Commenting on revenue and profit of key industry players

Some key general retail industry players for this current fiscal year are Home Depot, Lowe’s, Wal-Mart, Target Corp., Sears Holdings Corp., and in the department stores, Macy’s. In order of revenues from largest to smallest for this fiscal year ending in January 2012, Wal-Mart is currently leading this quarter with $ 109,366 millions; Home Depot follows with $20,232 millions. In addition to this two, Target Corp. follows with $16,240 millions, and then comes Lowe’s with $14,543 million and finally Macy’s with current revenues of $ 5,939 million. Wal-Mart raised its revenue by this quarter of this year compared to the revenues of the same quarter last year, from $103, 016 millions to $ 109,366 millions. Target also raised its revenues this quarter of this year, from $ 15,532 millions to $ 16, 240 millions, as well as Home Depot from $ 19, 410 to $ 20,232 millions. This rises in revenue, in this company’s, are due to the fact that people are looking for low prices in these big box discount stores that offer a great variety of products, such as Wal-Mart and Target, at lower prices. In terms of Home Depot, we can see how the improvement in the housing market is changing and gradually augmenting the revenues of this huge home-improvement company.

In 2010, Wal-Mart reported a 3.7 % profit ratio return from revenues, which gave them a net income of $15,535 millions. Target Corp., also in 2010, reported a 4.3% return on revenues, which gave them a net income of $2,920 millions that year. The reason why I mention these 2 major companies is because they had the most significant change in revenues from 2010 to 2011 and to the present fiscal year that ends in January. This means that if the profit returns percentage happens to stay the same, as revenue increases, the higher their net income will be. For example, if Wal-Mart were to report a 3.7% profit ratio in 2011, the net income would raise 73 million than that of 2010. In addition to that, if the revenues of these companies continue to grow as they are doing, their net income would also grow significantly, making these companies much more solid in this upcoming fiscal year. Finally, if the profit percentage ratio does increase, net income increases, meaning that the companies are doing very well.

Links:

http://www.netadvantage.standardandpoors.com.proxyau.wrlc.org/NASApp/NetAdvantage/cp/companyFinancials.do

http://www.netadvantage.standardandpoors.com.proxyau.wrlc.org/docs/indsur///reg_0511/regb0511.htm#netincome

http://www.netadvantage.standardandpoors.com.proxyau.wrlc.org/docs/indsur///reg_0511/regc0511.htm#profitratios

recent events

Macys has recently developed a new “online destination for fashion”. What they have called it is “mBLOG” which provides viewers with the latest trends and designs in fashion. They are hoping that this inside look into the fashion and home décor will excite shoppers to come in and visit the store. What this also does is allow Macys to see what is popular and likeable before they actually produce the products, saving Macys money. This site is great for the customer.  It gives them an inside look into the latest fashion trends and designs. It also provides viewers with Macy’s major sales and discounts.  On the other hand, the website gives fashion advice to people who seek it, while keeping them informed with major fashion line launches.  

"Macys.com is already a leading resource for fresh fashion, home and beauty products from the world's top brands," said Martine Reardon, executive vice president of marketing for Macy's. "We are excited to enrich our customers' online experience, offering a destination for high-quality content that gives readers direct access to a unique and influential set of voices."

Busineswire.com / Etrade.com

Approaching Holiday Season

While there are many current events happening every day in the retail industry, a common theme throughout seems to be the approaching holiday seasons and expected sales. Companies have been worried about their fourth quarter sales, which usually generates the bulk of their annual sales. Consumer spending has not increased since the recession, and consumers are looking to spend as little as possible even through the holidays. Small companies especially are worried that this could "push their businesses over the edge." Nikoleta Panteva, a retail analyst for IBISWorld Inc., states that small merchants usually garner 25-30% of their total annual sales in the last six weeks of the year, as compared to 20% from the big box retailers. There is only so much a small company can do to stay in business- many have been lowering prices, however, there is only so low they can go to still make a profit. A main problem for them seems to be that larger stores offer a wide variety of products, where as smaller stores usually specify on one specific product which causes them to not attract as many customers.

Contradictory to that last statment, another article explored how Coach is expecting excellent growth in the holiday season, despite having a more narrow line of products similar to a small merchant. They saw profits rise 14% in their fiscal first quarter earnings on strong handbag and accessory sales, as well as growth in the men's business. Coach also reported strong growth outside its brick and mortar presence, with the company website posting double digit sales growth and mobile commerce accounting for over 15% of Coach.com's total site traffic.

Both article go on to make very different but important points about the current trends in retail. On one hand, many retailers are worried about the upcoming holiday season not reaching their sales expectations. This is a time when the retail industry flourishes, and it could seriously hurt many businesses if sales are not up to par. Small businesses especially have reason to worry, seeing as how their sales have not met expectations all year, and a bad holiday season could mean the end for them. As bad as these trends seem, they were not unexpected. In an uncertain economy, people are trying to spend less on discrentionary items and have cut back on gift giving because money has become so unavailable. Many people are looking to get all their holiday gifts from discount retail stores such as Wal-Mart or Target, and may not even glance at small merchants anymore. On the other hand, some companies such as Coach are looking at the holiday season with optimism. Their profits generated from the online and mobile markets have given them hope to continue a successful year into the holidays. Since it was so successful for Coach, maybe some other retail companies should follow their lead and focus more attention on these markets to increase growth and sales.

http://online.wsj.com/article/SB10001424052970204644504576652771127742178.html
http://online.wsj.com/article/SB10001424052970204422404576597442264003476.html?mod=WSJ_hps_sections_smallbusiness

Recession Issues and Balance Sheet Financing

How has the recession (2008-2009) affected companies’ balance sheets?

In 2007, the real estate crisis hit and the economy has been in a balance sheet recession where the private sector began to minimize debt rather than maximize profits. This was late 2007. Beginning 2008, Lehman Brothers became the example of the financial crisis. "Balance-sheet recession is a problem of borrowers, while financial crisis is a problem of lenders" (Koo). People with damaged balance sheets lack interest in raising their borrowing at any interest rate. In reference to liquidity, capital from government spendings are necessary for banks to be able to lend money again. The recovery that started from 2009 led people to think that the economy is on its way to full recovery. The balance sheet issue was still in full force so politicians refused to renew fiscal stimulus in February 2009.

The financial crisis of 2008 which continued into 2009 was a worldwide crisis and considered one of the worst since 1933 with the Great Depression. By early December, the whole economy was heading downward with no light at the end. The recession that started in 2007 (late December) only worsened when the retail sales decreased. Come November 2008, U.S. citizens grew discouraged and went about trying to save money and decrease credit card purchases. Auto sales were down by about 37% in November to the lowest they had been in about 26 years. GM fell 41% and Ford 31%. Retailing plunged dramatically. They rang up the lowest November sales in more than 30 years as holiday seasonal shoppers did not purchase and not only failed to lift the economy but showed that the crisis is further distressing everyday consumers. Balance sheets showed decreasing numbers from this horrid situation. Thirty huge key player companies like Macy's, Sears, Abercrombie and Target all posted sales declines and lowering balance sheets. The Fed Reserve reported in Dec. 2008 that each region in the country documented much in their sales declines and decreases in manufacturing. The balance sheets faced financial decreases and assets went down. Retailers found themselves in a tough situation during the financial crisis period of 2008 and 2009.

Koo, Richard. "Is American Headed for a Double-dip Recession?" The Economist. Web 26 Oct. 2011.

Global Company- Nike

I found an article that focused on the global market for Nike, Inc. and how they plan on expanding their global plan in the upcoming years. According to the Los Angeles Times, "the world's largest goods maker Nike has launched a plan to expand the global retail market, opening 250-300 stores around the world in the next five years." Citadel Outlets are also looking to expand, which would give Nike an even more competitive advantage with 2 major companies expanding around the world.

Nike is known around the world as being a global competitor for their merchandise and apparel, most specifically shoes. With the new expansion plans in place, Nike is taking steps to become even bigger and more well known throughout the world. The more they expand, the more income and sales they are opening up opportunities for. Some problems recently arose concerning Nike and ethics. They became known for poor working conditions in Asia, treating their workers unfairly and paying them unfair wages. While Nike took a hit from that, they are responding by changing practices and expanding. These two should help Nike recover, although they didn't take too big of a hit. As Nike becomes more globally competitive, they will have a larger advantage over their competitors such as Under Armour and Adidas.
Source:
http://www.cantonscore.org/the-global-retail-market-plan-of-nike.htm

Outsourcing

Many of the players in the retail industry manufacture overseas and utilize outsourcing. This is especially true with companies such as, Nike, Macys, and Wal-Mart. Wal-Mart uses companies like Infosys and Wipro for their outsourcing in Asia and other international country’s. In fact, contracts like these are worth upwards of $500million Dollars so the overseas contracting business is a very competitive business. Keep in mind that these are not manufacturing contracts, but IT contracts.  Furthermore, India has over 26% of the worlds IT exporting services. Other major retailers like Tesco, the British version of Wal-Mart, also outsources their IT to countries in Asia, specifically, India. In fact, Tesco claims it saved over $60million by outsourcing its IT to India. Wal-Mart saves a similar amount by doing this too. The reason Wal-Mart does this is to help in the globalization process of their corporation.  Wal-Mart also has a joint venture with a company called Bharti, to increase its presence in India.

Nike is another Corporation that outsources to Asia. Nike produces a lot of their shoes in Asia because labor is so much cheaper. As a result, less is taken from their bottom line and they profit more. Home Depot and Sears also do a lot of outsourcing to China. A lot of their products are produced in China because of the cheep labor. There was a famous case in 2006 concerning the Young Sun Lighting Co, which produces lamps and fixtures for Home Depot and Sears, because of poor working conditions in the factory. An overall theme for outsourcing in Asia is that the working conditions in the factories are very poor. Some controversial companies such as Nike have a tarnished reputation because of this.

-David Connolly

http://www.businessweek.com/magazine/content/06_48/b4011001.htm

http://www.businessweek.com/globalbiz/content/jun2009/gb2009068_435509.htm

Which company in your industry are most global? What has been the key to their success in other countries?

I found a list of the “Global Powers of Retailing”. This list includes the major global companies that are leading the retail industry in each of their 32 countries. The list ranks companies globally according to their overall revenue. Wal-Mart is ranked #1 top global retail company in the world and in the US. Wal-Mart’s 2010 retail sales were $ 303,935 billion. It had sales per store of 72,400,000 in 2010 with about 4, 198 stores. Today, Wal-Mart has about 6,000 outlets, which proves that they are still expanding.

They are also expanding in the grocery department as well as Target and other large-format value stores. For example, Wal-Mart has created a “Wal-Mart Express” which provides fresh “foods, dry grocery, consumables, health and beauty aids, over-the-counter medicines and in some stores pharmacy counters”. They are attracting all of the different consumers because these stores will be located in small rural communities, as well as in urban neighborhoods. All successful retailers are identified by their selling proposition. The key to Wal-Mart success in the US and in other countries is their price uniqueness. In bad economic times, people are looking for low prices and good quality products. That’s why during the bad economic times Wal-Mart still increases its sales: “Customers stocked up on low-priced merchandise and Wal-Mart quadrupled its same-store-sales gains over May 2007.”

Wal-Mart’s worldwide success is due to its discount store set up. In 2010, Wal-Mart’s worldwide sales generated $ 421, 886 billion. They also had an increase in sales of 1.3 %. These are due to their low price stores during bad economic times, which attract many consumers.

Links:

http://www.stores.org/2011/Top-100-Retailers

http://retailindustry.about.com/od/retailbestpractices/a/retailindustry_article1.htm

http://retailindustry.about.com/od/famousretailers/a/retailercountry.htm

Companies over the world that are major in Retail !

What non-US companies are key players in the industry?

In the retail industry, we experience seeing many non-U.S. global retailers that play key roles. All over the world from Australia to Belgium, we find companies that have such a significant impact on the retail industry. In Australia, we see that Woolworths Ltd. is a major retailers. They are a convenience store. In Canada we see the retailer that is a top retailer called Loblaw Companies ltd. where it is more of a discount store and warehouse club. China, which is now a booming country is many industries and becoming one of the top producers in the world in manufacturing goods and having plants in their country, has a top retailer called Bailian Brilliance group. France is quite a wealthier country and has retailers that are more luxurious than other countries. That is more popular as a trend throughout European nations. In France, we see the second top retailer called Carrefour. They are a discount store as well and convenience. Germany has the top third of their country called Metro AG which is a company that sells apparel and footwear. Sweden actually is the creator of the company called Ikea, as we see the Ikea group popular even here in the U.S. They sell household goods and furnishings. United Kingdom has a huge retailer and worldwide known called Tesco. They are a discount department store that does very well in the retail industry. As we can see, it has been a popular trend over the world to have many top retailers and companies that supply goods in the retail industry. Many countries have discount stores or department stores or convenience stores that all fall under the retail category that become worldwide. For example, Ikea is a huge company and has been brought into the U.S. for Americans to enjoy their goods. Overall, many companies over the world have something to offer in retail.

http://retailindustry.about.com/od/famousretailers/a/what-are-worlds-largest-retail-companies-retailers-chains-complete-list-2011-.htm

From,

Falen Serena

Section 3 : Consumer Trends

I found some information about retail sales and therefore consumer spending and trends.

Retail sales growth slowed because of tough economic conditions and because of a weaker housing market during 2009 and 2010. However, in July 2011, the US consumer spending demonstrated that retail sales augmented 2.8% for nondurable goods compared to the percentage of sales in July 2010. Another indicator of consumer trends is the increase of 8.3 % of total US retail sales in the first 8 months of this year (“Retail Sector,” 2011). For example Home Depot, ranked #1 major home improvement company, rose 3% on sales even though a weaker housing market has affected it, and Macy’s, ranked #1 major department store, raised its sale’s income by 5.7% (Schulz, 2011).

Another important consumer trend that affects US retail sales is tourism spending, which rose 4.7% during the first quarter of 2011 compared to 2010 (“Retail Sector,” 2011). The Internet retail sector is being affected by consumer trends as well. A popular Internet consumer trend is the use of a tablet as a more effective tool to buy online. Retailers like Macy’s report that tablet users place bigger and more expensive orders, adding 10 to 20% more to the cost, compared to shoppers that use a PC or a smartphone. Tablets and mobile device consumer spending represent 3% or 4.5 billion dollars of consumer online spending and it is expected to rise. (Mattioli, 2011).

It seems as if consumers are regaining confidence and stability in their income as the economy improves. Companies respond to these consumer trends. Therefore, these companies that are gaining money through online retailing are going to improve their online retailing by making the sites "tablet friendly".

Links:

http://online.wsj.com/article/SB10001424052970204010604576597151983657300.html?KEYWORDS=Tablet%3A+ultimate+buying+machines - Tablets: Ultimate Buying Machines

http://subscriber.hoovers.com/H/industry360/overview.html?industryId=151

http://www.stores.org/STORES%20Magazine%20July%202011/home-improvement

http://www.stores.org/STORES%20Magazine%20July%202011/department-stores

How do Retail Stores differentiate from each other?

Companies in the retail industry differentiate themselves from one another in several categories. One of the most obvious ones is price. Every consumer has their spending limits; and depending on how much they are able or willing to spend, will decides which kind of store they will shop in. This means some people are only able to shop in inexpensive stores, such as target, while others can shop in high end stores like Neiman Marus.

“While the free spending of the affluent may not be of much comfort to people who are out of jobs or out of cash, the rich may contribute disproportionately to the overall economic recovery.”

“This group is key because the top 5 percent of income earners accounts for about one-third of spending, and the top 20 percent accounts for close to 60 percent of spending,” said Mark Zandi, chief economist of Moody’s Analytics. “That was key to why we suffered such a bad recession — their spending fell very sharply.”-NY TIMES ARTICLE

Another way that retail stores can be categorized is by looking at the apparel they sell. – Some stores carry specific items such as summer wear, sports clothes, jewelry etc. While others carry clothes specific for women, men, or children.  This is true with retailers like Victoria’s Secret, Men’s Warehouse and Gap Kids.  

http://www.nytimes.com/2011/08/04/business/sales-of-luxury-goods-are-recovering-strongly.html

Current Events in Retail

What are some current events in your industry?

http://online.wsj.com/article/SB10001424052970203388804576614653132866200.html

This article from the Wall Street Journal is all about sales increases during the month of September, mainly due to discount prices and back-top-school shopping sales. Companies like Target, Costco, Macy's, Nordstrom, Saks, and Kohls all saw sales percentage increases that were higher than what analysts expected. While this was a positive note, the vacancy rate in malls is increasing. Retailers have recently been scared out of opening new stores in such an uncertain economy. Also, retailers are not looking forward as much to the holiday season this year. They are concerned about stress on consumers and weaker traffic blunting sales growth. FedEx Corp., who usually sees a lot of holiday traffic, expects slower growth this year. They expect holiday shipments to climb anywhere from 2.5%-3% as opposed to the 4.3% growth in 2010. The holiday season is not expected to benefit retailers as well as it did in previous years, and this is an prevalent concern in the retail industry.

The increase in growth for retailers in September was no surprise. The back to school savings lure consumers in, as everyone is looking for a good deal. Retailers know that products like clothing and school supplies will be necessary to start a new school year and they take advantage of September as a month to offer discounts but still boost sales and growth. On the other hand, the concern looking ahead to the holiday season was no surprise either. The current economy has consumers purchasing more and more inferior goods and less normal goods. Because of this, gift giving won't be as much of a priority and the holiday season will suffer more so than in previous years. While growth is still expected, it will not be nearly as high. These events are currently affecting the retail industry, and will continue to affect the industry throughout the coming months.

Pricing Trends and Patterns!

What are pricing trends in the industry?

In the retail industry, pricing trends change over time. During different seasons and holidays, the trends vary and may shift upward or downward. We try to predict future movement of a stock or company based on past trends and data that have been collected and obtained. "Trend analysis is based on the idea that what has happened in the past gives traders an idea of what will happen in the future" (investopedia).

For example, pricing trends have been pretty stable lately and stores are realizing from the pricing trend being stable, they have not been bringing in enough business and must push prices upward. Trends in a time where the economy is not doing well have shown in the past that prices increase. "Retailers are raising prices on merchandise an average of 10 percent across the board this fall in an effort to offset their rising costs for materials and labor" (wsj). This has not always proven successful in the past considering that consumers do not have the money to spend on these goods and especially at such high prices. Retailers now are trying to raise prices just enough to get more money and keep customers. Pricing trends during good times remain consistent to what the company is reputable for. For example, Walmart, a discount store, will not push up an retail prices and keep their usual low cost items for customers to buy. They have done well and their pricing trends stay the same.

Trends sometimes change due to other things than just recessions and hard economic times. Trends may change because of holiday seasons. We have seen that consumer spending is way higher in December and therefore, companies push prices up. Yearly, we see that companies do sell their goods and these higher prices and trends are created. We review the records and the consistency of sales proves that each year it is okay to keep prices high during holiday seasons.

Overall, pricing trends in retail take a turn for the better and for the worse at times but thats what a trend is all about. We review past history and it's patterns so we can navigate our future and what to predict for sales and our economy.

http://online.wsj.com/article/AP677949c8db7440048048ff7df9b20e58.html?KEYWORDS=pricing+patterns+in+retail

http://www.investopedia.com/terms/t/trendanalysis.asp#axzz1a9KEN62o

Business and Ethics by Carlos Andreu

Business and Ethics by Carlos Andreu 

· What are some interesting mission statements or values statements of some of the companies in your industry? What do their statements reveal about them?

I was looking at some major retail companies mission statements. I was reading about Target’s, Home Depot and Costco Wholesale mission statements. Home Depot’s statement caught my attention because unlike many other companies, Home Depot breaks down its mission statement into “8 corporate values to guide employees at all levels”. The 8 corporate values are: (1)"Taking care of our people: The key to our success is treating people well. We do this by encouraging associates to speak up and take risks, by recognizing and rewarding good performance and by leading and developing people so they may grow. (2)"Giving back to our communities: An important part of the fabric of The Home Depot is giving our time, talents, energy and resources to worthwhile causes in our communities and society. (3)"Doing the right thing: We exercise good judgment by "doing the right thing" instead of just "doing things right." We strive to understand the impact of our decisions, and we accept responsibility for our actions. (4)"Excellent customer service: Along with our quality products, service, price and selection, we must go the extra mile to give customers knowledgeable advice about merchandise and to help them use those products to their maximum benefit. (5)"Creating shareholder value: The investors who provide the capital necessary to allow our company to grow need and expect a return on their investment. We are committed to providing it. (6)"Building strong relationships: Strong relationships are built on trust, honesty and integrity. We listen and respond to the needs of customers, associates, communities and vendors, treating them as partners. (7)"Entrepreneurial spirit: The Home Depot associates are encouraged to initiate creative and innovative ways of serving our customers and improving the business and to spread best practices throughout the company. (8)"Respect for all people: In order to remain successful, our associates must work in an environment of mutual respect, free of discrimination and harassment where each associate is regarded as a part of The Home Depot team."

This statement reveals that Home Depot is devoted to give back to all of their stakeholders. They focus on costumer satisfaction, by providing good services and on creating loyal costumers for their brand by building strong relationships based on “trust, honesty and integrity”. Their statement also reveals that they base their decision thinking on what is best for their stakeholders, not just taking a decision that can affect the community or environment, for example, to gain a larger profit: “We strive to understand the impact of our decisions, and we accept responsibility for our actions.” Also, I was reading that these values are central to the company’s success. They point out in there website that these values are their “competitive advantage in the market”. As I pointed out in the first posting, companies make profit not only because of selling products. Retailers need to make sure costumers are satisfied with their products and services because this creates loyal costumers and stakeholders for companies, which creates long-term profit. I think Home Depot seems to have values that fulfill this.

Here are some other mission statements:

Target: "Our mission is to make Target the preferred shopping destination for our guests by delivering outstanding value, continuous innovation and an exceptional guest experience by consistently fulfilling our Expect More. Pay Less. ® Brand promise." "To support our mission, we are guided by our commitments to great value, the community, diversity and the environment."

Costco: "Costco's mission is to continually provide our members with quality goods and services at the lowest possible prices. In order to achieve our mission we will conduct our business with the following Code of Ethics in mind: Obey the law, take care of our members, take care of our employees, respect our vendors If we do these four things throughout our organization, then we will realize our ultimate goal, which is to reward our shareholders. "

Links:

https://corporate.homedepot.com/wps/portal/? - Look for values under our company

http://retailindustry.about.com/ - look for TargetCorp. and Costco Wholesale mission statement

Sincerely,

Carlos Andreu 

Recent News on What Reailers are doing and how it effects them

During my recent Readings I have found out several new things. In the "Fashion" world, designers are already trying to figure out next springs styles and trends. At these high end fashion and runway shows, corporations like Neiman Marcus, Macy's, Bloomingdale's, and Nordstrom, are sitting in the front rows, eying which clothing lines they like and don't like. Something that most people don't know is that lower priced retailers such as Target and J.C. Penny are present at these super high end fashion shows as well.

I think that these lower priced retailers such as, Target and J.C. Penny are doing a great thing by attending these fashion shows. This is a great way for these lower priced retailers to stay innovative, up to date, and maybe even ahead of the curve.This is crucial in the present economy because, if you are selling products that are trendy you are selling products. Staying appealing to the consumer is crucial because you have to make sales. In this economy, cotton prices are sky rocketing, and labor costs are rising, it is crucial for some of these company to play their cards right.

"We pay attention to the shows," said Penney's trend director Cyndie Washburn-Nester. "We are looking at what people are doing."

On the other hand, there is a general curve in the way higher end consumers are spending there money. They are gravitating toward the higher end products and not only looking for what is on sale. The high end consumers are willing to pay the full price.


http://www.marketwatch.com/story/investing-through-the-lens-of-fashion-2011-09-20


Sincerely,

David Connolly

Business and Ethics

· What are some interesting mission statements or values statements of some of the companies in your industry? What do their statements reveal about them?

I was looking at some major retail companies mission statements. I was reading about Target’s, Home Depot and Costco Wholesale mission statements. Home Depot’s statement caught my attention because unlike many other companies, Home Depot breaks down its mission statement into “8 corporate values to guide employees at all levels”. The 8 corporate values are: (1)"Taking care of our people: The key to our success is treating people well. We do this by encouraging associates to speak up and take risks, by recognizing and rewarding good performance and by leading and developing people so they may grow. (2)"Giving back to our communities: An important part of the fabric of The Home Depot is giving our time, talents, energy and resources to worthwhile causes in our communities and society. (3)"Doing the right thing: We exercise good judgment by "doing the right thing" instead of just "doing things right." We strive to understand the impact of our decisions, and we accept responsibility for our actions. (4)"Excellent customer service: Along with our quality products, service, price and selection, we must go the extra mile to give customers knowledgeable advice about merchandise and to help them use those products to their maximum benefit. (5)"Creating shareholder value: The investors who provide the capital necessary to allow our company to grow need and expect a return on their investment. We are committed to providing it. (6)"Building strong relationships: Strong relationships are built on trust, honesty and integrity. We listen and respond to the needs of customers, associates, communities and vendors, treating them as partners. (7)"Entrepreneurial spirit: The Home Depot associates are encouraged to initiate creative and innovative ways of serving our customers and improving the business and to spread best practices throughout the company. (8)"Respect for all people: In order to remain successful, our associates must work in an environment of mutual respect, free of discrimination and harassment where each associate is regarded as a part of The Home Depot team."

This statement reveals that Home Depot is devoted to give back to all of their stakeholders. They focus on costumer satisfaction, by providing good services and on creating loyal costumers for their brand by building strong relationships based on “trust, honesty and integrity”. Their statement also reveals that they base their decision thinking on what is best for their stakeholders, not just taking a decision that can affect the community or environment, for example, to gain a larger profit: “We strive to understand the impact of our decisions, and we accept responsibility for our actions.” Also, I was reading that these values are central to the company’s success. They point out in there website that these values are their “competitive advantage in the market”. As I pointed out in the first posting, companies make profit not only because of selling products. Retailers need to make sure costumers are satisfied with their products and services because this creates loyal costumers and stakeholders for companies, which creates long-term profit. I think Home Depot seems to have values that fulfill this.

Here are some other mission statements:

Target: "Our mission is to make Target the preferred shopping destination for our guests by delivering outstanding value, continuous innovation and an exceptional guest experience by consistently fulfilling our Expect More. Pay Less. ® Brand promise." "To support our mission, we are guided by our commitments to great value, the community, diversity and the environment."

Costco: "Costco's mission is to continually provide our members with quality goods and services at the lowest possible prices. In order to achieve our mission we will conduct our business with the following Code of Ethics in mind: Obey the law, take care of our members, take care of our employees, respect our vendors If we do these four things throughout our organization, then we will realize our ultimate goal, which is to reward our shareholders. "

Links:

https://corporate.homedepot.com/wps/portal/? - Look for values under our company

http://retailindustry.about.com/ - look for TargetCorp. and Costco Wholesale mission statement

Standing Out with CSR

http://ethisphere.com/wme2011/

This article came from a website called Ethisphere who is "a leading international think-tank dedicated to the creation, advancement, and sharing of best practices in business ethics, corporate social responsibility, anti-corruption, and sustainability" (Ethisphere). This article in particular was about the winners they selected as 2011 World's Most Ethical Companies. They chose these winners based off of 4 criteria: (1) ethics and compliance program, (2) reputation, leadership, and innovation, (3) governance, and (4) corporate citizenship and responsibility. There is no set number of companies that make the list; is is simply based off of recognizing companies that "go beyond making statements about doing busness ethically and translate those words into action" (Ethisphere).

For the year 2011, 110 companies made the list. Of those 110, five were from the retail industry. They included three American companies: Gap, Patagonia, and Timberland. The other two were Adidas (Germany) and Comme iL Faut (Argentina). The process to be placed on this list is lengthy and in depth, so these 5 companies are clear stand outs in the retail industry, and showed they have outstanding ethics programs. Patagonia has been on the list since the year 2006 and has continued going strong. The Gap, Timberland, and Comme iL Faut have all appeared on the list prior to 2011, but none have stayed on it consistently. Something interesting to be noted is that Nike has been on the list since 2006 with Patagonia and 2011 is the first year they were not selected as one of the World's Most Ethical Companies.

Ethics are KEY in Retail!

What Are Key Ethical Issues This Industry Faces?

The retail industry finds way to face a variety of ethical issues. Trust between workers and managers is something i have recently discussed in my business class and that must be based on fairness, honesty, openness and moral integrity. Leadership can help instill corporate values in employees as well. The industry has many employees and people could end up cheating or using fraud and finding information that is private to the company and using it to invest in stocks because they have one leg up on people and may know future outcomes. This clearly is unethical because companies in the retail industry are all competing and it is not fair for one to lost out because of unethical people that work for the companies. Increasing numbers of companies have adopted written codes of ethics for their businesses and employees to follow. They focus on behavior, environmental supports, and etc.

Eric Petroff, a writer in retail for investopedia said that "with such financial rewards at stake, the competition acquire new business is incredibly fierce" (www.investopedia.com). A major career consideration is ethical conflicts brought about by realizers and the sectors in itself. Brokers do not get paid unless the product or service is sold. Customers interests sometime take a "back sear to the broker's need to generate income." Brokers in the retail industry are constantly weighing the need to make money against making appropriate recommendations. That is an ethical issue for them to face with trading the stocks and sometimes knowing information (www.investopedia.com).

ALWAYS,

FALEN RAUCHWERGER

http://www.cnbc.com/id/44626390


The retail industry is actually doing well in this sluggish economy. In fact, sales are predicted to increase by more than 3% in the next coming months. It seems that consumers are not worrying about their wallet so much when they are head out to the store to buy. According to this article, they are not foreseeing a gloom and doom for the industry. In the next coming weeks there will be many predictions made on how the holiday spending in the retail industry will turn out.

How Does the Retail Industry Work and Make Money?

This article on investopedia.com answers a lot of questions




http://www.investopedia.com/features/industryhandbook/retail.asp#axzz1YP4vU8Mj


The term Inventory Turnover is crucial.


According to investopedia  this is calculated by taking the sales over the inventory     sales
                                                                                                                                               Inventory




or            Cost of Goods Sold
                 Average inventory






FYI-Investopedia is a very credible source, nothing like wikipedia even though it sounds like it






Sincerely,


David Connolly

· What are the basic economics of the industry? How do companies make money? What are their costs?

· What are the basic economics of the industry? How do companies make money? What are their costs?

Researching in the Journal of Retailing, I was reading that companies in the retail industry make money by being innovative, effective and efficient. Innovation attracts customers, for example, technological advances can make products easier to reach and more efficient for costumers, therefore improving the costumer experience and costumer loyalty. For example, Redbox makes its product much more reachable to every buyer by using the kiosk technology to allow costumers to engage in a self-service purchasing process. This not only is an advantage for costumers but it also gives benefits to the company, by reducing the cost for employees. Companies make money by being effective, for example, Zara increases revenue by matching product assortment with demand and implementing flexible prices, which involve different types of buyers in the market. To make money in the retail industry, companies must be efficient by reducing cost. For example, Netflix made an efficient advancement by introducing an “industry-standard bar-code sorting machine to handle the odd-shaped envelopes used to mail out DVD’s, increasing the number of envelopes processed to 5,000 envelopes and hour”, this increases productivity. Some of the cost retail industry companies faces are employee wages, obtaining products from manufactures, and paying for advertisement. By being innovative, effective and efficient, businesses can reduce these costs. Finally, what really makes money for a business is improving the costumer’s experience. Redbox’s revenue “grew by 99% in 2009 as it installed over 8,700 new kiosk”, improving the costumer satisfaction because it was a simpler and faster purchasing process for costumers. Making money for retailers is more than just selling products, retailers need to make sure costumers are satisfied with their products and services because this creates loyal costumers for companies. Loyalty assures long-term profits for companies because buyers will continue buying if satisfied. “Profits from retail business model innovation (improving costumer experience) can exceed the profits that can be extracted from product or process innovations (which often mainly influence short-term gains)”.

We should focus on a company or companies that have this elements to make our investment suggestion much more valid.

Supply and Demand for Retail

Discuss Supply and Demand in the Retail Industry

As in any industry, supply and demand in the retail industry are a result of several factors that each contribute to the economy and affect how much people are willing to buy and also how much sellers are willing to sell. Some of the major factors in the retail industry that affect supply and demand include competitors and availability of substitutes, annual holidays, and the threat of new entrants.

Competition in the retail market and the availability of substitutes are arguably the biggest contributors that affect the supply and demand in the market. There is such a vast selection of retail stores and competition is constantly present. This is especially evident in places such as a shopping mall, where clothing stores are lined up next to each other and have to compete for customers. Also, substitutes are very readily available in retail. For example, Under Armour and Nike provide very similar items so it is easy to substitute one company for the other. If the price of Under Armour clothing is cheaper, more customers are likely to shop there over Nike because of the close similarities in products.

Along with competition, annual holidays and the threat of new entrants affect the supply and demand for products in the retail market. In December, both production and sales increase steadily because of the Christmas season. Suppliers are willing to supply more and buyers are willing to buy more during this gift giving time. Also, the threat of new entrants is always a factor to take in to consideration in retail. Many retail stores are chain stores and open at new locations all the time. If a Target is about to open right next to a Wal-Mart, that is going to affect the supply and demand of both stores.

(http://www.investopedia.com/)