaders” not only to sign up recruits, but also to teach
these recruits how to sell. Payments to these group
leaders are based on sales of those they have
recruited, giving them a strong incentive to take
responsibility for those under them in the hierarchy.
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Avon: Queen of Door-to-Door Sales
Yearly sales worldwide: $9.93 billion in 2007
Employees: 42,000
Independent distributors: another 5.4 million people
in over 114 nations
Marketing: The distributors sell 2.5 billion units
yearly of Avon’s plethora of personal-care products,
as advertised in 600 million sales brochures printed
yearly in 25 different languages.
Avon’s and Mary Kay’s business models have
been so successful that many other companies,
selling a broad spectrum of products, have entered
living rooms across the U.S. and around the world in
the form of selling parties. Tools designed for
women, golf clubs, pet supplies and wine are only a
few items that are selling big in the home.
Another direct selling option from the home is
women’s apparel. Companies such as Doncaster,
Carlisle and Worth enable women who are
independent representatives to show and sell clothes
and accessories from their homes or company show
rooms at trunk shows, usually held four times per
year. It’s a model similar to Tupperware parties. At
Doncaster, for example, “associates” are trained by
district sales leaders to learn the ropes of fashion
display, merchandising and marketing, as well as the
nuts and bolts of processing orders and collecting
payments. Each quarter, associates send out advance
marketing materials and invitations (professionally
produced by Doncaster) to friends and acquaintances.
Appointments are made by customers to see and try
on pieces from the current line. Orders are placed,
and then the apparel is delivered to the customers
within several weeks. Prices range from $60 for
accessories up to $1,000 or more for suits and
outerwear. Annual sales for these private companies
run between $30 million and $130 million. Average
annual income for associates is about $40,000, with
top sellers earning more than $100,000.
Telemarketing
Despite the fact that many consumers find
telemarketing annoying, it does create sales. “Do not
call” list regulation at the federal level places the
future of this industry in doubt. As of early 2005, the
Federal Trade Commission amended its
Telemarketing Sales Rule to require telemarketers
purge their call lists of all names and numbers found
on the National Do Not Call Registry
(www.donotcall.gov). This registry, which opened in
June 2003, contains upwards of 145 million
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registrants. Fears that the registry would expire in
2008 were put to rest when the Federal Trade
Commission pledged not to drop any numbers from
the list, regardless of when they were registered. In
August 2008 the FTC enacted a further cut aimed at
telemarketing by imposing stricter regulations on
calls and setting a ban on prerecorded call messages
effective September 1, 2009.
8) Rise of Showcase Stores and Super-
Merchandisers
Super-merchandisers are the polar opposites of
discount department stores. Discount stores like
Target focus on stocking their stores with basic items
from a wide variety of merchandise categories set in
large stores with minimal operating costs. Super-
merchandisers, on the other hand, spend huge
amounts of money on the construction of unique (and
often entertaining) stores and devote large portions of
these spaces to non-retail purposes, either for
ambiance and style or for demonstrations and
practice areas for their products. The stores, which
are also known as “showcase stores,” are also staffed
with the most qualified people available, people who
are knowledgeable about the products and the use of
them. Super-merchandisers have popped up in
several different categories, operating in a number of
specialty fields such as sporting goods, high fashion
and cooking. These retailers began as anomalies, too
opulent to be considered profitable, but for one
reason or another, they have proven immensely
successful.
One such merchandiser is Cabela’s, originally a
catalog-only retailer devoted to hunting and fishing
goods. After the catalog business was firmly
established, the owners of Cabela’s decided that they
wanted to showcase their products in a store which
would not only display all the things they sold, but
would act as a flagship for the company. With these
ideas in mind, they spared no expense in the
construction of the store. High, wood-beamed
ceilings, hardwood floors and lush furniture were just
the beginning. For their fishing clientele, they built
four 8,000-gallon fish tanks, stocked with huge fish
for shoppers to ogle, while almost half the floor space
was devoted to wildlife scenes that include stuffed
bears, caribou and other trophy animals set amidst
built-in landscapes of rocks and waterfalls. Of
course, the store was not complete without people to
staff it, and they had to know and love what they
were selling. After an arduous process of
interviewing and testing numerous applicants, each
employee hired was more park ranger or outdoors
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expert than sales clerk. Thus a super-merchandiser
was born.
Built in a small town, more than a hundred miles
from any urban center, the Cabela’s store was not
expected to see many visitors, or even turn a profit.
It was for show only. Then something astounding
happened: People started flocking to the sleepy little
town in droves, traveling hundreds of miles and
staying for hours, coming to see this retail
phenomenon. Hunters, fisherman and outdoors
enthusiasts came with their families, their dogs and
even their horses as though they had found a new
home. The store proved so successful that the firm
decided to build several more just like it. Cabela’s
had 28 such stores as of November 2008, with two
additional stores in the planning or construction
stages. Each has received rave reviews, and has been
welcomed not only by shoppers but also by the towns
in which they were built. They have even become
major tourist attractions, drawing as many as 6
million people a year.
The story of Cabela’s success is not unique.
Several other retailers have found super-
merchandising to be a viable strategy. Bass Pro is
another company that began as a cataloguer for
outdoor gear and has built stores similar to those of
Cabela’s, with similar reactions. Dick’s Sporting
Goods had 348 stores in 38 states as of early 2008,
many of which are vast and immaculate, featuring an
enormous, well-stocked selection of sports gear, with
display models in abundance and many specialty
services such as bicycle maintenance and repair.
American Girl, an upscale retailer of dolls and doll
accessories, has a 42,000 square foot flagship
American Girl Place store in Chicago, Illinois with a
café, theater, photo studio and doll hair salon. Girls
and their families line the street before the doors open
each day, bringing their American Girl dolls with
them and buying more inside. The firm has
additional stores in Los Angeles and New York, as
well as smaller American Girl Boutique and Bistro
locations in Atlanta, Dallas, Boston and Minneapolis.
American Girl is now a subsidiary of toy giant
Mattel, Inc.
Finally, several large corporations have opened
“flagship stores,” built with the same showcase idea
in mind. The flagship stores of Polo Ralph Lauren
and Nike are excellent examples of these. Ralph
Lauren showcase stores, located in downtown
Chicago and Manhattan, are opulent buildings more
reminiscent of 19th century mansions than retail
stores. Nike stores in the super-merchandiser
category are futuristic extravaganzas, each custom-
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designed, built and lighted in order to inspire awe in
all who see them.
The trend has proven successful enough to
inspire copycat stores in industry sectors as varied as
electronics and home improvement. Apple and Sony
have opened showcase stores, albeit on a smaller
scale than Cabela’s. These are hip boutiques filled
with their latest electronic gadgets located in upscale
shopping districts or malls. Like Cabela’s, the
electronics companies have staffed their showcase
stores with experts in all store products. Customer
education is emphasized as strongly as making sales.
Sony operates elaborate showcase stores in major
malls. Apple, especially, has enjoyed astounding
success, with 2007 sales of $4,000 per square foot
(compared to about $971 per square foot at Best
Buy). Apple operated 200 retail stores as of late
2008, including stores in the U.S., Canada, Japan and
the U.K. A massive, flagship store is in Manhattan,
and major, large showcase stores are in such areas as
the Galleria Mall in Houston and Palo Alto’s main
shopping district.
Why have these stores been so successful? They
were designed from the ground up to cater to specific
niche audiences. Also, they fit perfectly in the trend
of entertainment-based retailing. That is, the more
entertaining a shopping environment is, the more that
target consumers will drive a long way to get to the
store and stay a long time once they have arrived.
All of these stores were conceived with a very
specific group of consumers in mind: enthusiasts and
professionals who are very dedicated to the products
offered by the stores. These super-merchandising
stores offer something that no other kind of retailer
has offered before: the perfect atmosphere for buying
a certain product, be it a rifle, a new pair of running
shoes or a doll with a complete wardrobe. These
stores always give customers an opportunity to learn
more about their personal sports, hobbies, needs or
interests. Store staff members tend to be enthusiasts
themselves who can answer questions expertly. The
stores have also targeted consumers who have often
been underserved in the past, and who have never
before been offered such a wide variety of top-quality
products, such as hunters and cooks. Super-
merchandisers have filled in a previously unseen gap.
However, super merchandisers, like all other
retailers, are facing difficult times in the global
economic crises of 2008. Cabela’s, for example,
announced plans to reduce its staff by 10% in late
2008.
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Spotlight: Abt Electronics
Another great example of showcase stores is Abt
Electronics, a family-owned and run business in
Glenview, Illinois. Abt has a 65,000 square foot
showroom dedicated to a wide variety of electronics
from home entertainment to kitchen appliances.
Customers walk through an entrance atrium with a
7,500 gallon aquarium, fountain and sculptures to
reach a maze of walled-off boutiques that showcase
products. Customers like the opulent atmosphere,
while manufacturers such as Apple, Bose, Sub-Zero
and Viking like the separation of their products from
their competitors. Each boutique is specially
designed, such as the 3,000 square foot, $1 million
“Living Kitchen” that showcases Sub-Zero and Wolf
ranges, cooktops, refrigerators and freezers. There is
also a $5 million design center near the main store.
The concept is working to the tune of $300 million in
annual revenue. The company was founded in 1936
by an $800 investment as a family-owned enterprise.
Today, it is one of the world’s largest independent
sellers of consumer electronics, housed in a 355,000
square foot facility, employing 1,000 people.
9) Bricks, Clicks and Catalogs Create Synergies
While Online Sales Growth Slows
The 2008 slowdown in consumer spending has
put the brakes on online retail sales. Analysts at
eMarketer project 2008 online sales to be $136.8
billion, up only 7.2% over the previous year (not
including travel sales). This is a letdown from the
19.8% growth rate they found in 2007. They further
predict a very low 4.1% growth rate in 2009, to
$142.4 billion. Analysts at commScore found that
October 2008 online retail sales were up only 1%
over the previous year, and they predicted essentially
no growth for the critical holiday months of
November and December 2008.
Broadband connections expanded at an
astounding rate in recent years, and therefore online
activity such as retail sales grew apace through 2007.
By the beginning of 2008, there were more than 100
million homes and businesses in the U.S. with
broadband connections. There will be some slowing
in the broadband growth pattern as saturation points
are neared.
Several factors will encourage consumers to do
more of their shopping online, including today’s
wildly fluctuating gasoline costs, the fact that
consumers feel pressed for time, the widespread
adoption of high speed Internet access and growing
ease-of-use of online shopping carts.
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Online shopping often goes hand-in-hand with
in-store shopping. Numerous surveys consistently
show that most shoppers prefer to make their
purchases in physical stores. Surveys also report that
a large number of shoppers who browse a traditional
retail firm’s web site do so to gain information, later
visiting a physical store to make a purchase. The
reverse is also true. Many shoppers do their
homework on foot, visiting stores to see, touch or try
on merchandise and then make their purchases online
to avoid waits at cash registers or the need to deliver
gift items themselves. According to Accenture, 69%
of consumers research products online before buying
in a store, while Deloitte Touche reports that 62% of
consumers have looked at least once at an online peer
review before buying. For every dollar spent by
consumers online, an additional $6 is spent in stores
as a result of Internet research.
The most successful companies among retail
firms of all types will be those that take full
advantage of the stability of traditional, store-based
retailing and combine it with the growing popularity
of catalog and Internet-based retailing. Such a
strategy would entail:
• Seamless integration of store, catalog and
Internet-based offerings to consumers, providing
choices of 1) place and method of purchase, 2)
method of pickup or shipment and 3) place or
method of returns, repairs and additional services
as needed.
• Communication of a seamless brand identity and
level of service throughout catalogs, retail stores
and web sites.
• Opportunities to offer personalized marketing
and service through the use of customer profile
data.
Few companies have reached this level of
integration of traditional and non-traditional retailing.
However, for good examples of companies that are
evolving toward such “seamless” strategies, study
Wal-Mart, REI, The Gap, Staples and Victoria’s
Secret.
At lingerie giant Victoria’s Secret, customers
find enhanced flexibility and customer service thanks
to the opportunity to shop via the web, the Victoria’s
Secret catalog or Victoria’s Secret stores. In addition
to the millions of catalogs that are mailed every
week, stores hand out copies of the catalogs—which
feature the web address of VictoriasSecret.com, as
well as phone and fax ordering options. The point is
to create loyalty-inducing convenience for customers,
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giving them options for purchasing when, where and
how they please. Online apparel sales are soaring.
Even more innovative ways of merging bricks
and clicks are evolving. In 2007, Bloomingdale’s
tested an interactive “mirror” that allows customers
to model outfits while in stores, sending an image
across the Internet to friends PCs. Friends can then
comment on the outfits by instant messaging, even
going so far as to consult an online Bloomingdale’s
inventory to suggest alternatives to the in-store
shopper.
As online retailers face slowing sales and a grim
holiday shopping season forecast for 2008, many are
revamping their web sites to better attract customers.
Free shipping offers proliferate, and a number of web
sites are adding product videos, customer reviews
and creating Facebook pages to promote their sites.
Clearance sale pages are also becoming more
popular.
10) Location Based Services (LBS) and
Advertising on Cellphones Take Hold
GPS technology is allowing advertisers and
information providers to push information to mobile
consumers based on their locations. For example,
GPS-equipped cellphones have the potential to alert
consumers on the go to nearby restaurants,
entertainment attractions and special sale events at
retailers. Location based advertising is already fairly
common in Japan and in parts of Europe. This is an
adjunct to location based services (LBS), based on
GPS, which are growing in popularity. In America,
several leading companies have developed expertise
in enabling GPS maps and location based data to
appear on cellphones include Smart2go, TeleNav and
MapQuest.
Thanks to rapidly evolving technologies,
cellphones have the potential to deliver a wide
variety of advertising and local data to the consumer.
Enablers include faster Internet access for cellphones
(including new 3G networks with very high speeds);
color screens; TV and video delivered to the
cellphone by subscription; and mobile access to
Internet sites, such as Vindigo, that were created
especially for use by cellphone consumers who are
on the go.
Typically, cellphone technologies and services
evolve much faster in Asia and Europe than in the
U.S., and advertising via cellphone is no exception.
In Asian nations such as South Korea and Japan, for
example, consumers are enthusiastic adopters of new
cellphone services. Savvy marketers are delivering
ads to cellphone screens. Many of these ads are
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entertaining or include contests of some sort. Other
ads deliver coupon-like information that enables
consumers to save money.
Cellphone advertising became a reality in the
U.S. in late 2006 when cellphone carriers such as
AT&T, Sprint and Verizon began testing and rolling
out mobile phone ads. Virgin Mobile USA has tested
programs that reward customers who view at least
four ads per day with reduced monthly bills and
access to free programming. Research firm
eMarketer estimates that global cellphone advertising
revenues were $2.7 billion in 2007, and could reach
$4.6 billion in 2008 and $19.1 billion by 2012. To
put that projection into perspective, bear in mind that
the global cellphone user base will be about 5 billion
by 2012, so those revenues represent only about $5
per subscriber.
Major Internet firms such as Google, Yahoo! and
Time Warner are establishing advertising networks
designed for cellphones. Google began selling ads
for cellphone-viewable web pages in late 2007.
Meanwhile, broadcast giant CBS’ mobile unit is
partnering with social network service Loopt to
display ads on web sites CBS Mobile News To Go
and CBS Sports Mobile. Loopt’s GPS-based
technology and social media activity makes location
based-ads possible.
In much of Asia and Europe, delivery of ads via
cellphones is not prohibited or is subject to minor
regulations. In the U.S., cellphone owners must opt-
in or be viewing an Internet site before they can be
subjected to ads. In fact, the Federal
Communications Commission (FCC) released an
order in early 2007 requiring mobile marketers to
obtain express consent from customers before
wireless carriers can release customer information to
third parties that might attempt to target ads.
However, there are many offerings that U.S.
consumers may find compelling enough to get them
to participate. To begin with, millions of American
cellphone carriers are now buying subscriptions to
cellphone TV programming, music programming,
games and sports programming, which may contain
ads. Others are subscribing to news services and still
other consumers use their cellphones and PDAs to
access Internet sites that contain ads in addition to
useful information.
Likewise, broadcast and cable TV programming
can encourage cellphone users to participate in
interactive advertising and entertainment. For
example, U.S. reality TV show American Idol has
viewers vote for contestants via text messaging. In
China, News Corp.’s television unit has encouraged
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viewers to download bingo boards to their cellphones
so that they can play along with games that are on
TV. Potential ways to get consumer interest are
endless. General Motors ran a campaign that
encouraged consumers to send in photos from their
cellphone cameras and enabled participants to
download special ring tones.
At Heathrow Airport near London, and in
London’s train stations and shopping malls,
consumers carrying Bluetooth-enabled cellphones
may come within range of transmitters alerting them
to digital ads and offers. The cellphone ads may be
combined with nearby billboards for greater effect.
Content often includes interviews with musicians or
entertainers, spots about new cars, or travel-related
services. The spots tend to be about 30 seconds long,
and high levels of consumers who are in range, about
10%, have downloaded the ads.
Mobile Advertising and Marketing Companies to
Watch:
AdMob, www.admob.com, a mobile phone ad
distributor, offers both advertisers and publishers to
target and personalize cellphone advertising in more
than 160 countries. Its 4INFO service offers mobile
web users access to business listings, sports scores,
weather, flight information, movie times, mobile
downloads and more.
Ingenio, paypercall.ingenio.com, a San
Francisco, California-based company, now owned by
AT&T, that offers a pay-for-performance advertising
system that places ads relating to mobile Web
searches next to search results. (Ingenio also
provides this service on standard, non-mobile Internet
searches.) The firm has deals with Microsoft’s MSN
unit and with AOL.
Medio Systems, Inc., medio.com, a mobile
marketing firm in Seattle, Washington that provides
the default search engine for a variety of mobile
phones served by carriers including Verizon Wireless
and T-Mobile. Its Medio MobileNow Ad Network
offers pay-per-click mobile ads to advertisers.
Vindigo, www.vindigo.com, is an American firm
that provides ring tones, maps, news, entertainment
and sports programming to cellphones and PDAs. It
offers a large range of mobile advertising and
branding opportunities, including the ability to
advertising on its entertainment and news sites that
have been designed especially for mobile screens.
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Wavemarket, www.wavemarket.com, a
California firm offers mobile media, messaging,
friend and family finding programs and campaign
management.
11) Retail Technologies Leap Ahead
Retailers, especially grocery retailers, are
investing heavily in new technology that will
simplify transactions and increase customer service.
A host of gadgets, such as touch-screen information
monitors, hand-held scanners, RFID tagging and
fingerprint identification, are now in place at many
stores across the U.S. and in Europe.
Customer Checkout
Retail productivity has benefited tremendously
from the construction (or remodeling) of new, more
efficient stores with the latest checkout and inventory
control equipment. Today, you’ll find at least the
basics in computer systems in even the smallest
stores. Virtually all chain retailers are utilizing point-
of-sale computer systems, in which bar code scanners
immediately capture sales information at the cash
register, adjust the inventory in the computer and
reorder merchandise automatically. The more
advanced point-of-sale systems prompt cashiers with
suggestions of additional merchandise that might go
well with the items being purchased.
This technology has helped companies like Wal-
Mart and Nordstrom to become giants in their
segments. Retailers who could not invest in
productivity-enhancing technology and remodeling
have suffered, since newly equipped stores show
significantly higher profits due to growth in
efficiency.
A boon to habitual customers is the convenience
provided by the proliferation of private-label cash
balance cards such as those issued by Starbucks.
Customers pay for a card in amounts from $5 to
$500, which creates a debit account. Instead of
handing over a few dollars in cash for a Grande Latte,
customers have their cards swiped and their account
balances are lowered accordingly. Additional
deposits may be added into the accounts as necessary
for ongoing use of the same cards.
Still another benefit for speedy shoppers is
fingerprint identification. Major chain stores across
the U.S., such as Kroger, Co., Blockbuster, Inc. and
Piggly Wiggly Co., maintain secure personal files
that store credit or debit card numbers along with
encrypted fingerprint images. When it comes time to
check out, participating shoppers merely press their
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fingers on a pad at the payment terminal. The system
verifies the customer’s fingerprint image and charges
the associated credit or debit card on file. The goal is
to increase speed and convenience for shoppers, as
well as to curtail credit card fraud. Piggly Wiggly
and Bi-Lo are among the supermarket chains that
already have fingerprint technology at work in stores
for verifying customer identities when cashing
checks (a system in use by many banks across the
U.S.). However, some customers are still hesitant to
sign up for this service, mostly because of concerns
about infringement on privacy. Biometric systems
such as fingerprint or retinal scans are perceived by
some consumers as ominous portents of a future in
which government and law enforcement agencies
have the power to track every move, even moves as
seemingly innocuous as buying groceries.
Still another innovation in checkout is hand-held
or shopping-cart mounted scanners that provide a
“checkout-as-you-go” service. Shoppers pick up a
scanning device and small computer monitor from a
rack near the entrance (or grab a shopping cart with
the device attached) and scan their store customer
loyalty cards with a detachable barcode reader.
Information about past purchases appears on the
monitor as well as special offers dictated by personal
preferences. As the shopper walks the aisles and
scans items for purchase, the system keeps a running
tally and suggests complementary items. Scan a jar
of peanut butter, and the computer suggests buying
jelly or offers an instant coupon on the brand of jelly
purchased by that customer in the past. The system
also beams signals to the store's central computer
network regarding shoppers’ locations in the store.
The monitor displays information and special offers
about nearby items, based on which aisle the
customer happens to be in at a given time. An
additional feature is the ability for shoppers to create
online shopping lists at store web sites and have those
lists beamed into the device and displayed on the
monitor, complete with a map of the store indicating
where each item can be found.
Stop and Shop of Quincy, Massachusetts had a
shopping cart-mounted version of the system called
the Shopping Buddy (made by IBM) in 20 of its
stores in the northeastern U.S. In 2008, Stop and
Shop switched to a smaller, hand-held device called
easyShop which is made by Motorola and uses
software developed by Modiv Media. The easyShop
device, which costs more than $500 each, is in use in
about 100 Stop and Shop stores.
There are concerns are that shoppers will attempt
to leave stores without paying for their scanned
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merchandise. Video-surveillance is necessary as are
random spot checks in which customers are required
to pass through a traditional checkout stand where
items are scanned all over again.
However, the efficiencies gained by shorter
shopping times, customer convenience and
personalized marketing outweigh the growing pains.
Watch for growing numbers of retailers to roll out
versions of the personal scanning systems in the mid-
term and beyond.
In-Store TV
Many retailers, including Kroger, Wal-Mart and
Metro Group’s Future Store in Rheinberg, Germany
are installing large (up to 42 inch) plasma or high-
definition LCD monitors throughout their stores. In
the case of Wal-Mart, the monitors display a
proprietary television network programmed with ads
for a wide variety of merchandise. Each screen
displays ads relating to nearby inventory. For
example, a monitor near the bananas shows ads for
produce, while another monitor on the cereal aisle
shows commercials for breakfast foods. Major food
companies such as Kraft, Unilever and PepsiCo are
lining up to buy air time on the Wal-Mart network,
which captures 130 million viewers every four
weeks, making it the fifth-largest network in the U.S.
(behind NBC, CBS, ABC and Fox). Rates run
between $137,000 and $292,000 per commercial for
a four-week run, based upon the length of the
commercial and the number of stores in which the ad
appears. In addition to ads, in-store televisions often
broadcast national and world news items and public
service announcements.
Text Messaging
Tech firms NearbyNow and GPShopper are both
offering text messaging services that allow shoppers
to use their cell phones and PDAs to search
inventories and sales at shopping malls. Signs are
posted around the malls inviting shoppers to send a
six-digit text message to a specific address for sales
information. A welcome message is sent back, with a
prompt for shoppers to type in the brand or product
they want. For example, “Ralph Lauren sweater”
will return the names of the stores that carry sweaters
by that brand along with prices and relevant sales.
The system catalogs almost every item in every store
in the mall, generally between 600,000 and 800,000
items. NearbyNow has deals with 650 U.S. cities and
shopping centers, while GPShopper’s Slifter mobile
phone service links 350 million products at 200,000
retail locations to shopper’s phones.
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In addition to the in-mall service, the technology
has links to Google. Shoppers can search online for
an item and a mall (e.g. “Levi’s 501 jeans Redfield
mall”), and view a list of stores in the mall that carry
that item. Clicking on a retailer enables the shopper
to sign up to receive an e-mail within minutes about
the item and if the needed size is in stock.
12) RFID Drives Inventory Management
Evolution
The biggest technology breakthrough in
inventory management is RFID (radio frequency
identification)—the placement of microchips in
product containers, cartons and packaging, combined
with the use of special sensors in warehouses or on
store shelves that alert a central inventory
management system as to shipment arrivals, product
purchases and the need to restock inventory,
communicating via wireless means. From loading
docks to store shelves to cash registers to parking
lots, RFID readers have the potential to wirelessly
track the movement of each and every item of
inventory. Bar codes will be replaced by Electronic
Product Codes (EPC), which are stored in RFID
microchips. In retail stores, the chips could even
eliminate the need to scan each item at checkout.
Checkout stations will be equipped with receivers
that automatically calculate purchases a cart full at a
time, rather than each individual item. These systems
can lead to great reductions in shoplifting and the
elimination of costly manual inventory counts.
Leading suppliers of RFID tags include Intermec
Technologies Corp. and Symbol Technologies, which
is a unit of Motorola.
Another potential advantage of RFID is that
manufacturers and distributors will be able to reduce
overall inventory thanks to greater supply chain
efficiency. Marks & Spencer, a major retailer in the
U.K., is replacing bar codes with an RFID system,
including tags for the millions of containers that hold
food being shipped from suppliers to its stores. It
takes a mere five seconds to receive data from 50
containers, an 85% improvement in the time it takes
to scan bar codes. The savings of time as well as
reduced cost of spoiled food are expected to make the
system’s $3-million price tag feasible.
Wal-Mart is also heavily invested in this new
technology. The firm requires most of its top
suppliers to have RFID tags on every pallet and case
coming to its distribution centers and stores. The
program started with Wal-Mart’s top 100 suppliers in
2005 and has been expanding ever since. By January
2008, 15,000 of its suppliers still hadn’t complied
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with the RFID request. Hoping to concentrate on a
simple way to begin to remedy the problem, Wal-
Mart began charging suppliers $2 per pallet that
doesn’t have an RFID tag shipped to its Sam’s Club
distribution center in Texas, ostensibly to cover the
company’s costs to affix tags on each pallet once it’s
delivered. The thinking is that if the smaller, 700-
store Sam’s Club chain (which sells items on pallets
in bulk) gets on board the RFID train, then the larger
Wal-Mart system may follow. One industry estimate
calculates that the coded cases and pallets will save
the retail giant $407 million per year. Should RFID
tags be placed on every item in every store, Wal-Mart
has the potential to save immense sums yearly
through full implementation of RFID systems.
Savings of that magnitude, however, depend on
the ability of Wal-Mart and its suppliers to
successfully implement and utilize widespread RFID
at a reasonable cost. So far, that hasn’t happened.
To begin with, today’s RFID is being used on case
and container shipments, not on individual products.
Tagging the individual products on a cost-effective
basis may still be many years away. There is a
significant challenge of overcoming inertia in moving
the world of distribution into full use of RFID.
Today’s RFID tags and scanners are still
manufactured in relatively low volume, so their costs
are high at about 15 cents apiece. Likewise, creating
and installing software to take full advantage of
RFID data is still difficult and expensive, although
low-cost commercial software systems will
eventually emerge. Finally, there is the problem of
training staff to utilize RFID.
By the beginning of 2007, about 1,000 Wal-Mart
stores (less than 20% of all properties) were equipped
to read RFID tags, including some Sam’s Club stores.
The firm implemented RFID in 400 additional stores
by 2008. Not all of Wal-Mart’s goals are being met.
Wal-Mart planned to have 12 of its 120 distribution
centers using RFID by the beginning of 2007, but
was only able to implement in five distribution
centers. Some suppliers are unhappy with the time
and money they must invest in order to use RFID,
and significant financial benefits and cost reduction
have not yet emerged. Implementing such a radical
technology is going to take time, extra effort and
large investments of capital, but vast potential looms
on the horizon nonetheless.
The greatest advantage of RFID implementation
in stores such as Wal-Mart may be reduction of out-
of-stock situations. The ability to keep popular items
properly in-stock means higher revenues. Wal-
Mart’s initial test of in-stock advantages was done in
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2005. It included 12 stores equipped with RFID
readers, and 12 control stores operating in the
traditional non-RFID manner. The test was
conducted by the University of Arkansas. The study
found a significant reduction (16%) in out-of-stock
situations. The reduction could add as much as 3-4%
to Wal-Mart’s annual sales. The University of
Arkansas conducted a similar test in 2008 that
corroborated the first test’s findings. Proctor &
Gamble, a major supplier to Wal-Mart and other
mass merchandisers, theorizes it could increase
annual sales by $1.2 billion via RFID technology by
reducing incidences of out-of-stock items in stores.
RFID is already in wide use for such tasks as
tagging livestock and for motorists using non-stop,
pre-paid lanes on toll ways (often called EZPass).
ExxonMobil is also on the bandwagon with the
SpeedPass wireless payment system, based on Texas
Instruments RFID technology. Participating drivers,
numbering more than 6 million, wave a prepaid 1.5-
inch wand attached to their key chains at the pump.
The system stores personal preferences, such as
whether or not the customer likes a printed receipt,
and tends to reduce transaction time significantly.
SpeedPass works inside the company's food marts as
well. SpeedPass can debit a checking account or post
a charge to a credit card. For more details, see
www.speedpass.com.
RFID on Steroids
University of California at Berkeley professor
Dara O'Rourke published a paper in 2004 describing
the potential consumer revolution posed by the
advent of RFID technology. Imagine using a
cellphone camera to scan an RFID embedded in the
packaging of a steak. The data encrypted in that code
links to a web site showing pictures of the ranch from
which the meat came and medical and feed records
pertaining to the specific cow. Science fiction you
say? Software is already on the market that enables
camera-enabled phones to read barcodes.
Supermarkets in Japan currently provide the
technology via meat counter computers that display
information relating to specific codes on each
package.
In Germany, the grocer Metro operates an entire
store equipped with RFID, as well as several other
technologies, called the Future Store. Not only is
every item equipped with a tag, but a tag reader is
also installed in each shelf. Customers are given
touch-screen computers that also have readers, which
can assist them in finding products by a keyword
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search as well as ring up each item as it is placed in
the cart. Though the system has experienced bugs
and glitches, it is a bold venture that gives shoppers a
good idea of what the store of the future might look
like. Other retailers are studying this store very
closely. In the U.S., retail chains with RFID projects
include Best Buy, Target and Albertson’s. The U.S.
Department of Defense is also pursuing the use of
RFID on its massive amounts of inventory. In
addition, the pharmaceutical and hospital industries
are extremely interested.
The problems facing the widespread use of these
chips include cost, snags in technological
developments and concerns about privacy. RFID
tags and the equipment to read them were
prohibitively expensive at first. There were technical
glitches as well. Early shipments of RFID-embedded
pallets often had a low read-through rate due to
dampness or other conditions. However, costs will
fall dramatically as the volume of use of this
technology spreads and reliability will continue to
improve as new products hit the market. Innovative
companies are researching novel ways to make RFID
tags. For example, Nanosys is researching the
possibility of utilizing its nanotechnology expertise to
reduce the cost of manufacturing the tags by a
significant margin.
At MIT, experts are endeavoring to enhance
RFID systems by continuing work on a project
originally called the Auto-ID Center. Now called
EPCglobal, the initiative is backed by more than 50
companies including Wal-Mart, Proctor & Gamble
and Coca-Cola. (See www.epcglobalinc.org.) In late
2004, the project reached its goal of developing a
common language for all RFID chips, thereby
substantially reducing costs. It is estimated that costs
must fall to between one and five cents per chip and
around $100 per scanner for this new wave of
technology to be universally adopted. (As of early
2008, costs in actual commercial RFID use were
about 15 cents per chip.) EPCglobal has been at the
forefront of design standards for all components of
RFID systems, including electronic product codes for
the tags and software to look after them. In 2007, the
project launched the www.DiscoverRFID.org web
site devoted to informing the public about the use and
benefits of the technology.
When fully implemented, RFID systems will be
more than mere inventory management systems.
They will be able to track virtually every item made,
from the factory to the freight container to the
shipping line to the warehouse to the store, even from
the checkout lane to the home. They could even be
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used to sort recyclable items for reuse by the
manufacturers, following the entire lifecycle of every
product.
Proponents of the systems are looking for
compromises in the nature of tags that are deactivated
once items are purchased. Despite ethical concerns
and early technical glitches, RFID is the future of
retail inventory management. Look for mass use of
radio tags by 2011 to 2015. However, the global
slowdown in retailing in 2008 will dampen funds
available for investment in new technologies at many
retail companies.
Gen 2 RFID
Several companies are testing next generation
RFID tags. The goal is to provide more information
automatically while increasing read-through rates. A
major difference will be an increase in the potential
memory on board each tag to 256 bits, a tripling over
first generation tags. The ultra high frequency (UHF)
readers that receive data from the tags will be better
able to focus on RFID tags in their immediate
vicinity. This means that a facility could have a
larger number of readers without fear that they will
duplicate readings. EPCglobal has published
standards for Gen 2 RFID. Additional goals are
complete international interoperability and a read rate
of about 1,500 tags per second (compared to 100 in
Gen 1). In 2007, Intel created a new chip for UHF
readers, which will lower the cost of RFID systems
significantly.
13) Self Service Retail and Travel Technologies
Take Off
Self-Service Checkout
Another innovation that has been growing rapidly
in store use is the automated self-checkout kiosk.
Thousands of these machines are in use in traditional
retail stores, notably in major chains such as Kroger,
Albertson’s, Wal-Mart and Home Depot. Most major
airlines have now installed similar automated kiosks
for checking in passengers, saving significant
overhead necessary to support ticket agents.
Though initially avoided by many shoppers
because of worries about mistakes and complications,
these clerk-less checkout lanes have been gaining
popularity and have become the preferred method of
checkout for many customers, especially after they
have used them many times. Automated checkout
machines have attracted a certain amount of ire,
however. From the consumer perspective, older
shoppers dislike the increasing lack of human
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interaction that began with the automated use of such
systems as voice mail and has culminated in this new
technology, which completely replaces customer
relations with clerks. Of course, for retailers,
installing these devices is simply good business. The
machines pay for themselves in nine to 12 months, as
the cost saved in labor alone is enormous.
Self-Service Kiosks turn into Super Vending
Machines
A San Francisco startup company called Zoom
Systems (www.zoomsystems.com) is placing extra-
large vending machines, referred to as robotic retail
store networks, in locations such as airports, hotels,
office campuses and universities across the U.S.
Instead of offering drinks and snacks, these machines
typically offer up to 120 high-dollar items such as
iPods, digital cameras, headphones and wireless
laptop cards. Each machine is about 40 square feet in
size. Users choose a product using a touch screen
that displays detailed product information. A robotic
arm retrieves a selected item and deposits it in a bin,
at which time the user’s credit card is charged. With
hundreds of machines in place, Zoom is betting that
consumers will have few problems with spending as
much as $500 at a vending machine. Early results are
promising, as the machines generate between
$60,000 and $240,000 in annual sales per location.
Zoom had 780 ZoomShops in place by late 2008, in
the U.S. and Japan. Just as ZoomShops can be
customized to locations, they can also be customized
to brands. For example, a cosmetics company could
customize a Zoom Shop so that it carried the look
and feel of the brand and offered the best of its
product line. Because the stores are located in high
traffic consumer areas, these customized stores can
provide branding opportunities as well.
Another growing use for vending machines is for
DVD rentals. Many companies build and sell these
machines, which are generally stocked by the owner
with films and television programs in DVD format.
Users charge the rental fees to credit cards. Redbox
Automated Retail LLC is a leader in this field.
Redbox is a venture owned by a subsidiary of
McDonald’s Corporation and Coinstar, Inc. There
are 10,000 Redbox kiosks in locations such as
McDonald’s restaurants, in addition to supermarkets
and other high traffic locations that offer a selection
of about 500 DVDs each for a $1 rental fee. RedBox
expects the self-service DVD rental market to grow
to $3 billion by 2009, and it is positioning itself to
have a major market share. Redbox is very user-
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friendly. For example, it charges no late fees. The
company also offers an online movie rental service.
Size Scanners
Several Levis Stores across the U.S. and in
London are promoting a high-tech scanning booth
that promises to scan shoppers for their exact
measurements and then print out a selection of
clothing lines and styles that will fit the best. The
process takes about 10 seconds, and is the result of
technology developed by a U.S. Department of
Energy research facility. Built by a private company
called Intellifit (www.intellifit.com), the glass booths
cost about $50,000. Intellifit is currently leasing the
booths to client stores, with a handful of installations
in malls in Pennsylvania, California, Oregon and
Virginia as of 2008.
14) Retailers Find New Markets in China While
India’s Retail Industry Sees Lukewarm
Growth/Russia Attracts Retail Interest
It is clear that rising household income and a
growing middle class in India, China and Russia offer
potentially lucrative expansion markets for
sophisticated retail firms headquartered elsewhere
(such as leading retailers from Japan, Europe, the
U.S. and Australia). However, multiple challenges
face firms attempting to break into these markets. In
addition to the need to understand local consumer
tastes and requirements regarding packaging,
displaying and advertising retail merchandise, there
are daunting government regulations to overcome,
and frequent encounters with demands for well-
placed bribes in order to secure building permits and
business licenses. Foreign retailers will eventually
do well in these markets, but it is going to be a long
haul requiring patience and significant investment.
Meanwhile, the global financial crisis of 2008 is
dampening growth in these nations, and many
previously announced expansion plans will be
delayed or cancelled. The Russian market faces
unique problems, since Russia’s economic growth
has been based largely on its status as one of the
world’s largest oil and gas producers. Plummeting
oil and gas prices in late 2008 have seriously
dampened growth prospects there.
In China, retailers are all scrambling to grab their
piece of the rapidly growing Chinese retail market.
A burgeoning middle class, estimated at 250,000 to
400,000 people by late 2008, is growing rapidly as
the Chinese economy expands. These consumers are
hungry for ever-widening varieties of products.
These new shoppers seek the convenience, comfort
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and selection offered by Western-style stores. Bain
& Co. estimated that overall retail sales are growing
at a rate of 15% per year in China, and that the
market will reach $860 billion by 2009.
Wal-Mart operated 202 stores in China through a
combination of join ventures and minority-owned
subsidiaries as of early 2008. Dutch company
Makro, German grocer Metro and, of course,
Carrefour SA, the French discount giant, have all set
up shop. Carrefour had a network of 118
hypermarkets in China as of 2008.
New regulations, in accordance with China’s
2001 entry into the World Trade Organization, took
effect in December 2004 that allow foreign
companies complete ownership of Chinese stores
(foreigners were previously limited to a 65% stake
and had to seek Chinese joint venture partners);
require only local government approval instead of
central-government okays; and allow stores to be
located anywhere in China instead of only provincial
capitals and selected large cities.
Although Chinese retailers of all kinds have the
benefit of knowing the ins and outs of their local
markets, they do not have the deep pockets,
management expertise and scale of the foreign firms.
The growing presence of Western retailers has
created a healthy competitive atmosphere. In the
mid-term, the new competition may drive forward the
retail industry in China, as well as further develop the
Chinese economy while it assists bottom lines in the
U.S. and elsewhere.
There may be troubled waters ahead for large
foreign retailers such as Wal-Mart and Carrefour if
the Chinese government finalizes new regulations
that raise costs and increase red tape for rapid
expansion. The rules under review by the Chinese
State Council may require retailers to file detailed
blueprints for proposed locations and hold public
hearings about the impact of new stores on the local
communities. Chinese retailers such as WuMart
Stores, Inc. and Lianhua Supermarket Co. of
Shanghai are lobbying for these measures, claiming
that foreign retails have been enjoying an unfair bias
from the government.
India’s retail sector has been largely closed to
foreign companies. However, most business sectors
in India are now enjoying relaxed regulations
regarding foreign investment and ownership. There
is the potential for foreign ownership of minority
stakes of perhaps 25% to 49% in retail chains. This
will lead to introduction of foreign retail concepts in
cooperation with local partners. While the middle
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class is smaller in India than in China, there remains
exceptional long-term potential here for retailers.
Foreign companies are now allowed to own
100% of cash-and-carry subsidiaries that sell supplies
to businesses (not to retail consumers). This has
encouraged retail giant Carrefour to create two
business models in India. The first is a franchise
business that is providing a license to an Indian firm
to open Carrefour hypermarkets within India. The
second business is a cash-and-carry supplier that will
provide merchandise to these hypermarkets on a
wholesale basis.
Meanwhile significant Indian retail enterprises
exist, such as Pantaloon Retail (India) Ltd.’s
Pantaloons department stores and Big Bazaar
discount hypermarkets, Tata Group’s Westside
department stores and RPG Group’s Spencer’s.
Reliance Industries, one of India’s largest business
groups, made plans to invest $6 billion starting in late
2006 to open 1,000 hypermarkets and 2,000
supermarkets through 2011, starting with 11 locations
in the city of Hyderabad.
In early 2006, India loosened regulations slightly
by enabling foreign investors to own up to 51% of
“single-brand” retail stores. In other words,
companies such as Ralph Lauren or Apple might be
encouraged to expand their stores into India under
this scenario. However, Indian partners must be
involved, and under Indian law they will have
significant rights.
Meanwhile, Wal-Mart announced a joint venture
with business giant Bharti Enterprises, in November
2006, to develop discount stores in India. Stores
would be owned by Bharti under a franchise
agreement with Wal-Mart. Bharti will invest up to
$2.5 billion in the stores. The announcement led to
vast demonstrations by thousands of small vendors,
farmers and workers who feel that the opening of
stores like Wal-Mart threatens their livelihoods.
Small, largely unorganized shops and stalls are the
traditional methods of selling to consumers in India.
Despite the protests, Wal-Mart is currently supplying
Bharti with technical support and the two firms plan
to open a wholesale cash-and-carry supply chain
operation in 2009.
India’s once rosy forecast for booming retail
growth has darkened considerably. The retail sector
was expected to expand from $300 billion in 2007 to
$637 billion in 2015. Projected sales for 2008 are
only about $350 billion. The country’s booming
population, 60% of which is under the age of 30, has
not adopted western shopping habits as quickly as
expected. High-dollar Western brands such as
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Tommy Hilfiger, Gucci, Jimmy Choo and Calvin
Klein are finding smaller markets in India than
previously thought as most Indians shy away from
spending three to 10 times more for international
brands. Three Build-A-Bear Workshop, Inc.
franchises opened by Murjani Group have closed, as
have more than 20 Straps stores, run by India’s
Oswal Group that featured lingerie by Hanesbrands,
Inc.
Western retailers continue to study Indian
markets, however, and a number of deals are on the
horizon. In late 2008, U.S. mall developer Vornado
Realty Trust signed a joint venture deal with Indian
conglomerate Reliance Industries Ltd. to invest $500
million in building and operating shopping centers in
India. Britain’s Tesco PLC is working with Tata
Group to develop a wholesale cash-and-carry
business similar to Wal-Mart’s deal with Bharti.
Development is slow. U.S. real estate broker
Cushman & Wakefield estimates that almost 17
million square feet of malls would be built in 2008 in
eight Indian cities. Compared to the 45.5 million
square feet of new retail space expected in the eight
largest U.S. markets, India’s expansion is modest.
As U.S. retailers face a grim economic outlook
starting in 2008, some retail investors are looking to
Russia’s expanding affluent class for possible new
markets. U.S.-based Developers Diversified Realty
Corp. announced plans to build three malls per year
in Russia and the Ukraine between 2008 and 2015.
The firm intends to invest as much as $500 million a
year in Russia and Brazil. Analysts at Russian
brokerage Jones Lang LaSalle report that Russia’s
economy grew 8.1% in 2007, and that the volume of
shopping space per 1,000 residents is about 420
square feet compared to the 25,758 square feet of
available shopping space for every 1,000 American
residents.
Unlike Developers Diversified’s typical U.S.
open air strip malls anchored by department stores,
initial projects planned for Russia are vertical
structures anchored by supermarkets. The projects
will be located in relatively small cities that lack
many retail options. In addition to Developers
Diversified, Orco Property Group of Luxembourg
and Altarea of Paris plan Russian developments.
Overall, Jones Lang LaSalle claims that 54 million
square feet of shopping space is scheduled for
completion by 2011.
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15) Lifestyle Centers and Super-Regional Malls
Falter/Mall Glut Anticipated
Super-regional centers (that is, shopping centers
or malls which include at least three department
stores and at least 800,000 square feet of retail space)
were favored in new construction up until 2008.
New malls have been slightly smaller than those of
the past, averaging 1,060,000 square feet between
2008 and 2009, compared to an average of 1,148,000
square feet from 1997 through 1999. Malls like these
can cost more than $200 per square foot to build,
making the new properties’ investments in the range
of $150 million to $250 million each.
Other types of shopping center properties, such
as power centers and lifestyle centers, had been
developing rapidly in recent years , in many cases
robbing traffic from traditional malls. A “power
center” is typically an open-air complex of category-
dominant anchors such as category-killers, home
improvement stores, discount stores and warehouse
clubs. A “lifestyle center” is an open-air, highly
landscaped configuration of approximately 50+
stores. Generally located near upscale
neighborhoods, lifestyle centers offer leaseable retail
area of 150,000 to 500,000 square feet, with at least
50,000 square feet of space typically dedicated to
upscale national specialty stores such as Williams-
Sonoma.
There are also hybrid centers, and value oriented
centers. Hybrids have some of the features of
enclosed malls and lifestyle centers. That is, they
have both open-air sections and enclosed sections.
Value-oriented centers are built on formats that
emphasize discounted prices. These include outlet
malls. Many new value-oriented centers feature
significant entertainment segments.
Fueled largely by investment money provided by
pension funds, REITs and professional money
managers, these new shopping centers had been very
popular, if not always profitable, investments. The
global economic crisis of 2008 is making developers
painfully aware of recent over-development and
putting the brakes on growing numbers of new
projects. According to Property & Portfolio
Research, Inc., developers have built 1 billion square
feet of retail space in the 54 largest markets in the
U.S. from 2000 through 2008. This is 25% more that
what was built during the same period in the 1990s.
In 2007 alone, 37 lifestyle centers were built, totaling
12 million square feet. There are currently 38 square
feet of retail space for every person in those 54
markets, up from 29 square feet in 1983.
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The end result of the glut of mall space is a retail
space shakeout. Property & Portfolio Research
projects a decline in occupied retail space in major
U.S. markets of 1.2 million square feet in 2008, the
first decline since the 1990-1991 recession. As the
financial crisis hit in late 2008, there were about 74
lifestyle centers under construction and more than
100 projects under development. Expansion plans
are being shelved and new projects are being
postponed or cancelled altogether. Property &
Portfolio Research forecasts that in 2009, retail-space
construction will fall 48% from 2008 to 71 million
square feet.
Major Entertainment/Retail Projects of 2008
Hamilton Town Center, Noblesville, Indiana, .95
million square feet, completed Spring 2008
Shoppes at River Crossing, Macon, Georgia, .75
million square feet, completed Spring 2008
Spotsylvania Towne Center, Fredricksburg,
Virginia, 1.7 million square feet, completed Fall 2008
Village at Fairview, Fairview, Texas, 1 million
square feet, completed Fall 2008
Legacy Place, Dedham, Massachusetts, .74 million
square feet, completion Summer 2009
Elk Grove Promenade, Elk Grove, California, 1.2
million square feet, completion Fall 2010
Shops at Summerlin Centre, Las Vegas, Nevada,
1.2 million square feet, completion Fall 2010
(Delayed from a previously scheduled 2009 opening
date. The developer, General Growth Properties, is
facing serious challenges in restructuring its debt, and
further delays may be required.)
The District at Desert Star, Las Vegas, Nevada, 1.2
million square feet, completion Spring 2011
* Square footage applies to gross leaseable area
Source: International Council of Shopping Centers
www.icsc.org
Shopping mall performance in recent years was
sharply delineated by economic scale. Low-end
malls showed weak sales per square foot while high-
end malls were the most successful. Malls catering
to wealthier customers also cost more to build and
operate, and are able to charge higher rental rates.
For example, Taubman Centers, Inc., a luxury
shopping center developer that owns 25 malls in 12
states, reported average sales per square foot of mall
space of $550 in 2007, a figure much higher than
typical malls, which often report average sales in the
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$350 range. 2008 sales per square foot increased
2.3% in the first nine months of the year.
This may change, however, as the economic
crisis of 2008 takes effect. Retailers expected to
weather the storm tend to be discount stores and
outlets where low prices can still attract shoppers.
Simon Property Group reports that year-to-year
growth in comparable sales per square foot was
stronger at outlet centers than at traditional high-end
malls as of early 2008. At Simon’s Chelsea Premium
Outlets center in Houston, Texas, for example, sales
per square foot rose 5.4% to $511 as of March 2008,
compared to the previous year. By comparison, sales
per square foot in the same period in regional malls
rose by only 0.8% to $491.
Spotlight: Mall of America
The largest mall in the U.S. is the Mall of
America (www.mallofamerica.com), located in
Bloomington, Minnesota. First opened in 1992, it
contains 4.2 million square feet of gross building area
(2.5 million leaseable) and is visited by an average of
110,000 people daily (or 40 million people per year).
Entertainment is everywhere in this mall: 14 movie
screens, a comedy club, night clubs, a 1.2-million
gallon walk-through aquarium, a seven-acre
amusement park, the NASCAR Silicon Motor
Speedway, LEGO building center, A.C.E.S. Flight
Simulation and over 520 specialty shops. Total
employment in the center ranges from 11,000 in
normal times and up to 13,000 during holiday and
summer seasons. (Not everyone comes here just to
shop: the Mall of America reports that more than
4,000 people have exchanged wedding vows in the
Malls “Chapel of Love” wedding chapel, and the
mall’s mall-walking list, the “Walksport Mall Stars!”
has registered more than 4,000 people.
With the addition of a 306,000-square-foot Ikea
home furnishings store, the mall enters its newest
phase of construction. Shoppers from far and wide
visit Bloomington and stay several days specifically
to shop this mammoth mall. International visitors are
common. Overall, visitors from outside the mall’s
150-mile radius hover at around 35%.
The Ikea store, while not directly connected to
the original mall, is part of a 42-acre new Phase II
development just north of the original site. Tentative
plans for new tenants include several hotels, an office
building, a spa and entertainment attractions, which
may include a performing arts theater. The Phase II
mixed-use complex is zoned for up to 5.6 million
square feet of new development.
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16) Entertainment-Based Retailing, including
Power Towns
Since the earliest days of the marketplace,
merchants have realized that entertainment draws
crowds of people who linger and shop. Even during
the Dark Ages, jugglers, storytellers and other
entertainers were an integral part of public markets,
helping to draw throngs of people who might
purchase goods.
For the foreseeable future, entertainment’s value
as a drawing card for retail customers will be of
growing importance, especially for the retailing of
goods beyond everyday staple items. In fact, the
explosive growth of retailing over the Internet means
that brick and mortar retailers must offer more than
the mere availability of merchandise in order to lure
shoppers out of their homes, away from their
computer screens and web browsers and into the
retail store. New shopping centers, especially those
in urban areas, are devoting up to 40% of gross
leaseable area (GLA) to entertainment, restaurants
and movie theaters.
Yet consumers still want the convenience found
in neighborhood centers. Consequently, many new
shopping center developments are including the most
desirable elements of both power centers and lifestyle
centers, including dominant anchor tenants in large
formats, dotted with smaller specialty retailers and a
plethora of entertainment and dining facilities, all set
in a pleasant outdoor environment with sidewalks,
trees, lawns and ponds. In many ways, they are the
shopping center equivalent of the super-merchandiser
stores.
These centers, sometimes called power towns,
include Desert Ridge in Scottsdale, Arizona; the
Burbank Empire Center in Burbank, California; and
Avon Common in Avon, Ohio. They sprawl over 80
to 100 acres and contain 600,000 to 1,000,000 square
feet of retail space. Builders spent 25% to 30% more
on these areas than on a comparable power center,
sparing no expense to make the stores and
surrounding areas as pleasant and attractive as
possible. Though the costs of power towns might be
intimidating, they have impressive drawing power for
customers. Desert Ridge, for example, brings in
shoppers from a 15-mile radius, with many people
driving past other shopping centers just to go to there.
Beyond these initial projects, however, lies the
potential for even more ambitious mixed-use
projects. Developers are planning to make centers
that not only provide entertainment but are also
designed to be communities, with space for offices
and residential areas. These projects may even
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include areas for post offices, day-care centers and
community centers for performance theatres and
galleries. An early form of this idea is found in the
Easton Town Center, in Columbus, Ohio. Built for
pedestrians instead of cars, the 1.7-million-square-
foot retail center contains anchors such as Nordstrom,
Barnes & Noble, a Trader Joe’s and an AMC theatre,
mixed in with a spa and fitness center, a comedy club
and a mammography center. The retail center sits
within a 1,300 acre, 12 million square foot mixed-use
development overseen by The Georgetown Company
and Limited Brands.
Another example is the long-anticipated $2-
billion Meadowlands Xanadu center being built by
Colony Capitol Acquisitions in New Jersey (the
project was originally under the control of Mills
Corp.). Beyond retail tenants, there will be a 780-
foot ski slope for skiing and snowboarding called the
Snow Dome; a Culinary Arts Center with live
cooking demonstrations; an enormous ferris wheel
with views of Manhattan; and a 44,000 square foot
LEGOLAND Discovery Center. Developers are
betting that Xanadu’s entertainment features will
draw enough shoppers to justify steeper than usual
rent averages of $67.50 per square foot for its non-
anchor space. Xanadu’s entertainment features will
open in 2009.
17) Shopping Center Tenants Face Slow
Sales/Store Closings force Landlords to
Become Creative
Many major chain store companies are cutting
expansion plans for 2008 and beyond, as mall traffic
is slowing and sales at the cash register are generally
disappointing. (The most notable exceptions are
discount giants Wal-Mart and Costco, where
consumers are flocking to take advantage of everyday
low prices for essential household needs.) After a
weak holiday season at the end of 2007, store
managers in many malls found themselves facing
light traffic in early 2008 and devastating losses in
the fall of 2008 as the global economic crisis gained
momentum. For the near-term, companies such as JC
Penney announced cuts in new store openings, while
stores such as Foot Locker and Zales announced that
they were closing large numbers of stores. Pacific
Sunwear announced in January 2008 that it is closing
its 150 d.e.m.o. stores, although this will leave the
chain with about 950 remaining stores that operate
under other brands. Wilson’s the Leather Experts
announced the closing of 158 of its 260 mall stores.
Worse still, a growing number of chains filed for
bankruptcy in recent months, including Sharper
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Image, Domain, Inc. (furniture), Fortunoff (jewelry)
and Circuit City (electronics). More announcements
of closings, retrenching and bankruptcy will occur
throughout 2009. A leading trade group, the
International Council of Shopping Centers (ICSC),
reported that 4,632 store closures were announced in
the first 10 months of 2008, up from 4,603 during the
entire 2007 year. Apparel stores accounted for
26.4% of the closure announcements, jewelry stores
18.1%, home entertainment 17.6%, food and
beverage 14.5% and home furnishings 6%.
Furthermore, ICSC projects that announced-store
closings will reach approximately 6,100 in 2008 and
surpass 3,100 for the first six months of 2009.
The net effect of these store closings will be hard
on suppliers, employees and on mall owners alike.
Firms that own and operate malls and shopping
centers will be scrambling to find replacements for
empty spaces. Meanwhile, landlords’ rental income
will fall.
Of particular difficulty for landlords is the task of
finding tenants for empty “big boxes” and department
store sites, for example when a department store
abandons perhaps 200,000 square feet under one roof
due to consolidation and store closings. Owners are
having a tough time finding tenants for such large
volumes of space. In some cases, cutting the boxes
into smaller spaces is a viable option. Paradise
Development Co., a Las Vegas owner and property
developer, split a former large store into two 25,000
square foot spaces now leased by Copeland’s
Sporting Goods and Barnes & Noble. In a similar
circumstance, the developer split a defunct Home
Place store into a 30,000 square foot Bed, Bath &
Beyond and a 20,000 square foot DFW Shoes
discount store. Both projects cost a cool $2 million
to renovate. Faced with tens of thousands of empty
square feet in large spaces, many developers are
biting the bullet and following suit.
However, developers who lease to Wal-Mart in
particular are reaping large rewards. The discount
giant’s generally busy traffic is spilling over to
nearby stores, restaurants and entertainment venues.
Hanover Mall, in Hanover, Massachusetts is seeing
occupancy boom since Wal-Mart replaced another
discount department store called Ames in 2003.
Since the switch, overall occupancy rose from 78% to
97%. Sales per square foot across the mall jumped
from $300 to $350 in the same period. Costco is
another highly desirable discounter to have in or near
a major retail center.
Meanwhile, as many major chains are closing
large numbers of mall stores, mall operators are
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looking for new categories of niche tenants. For
example, day spas or medical spas are becoming
commonplace in malls, where clients can receive a
botox shot or laser-based removal of unwanted hair.
(This is a growing trend. The International Medical
Spa Association reports that its membership grew
from 450 in 2004 to nearly 2,500 in 2007.)
Meanwhile, mall owners are now more likely to
consider incorporating nightclubs or additional food
and drink venues in their empty spaces. In addition,
rental agents are actively seeking unique locally-
owned stores to expand into mall spaces when
national chain store tenants vacate.
18) Malls Morph to Stay Afloat
The days of the dull, old-fashioned enclosed mall
are numbered. Anchor tenants such as major
department stores are moving or going out of
business, leaving mall owners with echoing empty
spaces of painfully high square footage. An
estimated one-third of the malls in the U.S. are
obsolete or soon to become so. Malls are forced to
adjust in order to stay in business.
One way to attract customers is to raise the
roof—literally tear off the connecting roofs between
stores to create an open-air environment. Parking
garages are coming down as well so shoppers can
park directly by the entrance of their favorite stores.
Department store chains such as J.C. Penney and
Macy’s are opening freestanding stores at mall sites.
Typically built to have a single floor, the stand-alone
locations have plenty of close-in parking, and offer
shopping carts and centralized checkout stands for
convenience.
For example, Bella Terra in Huntington Beach,
California was an enclosed shopping mall built in
1966. Builder J.H. Snyder Company spent $170
million to tear off the roof and knock down walls,
transforming the mall into an open-air lifestyle center
with 74 shops and restaurants and a 4,000-seat, 20-
screen cinema megaplex. The rebuilt center features
Italian architecture and design accents.
Some operators of enclosed malls are scrambling
to find alternative tenants to fill empty spaces. Wal-
Mart, for example, opened a two-story store in a mall
in a suburb of New York City and a three-story
location in a Los Angeles mall formerly occupied by
a Macy's department store. The pluses for Wal-Mart
in these locations are access to mall shoppers without
having to acquire real estate that is scarce in
congested areas, as well as favorable leases with mall
owners who are anxious to fill large amounts of
space. On the other hand, Wal-Mart faces increased
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security and logistics costs and the difficulty of
having to switch from a single-floor sprawl to multi-
story confusion.
Internet Research Tip: Shopping Centers
For up-to-the-minute facts and figures about
shopping centers of all types, visit the International
Council of Shopping Centers, www.icsc.org.
19) Luxury Item Sales Slow
After years of aggressive spending on luxury
goods by wealthy consumers, the party is over for
high-end retailers. With stock portfolios plummeting
and unemployment rates on the rise, luxury goods
companies such as LVMH Moet Hennessy Louis
Vuitton, Coach, Chanel, Prada and Cie.Financiere
Richemont SA (which owns the Cartier brand) are
reporting falling revenues and anticipating further
slumps.
Moderately-priced retailers are taking hits as
well, especially those that had recently experimented
with upscale lines to capitalize on the formerly
growing affluence enjoyed through early 2008.
Banana Republic, for example, celebrated its 30th
anniversary year in 2008 with the launch of a higher-
priced BR Monogram line. Coldwater Creek tested a
new line called Spirit which had higher price points
than the rest of its merchandise only to pull the plug
in mid-2008.
Uber-expensive automobiles, real estate, aircraft
and jewelry are also flooding the market at bargain
prices as owners feel the economic pinch. Highly
customized Bentley sedans that once sold briskly at
more than $300,000 are appearing in classified ads at
greatly reduced prices. Even luxury resort areas such
as Aspen, Napa Valley and Palm Beach are seeing
vacation home prices soften.
The famous jewelry firm Tiffany & Co.
announced dramatic decreases in sales and profits for
the third quarter of 2008. Same-store sales in the
U.S. were down 14% compared to the previous year.
Luxury department store chains Neiman-Marcus and
Saks suffered dramatic drops in sales in the fall of
2008 also. Conspicuous consumption is out of
fashion, and consumers are no longer willing to
stretch their budgets to acquire luxury brands.
Instead, they are now more interested in paying down
their debts. Savvy retailers will stress “affordable”
luxury items of lasting value and eco-friendly
materials.
Luxury chains had been enjoying great growth in
emerging markets in Russia and China, but dwindling
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economic activity in those markets will hamper
expansion plans and put a damper on profits.
20) LOHAS- Socially Conscious Consumers
Create Challenges and Opportunities for
Advertisers and Marketers
LOHAS, an acronym for Lifestyles of Health and
Sustainability, is a term used to describe the segment
of consumers whose purchases are influenced by
matters such as corporate social responsibility,
recyclable materials, energy efficiency, organic
contents, toxicity, allergens, environmental impact
and alternative living styles. “Eco-friendly” products
are important to them, but these consumers should
not be confused with extreme “greens” or
environmental fanatics.
LOHAS consumers typically prefer to buy
organic or “natural” foods, dietary supplements and
personal care products; they also often prefer
alternative medicines and therapies, in the form of
acupuncture, massage and herbal remedies.
Furthermore, these consumers tend to be strong
advocates for renewable energy and seek out
socially-conscious products and companies.
LOHAS consumers are from all age groups and
income levels. Although this group of people is far
from homogeneous, it represents a significant and
growing portion of the consumer market. Some of
their issues have begun to gain popular momentum.
In the face of growing levels of obesity, pervasive
chemicals and hormones found in food, and the
world’s massive fossil fuel consumption, concerns
about personal health and sustainable energy have
begun to affect consumer buying practices.
As a result, many more companies have begun to
present themselves as environmentally- and socially-
conscious entities. Many have taken steps to build
green facilities, to place stricter controls on the
working conditions at factories run by suppliers, or to
ensure that fair wages are paid by suppliers. Many
also contribute significant sums to charitable
organizations. One recent example of this corporate
trend is Gap Inc., which in 2004 released its first-ever
“Social Responsibility Report.” In an unusual move,
the clothing retailer admitted problems with some
suppliers regarding work and safety conditions, and
revoked its approval of 136 factories. In the global
business arena, social responsibility appears to be an
important issue that companies must address.
In 2007 and 2008, magazines as diverse as Shape
and Town and Country devoted entire issues to
environmentally-friendly topics. Advertisers jumped
to provide eco-sensitive ads highlighting products
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that fall into “green” categories such as those using
recycled packaging or non-animal tested.
Recent trends in high energy costs have
combined with the global financial crisis of 2008 to
boost the LOHAS mentality. Consumers are now
much more financially conservative, and they want
items that are of lasting value. A “less is more”
mentality will spread. For example, the continual
growth in the size of the average new home built in
the U.S. has stopped, and homes will be smaller, but
smarter, going forward. The same is true in
automobiles, as evidenced by the tremendous success
of the small, but smart, cars like the Prius and the
Mini. Health care costs and other considerations are
boosting demand for products that promote a healthy
lifestyle.
Savvy retailers, manufacturers and marketers will
adopt the following practices in order to position
themselves for the LOHAS market:
• Stress the utility and long-lasting value of
products (as well as their inherent beauty and
fashion)
• Stress an organization’s sensitivity to
environmental issues, energy concerns, personal
health needs and restrained personal budgets
• Show consumers concrete examples of value,
lowered environmental impact and/or reduced
costs in products and services
• Cater to consumers’ concerns about health issues
by supporting appropriate causes and creating tie-
ins to health education and issues
• Be aware that consumers will pay more for
LOHAS-centric goods and services, but only
when they see lasting value or reduced
environmental impact. For example, surveys
consistently show that many consumers will pay
a bit more for electricity that is generated by
renewable means. Another example: Each
month, thousands of consumers pay a higher
price for hybrid-equipped vehicles than they
would have paid for traditional cars, despite the
fact that it can take years and years to earn a
return on that extra cost.
• Day-to-day consumer products must be priced
within reason, even if they have high LOHAS
factors.
21) How to Interpret Reports of Retail Sales
Because several different organizations publish
monthly sales reports on America’s retail sector,
these reports can be tricky to interpret, depending on
exactly which portion of retail you are trying to track.
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Period Compared: At all times, you should be aware
of the dates being compared. For example, a
comparison of April 2005 sales over March 2005 (the
previous month) will be quite different from a
comparison of April 2005 sales over April 2004 (the
previous year).
Same Store Sales/Comparable Store Sales: You
should also be aware of the difference in “Same Store
Sales” and “Total Sales.” Same Store Sales are
results only for the stores in a retail chain that have
been open for at least 12 months. This is a solid
indicator of the consistency of sales through the
chain. For example, in April 2004, Wal-Mart
reported an increase in Total Sales of 11.7% over the
previous year. However, Same Store Sales were up
only 4.4%. The difference accounts for the fact that
Wal-Mart opened a large number of new stores over
the previous 12 months. (Same Store Sales may also
be referred to as Comparable Store Sales.)
The following is a list of easy to use resources for
retail sales trends.
A. U.S. Department of Commerce Reports—
Retail Stores, Automobiles, Food Service:
To begin with, the U. S. Department of
Commerce (DOC) publishes its Monthly Retail Trade
Survey, and a corresponding Annual Retail Trade
Survey at www.census.gov/mrts/www/mrts.html.
When you see this bureau’s retail trade figures in
print, however, bear the following things in mind:
1) DOC includes all types of retail trade in its
numbers, including new and used
automobiles, gasoline and food service at
restaurants.
2) Every month, the DOC surveys a few
thousand stores and restaurants (out of a total
U.S. base of about 3 million) to get its
figures.
3) If you dig deeper into its reports, the DOC
breaks down sales by category of store. Near
the top of its reports, you will find “Total”
(including autos and restaurants), “Total
excluding automobiles and parts” and
“GAFO.” The GAFO figure represents
General Merchandise stores only, including
department stores, furnishings, electronics
and appliances, clothing, books, sporting
goods, office supplies and gifts.
4) Next, be aware that the DOC reports
“Adjusted” and “Not Adjusted” sales. The
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Adjusted figures have been altered to allow
for seasonal variations, such as the dates of
major holidays.
5) The DOC publishes “Advance Monthly
Sales” as an estimate. For example, on April
13, 2004, DOC published advance estimates
of March 2004 retail sales. A final, more
conclusive report is published several weeks
later.
www.census.gov/svsd/www/advtable.html
B. U.S. Department of Commerce—Retail E-
Commerce Sales Reports
The DOC includes “Non Store Sales” in its
monthly and annual reports. It also issues a very
useful, separate report (“Retail E-Commerce Sales”)
that breaks out E-Commerce sales and compares the
market share of E-Commerce to traditional sales.
These reports track the growth of E-Commerce sales
over a period of several quarters and several years so
that you can readily see the growth of Internet-based
retailing. www.census.gov/mrts/www/mrts.html.
C. comScore E-Commerce Sales Reports.
comScore Networks, Inc. (www.comscore.com)
also tracks retail sales online on a continuing basis. It
releases figures for the previous month about 12 days
after the end of the month. Its figures can be very
useful in tracking the growth of e-commerce, and
they are published much faster than those of the
DOC.
It’s important to note that surveys of e-commerce
sales can vary widely, depending on whether they
include revenues from travel booked online (a huge
category) and automobiles or other peripheral items
sold online. The comScore reports are broken down
to show the difference that adding in sales of travel
would make.
D. Major Chain Store Sales and the
International Council of Shopping Centers
An industry group that represents mall and
shopping center owners, the International Council of
Shopping Centers (ISC, www.icsc.org) reports on
sales at approximately 50 major national chains, and
releases that report about one week after the end of
the month. For about 20 years, stores tracked in this
report included many of the best known chains. By
2008, however, several large chains had stopped
reporting monthly, including Macy’s and Home
Depot. This makes the total monthly sales report
much less useful an indicator. The report provides
both Same Store Sales and Total Sales for the
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previous month. While the report is extremely useful
in tracking general merchandise sales, it should not
be confused with total retail sales at all types of
stores.
ShopperTrak Weekly and Monthly Retail Reports:
ShopperTrak (www.shoppertrak.com) promptly
provides very useful weekly and monthly retail sales
reports. Its products include the respected National
Retail Traffic Index (NRTI) and the National Retail
Sales Estimate (NRSE).
National Retail Federation Monthly Reports: The
National Retail Federation (NRF) is a massive trade
organization representing firms involved in the retail
industry. Its monthly reports on retail sales, which
can be found at www.nrf.com, focus mainly on
results at major chain stores, many of which are mall-
based. As of January 2005, the group expanded its
surveys to include building centers like Home Depot,
supermarkets and drugstores.
E. Major Chain Store Sales—Goldman Sachs
Retail Composite Index
Goldman Sachs compiles an index of changes in
monthly sales at stores that have been open at least
one year (“same store sales”). The index tracks
America’s largest chain store companies, such as
Wal-Mart, Costco, Target, The Gap, Federated, J.C.
Penney, TJX, Kohl’s, Limited Brands, Nordstrom
and Saks Fifth Avenue. Since the index ignores
newly opened stores and only compares the year over
year change in sales at established stores, it is
extremely useful in determining the true direction of
revenues at major chains.
Plunkett Research, Ltd. www.plunkettresearch.com

Chapter 2

RETAIL INDUSTRY STATISTICS

Tables and Charts:

U.S. Retail Industry Overview 31

Exports, General Imports & Trade Balance in Goods, U.S.: 1980-2nd Quarter 2008 32
Total U.S. Retail Sales & Annual Percent Change: 1992-2008 33
Retail & Food Services Sales by Kind of Business, U.S.: 2002-August 2008 34
Retail & Food Services Sales by Kind of Business, U.S.: Monthly, through August 2008 36
Estimated Quarterly U.S. Retail Sales, Total & E-Commerce: 1st Quarter 2001-2nd Quarter 2008 38
Total U.S. Disposable Income, Expenditures & Gross Domestic & National Product Per Capita: 1960-2008 39
Average Annual U.S. Household Expenditures: 2001-2007 40
Distribution of Total U.S. Annual Household Expenditures, by Major Category: 2008 (Estimates) 41
Resident Population Estimates by Age, U.S.: 2001-2010 42
Twenty Largest Shopping Centers, U.S.: November 2007 43
Top 20 Websites, U.S.: October 2008 44
Top 20 Retail Websites, U.S.: November 1, 2008 45
Employment in the Retail Industry, U.S.: 2002-September 2008 46
Plunkett Research, Ltd. www.plunkettresearch.com

U.S. Retail Industry Overview

Amount Unit Year Source
1
Total Retail Sales in 2008 4,400 Bil. US$ 2008 PRE
1
Total Retail Sales in 2007 4,483 Bil. US$ 2007 Census
Total e-Commerce Retail Sales in 2008 145.6 Bil. US$ 2008 PRE
Total e-Commerce Retail Sales in 2007 124.6 Bil. US$ 2007 Census
Motor Vehicle & Parts Dealers 919.3 Bil. US$ 2007 Census
Furniture & Home Furnishings 118.7 Bil. US$ 2007 Census
Electronics & Appliance Stores 111.4 Bil. US$ 2007 Census
Bldg. Materials & Garden Equip. & Supplies Dealers 337.2 Bil. US$ 2007 Census
Food & Beverage Stores 560.6 Bil. US$ 2007 Census
Health & Personal Care Stores 237.4 Bil. US$ 2007 Census
Gasoline Stations 445.2 Bil. US$ 2007 Census
Clothing & Accessories 224.7 Bil. US$ 2007 Census
Sporting Goods, Hobby, Book & Music Stores 87.3 Bil. US$ 2007 Census
General Merchandise Stores 576.4 Bil. US$ 2007 Census
Miscellaneous Store Retailers 118.8 Bil. US$ 2007 Census
Nonstore Retailers 303.4 Bil. US$ 2007 Census
Food Services & Drinking Places 442.3 Bil. US$ 2007 Census
Annual Disposable Personal Income per Capita, 2007 33,667 Current US$ 2007 BEA
Annual Disposable Personal Income per Capita, 2008 35,152 Current US$ 20082 BEA
Total Exports of Goods 1,162.7 Bil. US$ 2007 ITA
Total Imports of Goods 1,953.7 Bil. US$ 2007 ITA
Number of U.S. Shopping Centers3 90,786 2006 ICSC
1 2
Includes food services sales. Annualized as of the third quarter.
3
Methodology has changed to reflect a count of actual properties, as opposed to an extrapolation based on a database
count of larger properties.
PRE = Plunkett Research estimate BEA = U.S. Bureau of Economic Analysis
ICSC = International Council of Shopping Centers ITA = International Trade Association
Census = U.S. Census Bureau

Source: Plunkett Research, Ltd. Copyright© 2008, All Rights Reserved

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Exports, General Imports & Trade Balance in

Goods, U.S.: 1980-2nd Quarter 2008
(In Billions of US$; Latest Year Available)
Total goods1 Manufactured goods2,3
Year
Exports Imports Balance Exports Imports Balance
1980 238.7 261.0 -22.3 171.7 149.8 22.0
1981 216.4 244.0 -27.5 155.3 151.7 3.6
1982 205.6 258.0 -52.4 148.5 171.2 -22.7
1983 205.6 258.0 -52.4 148.7 170.9 -22.2
1984 224.0 330.7 -106.7 164.1 230.9 -66.8
1985 218.8 336.5 -117.7 168.0 257.5 -89.5
1986 227.2 365.4 -138.3 179.8 296.7 -116.8
1987 254.1 406.2 -152.1 199.9 324.4 -124.6
1988 322.4 441.0 -118.5 255.6 361.4 -105.7
1989 363.8 473.4 -109.6 289.4 379.6 -90.2
1990 393.0 496.0 -103.1 314.9 389.6 -74.7
1991 421.9 488.9 -67.0 345.4 393.8 -48.4
1992 447.5 532.0 -84.5 368.2 434.3 -66.1
1993 464.9 580.5 -115.6 388.5 480.0 -91.5
1994 512.4 663.8 -151.4 430.8 557.9 -127.0
1995 583.0 743.5 -160.5 485.0 629.6 -144.7
1996 622.8 791.3 -168.5 522.7 659.9 -137.2
1997 687.6 870.2 -182.6 591.3 728.6 -137.3
1998 680.5 913.9 -233.4 595.3 792.5 -197.2
1999 692.8 1,024.8 -331.9 611.8 882.8 -270.9
2000 780.4 1,216.9 -436.5 689.6 1,013.5 -324.0
2001 731.0 1,142.0 -410.9 641.9 950.7 -308.8
2002 693.3 1,163.5 -470.3 606.6 975.4 -368.8
2003 723.7 1,259.4 -535.7 626.1 1,027.4 -401.3
2004 817.9 1,469.7 -651.7 709.8 1,175.6 -465.8
2005 904.4 1,670.9 -766.6 782.3 1,288.3 -506.0
2006 1,037.1 1,855.1 -818.0 890.8 1,416.6 -525.8
2007 1,162.7 1,953.7 -791.0 981.8 1,480.7 -498.9
Q2 2008 660.8 1,054.9 -394.2 535.4 744.6 -209.2
1
Includes non-monetary gold, military grant aid, special category shipments, trade between
the U.S. Virgin Islands and foreign countries and undocumented exports to Canada.
Adjustments were also made for carryover. Import values are based on transaction prices
whenever possible.
2
Manufactured goods include commodity sections 5-9 under Schedules A and E for 1970-
1982 and SITC Rev. 3 for 1983-forward. Manufactures include undocumented exports to
Canada, non-monetary gold (excluding gold ore, scrap and base bullion) and special category
shipments.
3
Census data concordances link the 1980-1992 data into the best possible time series. 1991
imports include revisions for passenger cars, trucks, petroleum and petroleum products not
included elsewhere.
Source: U.S. International Trade Administration
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Total U.S. Retail Sales & Annual Percent

Change: 1992-2008
(Includes Retail Automobile, Gasoline & Food Services Sales)

Total Retail Sales Percent Change

Year
(In Trillions of US$) (%)

1992 2.019 NA

1993 2.158 6.9

1994 2.336 8.2

1995 2.456 5.2

1996 2.610 6.2

1997 2.732 4.7

1998 2.859 4.7

1999 3.094 8.2

2000 3.294 6.5

2001 3.386 2.8

2002 3.466 2.4

2003 3.615 4.3

2004 3.846 6.4

2005 4.082 6.1

2006 4.308 5.5

2007 4.483 4.1

2008* 4.400 -1.8

*Plunkett Research estimate.

Source: U.S. Census Bureau; Plunkett Research, Ltd.

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Retail & Food Services Sales by Kind of Business, U.S.:

2002-August 2008
(Estimates in Millions of US$)
NAICS Jan-Aug
Kind of Business 2002 2003 2004 2005 2006 2007
Code 2008*
Retail and food services sales, total 3,466,136 3,615,170 3,846,316 4,088,031 4,330,457 4,482,668 3,023,303
Total (excl. motor vehicle and parts dealers) 2,645,867 2,773,955 2,981,775 3,199,724 3,429,345 3,563,416 2,439,269
Retail sales, total 3,134,322 3,265,477 3,474,340 3,693,430 3,904,305 4,040,411 2,715,571
Retail sales, total (excl. motor vehicle and parts
2,314,053 2,424,262 2,609,799 2,805,123 3,003,193 3,121,159 2,131,537
dealers)
1
GAFO 913,925 948,246 1,007,195 1,065,523 1,129,437 1,162,719 745,309
441 Motor vehicle & parts dealers 820,269 841,215 864,541 888,307 901,112 919,252 584,034
4411,
Automobile & motor vehicle dealers 757,354 776,620 797,292 816,934 827,400 843,181 532,043
4412
4411 Automobile dealers 707,675 721,032 734,729 749,989 761,542 771,329 478,847
44111 New car dealers 645,759 656,885 665,894 675,726 683,059 681,542 417,742
44112 Used car dealers 61,916 64,147 68,835 74,263 78,483 89,787 61,105
4413 Automotive parts, accessories & tire 62,915 64,595 67,249 71,373 73,712 76,071 51,991
442, Furniture, home furn., electronic &
178,507 184,485 200,114 214,579 230,168 230,016 143,241
443 appliance stores
442 Furniture and home furnishings 94,610 97,528 105,303 112,403 121,190 118,657 72,914
4421 Furniture stores 51,342 52,070 56,476 60,293 63,886 62,727 39,864
4422 Home furnishings stores 43,268 45,458 48,827 52,110 57,304 55,930 33,050
443 Electronics & appliance stores 83,897 86,957 94,811 102,176 108,978 111,359 70,327
44311 Appliance, TV & other electronics 63,343 66,129 72,247 77,531 83,992 85,414 54,327
443111 Household appliance stores 14,211 14,524 15,725 17,035 18,071 18,121 11,585
443112 Radio, T.V. & other electronics stores 49,132 51,605 56,522 60,496 65,921 67,293 42,742
44312 Computer & software stores 17,311 17,512 19,096 21,127 21,334 22,353 13,648
Bldg. materials & garden equip. &
444 248,888 265,052 298,782 327,410 358,569 337,173 224,663
supplies dealers
4441 Building materials & supplies dealers 217,445 231,984 263,604 290,323 317,232 295,819 190,047
44413 Hardware stores 17,009 17,610 18,122 18,755 19,495 20,888 14,171
445 Food & beverage stores 465,794 477,130 494,966 516,851 541,688 560,649 390,088
4451 Grocery stores 420,288 429,962 444,610 463,580 482,805 501,077 350,724
4453 Beer, wine & liquor stores 30,061 30,676 32,434 34,386 37,654 39,584 26,866
446 Health & personal care stores 180,143 192,224 198,933 208,711 224,169 237,437 162,793
44611 Pharmacies & drug stores 153,946 164,588 167,243 175,429 189,323 198,370 134,741
447 Gasoline stations 250,770 273,566 320,435 373,344 404,485 445,212 352,748
448 Clothing and accessories 172,617 178,778 190,079 201,896 214,732 224,651 140,083
4481 Clothing stores 122,954 128,303 137,057 146,315 155,352 165,115 103,075
44811 Men's clothing stores 8,119 8,488 9,051 9,465 9,772 10,527 6,439
44812 Women's clothing stores 31,280 32,525 34,734 36,948 39,407 40,383 25,233
44814 Family clothing stores 64,305 67,272 71,963 77,510 82,680 85,313 52,867
4482 Shoe stores 23,215 23,219 23,740 25,488 27,206 26,506 17,752
44831 Jewelry stores 24,816 25,543 27,543 28,216 30,096 30,743 17,776
(Continued on Next Page)
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Retail & Food Services Sales by Kind of Business, U.S.:

2002-August 2008 (cont.)
(Estimates in Millions of US$)
Jan-
NAICS Kind of Business 2002 2003 2004 2005 2006 2007 Aug
Code 2008*
Sporting goods, hobby, book & music
451 76,988 77,335 80,061 82,456 87,200 87,324 55,677
stores
45111 Sporting goods stores 26,347 27,168 28,853 31,179 35,242 37,079 25,065
451211 Book stores 15,450 16,179 16,757 16,977 16,589 17,021 11,240
452 General merchandise stores 446,648 468,734 497,174 524,950 552,191 576,426 379,366
4521 Department stores (excl. L.D.) 220,743 214,427 215,657 214,244 212,181 209,892 123,879
452112 Discount department stores 133,886 128,445 129,547 128,138 128,716 128,875 78,151
452111 Conventional & national chain dept stores 86,857 85,982 86,110 86,106 83,465 81,017 45,728
4521 Department stores (incl. L.D.) 227,773 221,030 221,972 220,541 218,030 215,723 127,300
452112 Discount department stores 137,545 131,732 132,698 130,966 131,482 131,822 79,966
4529 Other general merchandise 225,905 254,307 281,517 310,706 340,010 366,534 255,487
45291 Warehouse clubs & superstores 191,252 216,327 242,423 270,177 297,934 323,305 227,191
45299 All other general merchandise stores 34,653 37,980 39,094 40,529 42,076 43,229 28,296
453 Miscellaneous store retailers 104,163 103,056 105,253 110,593 119,493 118,848 78,198
454 Nonstore retailers 189,535 203,902 224,002 244,333 270,498 303,423 204,680
4541 Electronic shopping & mail-order 122,313 131,171 147,199 161,598 182,432 210,431 138,655
45431 Fuel dealers 23,988 28,961 31,879 37,199 38,329 46,190 35,922
722 Food services & drinking places 331,814 349,693 371,976 394,601 426,152 442,257 307,732
7221 Full service restaurants 148,211 155,085 163,834 172,241 188,112 193,059 135,278
7222 Limited service eating places 138,302 147,087 158,699 169,684 182,861 186,900 128,662
7224 Drinking places 16,417 17,580 18,168 19,033 19,329 23,362 17,111
* Through August.
1
GAFO sales include general merchandise, apparel, furniture and miscellaneous specialty store segments within the retail industry. The
term excludes automotive and food stores. GAFO represents stores classified in the following NAICS codes: 442, 443, 448, 451, 452,
4532. NAICS code 4532 includes office supplies, stationery and gift stores.
L.D. = Leased Department Stores

Source: U.S. Census Bureau

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Retail & Food Services Sales by Kind of Business, U.S.:

Monthly, through August 2008
(In Millions of US$; Not Seasonally Adjusted)
Kind of Business Jan. Feb. March April May Jun. Jul. Aug. CY CUM PY CUM
Retail & food
346,951 348,876 378,755 375,400 405,376 385,737 391,683 390,525 3,023,303 2,941,424
services sales, Total
Retail sales & food
services excl. motor
280,111 278,636 300,572 299,984 327,268 314,258 319,776 318,664 2,439,269 2,309,907
vehicle & parts
dealers
Retail sales, total 312,020 313,244 340,236 337,459 364,540 346,727 351,701 349,644 2,715,571 2,647,371
Retail sales, total
(excl. motor vehicle 245,180 243,004 262,053 262,043 286,432 275,248 279,794 277,783 2,131,537 2,015,854
& parts dealers)
GAFO* 84,711 87,385 93,727 89,438 99,696 94,384 95,039 100,929 745,309 726,191
Motor vehicle & parts
66,840 70,240 78,183 75,416 78,108 71,479 71,907 71,861 584,034 631,517
dealers
Automobile & other
61,063 64,304 71,769 68,883 71,327 64,647 64,932 65,118 532,043 580,557
motor vehicle dealers
Automobile dealers 56,873 59,293 65,137 61,508 62,895 57,084 57,476 58,581 478,847 527,952
New car dealers 49,443 51,188 56,849 53,731 55,328 49,488 50,281 51,434 417,742 466,377
Used car dealers 7,430 8,105 8,288 7,777 7,567 7,596 7,195 7,147 61,105 61,575
Automotive parts, acc.
5,777 5,936 6,414 6,533 6,781 6,832 6,975 6,743 51,991 50,960
& tire stores
Furniture, home furn.,
electronic & appliance 17,690 17,679 17,795 16,929 18,427 17,720 18,377 18,624 143,241 145,668
stores
Furniture & home
8,858 8,822 9,136 8,812 9,454 8,942 9,429 9,461 72,914 77,420
furnishings stores
Furniture stores 4,989 5,063 5,100 4,817 5,156 4,670 4,911 5,158 39,864 41,710
Home furnishings
3,869 3,759 4,036 3,995 4,298 4,272 4,518 4,303 33,050 35,710
stores
Electronics &
8,832 8,857 8,659 8,117 8,973 8,778 8,948 9,163 70,327 68,248
appliance stores
Appl., TV & other
6,825 6,898 6,603 6,202 7,021 6,741 6,910 7,127 54,327 52,152
elect. stores
Household appliance
1,349 1,396 1,402 1,427 1,500 1,526 1,530 1,455 11,585 11,794
stores
Radio, T.V. & other
5,476 5,502 5,201 4,775 5,521 5,215 5,380 5,672 42,742 40,358
elect. stores
Computer & software
1,740 1,711 1,773 1,634 1,597 1,708 1,735 1,750 13,648 13,904
stores
Building mat. &
garden equip. & 21,906 21,783 25,703 31,011 34,385 31,597 30,879 27,399 224,663 231,162
supplies dealers
Building mat. &
19,707 19,264 21,802 25,501 27,372 26,091 26,364 23,946 190,047 201,984
supplies dealers
Hardware stores 1,476 1,392 1,601 1,876 2,158 2,039 1,862 1,767 14,171 13,996
Food & beverage
46,981 45,351 48,557 46,930 51,398 48,876 51,077 50,918 390,088 367,537
stores
Grocery stores 42,843 40,970 43,824 42,242 46,008 43,702 45,625 45,510 350,724 329,837
Supermarkets & other
groc. (except conv.) 40,162 38,315 40,949 39,360 42,815 40,523 42,290 42,212 326,626 307,869
stores
Beer, wine & liquor
2,830 2,976 3,176 3,197 3,655 40,523 42,290 42,212 326,626 307,869
stores
(Continued on next page)
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Retail & Food Services Sales by Kind of Business, U.S.:

Monthly, through August 2008 (cont.)
(In Millions of US$; Not Seasonally Adjusted)
Kind of Business Jan. Feb. March April May Jun. Jul. Aug. CY CUM PY CUM
Health & personal care
20,219 20,078 20,779 20,081 20,917 3,516 3,775 3,741 26,866 25,105
stores
Pharmacies & drug stores 16,968 16,712 17,184 16,610 17,297 20,076 20,396 20,247 162,793 157,061
Gasoline stations 37,914 36,789 41,281 42,637 47,418 48,825 50,341 47,543 352,748 291,860
Clothing & clothing access.
14,459 16,128 18,119 17,384 19,409 17,344 17,722 19,518 140,083 137,599
stores
Clothing stores 10,792 11,381 13,584 12,960 14,115 12,891 13,150 14,202 103,075 101,658
Men's clothing stores 731 722 816 851 908 860 751 800 6,439 6,406
Women's clothing stores 2,570 2,785 3,406 3,452 3,642 3,230 2,991 3,157 25,233 25,267
Family clothing stores 5,325 5,680 6,751 6,395 7,173 6,582 7,156 7,805 52,867 52,198
Shoe stores 1,744 1,999 2,285 2,207 2,366 2,092 2,191 2,868 17,752 17,265
Jewelry stores 1,774 2,583 2,064 2,042 2,723 2,169 2,179 2,242 17,776 17,290
Sporting goods, hobby, book
7,049 6,024 6,649 6,439 6,998 6,940 6,986 8,592 55,677 53,911
& music stores
Sporting goods stores 2,382 2,495 3,077 3,092 3,368 3,520 3,418 3,713 25,065 23,917
Book stores 2,285 1,144 1,019 1002 1,156 1,074 1,124 2,436 11,240 10,971
General merchandise stores 42,052 44,205 47,929 45,576 51,427 49,273 48,567 50,337 379,366 361,018
Department stores (excl. LD) 13,412 14,490 15,938 15,134 16,823 16,014 15,518 16,550 123,879 127,521
Discount dept. stores 8,579 9,032 9,994 9,321 10,471 10,219 9,978 10,557 78,151 79,333
Conventional & national
4,833 5,458 5,944 5,813 6,352 5,795 5,540 5,993 45,728 48,188
chain dept stores
Department stores (incl. LD) 13,790 14,891 16,384 15,557 17,287 16,445 15,937 17,009 127,300 131,117
Discount dept. stores 8,778 9,243 10,230 9,544 10,713 10,447 10,203 10,808 79,966 81,174
Conventional & national
5,012 5,648 6,154 6,013 6,574 5,998 5,734 6,201 47,334 49,943
chain dept stores
Other general merchandise
28,640 29,715 31,991 30,442 34,604 33,259 33,049 33,787 255,487 233,497
stores
Warehouse clubs &
25,504 26,426 28,442 26,950 30,682 29,574 29,393 30,220 227,191 206,592
superstores
All other gen. merchandise
3,136 3,289 3,549 3,492 3,922 3,685 3,656 3,567 28,296 26,905
stores
Miscellaneous store retailers 9,253 9,025 9,224 9,322 10,667 10,144 10,431 10,132 78,198 77,358
Nonstore retailers 27,657 25,942 26,017 25,734 25,386 24,453 25,018 24,473 204,680 192,680
Electronic shopping & mail-
17,507 16,401 16,855 17,765 17,827 17,283 17,708 17,309 138,655 132,865
order houses
Fuel dealers 6,662 6,012 5,416 4,188 3,663 3,331 3,414 3,236 35,922 29,078
Food services & drinking
34,931 35,632 38,519 37,941 40,836 39,010 39,982 40,881 307,732 294,053
places
Full service restaurants 15,541 15,936 17,234 16,467 17,955 16,992 17,302 17,851 135,278 128,995
Limited service eating places 14,680 14,844 16,026 15,857 16,919 16,365 16,895 17,076 128,662 124,888
Drinking places 1,841 1,894 2,140 2,084 2,207 2,159 2,416 2,370 17,111 15,393
CY CUM = Current Year Cumulative. PY CUM = Previous Year Cumulative. LD = Leased Department Stores.
* GAFO represents stores classified in the following NAICS codes; 442, 443, 448, 451, 452, 4532. NAICS code 4532 includes office
supplies, stationery, and gift stores.
Source: U.S. Census Bureau
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Estimated Quarterly U.S. Retail Sales, Total & E-Commerce:

1st Quarter 2001-2nd Quarter 2008
(In Millions of US$; Not adjusted for Seasonal, Holiday & Trading-Day Differences;
Does Not Include Food Services)
E-commerce Percent Change Over
Retail Sales in US$ Mil.
as a Percent Previous Quarter
Quarter
E-commerce of Total Retail
Total * Sales Total Sales E-commerce
st
1 Quarter 2001 704,757 7,931 1.1 -11.1 -13.1
nd
2 Quarter 2001 779,011 7,873 1.0 10.5 -0.7
rd
3 Quarter 2001 756,128 7,810 1.0 -2.9 -0.8
th
4 Quarter 2001 827,829 10,903 1.3 9.5 39.6
st
1 Quarter 2002 717,302 9,721 1.4 -13.4 -10.8
nd
2 Quarter 2002 790,486 10,161 1.3 10.2 4.5
rd
3 Quarter 2002 792,657 10,836 1.4 0.3 6.6
th
4 Quarter 2002 833,877 14,283 1.7 5.2 31.8
st
1 Quarter 2003 741,060 12,334 1.7 -11.1 -13.6
nd
2 Quarter 2003 819,232 12,851 1.6 10.5 4.2
rd
3 Quarter 2003 830,692 13,761 1.7 1.4 7.1
th
4 Quarter 2003 874,493 17,698 2.0 5.3 28.6
st
1 Quarter 2004 794,659 15,897 2.0 -9.1 -10.2
nd
2 Quarter 2004 870,480 16,065 1.8 9.5 1.1
rd
3 Quarter 2004 873,596 16,952 1.9 0.4 5.5
th
4 Quarter 2004 938,573 21,992 2.3 7.4 29.7
st
1 Quarter 2005 839,112 19,529 2.3 -10.6 -11.2
nd
2 Quarter 2005 937,779 20,141 2.1 11.8 3.1
rd
3 Quarter 2005 947,835 21,276 2.2 1.1 5.6
th
4 Quarter 2005 994,452 27,080 2.7 4.9 27.3
st
1 Quarter 2006 906,635 24,509 2.7 -8.8 -9.5
nd
2 Quarter 2006 1,030,492 31,823 3.1 10.3 3.9
rd
3 Quarter 2006 934,619 30,624 3.3 -9.0 -13.3
4th Quarter 2006 1,027,047 35,322 3.4 4.3 30.4
1st Quarter 2007 984,776 27,092 2.8 -0.8 2.8
2nd Quarter 2007 1,009,517 31,602 3.1 1.3 6.2
rd
3 Quarter 2007 1,014,397 32,395 3.2 0.5 2.5
4th Quarter 2007 1,023,501 33,531 3.3 0.9 3.5
1st Quarter 2008 1,025,344 33,645 3.3 0.2 0.3
2nd Quarter 2008 1,034,803 34,606 3.3 0.9 2.9
* E-commerce sales are sales of goods and services over the Internet, an extranet, Electronic Data Interchange (EDI) or
other online system. Payment may or may not be made online.

Source: U.S. Census Bureau

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Total U.S. Disposable Income, Expenditures & Gross Domestic &

National Product Per Capita: 1960-2008
(In US$; Per Capita Estimates)
Personal
Disposable Gross Domestic Gross National
Consumption
Personal Income Product Product
Expenditures Population
Year
Chained Chained Chained Chained (000)
Current Current Current Current
(2000) (2000) (2000) (2000)
US$ US$ US$ US$
US$ US$ US$ US$
1960 2,022 9,735 1,835 8,837 2,912 13,840 2,929 13,938 180,760
1965 2,563 11,594 2,283 10,331 3,700 16,420 3,727 16,554 194,347
1970 3,587 13,563 3,162 11,955 5,064 18,391 5,095 18,520 205,089
1975 5,498 15,291 4,789 13,320 7,586 19,961 7,646 20,133 215,981
1980 8,822 16,940 7,716 14,816 12,249 22,666 12,400 22,956 227,726
1985 13,037 19,476 11,406 17,040 17,695 25,382 17,806 25,548 238,506
1986 13,649 19,906 12,048 17,570 18,542 26,024 18,616 26,137 240,683
1987 14,241 20,072 12,766 17,994 19,517 26,664 19,590 26,770 242,843
1988 15,297 20,740 13,685 18,554 20,827 27,514 20,923 27,647 245,061
1989 16,257 21,120 14,546 18,898 22,169 28,221 22,275 28,358 247,387
1990 17,131 21,281 15,349 19,067 23,195 28,429 23,335 28,600 250,181
1991 17,609 21,109 15,722 18,848 23,650 28,007 23,770 28,150 253,530
1992 18,494 21,548 16,485 19,208 24,688 28,556 24,783 28,693 256,922
1993 18,872 21,493 17,204 19,593 25,578 28,940 25,700 29,079 260,282
1994 19,555 21,812 18,004 20,082 26,844 29,741 26,944 29,850 263,455
1995 20,287 22,153 18,665 20,382 27,749 30,128 27,884 30,271 266,588
1996 21,091 22,546 19,490 20,835 28,982 30,881 29,112 31,015 269,714
1997 21,940 23,065 20,323 21,365 30,424 31,886 30,544 32,010 272,958
1998 23,161 24,131 21,291 22,183 31,674 32,833 31,752 32,912 276,154
1999 23,968 24,564 22,491 23,050 33,181 33,904 33,302 34,027 279,328
2000 25,472 25,472 23,682 23,862 34,759 34,759 34,896 34,896 282,433
2001 26,235 25,697 24,722 24,215 35,490 34,659 35,643 34,809 285,372
2002 27,167 26,238 25,504 24,632 36,326 34,866 36,432 34,971 288,215
2003 28,053 26,566 26,476 25,073 37,671 35,403 37,866 35,590 290,964
2004 29,563 27,274 27,911 25,720 39,796 36,356 40,056 36,595 293,644
2005 30,576 27,403 29,335 26,290 41,913 37,080 42,227 37,359 296,373
2006 32,222 28,098 30,773 26,835 44,046 37,750 44,307 37,976 299,199
2007 33,667 28,614 32,144 27,319 45,707 38,148 46,046 38,432 302,087
1 2 2
2008 35,152 28,545 33,378 27,104 47,260 38,387 47,314 38,821 305,313
1
Estimates for 2008 are annualized as of the third quarter.
2
Annualized estimates as of the second quarter.

Source: U.S. Bureau of Economic Analysis

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Average Annual U.S. Household Expenditures: 2001-2007

(Latest Year Available)
Characteristic 2001 2002 2003 2004 2005 2006 20071
Number of households (in thousands) 110,339 112,108 115,356 116,282 117,356 118,843 120,349
Income before taxes2 $47,507 $49,430 $51,128 $54,453 $58,712 $60,533 $62,410
General U.S. Household Characteristics
Average age of head of household 48.1 48.1 48.4 48.5 48.6 48.7 48.8
Average # of persons in household 2.5 2.5 2.5 2.5 2.5 2.5 2.5
Average # of earners 1.4 1.4 1.3 1.3 1.3 1.3 1.3
Average # of vehicles 1.9 2.0 1.9 1.9 2.0 1.9 1.9
Percent homeowners 66 66 67 68 67 67 67
Average U.S. Household Expenditures (in US$) 2006%3
Average annual expenditures $39,518 $40,677 $40,817 $43,395 $46,409 $48,398 100
Food 5,321 5,375 5,340 5,781 5,931 6,111 12.6
Food at home 3,086 3,099 3,129 3,347 3,297 3,417 7.1
Cereals & bakery products 452 450 442 461 445 446 0.9
Meats, poultry, fish & eggs 828 798 825 880 764 797 1.6
Dairy products 332 328 328 371 378 368 0.8
Fruits & vegetables 522 552 535 561 552 592 1.2
Other food at home 952 970 999 1,075 1,158 1,212 2.5
Food away from home 2,235 2,276 2,211 2,434 2,634 2,694 5.6
Alcoholic beverages 349 376 391 459 426 497 1.0
Housing 13,011 13,283 13,432 13,918 15,167 16,366 33.8
Shelter 7,602 7,829 7,887 7,998 8,805 9,673 20.0
Utilities, fuels & public services 2,767 2,684 2,811 2,927 3,183 3,397 7.0
Household operations 676 706 707 753 801 948 2.0
Housekeeping supplies 509 545 529 594 611 640 1.3
House furnishings & equipment 1,458 1,518 1,497 1,646 1,767 1,708 3.9
Apparel & services 1,743 1,749 1,640 1,816 1,886 1,874 3.9
Transportation 7,633 7,759 7,781 7,801 8,344 8,508 17.6
Vehicle purchases (net outlay) 3,579 3,665 3,732 3,397 3,544 3,421 7.1
Gasoline & motor oil 1,279 1,235 1,333 1,598 2,013 2,227 4.6
Other vehicle expenses 2,375 2,471 2,331 2,365 2,339 2,355 4.9
Public transportation 400 389 385 441 448 505 1.0
Healthcare 2,182 2,350 2,416 2,574 2,664 2,766 5.7
Entertainment 1,953 2,079 2,060 2,218 2,388 2,376 4.9
Personal care products & services 485 526 527 581 541 585 1.2
Reading 141 139 127 130 126 117 0.2
Education 648 752 783 905 940 888 1.8
Tobacco products & smoking supplies 308 320 290 288 319 327 0.7
Miscellaneous expenditures 750 792 606 690 808 846 1.7
Cash contributions 1,258 1,277 1,370 1,408 1,663 1,869 3.9
Personal insurance & pensions 3,737 3,899 4,055 4,823 5,204 5,270 10.9
Life & other personal insurance 410 406 397 390 381 322 0.7
Pensions & Social Security 3,326 3,493 3,658 4,433 4,823 4,948 10.2
1
Plunkett Research estimates.
2
Prior to 2004, income values are derived from "complete income reporters" only.
3
Individual categories as a percentage of total 2006 expenditures.
Source: U.S. Bureau of Labor Statistics
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Distribution of Total U.S. Annual Household Expenditures,

by Major Category: 2008 (Estimates)
(As Percentages of Total)
Expenditure Item Percent Distribution
Housing 33.3%
Transportation 21.1%
Food 14.0%
Personal insurance & pensions* 11.2%
Healthcare 6.3%
Entertainment 4.0%
Apparel and services 3.8%
Reading and education 2.3%
Miscellaneous and cash contributions 1.8%
Personal care products and services 1.1%
Tobacco 0.5%

* Includes Social Security.

Source: Plunkett Research, Ltd. Copyright © 2008, All Rights Reserved

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Resident Population Estimates by Age, U.S.: 2001-2010

(In Thousands; Latest Year Available)
Characteristics 2010 2007 2006 2005 2004 2003 2002 2001

Summary Indicators
Population, all ages 308,936 301,621 298,755 295,896 293,192 290,448 287,888 285,112

Median age NA 36.62 36.43 36.23 36.06 35.91 35.73 35.55

Five- & Ten-Year Age Groups

Under 5 years 21,426 20,724 20,452 20,300 20,060 19,774 19,537 19,350

5 to 9 years 19,850 19,674 19,526 19,599 19,754 19,976 20,235

10 to 14 years 61,810 20,314 20,587 20,845 21,117 21,193 21,108 20,892

15 to 19 years 21,474 21,275 21,020 20,703 20,468 20,362 20,305

20 to 24 years 21,032 20,994 20,947 20,870 20,636 20,299 19,797

25 to 29 years 21,058 20,575 19,945 19,458 19,051 18,896 18,938

30 to 34 years 104,444 19,533 19,607 20,010 20,408 20,673 20,802 20,732

35 to 39 years 21,176 21,119 20,952 21,007 21,373 21,830 22,280

40 to 44 years 21,985 22,436 22,824 23,022 22,964 22,941 22,843

45 to 49 years 22,861 22,767 22,462 22,103 21,752 21,272 20,709

50 to 54 years 21,013 20,459 19,986 19,486 19,034 18,695 18,662

81,012
55 to 59 years 18,236 18,206 17,341 16,479 15,719 15,082 13,934

60 to 64 years 14,476 13,350 12,993 12,583 12,109 11,501 11,104

65 to 69 years 10,752 10,368 10,127 9,955 9,744 9,581 9,531

70 to 74 years 8,600 8,542 8,512 8,516 8,605 8,701 8,791

34,120
75 to 79 years 7,325 7,387 7,416 7,420 7,468 7,450 7,443

80 to 84 years 5,699 5,670 5,636 5,558 5,417 5,309 5,147

85 years & over 6,123 5,512 5,286 5,055 4,847 4,715 4,546 4,417
Census Bureau estimates; July 1 of year. Based on 2000 Census.
NA = Not available.

Source: U.S. Census Bureau

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Twenty Largest Shopping Centers, U.S.: November 2007

(Ranked by Gross Leasable Area)
Number of
Rank Name Location Size (Square Feet)
Stores
1 King of Prussia Mall King of Prussia, PA 2,793,200 400
2 Mall of America Bloomington, MN 2,768,399* 522
3 South Coast Plaza Costa Mesa, CA 2,700,000 280
4 Millcreek Mall Erie, PA 2,600,000 241
5 Aventura Mall Aventura, FL 2,400,000 275
6 Sawgrass Mills Sunrise, FL 2,383,906 350
7 The Galleria Houston, TX 2,298,420 375
8 Roosevelt Field Mall Garden City, NY 2,244,581 294
9 Woodfield Mall Schaumburg, IL 2,224,000 300
10 Palisades Center West Nyack, NY 2,217,322 400
11 Tysons Corner Center McLean, VA 2,200,000 300
12 Westfield Garden State Plaza Paramus, NJ 2,132,112 290
13 Del Amo Fashion Center Torrance, CA 2,100,000 300
13 Plaza Las Americas San Juan, PR 2,100,000 300
13 Ala Moana Shopping Center Honolulu, HI 2,100,000 290
16 Lakewood Center Lakewood, CA 2,092,710 255
17 Scottsdale Fashion Square Scottsdale, AZ 2,049,169 250+
18 Oakbrook Center Oak Brook, IL 2,018,000 175
19 NorthPark Center Dallas, TX 2,000,000 235
19 Jordan Creek Town Center West Des Moines, IA 2,000,000 160
Note: The Eastwood Mall, formerly on this list, has reported its gross leasable area as the entirety of its complex including surrounding
properties (3.2 million square feet). The Director of Major Malls reports 1.6 million sq. ft. of grossable lease space enclosed within the
mall proper. Source: Wikipedia
* Mall of America has 4.2 million sq. ft. of building area, of which about 2.8 million is gross leasable area (GLA).

Source: International Council of Shopping Centers (ICSC)

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Top 20 Websites, U.S.: October 2008

(Based on Market Share of Visits)
Market
Rank Website
Share
1 www.google.com 6.17%
2 mail.yahoo.com 4.70%
3 www.myspace.com 3.91%
4 www.yahoo.com 3.78%
5 mail.live.com 1.94%
6 www.ebay.com 1.56%
7 search.yahoo.com 1.49%
8 www.facebook.com 1.24%
9 www.msn.com 1.17%
10 www.youtube.com 0.98%
11 www.gmail.com 0.82%
12 images.google.com 0.55%
13 www.wikipedia.org 0.53%
14 mail.aol.com 0.43%
15 my.yahoo.com 0.41%
16 search.msn.com 0.40%
17 news.yahoo.com 0.40%
18 www.pogo.com 0.39%
19 address.yahoo.com 0.35%
20 www.craigslist.org 0.34%
Note: The Hitwise data featured is based on US market share of visits,
which is the percentage of online traffic to the domain or industry, from
the Hitwise sample of 10 million US Internet users. Hitwise measures
more than 1 million unique websites on a daily basis, including sub-
domains of larger websites. Hitwise categorizes websites into industries
on the basis of subject matter and content, as well as market orientation
and competitive context.

Source: Hitwise, an Experian company

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Top 20 Retail Websites, U.S.: November 1, 2008

Market
Rank Name Domain
Share
1 Amazon.com www.amazon.com 11.17%
2 Wal-Mart www.walmart.com 5.44%
3 Target www.target.com 3.25%
4 Best Buy www.bestbuy.com 2.12%
5 JC Penney www.jcpenney.com 1.93%
6 QVC www.qvc.com 1.93%
7 Sears www.sears.com 1.65%
8 Circuit City www.circuitcity.com 1.50%
9 Overstock.com www.overstock.com 1.48%
10 Toys 'R Us www.toysrus.com 1.43%
11 Dell www.dell.com 1.42%
12 Home Depot www.homedepot.com 1.41%
13 Lowes www.lowes.com 1.30%
14 Home Shopping Network www.hsn.com 1.18%
15 Cabela's www.cabelas.com 1.09%
16 Kohl’s www.kohls.com 1.02%
17 Ticketmaster www.ticketmaster.com 0.99%
18 Kodak Galley www.kodakgallery.com 0.98%
19 K-Mart www.kmart.com 0.91%
20 Macy's www.macys.com 0.85%
Note: The Hitwise Retail 100 Index does not include websites from the following industries:
auctions, classifieds, subscription services, DVD and video game rental, reward point collecting
and coupons. Data is ranked by market share of visits.

Source: Hitwise, an Experian company

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Employment in the Retail Industry, U.S.: 2002-September 2008

(Annual Estimates in Thousands of Employed Workers)
NAICS
Industry Sector 2002 2003 2004 2005 2006 2007 20082
Code1
N/A Retail Trade 15,025.1 14,917.3 15,058.2 15,279.6 15,353.3 15,490.7 15,191.1
441 Motor vehicle & parts dealers 1,879.4 1,882.9 1,902.3 1,918.6 1,909.7 1,913.1 1,824.6
4411 Automobile dealers 1,252.8 1,254.4 1,257.3 1,261.4 1,246.7 1,245.3 1,162.9
4412 Other motor vehicle dealers 141.5 148.9 158.5 166.4 169.2 170.4 163.4
4413 Auto parts, accessories & tire stores 485.1 479.6 486.6 490.8 493.8 497.4 504.5
442 Furniture & home furnishings stores 538.7 547.3 563.4 576.1 586.9 581.0 559.9
443 Electronics & appliance stores 523.3 512.2 516.2 535.8 541.1 543.7 533.6
44311 Appliance, TV & other electronics stores 328.4 333.0 348.1 368.9 383.0 389.5 370.0
Computer, software, camera & photography
44312,3 196.9 179.2 168.1 167.0 158.0 154.2 154.1
supply stores
444 Building material & garden supply stores 1,176.5 1,185.0 1,227.1 1,276.1 1,324.1 1,305.3 1,226.3
4441 Building material & supplies dealers 1,024.6 1,038.2 1,082.6 1,134.0 1,178.5 1,163.1 1,100.5
4442 Lawn & garden equipment & supplies stores 151.9 146.9 144.6 142.1 145.7 142.2 131.0
445 Food & beverage stores 2,881.6 2,838.4 2,821.6 2,817.8 2,821.1 2,848.5 2,860.6
4451 Grocery stores 2,486.6 2,453.2 2,443.5 2,445.5 2,457.0 2,484.7 2,491.3
4452 Specialty food stores 256.0 247.2 241.9 236.0 228.6 225.6 221.2
4453 Beer, wine & liquor stores 139.1 138.0 136.2 136.4 135.5 138.2 142.8
446 Health & personal care stores 938.8 938.1 941.1 953.7 961.1 988.6 981.7
447 Gasoline stations 895.9 889.0 875.6 871.1 864.1 861.2 835.7
448 Clothing & clothing accessories stores 1,312.5 1,304.5 1,364.3 1,414.6 1,450.9 1,500.4 1,482.3
4481 Clothing stores 960.3 956.2 1,013.7 1,066.3 1,101.3 1,147.7 1,114.3
4482 Shoe stores 182.5 179.3 181.5 179.7 183.4 188.4 192.9
451 Sporting goods, hobby, book & music stores 661.3 646.5 641.3 647.0 645.5 658.2 667.6
4511 Sporting goods & musical instrument stores 434.5 428.0 432.3 447.4 458.1 472.1 451.4
4512 Book, periodical & music stores 226.7 218.5 209.0 199.7 187.3 186.1 201.5
452 General merchandise stores 2,812.0 2,822.4 2,863.1 2,934.3 2,935.0 2,984.6 2,913.7
4521 Department stores 1,684.0 1,620.6 1,605.3 1,595.1 1,557.2 1,576.7 1,481.7
4529 Other general merchandise stores 1,128.0 1,201.8 1,257.8 1,339.2 1,377.8 1,407.9 1,422.2
453 Miscellaneous store retailers 959.5 930.7 913.5 899.9 881.0 868.7 863.2
4531 Florists 121.9 112.6 106.5 101.2 94.9 93.4 83.7
4532 Office supplies, stationery & gift stores 434.7 416.1 402.0 390.7 374.4 363.9 364.0
4533 Used merchandise stores 107.5 108.7 112.4 113.4 114.0 117.6 121.6
454 Nonstore retailers 443.7 427.3 428.8 434.6 432.8 437.6 441.9
4541 Electronic shopping & mail-order houses 223.6 218.2 228.3 239.6 240.6 247.1 248.1
4542 Vending machine operators 59.1 54.7 50.8 50.5 49.6 49.0 45.1
4543 Direct selling establishments 161.0 154.5 149.7 144.5 142.6 141.5 136.1
1
For a full description of the NAICS codes used in this table, see www.census.gov/epcd/www/naics.html.
2
As of September or October. Preliminary estimate. Not seasonally adjusted.

Source: U.S. Bureau of Labor Statistics

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