Teen retailers: Record numbers, rosy predictions The grown-ups in their lives may be worried about the Fed, inflation, and when the housing market might rebound. But American kids have been on a shopping spree, and some teen retailers expect their cash registers will keep jingling straight through the holidays. And it's the newer retail brands that are showing the most spark. That's good news, because along with the tempered retail forecasts, analysts have been predicting teen sales would cool off. Piper Jaffray's biannual "Taking Stock With Teens' National Study of Teen Shopping Behavior and Brand Preferences" survey found that parents said they expected to spend 12 percent less, year-over-year, on clothing purchases for their teens, following a year of 30 percent-plus increases. Tween Brands, which includes the 'tween chains Limited Too and Justice, said yesterday that earnings rose 21 percent in the third quarter, and that sales increased 13 percent to $230.5 million. While Limited Too stores posted just a 1 percent gain in comparable stores sales, the real growth was at Justice, with same-store sales increasing 35 percent. And, given its fourth-quarter marketing plan and holiday merchandise, Tween said it believes it will increase earnings at least 19 percent in the fourth quarter. At Abercrombie & Fitch, net sales for the quarter increased 22 percent to $863.4 million. Overall, same-store sales increased 5 percent, but while Abercrombie & Fitch stores showed just 1 percent gain, comparable store sales at its Hollister Co. grew 8 percent. (Hollister took the No. 1 spot as teens' favorite place to shop in the Piper Jaffray survey.) Net income for the quarter hit a record $102 million. The company also said it plans to open its first European location in London in the first quarter of fiscal 2007. American Eagle Outfitters also posted record profits--with earnings for the quarter increasing 40 percent to $100.9 million, and sales climbing 20 percent to $696.3 million, exceeding company expectations. After launching aerie, its first sub-brand, the company said it is evaluating three stand-alone aerie stores. And while Martin + Osa is still new, the company said "management is confident that the brand concept, targeting 25 to 40 year olds, presents a meaningful growth opportunity. The company will have five stores open in time for the holidays and plans to open 15 stores next year." A&F and American Eagle are No. 3 and 4, respectively, in the Piper Jaffray survey of teens' preferred retail brands. One exception, though, is Hot Topic, which has been struggling. While it met expectations with a 19 percent increase in earnings, sales gained just 2 percent to $198.3 million. And same-store sales fell 6.8 percent. The company also announced that it named Chris Daniel as president of its Torrid chain, a plus-size store targeting young women.
For years, Americans professed a keen interest in products that had something--anything--to do with Saving the Rainforest. Today they've got more than just preservation on their minds: They want to wash their faces and fortify their foods with ingredients from the Amazon jungle. "'Saving the Rainforest' is passive when you're just giving to causes. People want to be more active by supporting products and companies from that part of the world," said Lynn Dornblaser, director of custom solutions at Mintel International, which released its forecast today of the "10 Hot Trends To Hit Supermarket Shelves In 2007." It isn't all about sustainability and fair trade. People also have self-preservation in mind, and many rainforest botanicals offer wellness, natural and anti-aging properties. "It's also about the exoticness and functionality of the ingredients," she said. Odwalla and Bossa Nova juices are among the specialty brands to include high-antioxidant rainforest ingredients such as the açaí and cupuaçu fruits. Mintel expects to see these in mainstream products next year, and also believes the beauty industry will embrace the Amazonian trend even more than food marketers. Dornblaser is most excited about changes in product packaging. "There's a new technology that allows manufacturers to create plastic packaging from a corn-based source. That's big news for two reasons: It's very easily renewable and--more importantly--it can be commercially composted." Corn-based polymer packaging is used by Newman's Own Organics for its pre-washed spinach and by Biota Colorado Pure Spring Water. Mintel's other trends for 2007 include:
Help wanted: Chief Beer Officer for Starwood Hotels & Resorts Worldwide. Must attend beer fests, sample more than 300 brews, tour breweries, host Oktoberfest and choose beer menus for new hotels. Knowledge of blogging--and beer--a must. Generous travel/expense account. Add that job opening to Chivas's current search for a couple to spend $200,000 ballyhooing the Chivas Life at exclusive polo and golf events while traveling the world--and blogging. While marketers are increasingly turning to word-of-mouth advertising and hiring companies to help them create buzz, others like Chivas and Starwood are hiring their own bees as product ambassadors. Starwood's job posting appeared as a full page ad in yesterday's Wall Street Journal and on HotJobs.com and Monster.com. Michael Solomon, a visiting professor of marketing at St. Joseph's University and author of "Conquering Consumerspace: Marketing Strategies for a Branded World," said the hiring of "ambassadors" is an example of a fundamental shift in marketing and part of a broader trend of consumer-generated marketing. "It is much more effective than traditional advertising because the source of communication is much more credible," he said. "Consumers know that advertising is a paid form of communication that is identified with a sponsor. Ambassadors are not perceived as employees." Starwood's newest employee will be part of its Best Brew program, which is supported with newspaper inserts, print in trade publications for brewers, and direct marketing to Starwood Preferred Guest members. Best Brew is part of Starwood's larger "Comfort isn't complicated" positioning, which has included free bottled water in guest rooms, as well as Seattle's Best coffee and apple cinnamon pie (that scent you smell in the lobby). All 130 of Starwoods' Four Points hotels in 22 countries are encouraged to carry indigenous craft brews. The North American properties will feature a selection of imports as well as craft brews. Each hotel also has a Beer Champion who can teach guests about beer and food pairings and encourage them to try new tastes. "Word-of-mouth is a lot less costly and easier to pull off, especially if you are recommending an obscure brand," said Solomon. That was true for Franklin Foods' Hahns Yogurt and Cream Cheese Spread. The Vermont cream cheese manufacturer turned to Bzz Agent to increase its regional distribution. Bzz representatives were sent to supermarkets with product coupons and encouraged markets that didn't carry the brand to do so. "Even better, because of our feedback to Franklin Foods, the company created a larger size, a new flavor and eliminated food coloring," said Joe Chernov, director of communications for Bzz Agent. "So word-of-mouth goes both ways." Solomon cautions there is risk in word-of-mouth and blogging for pay if companies are not upfront about it. He cites recent controversy over fake blogs, known as flogs, which are purportedly by consumers, but are actually written by company shills. Flogs are considered unethical by the Word-of-Mouth-Marketing Association.
Cingular Wireless will allow customers to transfer funds, pay bills, and perform other online banking transactions with their mobile phones starting next year. The Atlanta-based carrier will partner with Atlanta-based electronics-payment company Firethorn Holdings to allow customers to do their banking transactions from Web-enabled handsets. Firethorn is in talks with many banks and wireless carriers about similar relationships, but the Cingular deal is the first to be announced. While any Cingular handset with Web access will be able to do mobile banking, customers will need a bank account with a financial institution that participates in the service. Firethorn handles the relationships with the banks. Cingular customers go to their bank's Web site and sign up for mobile banking. The bank downloads the enabling technology and consumers can then conduct transactions. Cingular spokesman Mark Siegel stressed the importance of safety and security in launching a service of this nature, saying that Firethorn has created a data-encrypted, password-protected network over which transactions will be conducted. He also expressed confidence in Firethorn's ability to act as the intermediary between Cingular and the banks. "From our point of view, Firethorn provides a very good solution," Siegel said. "[The company can] handle all of the technical aspects and interface, which is an attractive alternative to Cingular having to establish links individually with banks." The mobile banking application is expected to be available to Cingular customers by the end of the first quarter of 2007. Siegel would not comment on revenue projections or overall impact the mobile application is expected to have, but did say it will charge users for the bandwidth they consume when performing banking operations. Banks may charge an additional fee for the service as well. Cingular this week introduced its BlackJack smartphone, a Samsung 3G handset that operates on the Windows Mobile 5.0 platform. Features include an MP3 player and access to the Cingular Music subscription service, which is compatible with content from eMusic, Napster and Yahoo, plus access to Cingular Video, Cingular's on-demand streaming video content service, which includes content from HBO.
Charismatic hair stylist Frederic Fekkai will introduce a line of products in February designed to address the challenge of hair thinning. Called Fekkai More, the four-product line stops short of saying it will spur hair growth, but does promise increased hair density. Hair loss, especially in females, was a taboo subject until the last decade. The drug company Pharmacia helped open the discussion in the 1990s with the launch of Rogaine, a topical hair growth medication. Since then, vitamin manufacturers, packaged goods marketers and beauty companies have rolled out products addressing hair loss and thinning. Fekkai More is meant for use by men and women, although Fekkai's following is largely female. Products in the line include a Scalp-Purifying Shampoo, Root Nourishing Conditioner, All-Day Density Styling Whip, and Nighttime Follicle-Boosting Treatment. Except for the follicle booster at $35, the products will retail for $25. The line will be available at Frederic Fekkai salons and Sephora stores. Other Fekkai products also sell in department stores, including Bergdorf Goodman and Bloomingdale's. Fekkai markets a host of hair care products, but this particular line was developed with scientists from the University of Arizona College of Pharmacy. A key ingredient is a niacin derivative, which is said to control the hormone responsible for hair loss when applied to the scalp. The system "creates visibly denser-looking hair," Fekkai said in a statement. Company materials say the active ingredient, "Niaplex," is "clinically proven to build and strengthen the scalp's natural barrier to maximize follicle health and resilience... and helps invigorate and nourish every strand with continued use." Fekkai More stops short of claiming to grow hair. Like other competing shampoos, conditioners and styling aids, such as Procter & Gamble's Pantene Full & Thick, the main benefit appears to be hair that looks and feels thicker. Doctors say that hair loss, or alopecia, in women can be caused by a thyroid condition, certain nutritional deficiencies, hormonal imbalances or endocrine disorders such as polycystic ovarian syndrome. Rogaine (now marketed by Pfizer, which inherited the brand through its Pharmacia acquisition) with its active ingredient minoxidil, is one of the only FDA-approved drugs shown to regrow scalp hair in some people. Both the men's and women's formulas are now sold over the counter. Pfizer recently launched a foam mousse-like form of Rogaine, but the most recent sales numbers for the brand and generic minoxidil are down. The $48 million hair growth product category is down 15% for the year ended Oct. 8, according to IRI. Rogaine sales declined 9% to $27 million at food, drug and mass outlets excluding Wal-Mart, IRI reports, while private label minoxidil sales decreased 22% to $20 million. Approximately 30 million women in the U.S. experience hair loss at some point in their lives, according to the American Academy of Dermatology.
If only its sales figures could match the reputation of its salespeople. Jaguar, for the third-year running, won the benchmark J.D. Power and Associates customer satisfaction survey. In fact, Jaguar scored the highest ever since the 20-year-old survey was redesigned in 2001, J.D. Power reported yesterday. The annual benchmark was based on responses from 42,218 new-vehicle buyers and measures satisfaction based on the dealership facility, salesperson, paperwork/financing process, vehicle price and delivery process. Cadillac moved from fifth place last year to second, while Porsche and Lincoln tied for third. GM's Saturn division tied with Lexus for fifth place. Saturn was the only non-premium nameplate to rank in the top five. Tom Gauer, senior director of auto retail research at J.D. Power, said Jaguar scored exceptionally well in terms of its salespeople. "They are in tune with needs and expectations of customers, as are their finance personnel. Consumers say they show concern for budget, for offering the best vehicle for a customer's needs," he said. Porsche scored well for dealership-facility measures--which is not a surprise, since the company engaged on a national retail facility upgrade in 2003. Lexus dropped to fifth place from second place in 2005, although their performance score is virtually identical to last year's. "It is still very strong performance, but when you look at Jaguar, Cadillac, Lincoln and Porsche it comes back to same story we see again and again in the industry. If the overall industry continues to improve and you don't, you get left behind," Gauer said. That's not likely to worry parent Toyota Motor Sales, since Lexus posted its best-ever sales month in October, and is currently the top luxury marque in the U.S. "Still," said Gauer, "It's something to be tuned in to."