Greenback Basic to open 1,000 Popshelf shops, geared toward wealthier customers

Popshelf stores are approximately 9,000 square feet and stock items such as housewares, seasonal decorations, and party supplies, including Dollar General’s own brand items.

Dollar general

Dollar general debuted a new store called Popshelf about a year ago, is aimed at wealthier suburban shoppers looking for good deal.

The Tennessee-based discounter announced on Thursday that it plans to have around 1,000 of its stores by the end of fiscal year 2025 – including around 100 other locations that will open in the next fiscal year. It has 30 popshelf stores in six states (as of October 29). It plans to open its first stores in Texas in early spring.

News of the ambitious expansion plan comes when the retailer said it will test its first international market by opening 10 stores in Mexico by the end of fiscal 2022. Dollar General expects 1,110 new stores to open in the coming fiscal year, including Popshelf, Dollar General and the international locations.

But shares fell more than 1% early Thursday after the company announced that sales in the same store will decline this fiscal year.

Emily Taylor, Dollar General’s chief merchandising officer, said in an interview that the retailer is accelerating expansion plans for the new store concept due to its popularity with customers. She said the average cart size and value are higher than the Dollar General stores of the same name, despite refusing to provide numbers.

For the dollar store chain, Popshelf is a way to attract new customers and increase profits. Its target customers are women who live in the suburbs and have annual household incomes of $ 50,000 to $ 125,000, the company said. The stores are approximately 9,000 square feet and stock items such as housewares, seasonal decorations, and party supplies, including Dollar General’s own brand items. Over 90% of the goods Popshelf sells are $ 5 or less, the company said.

Dollar General’s clients typically live in rural areas, are on tighter budgets, and are slightly older, Taylor said. Customers have an annual household income of $ 40,000 or less. Sales in the dollar stores also include a heavier mix of grocery and snack items that tend to be less profitable for the retailer.

Dollar General has more than 18,000 stores in 46 states. To drive growth, the retailer opened additional locations in no time at all. It also adds fresh fruits and vegetables in more of its shops and Expansion into healthcare. It rented his first chief physician in July.

Taylor said the idea of ​​Popshelf was born while Dollar General was working on its Non-Consumables Initiative, a company-wide attempt to add more items such as home accessories and party supplies to its store lineup that began in 2018. She said the company saw an opening for another store.

“We have found that there are many advantages to having a stand-alone concept, especially as it is a really exciting, fun and engaging shopping experience in the small box store,” she said.

That inspired Popshelf’s emphasis on colorful displays and frequent changes of goods to make visiting stores feel like a “treasure hunt,” whether shoppers are looking for a gift, preparing for a party, or decorating for the holidays, she said.

Depending on the season, the product mix includes toys, throw pillows, Christmas decorations, pumpkin-shaped disposable paper plates, balloons, bath bombs and specialties such as hot cocoa and cheese for a charcuterie platter.

Housewares in particular are a hot category, including decorative and organizational items, Taylor said.

She said popshelf stores offer customers the ability to purchase online and in-store for pickup. She said the company is also likely to start delivering home purchases so people who don’t live near a popshelf store can buy the products. She said it got a lot of requests for it on social media.

The company is also testing a store-in-a-store format. It has opened 14 smaller versions of Popshelf in DG Markets, a Dollar General format that’s bigger and has more food choices, and more are being added.

Looking for growth, coping with inflation

Dollar General seeks to fuel growth – and attract buyers with more disposable income – as it prepares for the decline in sales and copes with inflation. As its budget-conscious customers experience higher prices at gas stations and grocery stores, it reduces the money they can spend in dollar stores. Compared to other retailers, the discounter also has fewer opportunities to raise prices due to its good reputation and the risk of deterring customers.

His main competitor, Money tree, took a big step last week and said it would pass more of the cost on to buyers. It will start selling most goods for $ 1.25 instead of $ 1 to cover rising freight costs.

Dollar General said Thursday that it expects sales to decline between 2.5% and 3% in the same business for this fiscal year. On a two-year basis, this corresponds to a growth of around 13% to 14% if one takes into account the jump in sales during the pandemic.

The company expects earnings per share for the year of $ 9.90 to $ 10.20, slightly higher than its previous expectations of $ 9.60 to $ 10.20.

For the third fiscal quarter ended October 29th, which the retailer reported on Thursday, earnings exceeded analysts’ expectations.

The company earned $ 2.08 per share on sales of $ 8.52 billion. According to Refinitiv, an average of analysts expected Dollar General to make $ 2.01 per share on sales of $ 8.50 billion.

But net income of $ 487.03 million was lower than a year ago when it made $ 574.26 million, or $ 2.31 per share.

At the close of trading on Wednesday, Dollar General’s shares were up nearly 6% this year. The stock closed at $ 222.79 on Wednesday, which equates to a market value of $ 51.98 billion.

four methods consumers have modified because the pandemic started

Shoppers climb and descend an escalator at Willow Grove Park Mall in Willow Grove, Pennsylvania on November 14, 2020.

Mark Makela | Reuters

As the Christmas shoppers prepare for the festivities, they are preparing for a season that will be noticeably different than it was a year ago.

Big parties with family and friends. Busy shopping malls. A trip to Santa Claus. Maybe even a warm weather getaway. Consumers are again seeing more of these vacation rituals than possible. Almost three in five Americans are vaccinated against Covid-19, and the pace of it is new coronavirus cases has fallen below the level of summer rise, giving people more confidence to return to their holiday traditions.

Even so, not everything will be the same as it was before the Covid strike.

Buyers have developed new habits and new fears have arisen. Factory closures, congested ports and labor shortages can all result in limited gift choices and consumers easily missing out on a toy or gift they were hoping for. Prices could lead to a sticker shock, even.

Consumers are likely to swiftly switch between online and in-store shopping, taking full advantage of methods such as roadside collection. (Although on this holiday, convenience – rather than avoiding the crowds – will determine the decision.) Shops have largely given up breaks, but other avenues have emerged for Insolvent consumers to finance their vacation purchases.

“Black Friday will be like no other” Macys CEO Jeff Gennette told analysts on a conference call Thursday. “We are Closed on Thanksgivingwhich is a big change from 2019. But we expect our digital business to be very heavily tracked throughout the day … and we are ready for all of the expected traffic that is about to begin [in stores] at 6:00 am the day after Thanksgiving. “

Here’s a closer look at some of the ways this Christmas season is likely to be different than it has been in the past:

Slowdown in ecommerce growth

Holiday e-commerce sales are up at least one mid-teens clip year over year as long as Adobe Analytics stays on top of things. That should change this year.

Online sales in the US are expected to grow 10% to $ 207 billion, according to Adobe’s Digital Economy Index. That’s after a massive pandemic-related increase of 33% last year. Adobe tracks more than 100 million products online across 18 product categories across the web.

“There are many macroeconomic factors at play here … that could drive consumers to switch between online and offline purchases,” said Vivek Pandya, senior analyst at Adobe Digital Insights.

Stories about the supply chain and crowded ports are likely to help more people shop in stores instead of online whenever possible, he said. And after an unprecedented surge in e-commerce spending last Christmas season, it was likely that growth would slow, Pandya added. Still, Adobe predicts this will be the first public holiday that online spending will top $ 200 billion.

Buyers return to the stores

Christmas shoppers search for deals during the Black Friday sales event at the Pentagon Center shopping mall in Arlington, Virginia on November 29, 2019.

Loren Elliott | Reuters

Are you thinking about going to the mall on Black Friday? You’re not alone. Shops will be much busier than they were a year ago as shoppers’ fear of venturing out of the house has eased significantly.

The National Retail Federation said it was expecting almost 2 million more people will shop from Thanksgiving Day through Cyber ​​Monday, even though 61% of shoppers have already started buying gifts. The retail group used Prosper Insights & Analytics to survey 7,837 adults from November 1 to 10 about their plans and progress.

On Black Friday, 64% said they expected to go to stores to shop, up from 51% last year, NRF said.

ICSC, a retail organization that represents the shopping mall industry, conducted its own survey of 1,005 people from September 24-26 and learned that half of US consumers plan to visit more stores this year to To buy gifts. In the past year, 45% said they went to shopping malls.

Consumers cited the ability to touch and feel products, get what they want instantly, and finding gift ideas as the main reasons for the trip. More than three quarters of people said they went to shopping centers to have a bite to eat or to use other services in the shopping centers.

“Vaccination rates are improving in some of our regions, and California in particular,” said Jean-Marie Tritant, US president of the Unibail-Rodamco-Westfield global shopping mall. “This makes people feel even more comfortable when they return to places where they can meet.”

Buy gifts now, pay later

Confirm the Holdings Inc. website home screen on a laptop computer in an arranged photo taken on Wednesday December 9, 2020 in Little Falls, New Jersey, USA.

Gabby Jones | Bloomberg | Getty Images

Gone are the old school days of the layaway. Consumers have a new way to cover the cost of vacation travel: Buy now, pay later Payment plans.

The use of installment payments is expected to gain popularity this holiday season. These services enable a buyer to purchase an item, take it home immediately, and cash out in set increments. Layaway, on the other hand, required a retailer to reserve an item and keep that purchased item for the consumer.

BNPL has established itself as a retailer including Macys, Walmart and target Make deals with companies like. away Confirm, based in Australia additional payment and Sweden’s Klarna.

According to data from Adobe Analytics, “Buy Now, Pay Later” online sales increased 10% this year compared to 2020 and 45% compared to 2019. One in four respondents in an Adobe survey said they had used BNPL plans in the past three months, with apparel, electronics, and groceries being the top three categories.

Summarize memories

Fans attend a concert by recording artist Machine Gun Kelly during a stop on his Tickets to My Downfall tour at The Theater at Virgin Hotels Las Vegas on October 16, 2021 in Las Vegas, Nevada.

Ethan Miller | Getty Images

Wellness days. Dinner in a fancy restaurant. Tickets for a concert.

These gifts are returning to wish lists this year as consumers feel more comfortable around other people and long for experiences they’ve missed.

About 43% of consumers plan to redirect their spending this holiday season to experiences and service gifts, according to a survey by consulting firm Accenture of around 1,500 US consumers in August. This is even higher among the younger generations: 53% of Millennials and 50% of Generation Z say they are switching to more experience spending, the survey found.

Almost 70% of respondents plan to buy the same or more restaurant gift cards this holiday season compared to last year, and 47% plan to buy the same or more beauty products or services as gifts, e.g. B. a manicure.

Travel-related gifts in particular are on the wish list. According to the survey, 40 percent of older millennials – consumers between 32 and 39 – plan to purchase travel vouchers or airline tickets for others during the holiday season.

“We have some catching up to do,” said Jill Standish, director of Accenture’s retail group.

What it means for retailers and consumers

A cotton field

Scott Olson | Getty Images

The last time cotton prices were this high was in July 2011.

“In 2011 we needed a prayer meeting”, Levi Strauss Chief Executive Chip Bergh told investors on a conference call Wednesday.

Bergh remembered just going to a denim dealer and finding his way around Levi’s store. But he was also staring down a historic rise in cotton prices. Cotton had skyrocketed to over $ 2 a pound as textile demand recovered from a global financial crisis, while India – a major cotton exporter – curtailed supplies to help its domestic partners.

The price of a cotton T-shirt rose an average of $ 1.50 to $ 2, said Jack Kleinhenz, chief economist for the National Retail Federation. Consumers felt the effects. And it also eats away at companies’ profits.

Bergh sits in the camp with analysts and experts who say current cotton price inflation will be less damaging to the industry. Manufacturers and dealers have pricing power. Businesses can pass the higher costs on without destroying consumer demand.

“It’s a completely different situation today,” said Bergh. “We have been able to accept the pricing for the past 12 months and it remains.

cotton Prices rose to a 10-year high on Friday, hitting $ 1.16 a pound, reaching levels not seen since July 7, 2011. The price of the commodity rose about 6% this week and is up 47% since the start of the year. Analysts note that profits are further boosted by traders rushing to cover their short positions.

The start-up results from a number of factors. Last December, the Trump administration did blocked companies in the United States from importing cotton and other cotton products which originated in the western Xinjiang region of China, as it was feared that it was made with forced labor by the Uyghur ethnic group. The ruling, which remained in effect during the Biden administration, has now forced Chinese companies to buy cotton from the US, manufacture goods with that cotton in China, and then sell it back to the US

Extreme weather, including droughts and heat waves, has also wiped out cotton crops in the United States, the world’s largest exporter of this commodity. In India, poor monsoon rains threaten to affect the country’s cotton production.

The momentum already has shares of Hanes brands, a clothing manufacturer known for its underwear and cotton t-shirts. Historically, HanesBrands stocks fall when cotton prices rise. The stock is down 7% over the past week. On Friday alone, stocks lost 5% to close at $ 16.23.

“Real pricing power”

Credit Suisse analyst Michael Binetti said he felt any worries or setbacks in retail stocks due to soaring cotton prices were exaggerated.

He said only 2% of HanesBrands’ cost of goods comes from buying cotton directly. In 2012 this value was higher at 6%.

After the rise in cotton prices in 2011, HanesBrands had raised the prices of various cotton goods three times by a double-digit percentage by 2012 to offset inflation, Binetti said. HanesBrands’ profits were still shrinking from all of the costs that faced them. But ultimately, the company sustained some of those price increases. Today the company is in a healthier position with higher profit margins, said the Credit Suisse analyst.

“We believe stocks are underestimating the strongest momentum this sector has not had in over a decade. Real pricing power,” said Binetti.

Retailers have achieved this pricing power by proactively deviating from discount channels and reducing excess inventory. The Covid pandemic acted as “cover” for companies to accelerate this change. Persistent bottlenecks in the supply chain have also played a role in the depletion of inventory. This dynamic has driven costs so high that companies are raising prices and consumers are still buying.

“We believe inventory will remain rational, margins will remain strong, and retailers will be able to enforce bigger and more consistent price increases than they have been in over a decade,” said Binetti. He expects cotton inflation to be temporary.

UBS analyst Robert Samuels said the retailers he believes will be hardest hit by soaring commodity prices are those who specialize in denim. Cotton makes up more than 90% of the raw materials used to make jeans and other denim items.

“As if retailers don’t have to worry enough about supply chain constraints and labor shortages,” Samuels said in a message to customers.

A stronger tip

But Levi has already tried to allay fears about his denim business.

In his earnings call, Levi said the majority of its product costs were already being negotiated by the first half of next year amid very low single-digit inflation. A mid-single-digit increase is expected for the second half of the year. And Levi said it plans to offset that increase with the pricing measures it has already taken.

Levi has shifted its business from predominantly wholesale to a mixed base that has a growing share of direct sales to consumers. And with strong consumer demand and tighter inventory, the company was able to sell more products at full price.

Cotton accounts for about 20% of the cost of making a pair of Levi’s jeans, said CFO Harmit Singh, with each pair of jeans containing about two pounds of cotton.

Given the timing of his conference call, Levi was one of the first clothing retailers to speak out publicly about rising cotton prices. Others will publish their third quarter results in the coming weeks.

According to analysts at Goldman Sachs, given the timing of the contracted cotton purchases, it will be a while before rising cotton costs even show up in retailers’ profit and loss accounts. And it’s worth noting that cotton prices rose to more than $ 2 a pound in 2011, which is well above where the commodity is traded today.

Still, apparel stocks could come under pressure as higher prices persist. As examples, analysts cited companies such as Ralph Lauren, Gap Inc., Office brands, and Calvin Klein owners PVH. Shares in Kontoor Brands, which owns Wrangler and Lee jeans, fell nearly 6% over the past week, while PVH, Gap and Ralph Lauren were each down less than 2% for the week.

—CNBCs Michael Bloom contributed to this reporting.

Nordstrom takes stake in four Asos style manufacturers to win youthful customers

A woman can be seen shopping at ASOS, the online fashion store, on a laptop.

Dinendra Haria | SOPA pictures | LightRakete | Getty Images

Nordstrom said on Sunday that it has acquired a minority stake in four clothing brands owned by British online fashion house Asos.

The brands – Topshop, Topman, Miss Selfridge, and activewear label HIIT – are all aimed at younger consumers in their twenties. Financial terms of the deal were not disclosed.

Pete Nordstrom, President and Chief Brand Officer of Nordstrom, said he sees the collaboration as an opportunity to redefine the business model of a wholesaler like Nordstrom working with a retailer. He also expects the possibility of further strategic partnerships in the future.

While Asos retains operational and creative control of the Topshop brands, Nordstrom will own the exclusive retail rights for Topshop and Topman across North America.

“By making the Asos brands, including Topshop and Topman, available to our customers, we can create new and excitement,” said Pete Nordstrom in a statement.

The department store has been the exclusive distributor of Topshop and Topman in the USA since 2012. Nordstrom will now be the only stationary location for these brands worldwide.

As of this fall, customers can also pick up online orders from Asos at all Nordstrom and Nordstrom Rack locations, the companies said.

Asos acquired Topshop, Topman, Miss Selfridge and HIIT in February. The brands were put on the block after the Arcadia Group, the British retail empire run by billionaire Philip Green for 18 years, Filed for bankruptcy protection At the end of last year. Bans put in place during 2020 due to the pandemic dealt a heavy blow to Arcadia, which operated hundreds of stores. Asos, on the other hand, had a purely online business model.

Nordstrom is looking for ways to get its existing customers to return to shopping regularly while reaching out to people who have never visited its stores or website before. It has the potential to weather the pandemic – especially since many people are returning to work and school and need brand new wardrobes.

The company hopes Nordstrom will reach a younger generation of buyers with growing purchasing power by offering exclusive products from Topshop, Topman, Miss Selfridge and HIIT.

It could use a boost too. Nordstrom didn’t top its earnings before the pandemic. For the three month period ending May 1st, sales decreased by 13% compared to 2019. Increased labor and shipping costs as well as interruptions in the supply chain have put the business under further pressure.

Nordstrom shares are up about 15% since the start of the year. The company has a market capitalization of $ 5.7 billion.

Value hikes forward, however client firms hope consumers will not discover

Shoppers search for items at a Costco wholesale store on August 4, 2020 in Colchester, Vermont.

Robert Nickelsberg | Getty Images

Inflation is coming.

Look no further than coke and Procter & Gamble share plans to raise prices this week to compensate for rising raw material costs. The cost of raw materials, which range from lumber to resin, is rising, and companies are taking steps to protect profits.

The price increases follow a year of increasing demand for a variety of items, from paper towels to peanut butter jars. Sale of Consumer goods rose 9.4% to $ 1.53 trillion last year according to the Consumer Brands Association. Many manufacturers withdrew advertising and promotions to keep up with demand and gain market share without much marketing.

James Knightley, chief economist at ING International, predicts consumer prices will continue to rise in the near future, up nearly 4% year over year by May. The consumer price index, which is how much US consumers pay for a shopping cart, rose 2.6% in March from the same period last year according to the Ministry of Labor.

The stocks are “too low”.

Low inventory levels help companies improve their pricing power, he said.

“According to the Institute for Supply Management, the latest survey found that 40% of manufacturers say their customer inventories are” too low, “” Knightley said. “This is further evidence that corporate pricing power is increasing.”

Food industry analyst Phil Lempert said numerous factors have increased costs for farmers who pick produce, factories that make packaged consumer goods, and meat packers who process beef, pork and chicken. The ports are congested, the truck drivers are scarce and the food workers have to try to distance themselves socially. That makes it harder to keep up with demand and ship items, from cereals to Italian cheeses, worldwide.

Price increases are secret

Moody’s analyst Linda Montag said she does not see higher prices as a competitive advantage as all consumer businesses face higher raw material costs. In addition to Cola and P & G PepsiCo, Kimberly-Clark, General Mills and JM Smucker have dealt with price increases. And consumers may not even realize they are paying more for diapers or soda.

“Consumer companies across the board are very adept at implementing price increases without having to forego price increases of five to 10%,” Montag said in an interview.

Some of these methods include using new packaging, selling smaller packaging for the same price, or offering promotions that lower the price until consumers are used to the higher sticker price. Hedging positions also give some manufacturers such as Coke and Pepsi more flexibility to gradually increase their prices, as they do not feel the effects of higher raw material costs for several quarters.

More cash in consumers’ pockets means less risk

Price increases always carry the risk that the demand for these products will decrease. However, Moody’s analyst Chedly Louis said she doesn’t expect consumers to resort to private label products because consumers trust bigger brands during the crisis. This behavior is expected to last longer.

“There is potential for consumers to move to cheaper, lower margin products within P & G’s product portfolio. It’s still P&G, but it’s cheaper,” said Louis.

Many consumers also have more cash in their wallets from doing government stimulus checks and years without travel, sports games, and fine dining.

Not all companies have the same flexibility to raise prices. Piper Sandler downgraded Kraft Heinz Shares on Friday, citing the company’s relatively weak pricing power as a reason for the decision. Analyst Michael Lavery wrote that the company’s pricing power lags behind that of peers like General Mills, Mondelez and HersheyTherefore, rising prices could affect demand.

Discounts are rare

Most retailers will pass the higher prices on to consumers. Lempert said grocers are juggling more expensive services like online grocery delivery or roadside collection, leaving little margin for profit margins to absorb higher grocery costs.

Grocery costs had already risen as retailers offered fewer discounts while shoppers cleared shelves last spring and bought more cooking utensils than usual in the months that followed. Phil Tedesco, vice president of Retail Intelligent Analytics at NielsenIQ, said that in a typical month, 31.5% of units will be sold through promotions. In March, only 28.6% of the units were sold through promotions.

“This has resulted in fewer opportunities for shoppers to take advantage of the in-store sale, and as a result, the total cost of food products has increased slightly,” he said.

JP Morgan analyst Ken Goldman wrote in a note to customers Monday that higher prices will help grocers, especially given tough comparisons with last year’s skyrocketing demand.

“Too much inflation is bad for grocers, but a gradual 2-3% (roughly the percentage that producers have to go through) with a shift in the mix towards higher-priced products is likely to help a lot right now,” he said.

– CNBCs Melissa Repko contributed to this report.

Consumers spending cash to ‘get revenge’ towards COVID

What is Revenge Shop?

What we earlier referred to as retail therapy has taken on the new nickname revenge shopping as American consumers try to spend some money and make up for lost time during the pandemic.

consumer are ready to come back out and spend some money. And what used to be called “retail therapy” is now called “revenge shopping” as people try to make up for lost time during the pandemic.

Contribute Bodge, a smart shopping expert TrueTrae.comcalled this trend “fascinating”.

“It’s really a phenomenon we’re seeing now that consumers are spending more on getting revenge on COVID,” said Bodge. “They spend more on the things they couldn’t spend on before.”

Bodge said the trend will help businesses of all sizes small businesses – especially those who did not have a significant online presence – will see a huge boost.

“I drove my daughter to the mall the other day and it was like Christmas – the parking lot was full,” she said. “And so I really got the feeling that people were really out to get out there and see other people and buy things.”

The National Retail Federation predicts consumer spending will increase by at least 6.5% year over year in 2021.