Hackers No Match For Designer Handbags

With predictions that holiday spending is expected to reach its highest point since the Great Recession this season, we look at what’s “in” and what’s “out” this week in the retail world. Macy’s is the early bird so far in pecking away at the holiday retail pie, some well-known eateries are not yet feeling the holiday joy and a handbag maker is setting the example for corporates worldwide.

Well, whether Macy’s decision to open its doors at 5 p.m. on Thanksgiving this year is “in” or “out” depends on your plans for Thanksgiving day. More turkey or shopping? Mall with mobile or another glass of wine and the desktop? Suffice to say that the retailer is hoping shoppers will choose the mall with a mobile and wants to get ahead of the game. While many retailers plan to keep their doors firmly closed on Thanksgiving, Macy’s is opening them one hour earlier than last year, according to USA Today.

In early October, the Mall of America, the nation’s largest shopping mall, announced it would close on Thanksgiving. But this deliberation is an ancient one. Last month, Staples announced that it would close on Thanksgiving day for the second year, while, last year, REI touted its decision to close on both Thanksgiving day and Black Friday.

“We’re a different kind of company, and while the rest of the world is fighting it out in the aisles, we’ll be spending our day a little differently,” REI President and CEO Jerry Stritzke said in a YouTube post. “We’re choosing to opt outside and want you to come with us.” The Home Depot, Lowe’s, Nordstrom and GameStop have all announced plans to close on Thanksgiving day this year, as have other big names, such as Costco, Sam’s Club and Petco — to name but a few.

In 2014, according to a Time report, Macy’s planned to open at 6 p.m. on Thanksgiving, two hours earlier than the previous year, and Kohl’s and Sears quickly announced that they, too, would open at 6 p.m. on Thanksgiving day. When Macy’s announced that year that it would open at 6 p.m., JCPenney announced it would open its doors at 5 p.m.

On Monday, Macy’s told Associated Press that Macy’s stores would open at 5 p.m. on Thanksgiving, and most locations would close at 2 a.m. and then reopen at 5 a.m. on Friday.

A retail analyst for The NPD Group, Marshal Cohen, doubts that there will be a surfeit of stores closed on Thanksgiving and that many will follow Macy’s lead. “I think some stores may realize that it may be an expense they may not want to have, but they’re also afraid to not do it.”

So, because there can be no agreement on Macy’s decision and whether or not stores should open or close, let’s turn to the “outs” first.

 

Pier 1’s Board Given 12 Lashings

First, Pier 1’s biggest investor is cheesed off, to say the least, and is demanding changes on the company’s board. Pier 1 has seen earnings dive by 45 percent between fiscal years 2013 and 2014, although there was a small increase in the retailer’s revenues. In a letter to Terry London, chairman of Pier 1’s board, Alden Global Capital had harsh words, saying that London and the board “cannot be trusted to protect the best interest of Pier 1 shareholders.”

The letter went on to state: “The board has not only destroyed significant shareholder value but has presided over an extended period of poor stock price performance, poor operating performance and a substantial deterioration in EBITDA margins.”

Alden directly blamed London and Alex W. Smith, president and CEO, claiming that, since London’s appointment as Pier 1’s chairman in 2013, the company’s stock has dropped by 75 percent from around $16 to $4, while London has amassed $1 million in board fees. “Under your leadership, the board has failed to protect the best interests of shareholders and, instead, has demonstrated a clear inability to make intelligent compensation decisions and work with management to implement effective capital allocation strategies,” wrote Alden.

According to Alden, Smith has been paid over $70 million since he took over as CEO in 2006, and he stands to receive 741,000 shares when he steps down at the end of the year based on performance targets that were not achieved. Let’s just say that his holiday celebrations came and went early, and he is definitely on the “out.”

 

McDonald’s And Chipotle Old News?

McDonald’s, too, is on the outs this week. Despite the company’s All Day Breakfast and McPick 2 promotions, a survey by Nomura estimated that growth in same-store sales was less than a half of a percent in the third quarter. Last quarter, McDonald’s shares dropped after same-stores sales growth in the U.S. fell short of estimates. Franchisees expect same-store sales to decline by 0.8 percent in the fourth quarter, according to CNBC.

And the outs also apply to Chipotle Mexican Grill. According to Nomura Analyst Mark Kalinowski: “The company’s third-quarter promotions do not appear to have had the fully desired effects from the company’s perspective,” Kalinowski said, lowering his forecasts for the company and estimating same-store sales to be down 19.5 percent for the quarter.

Chipotle’s same-store sales took a nosedive by almost 30 percent in the first quarter, Chipotle’s first quarterly loss as a public company. Chipotle realized a profit in the second quarter, but same-store sales declined over 26 percent. Third-quarter earnings will be released on Oct. 25.

Chipotle had introduced a temporary loyalty program and free food and last week announced $3 burritos, bowls, salads and tacos on Halloween to costume-bedecked customers in efforts to attract foot traffic, but all in vain it seems.

 

Shake Shack Thinks Of Everything

Now, for the more positive news. Decidedly “in” this week is Shake Shack. The firm is eagerly embracing the mobile movement and has introduced a mobile app ordering platform, according to Chain Store Age. Using Apple’s iOS platform, guests place orders through their smartphones and pick up at its “Midtown East Shack” in New York City. So far, only one pickup location is active. The chain is spacing pickup times 15 minutes apart — a smart move that should speed things up for consumers who won’t have to wait in frustratingly slow-moving lines.

“We’re meeting people where they are and giving our guests a whole new way to experience Shake Shack,” said Randy Garutti, Shake Shack’s CEO. “We’ve got a lot to learn. We intend to take our time listening to our guests and tweaking the app before launching it in additional markets.”

The app shows menu favorites, a location finder, nutritional information and previous orders. But perhaps the best part is it tells consumers when traffic might be heavy so that they can choose the best pickup time. Did it really think of everything?

 

Supply Chain Canny

Walgreens, too, is definitely “in” … and up. Upping its supply chain logistics, that is, according to MarketWatch. The company is working to get products into the hands of customers faster and has initiated a ship-to-store program that will ship goods ordered on its website and mobile app, for free, to a Walgreens or Duane Reade store with no minimum purchase.

Joe Hartsig, Walgreens’ senior VP of merchandising, explained that goods not typically found in stores can be ordered online and shipped to a consumer’s local store. “With ship-to-store, customers have the ability to ship orders to their preferred Walgreens store if their residence or workplace isn’t a secure option.” Delivery time is three business days, and customers are notified by email once an order is ready for pickup. Not only that, but Walgreens digital coupons, Balance Rewards and digital promotions can be applied to online orders before checking out. Shipping of over $35 will continue to be free.

According to MarketWatch, shares were down Monday (Oct. 17) 0.3 percent and down 8.4 percent for the year so far.

 

Rewards, Rewards, My Kingdom For Rewards

TJX, too, is “in” and is upping its loyalty programs, a powerful incentive for shoppers, according to Chain Store Age. TJX Companies is renewing its existing program and has announced a multi-year renewal of its partnership with Synchrony. This will give the firm financing for its five-year-old Rewards Credit Card program.

Currently, cardholders earn rewards at any of TJX’s four U.S. retail chains — T.J. Maxx, Marshalls, HomeGoods and Sierra Trading Post — and online. Meanwhile, TJX Rewards Platinum Mastercard users also earn points on purchases made anywhere Mastercard is accepted. Loyalty rewards can be accessed on smart devices using an app.

 

And The Winner Is…

But the “in of the week” is Vera Bradley, the stalwart handbag maker. The company had the mettle to come clean and announce last Wednesday (Oct. 12) that it had been breached and hackers may have accessed customer data from payment processing systems.

That’s a breath of fresh air at a time when many businesses — Yahoo, for example — are delaying or not reporting announcements of data breaches.

Between July 25 and Sept. 23 of this year, hackers may have obtained cardholders’ names, card numbers, expiration dates and internal verifications. “Findings from the investigation show unauthorized access to Vera Bradley’s payment processing system and the installation of a program that looked for payment card data,” wrote the company in a statement.

Although the timing just ahead of the holiday season could have been better, the company has time to recover, and the public will appreciate its transparent approach. The company assured shoppers, saying that it had stopped the incident and that it continues “to work with [a] computer security firm to further strengthen the security of our systems to help prevent this from happening again.”

Bravo!