The Difference Between Coal and Diamonds is...

Pressure!

In our case, let's call it "Downward Pressure."

As a result of: 

being heavily inventoried

awful Holiday sales results

shrinking access to credit

Large retailers, especially those of the high-end variety, have not been able to order goods in their usual quantities from vendor partners.

This has created a boom in luxury goods at what I have coined as "echo-sites", defined as reputable retailers, usually restricted from carrying the brands due to the retailers discounting policies.

If one regularly reads the Oasis, this comes as no surprise, as the post-Thanksgiving business (or lack thereof), presaged this inevitability.

Last August TJX , the Marshall's and TJ Maxx parent company, announced plans to designate special floor space at each of it's locations to better spotlight the new collections previously unavailable to them.

And if that is not enough to convince skeptics, my trip to a Oasis fave, Costco, should do the trick.

While shopping at my neighborhood Costco in Chicago yesterday, The first table I encountered in the clothing area was stacked high with Ed Hardy t-shirts. These were not clearance peices, sent as one off, but piled high and 12 different shirts to chose from. 

What makes this development even more interesting was the price, an astonishing $31.99 for your choice of the shirts! The Nordstrom website has Ed Hardy t-shirts (while not exactly the same) for $106.

After collecting my usual food, book and hygiene needs, I noticed another table in the clothing area with an unusual amount of activity. Only this one had several women sorting though Seven Jeans. 

While the Neiman Marcus website features denim by Seven Jeans for prices ranging from $155 to (gulp!) $275, Costco sells 4 styles, all at $99.00! 

With the realities of the new economy becoming more clear each day, which of these three retailers seems better suited to deliver on their customer's demand for fashion and value?

Me too.

Slipping Into Darkness

I promised  today, Thursday, would be a hot day for the press, as retailers reported December figures.

Here are a few stories to illustrate the point (Click Headline to read entire story):

Deep  Discounts Fail to Help Retail Sales

Family Dollar Sees Boost This Year from Use of Food Stamps

The Grinch Stole Christmas: Retail Sales Plunged 4% in December

Macy's to Close 11 Stores Nationwide

Retailers Confirm, 2008 Holiday Season Worst in Decades

Saks December Same-Store Sales Plunge 19.8%

Neiman's Has a Lousy Christmas

This may seem like a lot to read, so I will ask that you only read this one in it's entirety:

A Brutal December for Retailers

Now that we have looked back, barring something spectacular being revealed, I only plan to look forward.

If one is a regular reader of the Oasis, these headlines are not surprising. There seemed to be no question this past holiday season would be horrible, the only question was how bad. 

By Thanksgiving the picture, literally (CLICK HERE), crystalized.

Our new goal, moving forward, is to discuss how to get through the coming downturn, both for retailers and consumers. Additionally, I will spot trends, spotlight innovative practices and continue to provide a lens to the retail marketplace for you, the reader.

Let's Get It Started!

Many Happy Returns

I was reading Ray A. Smith's article (U.S. Retailers to Report Grim Results)  on the Wall Street Journal website regarding the much anticipated December retail numbers due out Thursday and something sparked a memory of an unusual experience I had yesterday. 

Allow me to share and expand.

I went to my neighborhood Costco (a retailer who's praises I have sung on numerous occasions) yesterday and, as I approached the doors, saw something I have never witnessed before, a line to get in.

Mind you, yesterday's weather in Chicago was in the upper 20's, maybe 30, maybe.

Yet and still there were about 8-12 people standing in an orderly line outside the store. As I moved closer and closer I noticed the line extended some ways inside the store as well.  While walking and searching my wallet for the always misplaced membership card required to enter, I started wondering if the few items I needed was really worth standing in freezing weather.

Just as I resigned myself to the idea, I noticed the line was not to get inside the store, but an extension of the "Returns" line that was now, literally, winding outside the store.

The sight of that line and the thought, sparked by Mr. Smith's article, drove home a point I had not considered, how tough January business is in the retailing business.

This January, much like this December, is sure to be perhaps the worst month for retailing in, excusing the hyperbole, modern history.

Three things are needed to make a Perfect Storm in retailing:

• First, an uncertain economy. A bad economy is one thing, but "better the devil you know", they say. In bad economy, people have already made adjustments and pared down their spending habits. In uncertain economy, which is really a bad economy where people refuse to accept that reality, people attempt to maintain their lifestyles regardless of how difficult the reality of doing so is. This leads to large spending expenditures, followed by mass returns, pawning and borrowing. Sound familiar?

• Secondly, you need swollen inventories. Swollen inventories take up room needed to show new goods, inhibit buying teams from investing in newer, more relevant merchandise and forestall payments to vendors, banks and other creditors. If you consider we just came through the worst holiday season on record, and 4th quarter is when retail inventories swell to their highest levels, inventories are now HUGE, everywhere. This is why you are seeing, "Buy 1 Get 2 Free" signs in place of, "66% Off" signs popping up in stores. They seem to be the same thing,and while the latter gives customers merchandise for 1/3 the price, the former gives customers merchandise at 1/3 the price, but additionally removes two more items from the store's inventory. Inventory is a major problem at virtually every retailer right now.

• Lastly, you need reduced consumer foot-traffic. This point is not as obvious as it seems. Of course January is going to be infinitely slower than pre-Holiday business. However this January is sure to be slower than most because of something I wrote about in November, the greatly reduced number of gift cards sold this past Holiday Season. Gift cards ensure future business, period. When customers decided to steer clear from purchasing gift cards over the holidays, the message was clear, "We are not sure if we will be back, or if you we will be here when we do." The combination of loaded gift cards and huge discounts would have made for a festive January in retailing, instead we have the opposite effect.
  

Coupling these three factors with record rates of merchandise returns brings the problems many retailers face more clearly into focus.

A Perfect Storm has descended on the entire retail landscape and will have a disastrous impact on this, the last fiscal month of the calendar year. Look for Thursday's numbers to be bad, and this month's numbers to only accelerate the inevitable thinning of the retail herd.

Best of Inbox 01.02.09

Here's the best nugget I found in my box today:

I can't believe I am saying this, but NOW is the time to make your move. 

95% off is less than free. Here is the math on my theory.

If item a is $100 and tax is 10%, then your cost to take it out the door is $110.

If that item is 95% off, the math is as follows:

$100 - 95% = $5 and 10% tax of $0.50, so you are paying $5.50.

That is 45% less than the tax you would have paid on the item at the original price.

So as Jean Luc Picard said best: "ENGAGE!"

Best of December Windows

Tiffany - North Michigan Avenue

Somehow, every month, Tiffany manages to pack more punch in their little 24" x 16" windows than most others get out of space 10-20 times in size.

Always different, always new and forward and always, ALWAYS brand worthy, meaning it meets the standard of "wow" Tiffany customers anticipate.

Take a look (click images for better detail):

Mail Dominance

I thought I might share a few images from my inbox this morning. I expect this to be the norm going forward, not the exception.

I think everyone should sign up for e-mail alerts from their favorite retailers. Reason being, many of my favorites do not advertise in traditional (newspapers, magazines, televisions) manners to keep their costs down. Also, they are able to react quickly to market conditions. For example, Saks Off 5th regularly sent out alerts on deals that lasted for only a few hours throughout the entire Holiday Season. I took several people to the store and watched their jaws fall through the floor at the prices on everything from Prada to Zegna to Gucci.

If you are going to be a shopper, be an informed shopper.

Confronting My Pessimism

To get a gauge of this "Black Friday" business, I took a stroll around my neighborhood shops to get an idea of consumer enthusiasm. I live in downtown Chicago, so my "neighborhood" shops, along Michigan Avenue, Oak Street and State Street, may differ from yours, but I tried to be as comprehensive as possible.

Please note, Michigan Avenue is universally considered on of the world's top ten shopping addresses, so expectations were higher than normal.

I captured the afternoon on film to share with you and all pictures were taken between 1pm - 230pm, usually the busiest time of day.

Click on pictures to enlarge for better detail:

Pessimism be damned! UGG Australia has a rope line to get in. Average wait: 15 minutes

Optimism squashed, I notice there is not one person in the check out line at Urban Outfitters:

Kate Spade was trumpeting their $50 price point ON OAK STREET!

The undeniable elegance of Trabert & Hoeffer:

Even Luxury houses such as Chanel and St. John were pushing Sale, it's not even December for goodness sake:

Louis Vuitton is always bubbling with enthusiasm:

A While the 6o-foot Christmas tree at the 900 North Mall is always breathtaking,

The Lack of foot traffic to get in the mall left much to be desired, 

For even Santa was feeling a bit forgotten today (notice there is no line at the bottom right of the photo:

People were not fighting to get in Neiman Marcus:

Or Saks Fifth Avenue

But crowds at Apple let me know iPods, iPhones and Macs are still on everyones wish list: 

The overflow crowd at Garmin let me know there are still lots of people trying to find their way in the world:

There were two separate massive protests. One for Chicago Public School Funding picketing in front of Water Tower Place:

Another against wearers of fur marched, about 500 strong, up and down the Avenue:

They had a few escorts too:

But DJ in the window at Nike Town was there to remind everyone, the Holidays are about peace:

There were a few very serious shoppers out:

But the overwhelming majority of people, as evidenced by these crowd shots, were walking around empty-handed. And that's after the stores had been open for well over 5 hours:

So with such photo evidence, I need not wait until Monday's reporting period to say this weekend is hinting at Waterloo. I will post Saturday on "What's Next", so look for that.

Since it is the Holiday Season and I want to end on a high note. Treat yourself to one of life's great treats.

If you are in the vicinity of the Peninsula Hotel, just a block west of Michigan Ave. at Superior, there is no way you should pass up Pierrot Gourmet's, WORLDS BEST HOT CIDER!

They regulate the temperature of the cider to the outdoor temp. So if it is very cold, the cider is made very hot. However, if the temp is more mild like today's lows 40's, the cider is served hot, but at a drinkable temperature.

The crew knows a bit about the temperature because the drink stand is OUTSIDE the restaurant. Warm friendly faces and attitudes to match make this a stop every Chicagoan and tourist should put on your schedule.

The Hot Cocoa, served with a semi-sweet chocolate plastic stirring spoon, also cannot be beat.

Notice also, they maintain their 5-Star standards (hello authentic sterling silver carafes), even outdoors.

So even if you cannot afford the splurges of holiday's past, you can always afford to treat yourself to 10 minutes of civilization, if only in the form of a warm drink in your belly.

The Economy and Violence

Desperate times bring desperate measures.

Why would anyone expect a rational, calm public in the eyes of the worst economic crisis facing the country in seventy-five years.

 

These are just a few articles plucked from the headlines HALFWAY THROUGH "Black Friday". 

Click the headline to go through to the full original story:

Worker Killed by 5 am stampede at Walmart, Woman Miscarries.

Police Looking for Man who Stole Van at Walmart Last Night.

Fight at Walmart Leads to Arrest.

Shop Safely

Hadley Police Report Mall Vehicle Breaks.

Operation Deck the Malls set to curb economy driven thefts.

Black Friday Shoppers pushy and rowdy at Gurnee Mills.

This is only 5 hours into the day. Once editorial staffs report to work and reporters start to file their stories, the list, unfortunately, will grow exponentially. 

If you are a reader of this blog I would like you to remember two things this holiday season: Be Smart and BE SAFE.

Delivering on the Promise

Specialty Retailers love to tell you how "special" they are. However, from the customers perspective, what makes a retailer "special" is the meeting your clientele's expectation of being introduced to genuinely unique merchandise, artists or designers, and on a fairly regular basis.

While cost-effectiveness virtually prohibits brick and mortar retailers from really knocking your socks off each time you visit, I am perplexed as to why more of them opt not to use their online presence to do just that, showcase something new.

Today I would like to share a couple of websites I visit often, CoutureLab and Portero. While they both speak for themselves aesthetically, I would like to share a few thoughts on why they both work exceedingly well from a (repeat) business perspective. 

CoutureLab is truly one of the most unique and satisfying retail destinations on the web. If you need a gift for the person who has everything, well don't buy that person anything! If you seek a special "job well done" gift for yourself, or for that very special someone in your life, CoutureLab is your destination.

Upon entering the website you start to get a sense that something, both unusual and fascinating, is one click away. Not because you hear the thumping soundtrack of a famous DJ's techno-remix, or the page somehow sways like wheat fields in a windstorm. No, the power in this site's introductory page is it's immediate insistance that "this will be different." Right on page one you are told the site offers custom pieces from their formidable stable of artists and designers. All the while images of unique, one-of-a-kind merchandise flies across the screen before you can fully grasp how awesome they are.

After choosing from a broad range of categories, you are instantly (and I mean INSTANTLY) aware that your are at a destination with an well-edited assortment of artisans unlike anything you are used to. Each page screams "I want it all". From the Bottega Veneta double-flap briefcase to Vincente Gracia's nest and serpent ring , the amount of care, patience and craftsmanship is readily apparent.

The CoutureLab site also offers many different views of each item, a full, detailed description of the merchandise (and artist most times) and one of the best zoom features I've ever played with.

But the true strength of CoutureLab is.... they are always FRESH! 

The first button you can click on the first page of the website is literally "new." And while lots of websites offer that feature, few deliver on the promise as frequently as CoutureLab. My faith is rewarded on each visit by an item I have not seen, or perhaps, a new artist or designer I have not heard of before. I am sure you will admit that being first in your sphere of influence trumps just about everything else.

CoutureLab delivers on the promise by rewarding me each time I take a gander to their site. This, most certainly, is a site you should be visiting on a quite regular basis.

Next up is Portero, or what I refer to as Me-Bay. That's because it is an eBay designed for the likes of Audrey Hepburn.

Now the founders of Portero knew very well, the leviathan that is eBay, sold everything under the sun when they decided to start this company a short three and one-half years ago. The also knew eBay sold almost every luxury goods label imaginable. But what the Portero team understood that nobody else knew then (or really even now), is that luxury can never be luxury if sold next to knock-offs, or amongst disreputable vendors.

So that is what Portero offers, AUTHENTICATION! 

That cannot be overstated in the circus of today's online retail marketplace. Every item sold on Portero is certified as authentic by an in-house category specialist, or in some instances, a certified vendor. So gone are the days of finding out your Louis Vuitton wallet purchased for  $7.45 for is not the real deal when you take it to the store for a repair.

Enter the Portero website and you are jaunted to attention. "I'm sorry, does that say Picasso for sale?", you think before the page even finishes loading. Indeed it is. This is your immediate signal indicating you are somewhere special, where luxury means luxury.  

You are then directed to choose a category, at which time you are inundated by the biggest names in luxury: Hermes (yes croco Birkins live here), Judith Leiber, Dior, Cartier, Chopard, Bulgari, Rolex, Jaeger-LeCoultre, Baccarat and Lalique. That warm sensation becomes hot flashes as you start to notice the prices. Yes, that is a Rolex Oyster Perpetual Datejust in black and stainless steel on bid for $2975, a full 40% off it's retail price of $5550! Yes, that is a Gurhan 24k Yellow Gold Hammered Marquis Pendant necklace on bid for $725, less than half the regular retail price of $1760! Two great examples of why this site is one of the fastest growing entities on the web, for those in the know are aware that rare are the times you'll find Rolex or Gurhan at a discount. Yet here they are.

And therein lies the allure of Portero. A steady stream of new additions to their pre-authenticated auction inventory. The best names in luxury, all new or gently used and at a  tremendous discount. You are now forced to visit on a regular basis, lest that Chanel Large Black Caviar Leather Tote going for less than half-price is still there. Thus, Portero is always delivering on the promise, of sustained renewal.

These are two retailers getting the most on two important fronts, repeat business and word of mouth. Each exceeding the expectations of  their clientele on every visit with something fresh, new and exciting. A business model that can be applied quite easily, given the proper motivation and leadership. 

Now that is what I call "Special."