Compiled by Ray Young (RPM) and John Kelly (Daily Clips)

Thursday March 23, 2017

Sears Issues Dire Warning About its Ability to Survive The fat lady is singing at Sears Holdings Corp. The long-struggling retailer said on Tuesday that there was “substantial doubt” that it could stay in business. “Our historical operating results indicate substantial doubt exists related to the company's ability to continue as a going concern," Sears said in a filing with the Securities and Exchange Commission. In the filing, its annual report for the period ended January 28, 2017, Sears reported a $2.2 billion loss for the year. Its long-term debt as of January totaled nearly $4.2 billion, In the report, the retailer cited its efforts to cut costs, sell property, tap new funding sources and make other moves to lessen the continuing flow of red ink. But with revenue in a steep decline, it said it had to use money from its investments and other activities to fund operations. Sears, once the nation’s largest retailer, said an inability to generate additional liquidity might limit its access to new merchandise or its ability to procure services. Sears’ fortunes have been in decline for years amid its seeming inability to respond effectively to the rise of more nimble competition, both online and in the physical space. The company has lost a total of almost $10 billion over the last six years. It has not reported an annual profit since 2011. The chain has been selling off real estate and some of its other assets, including most recently its Craftsman tool brand, to raise cash. Sears has also borrowed money from the hedge fund of its chief executive, Eddie Lampert, and refinanced much of its debt. Sears has been steadily reducing its store fleet over the last several years. In December, it announced plans to close 42 namesake s stores and 108 Kmart outlets. It currently has less than 1,500 stores, down from some 3,500 in 2010. http://www.chainstoreage.com/article/sears-issues-dire-warning-about-its-ability-survive

Bebe Plans to Shut Its Stores and Focus on Web Sales

Bebe Stores Inc., a women’s apparel chain with locations across the U.S., is planning to shut its stores and seek a

turnaround as an online brand, according to people familiar with the situation.

The company is trying to close the locations without filing for bankruptcy, said the people, who asked not to be identified

because the efforts aren’t public. However, Chapter 11 may be required if enough landlords aren’t willing to negotiate, they

said. The company, known for selling trendy going-out apparel to young women, has been operating about 170 boutique

and outlet stores.

Bebe would become the latest retailer to shed brick-and-mortar stores and hitch its fortunes to e-commerce. Kenneth Cole

Productions said in November that it would close almost all of its locations, concentrating instead on its online, international

and wholesale businesses. A consumer shift to the internet has contributed to several retail bankruptcies this year, including

those of HHGregg Inc., Gordmans Stores Inc. and RadioShack.

Unlike many retailers, Bebe has no significant debt. But the company has lost about $200 million over the past four years,

and negotiating with landlords to get out of leases may prove difficult. The retailer didn’t immediately respond to requests for

comment.

The shares fell as much as 31 percent to $4.42 after Bloomberg reported on the plan. That was the biggest intraday decline

since May 2016.

Shakespeare Name

Manny Mashouf, who founded the company in San Francisco in 1976, owned 57 percent of its stock as of Jan. 26. He

remains chairman and chief executive officer of the company, which touts its apparel as fashion for “the confident, sexy,

modern woman.” Mashouf, now in his late 70s, created the brand as a twist on Shakespeare’s “To be or not to be.”

Last year, Bebe sold half of its brand to Bluestar Alliance LLC to develop a wholesale licensing business, a move that

helped raise cash.

The stock has fallen more than 80 percent over the past two years, though it began to rebound last month. It had been up 26

percent in 2017 through Monday’s close.

The company, now based in the San Francisco suburb of Brisbane, focuses on women’s apparel and accessories. Bebe

already announced some store closures for the current year. It said in February that it would be shuttering as many as 25

locations in fiscal 2017, reducing square footage by about 16 percent.

https://www.bloomberg.com/news/articles/2017-03-21/bebe-said-to-plan-to-shut-its-stores-in-brick-and-mortar-

retreat?cmpid=yhoo.headline

How Retailers can Transform ‘March Madness’ into ‘Marketing Magic’ With the first weekend of the 2017 NCAA Men’s Basketball Tournament posting an average of 9.325 million viewers across all games and four television networks, “March Madness” continues to captivate both major sports fans and casual viewers alike. But the frenzy also can be a big boon to retailers and brands seeking to launch marketing campaigns. CPG food and beverage brands are obviously big beneficiaries of the tournament: During last year’s tournament, wing orders were 24% higher than during the days prior to the tournament, while pizza orders were 17% higher, according to data from Yahoo. Sponsor apparel brands increased web site searches 33% on the first day of the tournament versus the week prior. While many retailers don’t always have the natural product ties to March Madness that food, beverage and apparel brands do, they can learn from these marketers how to drive awareness and purchases by engaging audiences in authentic, creative and fun ways. “There is a broad demographic that actually engages around March Madness, whether through filling out brackets and participating with team promotions,” said Courtney McKlveen, VP and Industry Lead of Retail, Travel and QSR at Yahoo. “It’s an interesting time of year for retailers to specifically think about ways to align with context and make the connection between their brand and the tournament itself in some way.”

Social, Mobile Share Top Seeds In Marketing Bracket Social media continues to build this connection between fans and brands, but with the tournament in full swing, retailers can integrate national hashtags and other promotional images into their own campaigns to spread the word. Official March Madness social media handles generated 26 million social engagements across Twitter, Facebook and Instagram through Sunday, March 19 — up 20% from the tournament’s first weekend in 2016 — so brands have a massive audience to make an impression on. Retailers can impact an even larger audience through their mobile devices, especially as more consumers shop on these devices. Marketers and advertisers can extend their campaign messaging across mobile apps using targeted native and native video ads to maximize brand engagement. “[Consumers’] shopping experience starts earlier and lasts longer, and a lot of that is driven by the amount of time that they spend on a mobile device,” McKlveen said. “It’s about the experience the consumer has with them across any device they use. Last year, the March Madness tournament dates represented the highest volume of app sessions for Yahoo Sports in the first half of the year, so it drives significant traffic. That translates into high mobile web traffic and content consumption. Retailers need to be where consumers are, because when they ultimately try to transact, the customer needs to have enough recall to pick you instead of another brand.” Context Drives Consumer ‘Brand Recall’ McKlveen reiterated that context is as important as targeting, especially since the tournament consists of dozens of individual games, each with its own unique moments. Brands that quickly and smoothly promote campaigns that coincide with many key moments can help foster brand recall for shoppers in a way that targeting specific demographics might not. While March Madness is the flavor of the month, retailers can apply this logic with other nationwide events or shopping seasons throughout the year to further understand how and when to meet the consumer. “With Millennials purchasing later in the shopping cycle, retailers have to remember to plan ahead of time, whether it’s sporting events, moments or holidays, so they can learn to adapt and repeat,” said McKlveen. “It’s about speaking to the audience, whether they’re preparing for their bracket or starting a competition with friends and family. And it’s about thinking of the length of time you’re spending with consumers. The word ‘loyalty’ is fun to throw around, but it still exists. In order to build loyalty, it takes time, and it means being there throughout the shopping cycle, and having the confidence to think about your ROI differently.” http://www.retailtouchpoints.com/topics/omnichannel-cross-channel-strategies/how-retailers-can-transform-march-madness-into-marketing-magic

Ex-Gordmans CEO Jeff Gordman, Another Bidder Poised to Make Offers for Bankrupt Company’s Stores Former Gordmans Chief Executive Jeff Gordman said Monday that he plans to submit a bid to operate a majority of the

bankrupt department store’s locations on an ongoing basis, while closing others.

The plan of Gordman — whose great-grandfather founded the 100-store chain in 1915 as a single shop — was joined

Monday by at least one other bidder that contemplates operating at least some of the stores on an ongoing basis.

“I love this company,” Gordman said in an interview with The World-Herald. “I am doing it for the most important

stakeholders, the employees that are the heart and soul. I feel an obligation to them.”

Houston-based retailer Stage Stores Inc. also says it is seriously considering submitting an offer to Gordmans for the

purchase of stores and assets so that it would operate at least some of the locations and one warehouse on an ongoing

basis. That also would rescue at least part of the bankrupt Omaha retailer from total liquidation.

Any plan to settle the affairs of Gordmans, which filed for bankruptcy protection last week after years of cratering sales,

would require approval by the bankruptcy court as being fair to creditors, such as landlords nationwide and lender Wells

Fargo Bank. Total debts are $131 million.

“If we can get a going-concern bid, from the perspective of the employees, the community perspective, it is going to be the

best thing for the community,” U.S. Bankruptcy Judge Thomas Saladino said at a hearing Monday in Omaha, referring to the

prospective bidders who contemplate ongoing operations.

Gordman worked for the department store starting in 1990 as an assistant manager. He became chief executive in 1996,

and sales over the years during his tenure rose from $197 million to $443 million, according to the court documents he filed

in support of his bid. Gordman said he intends to make a bid amenable to creditors and the court but said there are no

guarantees that he will succeed in doing so.

Gordman abruptly quit as CEO in 2013 after new majority owners — he sold the company to a private equity firm in 2008

that later sold shares to the public — insisted on a $70 million special dividend that depleted cash and required a $45 million

loan from a business lender.

“It is in my blood,” Gordman said. “I really love it.”

The Gordman court filing said his bid contemplates paying secured creditors such as banks 100 percent of their claims,

while reducing unsecured claims from creditors such as landlords through the assumption of store leases; Gordmans owns

none of its store premises, nor does it own the Aksarben Village headquarters or warehouses in Omaha and Indianapolis.

Also envisioned, according to the filing, is “the retention of thousands of employees.”

Gordman said in the World-Herald interview that he is attempting to line up financing for the purchase and that further details

will be forthcoming as the bankruptcy court assesses any offers for the whole company, some or all of its stores and some

or all of its apparel and home goods on hand in a going-out-of-business sale. The procedures should be decided by the end

of the month.

Attempts to contact officials with Gordmans via email and telephone were unsuccessful Monday. Last week the chain told

the Nebraska Department of Labor that it is closing the Aksarben Village headquarters with about 300 employees and the

Omaha warehouse with about 150 for good in May. It told the same to authorities in Indiana, where 140 people work in

another warehouse.

Gordman looks to have some competition if he chooses to bid. Stage Stores “has continued to seriously explore a bid for a

number of the debtors’ stores as a going concern,” Stage Stores said in a filing with U.S. Bankruptcy Court in Omaha on

Monday. Stage operates about 800 stores under a variety of names in 28 states. Stores operated by the company include

Bealls, Peebles and Goody’s.

Stage went on to say its offer would include assumption of a “substantial number” of Gordmans’ 100 stores’ leases in 22

states, and the “offer of employment” to certain store and warehouse workers. Attempts to reach officials with Stage Stores

were unsuccessful via email and telephone Monday.

Gordmans said in its Chapter 11 bankruptcy filing a week ago that it has already tried to find a buyer, with no success. More

than 100 prospective buyers were invited in over many months to scour the books and operations with an eye toward a deal.

There were no takers for the company whose sales at stores open at least a year fell for five out of the past six quarters.

Gordmans said in its bankruptcy papers it is preparing for a going-out-of-business sale to raise the most money possible for

creditors owed the $131 million; the company says it has apparel and home goods on hand that would fetch at least $74

million in a liquidation.

A company attorney said at a hearing Monday to hash out deadlines and procedures that the company welcomes any bids

that would operate stores on an ongoing basis, as well as combination bids that would seek to operate some and close

others after a going-out-of-business sale.

As for Stage Stores, which had sales last year of $1.4 billion, it doesn’t operate much in the Upper Midwest, where

Gordmans is concentrated, so the acquisition would make sense at least geographically, said Ken Perkins, president of the

Boston-based Retail Metrics research firm.

It’s unlikely that Stage would continue operating all of the stores, Perkins said. The company could keep the Gordmans

name, as Stage operates several other department store brands as well.

Stage also has ties to Gordmans President and Chief Executive Andy Hall, who came from the Texas-based chain before

landing at Gordmans in 2014.

Still, bringing in a new operator may just be delaying the inevitable.

“In today’s environment, just look around the landscape. It’s almost impossible to bring these things back,” Perkins said,

citing as examples Radio Shack and Wet Seal, each of which recently declared bankruptcy for a second time.

Stage is facing the same problems as Gordmans: tough competition from online retailers, off-price stores like TJ Maxx and

“fast fashion” chains like H&M and Zara.

“It’s a difficult business that’s been getting squeezed for a long time,” Perkins said of department stores.

Some of the retail peril that slammed Gordmans has brushed up against Stage. The company reported same-store sales

declines of 8.5 percent in the fourth quarter last year. It also has pared back from 820 stores in 2014 to 798 at the end of

2016.

“I don’t know what the benefit to them would be,” other than cherry-picking the most profitable Gordmans stores and adding

those to the fold, Perkins said.

http://www.omaha.com/money/texas-based-stage-stores-says-it-might-bid-for-gordmans/article_45865c1c-0d7a-11e7-9e2e-

cb51a262eb87.html

Kohl's CEO: We're 'not as Agile as we Need to be' to Compete Struggling discount department store chain Kohl’s must foster a faster-paced, more agile approach to retailing in order to

compete against a broad range of threats including e-commerce and off-price merchants, CEO Kevin Mansell said Tuesday

during a keynote interview here at the Shoptalk 2017 conference.

“Success for us is probably going to come by becoming an amazing omnichannel retailer, connecting the physical and digital

[channels],” Mansell said. “But for the customer, the experience has to get a lot more engaging to fulfill that mission. We

have to move faster. We have not used speed. We’re not as agile as we need to be to be a better competitor [to virtual and

brick-and-mortar retailers alike].”

Kohl’s has responded to the challenge by making improvements to its in-store experience, as well as testing smaller-format

stores in a number of U.S. cities. Mansell noted that 85% of Americans live within 15 miles of one of Kohl’s 1,200 locations

nationwide, with the vast majority of its 70 million customers still shopping in physical environments.

“Convenience and proximity are critical for us looking forward — that’s why so much of our investment is going into stores,”

Mansell said. “We think the way we win with the footprint we have is not to shrink the number of stores, but stores

themselves likely will get smaller — having much more of a physical presence is a much better path than less stores.”

Kohl’s also has invested about $2 billion over the last years on technology initiatives, efforts Mansell divides into two

buckets: Customer-facing improvements and store associate tools. He singled out the Kohl’s Pay mobile application,

launched in October, which allows the 25 million consumers who already have the Kohl’s branded credit card to make

purchases with their iPhone and Android devices by launching the Kohl’s app and selecting Kohl’s Pay from the menu

options to bring up a QR code reader. Customers scan the code, apply any savings offers or Kohl’s Cash within the app,

then tap to complete their purchase: The app automatically applies Kohl’s Cash and rewards points, and stores transactions

on customers’ mobile devices for easy returns.

“[Kohl’s Pay has been] embraced by customers because it addresses one of their biggest issues — keeping track of savings

tools, and getting the best possible price,” Mansell said. “It allows us to eliminate Kohl’s Cash coupons and other discounts

and dump them all in a digital wallet, which improves customer confidence and makes the shopping journey simpler.”

Kohl’s is also boosting spending on store associates in order to facilitate smoother, more efficient omnichannel services like

returns, ship-from-store and buy-online, pickup-in-store. "We have to be really focused on making the stores we have more

productive," Mansell said. “Why are we so focused on being best-in-class on omnichannel? Because that’s where we can

win."

While Kohl’s still enjoys intense loyalty from many shoppers, the company has struggled mightily in recent quarters, closing

18 underperforming stores in 2016 after years of aggressive expansion. Kohl’s last month reported fourth quarter net income

of $252 million, down 15% from the year-ago period; Q4 sales came in at $6.2 billion, slipping from $6.4 billion last year, with

same-store sales declining 2.2% from the year-ago period. Full-year sales could decline as much as 1.3% or rise as much

as 0.7%, while same-store sales are expected to remain flat or drop as much as 2%.

While Kohl's was one of many mall and department store retailers that fell victim to negative traffic trends over the holiday

season, its problems run much deeper, according to GlobalData Retail analyst Håkon Helgesen. “[We] believe that Kohl’s

fell off the radar of many consumers over the golden quarter,” Helgesen wrote in a note emailed to Retail Dive. “The blunt

truth is that Kohl’s does not have the pulling power that it once did and needs to work much harder to provide points of

differentiation that really resonate with customers.”

http://www.retaildive.com/news/kohls-ceo-were-not-as-agile-as-we-need-to-be-to-compete/438614/

Two Retail Associations to Combine Risk Events The Food Marketing Institute and National Retail Federation will combine their existing risk and safety signature events into

one cross-industry event starting in 2018.

The two groups will sponsor Protect in 2018, according to an announcement made Wednesday at the FMI’s Audit, Safety,

Asset Protection Conference in Orlando.

“Respecting the changing grocery landscape and the intense consolidation our industry has witnessed over the last several

years, our trade groups are making similar strategic decisions to maximize efficiencies and deliver greater value to the

audiences we serve,” said FMI president and CEO Leslie G. Sarasin. “Our partnership with NRF on Protect 2018 will afford

our food retail members the opportunity to expand their horizons, network in a larger sphere and get at the root of what they

seek to do best – mitigate risk.”

NRF president and CEO Matthew Shay added: “Securing retail brands, assets, people and prof its is the essence of

PROTECT’s brand promise,” said NRF president and CEO Matthew Shay. “We are enthusiastic to amplify the sphere of

influence of this gathering and ultimately help deliver the resources and information necessary to safeguard, prepare, protect

and defend the nation’s commerce streams.”

More information about the combined event, to be held in Dallas on June 11-18, 2018, will be announced at this year’s

Protect conference, which is sponsored by NRF and will take place at the Garylord National Harbor in Washington D.C. on

June 26-28.

http://www.chainstoreage.com/article/two-retail-associations-combine-risk-events

Why Kohl’s CEO Still Thinks Having More Stores is Better

One by one after the awful holiday season, many major retailers announced large-scale store closings earlier this year: J.C.

Penney (JCP, +0.71%), Sears (SHLD, -12.31%), Macy's (M, -0.18%), Abercrombie & Fitch (ANF, -3.41%), and on and on it

went.

Given record online sales that stood in stark contrast to terrible in-store numbers, it's easy to understand those retailers'

decisions, and to buy into the notion that retail is simply and irreversibly shifting online and away from physical stores.

But one big-box chain is making the opposite bet. Kohl's is also struggling with declining sales (comparable sales fell 2.4%

last year and haven't risen meaningfully in any year since 2010) and shrinking shopper traffic. But it's betting big that

maintaining a plentiful fleet of stores is what will save the day. Its argument: Stores support e-commerce, offer suppliers an

appealingly wide distribution and keep the retailer top of mind.

Here's the twist: While Kohl's isn't closing stores, hundreds of them will be made smaller.

Kohl's has poured $2 billion into tech initiatives in the last three years on things like supply-chain improvements, a tighter

integration of stores and online, and shopping apps. And many of those efforts have been in service of letting Kohl's do as

much for its customers, if not more, with less physical space.

"It's more than just small for the sake of small—it's small because technology enables us to be small," Kohl's CEO Kevin

Mansell told Fortune in an exclusive interview ahead of his talk on Tuesday at the Shoptalk industry conference in Las

Vegas.

Some of the tech investment is aimed at helping Kohl's maintain leaner, better planned inventories so it will need less space

in stores. The department store chain has also invested heavily in its app and web site and their interaction with Kohl's

inventory management system so that stores are a now a key part of its e-commerce fulfillment network. During the holiday

quarter, about one-third of Kohl's orders were either picked up in a store, or shipped by one.

And the retailer is equipping sales staff with handheld devices that will help them ring up a sale anywhere in the store,

meaning stores will need fewer cash registers in the future, freeing up the space they occupy.

Of the chain's 1,160 stores, some 300 are already small, between 35,000 and 55,000 square feet, compared to the standard

80,000 square feet of a Kohl's. (A typical Macy's is 120,000 square feet, as a point of comparison.) The bulk of any new

Kohl's stores will be in the smaller size range. And Kohl's will shrink another 200 of its standard-sized stores this year,

bringing to 500 the number of stores in a more compact format. (In some cases, Kohl's has freed up space for other

retailers.)

In contrast to Macy's, which is closing 100 stores, or Penney, which is closing 138, Kohl's is not planning to shutter any

significant amount of stores. That decision in part reflects Kohl's assessment of a test it conducted last year, when the chain,

which had never had to pare its fleet, eliminated 19 stores to understand the impact on sales.

The results were not encouraging. Kohl's nearby locations only managed to recoup 34% of sales at the closed stores (it had

expected to keep at least 38%). What's more, debunking the idea that online is an easy substitute for stores, digital sales fell

10% in those areas, and the retailer is likely to steadily lose more of that business over time.

Some 70 million people shop at a Kohl's at least once a year, and 85% of its sales are in stores, so Kohl's is loath to throw

any of that away. "People still spend a lot of their time and money in stores," said Mansell, noting that the vast majority of

individual Kohl's stores turn a profit.

Still, with shopper traffic down 6% last year and comparable sales forecast to fall as much a 2% (on top of a 2.2% decline

last year) or be unchanged at best, the retailer is under the gun to get more mileage out of its stores.

One size does not fit all

The new Holy Grail in retail is what executives call "localization," a strategy of eschewing the cookie-cutter approach to

selling the same items in the same way across the country. Everyone from Target (TGT, +0.36%) to Penney to Macy's are

talking up localization as a way to stay relevant.

"What we need to carry in a store is what's relevant to that store's customer," says Mansell. And that ultimately means fewer

kinds of items in a store, and therefore less need for space.

Kohl's has more broadly made it a high priority to stock less merchandise in stores, lest it wind up needing to sell more of it

at bargain basement prices. The saving grace for Kohl's during the last holiday season was tight inventory management,

which kept clearance sales to a minimum. Mansell said last month that Kohl's goal is to reduce inventory 3% a year for the

next three years.

A faster, nimbler management system "would allow us to have less inventory in the store," Mansell said. And the calculus is

that Kohl's e-commerce will play a crucial role in complementing the in-store assortment.

The case for leaner inventory applies to another major priority for Mansell: competing with fast-fashion chains like Zara and

H&M by speeding up the design-to-production-to-in-store-arrival cycle for its house brands, which include Sonoma, Apt. 9

and Croft & Barrow. It's an increasingly big priority for Kohl's given those brands' relatively weak performance during the

holidays, compared to national brands like Nike (NKE, -7.17%) and Levi's, which sold well at Kohl's stores.

Some 25% of Kohl's house brand business, which generates nearly half of its sales, is now produced under a quicker

process, and Mansell has told Wall Street that would rise to 40% this year.

Smaller stores that are easier to manage and re-stock are key to harnessing that benefit.

Searching for the right footprint

Of course, any major cross-country retailer has to also think about serving large national brands. One of department stores'

biggest draws, despite the sector's deep woes of late, is their large footprint, which makes them essential partners for any

brand that wants to be sold far and wide.

Kohl's extensive fleet was a key selling point in convincing fast-growing Under Armour (UAA, +0.53%) to sell its athletic wear

at Kohl's starting this month, as was Kohl's deep reach with women, a so far elusive clientele for Under Armour. So closing

hundreds of stores would undercut one of the retailer's key advantages. "You just can't replicate that online," Mansell says of

Kohl's all-out Under Armour presentation.

"If Kohl's is able to offer a more effective distribution network, we look more appealing," Mansell continued. And in a veiled

reference to the rivals that are closing large amounts of stores, he added: "There's a market share opportunity."

And this is where the size of the fleet goes hand in hand with the smaller size of 500 stores: It's easier to manage the

upkeep of those stores, refresh the merchandise, and improve the shopper experience and product presentation at a time it

is essential to give shoppers a reason to come into the stores. (In the service of a similar goal, Macy's has singled out 150 of

its 670 or so stores that will get more attention.)

For decades, Kohl’s was one of the fastest-growing companies in retail history, winning over legions of shoppers with

popular, affordable brands, good customer service and neat, well laid-out stores away from malls and closer to where

shoppers live. Kohl's, founded near Milwaukee in 1962, grew from 79 stores in 1992 to nearly 1,150 two decades later.

But the retailer can no longer get by with offering the same merchandise in the same formulaic manner in stores laid out the

same away across the U.S. Paradoxically, tech is what has created massive tumult in retail, but tech is what also offers

Kohl's and others a way out of their travails."We want to keep our stores fresh and flexible and we want to use technology to

enable a smaller footprint," Mansell said.

http://fortune.com/2017/03/21/kohls-stores-closings/

The Top 8 Furniture and Home Furnishings Retailers, Ranked by Ecommerce Penetration

Which furniture and home furnishings retailers have the highest ecommerce sales as a percentage of total revenue?

Here's the ranking from the eMarketer Retail and Ecommerce database.

1. Williams-Sonoma - 51.4%

2. Restoration Hardware - 45.7%

3. Pier 1 Imports - 19.0%

4. The Container Store - 11.9%

5. Kirkland's - 7.6%

6. Select Comfort - 6.7%

7. Bed Bath & Beyond 6.3%

8. Havertys - 1.4%

https://retail.emarketer.com/article/top-8-furniture-home-furnishings-retailers-ranked-by-ecommerce-

penetration/58d04ad7ebd4000e20e0fcb5?ecid=NL1014

Pop-Up Stores are Getting Smarter

With a shorter life span than some insects, the pop-up store will take over some dormant retail space on or near a busy

street; stock something hip and cool; then disappear.

Talk to Melissa Gonzalez, and you will hear about a different concept: A smart store that will soon pop up in a smart city.

As CEO and founder of The Lion'eseque Group, Gonzalez has years of experience in pop-up retailing. As chief pop-up retail

architect for 22 City Link, she will be bringing this experienced to bear at a smart city development in Loudon, VA.

“Brands understand the value of technology. They don't have the budget or the internal infrastructure” to undertake retail

projects, Gonzalez explained. But with the help of her consultancy, and the 22 City Link venue, they will get a chance to

experiment. “Come into our sandbox and learn,” she said.

Pop-up stores are becoming a “proof of concept” platform in two ways. The first is providing a test venue for a product,

figuring out how to engage the public and sell the good. But the second “proof” relies on various aspects of information

technology, since the store's performance has to be measured. That takes data gathering.

Start with sensors that can give you a door count of the customers who stopped by. Integrate RFID with in-store tracking to

understand how shoppers interact with the product. Does a clothing item get tried on a lot, but does not sell? Compare that

data to the POS information generated by the cash register. “It's a big advantage, but it's a big learning experience,”

Gonzalez said.

Technology also opens up possibilities. Rudimentary facial scanning can determine the gender and age of a shopper, and

can be tied to digital signage to deliver a demographically targeted ad, Gonzalez noted. Yet there are some tricky human

issues to this. “Some people like being tracked. Some don't.” she remarked.

Pop-ups exist as a cross between a focus group and a case study. It is up the retailer to set the threshold of success. They

can handle anywhere from 200 items down to one; in that case it was a pop-up showing off a sleeping pod. People were

encouraged to “come in off the street and take a nap,” Gonzalez recalled.

By the end of 2018, Gonzalez will be putting her pop-up knowledge into action when the first building in 22 City Link goes

up, with 2,500 square feet of retail space. Eventually, the development, in Loudon's Gramercy District, will amount to 2.5

million square feet of offices, residences and retail, well connected to road and rail. The development promises to be the first

“smart city” in the region.

http://www.dmnews.com/e-commerce/pop-up-stores-are-getting-smarter/article/645020/?DCMP=EMC-

DMN_DailyInsider_20170321&cpn=&spMailingID=16824490&spUserID=MzEzOTgxOTcwNjcyS0&spJobID=9816655

Stores Increase Advertising, Especially Social Media

In its latest survey of CFOs of some of the country’s largest retailers, BDO says 62% are increasing marketing and ad

budgets this year, especially in social media. And 38% intend to spend more on developing mobile.

When asked which promotional methods worked best last year, free shipping was the biggest winner at 39%, followed by

social media and email promotions, named by 24%. The worst? Print and TV promotional discounts, cited by just 7%,

followed by price matching, at 14%.

As a result, Natalie Kotlyar, leader of BDO’s consumer business practice, predicts more advertising bucks will flow through

social-media channels. “It’s just the best way to reach Millennials and Gen Z,” she tells Marketing Daily. “Social influencers

and peer reviews are critical to this age group.”

Equally expected, she says, are the CFOs’ continued investments in e-commerce and mobile, even as the industry goes

through a period of slow sales, widespread store closures and bankruptcies. “Those represent a rightsizing of the

marketplace, with growth in e-commerce offsetting the slowing in bricks and mortar stores. Increasingly, stores are focused

on how to handle the ‘Amazon Effect,’” she says. “Everybody expects a seamless shopping experience now, and retailers

know they have to provide it.”

The professional services firm’s study also finds that while they’re investing more in e-commerce capabilities to provide that

seamlessness, they’re also aware that they need to spend to make physical stores more appealing to shoppers. Target, for

example, just offered a peek on a sweeping redesign plan that is scheduled to begin in a single store in Houston in the fall.)

In the BDO survey, 52% of CFOs say they are investing more in remodeling and redesigning stores this year than last.

But perhaps most surprisingly, especially given the disappointing fourth-quarter performance of many large chains, the

execs are upbeat about the year ahead and expect sales to climb 4.9% this year, compared to the 3.4% they projected in

last year’s survey. (According to the U.S. Census Bureau, that prediction was close: Sales actually gained 3.3% last year.)

And they anticipate online sales will grow by 10.9%. While they expressed uncertainty over President Trump and the impact

border taxes might have on results, the CFOs say they base their optimism on strong levels of consumer confidence.

http://www.mediapost.com/publications/article/297567/stores-increase-advertising-especially-social-

med.html?utm_source=newsletter&utm_medium=email&utm_content=headline&utm_campaign=101547&hashid=m

eMarketer Unveils Estimates for Native Ad Spending

Offering its first estimate of the size of the native advertising market, eMarketer said spending on native digital display ads

will make up more than half of all digital display ad spending in the US this year.

US Native Digital Display Ad Spending, by Segment, 2016-2018 (billions)

The new forecast estimates that US native digital display ad spend will grow 36.2% this year to reach $22.09 billion. At that

level it will make up 52.9% of all display ad spending in the US.

“Growth of native digital display is being driven by publishers’ pursuit of higher-value and more mobile-friendly inventory, as

well as by advertisers’ demands for more engaging, less intrusive ads,” said eMarketer principal analyst Lauren Fisher,

author of a new report that highlights the forecasts.

Subscribers to eMarketer PRO can access the report here. For highlights of the report, tune into the new episode of the

“Behind the Numbers” podcast, which features a conversation with Fisher.

The vast majority of US native display ad spending goes to social networks, driven mainly by Facebook. This year, native

social network display ad spending will reach $18.59 billion, representing 84.2% of all US native display. But social’s share

of native is falling.

“We’re seeing a huge ramp up in non-social publishers adopting in-feed ads and video,” Fisher said. “Coupled with

continued advances on the programmatic native front, this will accelerate non-social native display spending.”

Since native advertising is largely purchased on social platforms, it’s also almost entirely mobile. Native mobile display ad

spending will reach $19.50 billion this year, representing 88.3% of all native advertising, and the share is growing. Native

mobile will represent 64.5% of all US mobile display ad spending this year.

Nearly all US native display ads are purchased programmatically, thanks to the heavy influence of social ads, the vast

majority of which are transacted via APIs. This year, native programmatic will represent 84.0% of all native digital display ad

spending, or $18.55 billion. However, excluding social, programmatic accounts for under half of all native non-social display

ad spending.

“It’s been a slow start to enabling programmatic buying for non-social native display ads, but with the majority of buying

platforms quickly moving to accommodate native ads, we see that changing in the next several months,” Fisher said.

https://www.emarketer.com/Article/eMarketer-Unveils-Estimates-Native-Ad-Spending/1015457?ecid=NL1001

Nielsen Catalina’s New Tool Measures Ad Reach Across TV and Facebook

Nielsen Catalina Solutions has a new tool for measuring sales effectiveness and unduplicated reach for consumer packaged

goods advertising across television, desktop and mobile publishers.

NCS says that Facebook is the first publisher lined up for the cross-media sales measurement solution and that means that

advertisers will be able to measure the return on ad spend of campaigns that include both Facebook and TV.

In addition to the new solution, Nielsen said that, in order to better understand how Facebook and TV advertising work

together to drive sales, NCS conducted a study of CPG brands.

"Advertisers consistently ask us for better, cross-channel sales effect measurement,” said Leslie Wood, chief research

officer at Nielsen Catalina Solutions, in a statement. "To reach this common goal, it will take more than the efforts of

individual media companies. It will take the entire industry, collaborating together and with independent, trusted third part ies.

We're excited to be working with Facebook towards achieving this goal."

“CPG advertisers want to know how their Facebook, Instagram and Audience Network campaigns are performing in

combination with their other advertising, including TV. NCS’s latest cross-media addition to their Sales Effect suite provides

those insights," said Fred Leach, director of Marketing Science, in a statement. "Advertisers already know that Facebook

and TV advertising work well together to drive sales -- the research from Nielsen Catalina Solutions quantifies that.”

NCS’s new solution announcement comes after yesterday CBS shared some results from research it conducted alongside

NCS.

CBS Chief Research Officer David Poltrack shared new data indicating that millennials will soon start watching more

broadcast television.

According to Adweek, CBS’ data shows the age range for millennials is now 22-40, outside of the typical 18-34

demographic, and that the average age of a millennial today is 30. He said that broadcast TV viewing will increase each

year for that demo, as will average economic value.

CBS’ new research also showed that ads placed during sitcoms provided the best ROI, followed by variety shows. The

results were part of a study in which CBS’ Campaign Performance Audit looked at how six different consumer packaged

goods’ ads performed across different genres of television.

http://www.fiercecable.com/broadcasting/nielsen-s-new-tool-measures-ad-reach-across-tv-and-

facebook?utm_medium=nl&utm_source=internal&mrkid=46172707&mkt_tok=eyJpIjoiTldVM1lqVTBPV0kxT0RabSIsI

CMOs Plagued with Widening Gap Between Strategy, Execution

Customers are more connected than ever before, but companies are failing to keep pace with expectations for frictionless

experiences.

Only 7% of more than 250 marketers surveyed are able to deliver real-time, data-driven engagements across both physical

and digital touchpoints, according to new research from the Chief Marketing Officer (CMO) Council and RedPoint Global.

Only 5% are able to see the bottom-line impact of engagements in real-time, primarily due to the current processes requiring

manual transport of data and intelligence from disconnected systems.

“Empowering the Data-Driven Customer Strategy: Addressing Customer Engagement From the Foundation Up” highlights

the gaps between strategy and execution that continue to prevent marketers from creating real-time engagements with

customers.

In an attempt to provide engagement capabilities, companies have willingly adopted a number of new technologies, and the

marketing technology stack has continued to grow. In the past five years, 42% of marketers have installed more than 10

individual solutions across marketing, data, analytics or customer engagement technologies, and 9% have brought on more

than 20 individual tools or solutions.

During that same time, marketers have gone through numerous rounds of “rip and replace,” with 44% of marketers

indicating that they have spent more than 25% of their marketing budgets to replace existing technologies. And despite the

implementation and discarding of various data and customer experience solutions, only 3% of marketers believe they are

totally connected and aligned across all systems, with data, metrics and insights flowing seamlessly across all technology

platforms.

While the customer wants to see real-time responses and reactions to their behaviors, marketers are still dealing with

complex processes and offline data, which is delaying their access to the intelligence they need to create the next best

action with a customer, said Liz Miller, senior vice president of marketing for the CMO Council.

“These delays are further increased due to a lack of clear ownership over the customer experience strategy as a whole, with

multiple teams and departments battling for customer attention across a growing, fragmented landscape of data and

engagement systems,” Miller says in a release.

In order to create truly connected experiences, marketers need to define a clear owner of the data-driven customer strategy.

Of the marketers surveyed, 78% agree that the CMO should be the catalyst and driver of this strategy. However, only 19%

are actually charged with the full burden of developing the customer strategy today, with 51% instead developing customer

engagement strategies through individual teams, on either an organized or ad-hoc basis.

When asked specifically about the gap between strategy and execution, marketers point to two key issues: fractured

execution systems and siloed customer data. Only 6% of marketers believe they are able to get a complete view of their

customer from all available data sources. Just 7% of the marketers surveyed are able to leverage in-line analytics to drive

real-time decision-making within the engagement platform to deliver better experiences.

Only 8% of marketers have been able to implement and onboard systems in an effort to establish a best-of-breed model of

technologies and platforms. A high number of marketers (43%) agree that they are not lacking data; rather, they are missing

the ability to transform data into real-time action.

In addition to the capability gaps cited in the research, marketers identified key roadblocks that are preventing their

organizations from implementing a truly data-driven customer strategy. They are budget limitations (54%), failure to embrace

a customer-centric culture (43%), lack of senior-level support to spark change and advance the customer experience

agenda (32%) and lack of a solid data foundation upon which a customer data strategy can be built (31%).

The study is based on the findings of a survey that was conducted during the first quarter of 2017, primarily among

marketers within consumer-focused industries including finance, retail, CPG, travel and hospitality.

http://www.mediapost.com/publications/article/297539/cmos-plagued-with-widening-gap-between-strategy-

e.html?utm_source=newsletter&utm_medium=email&utm_content=headline&utm_campaign=101544&hashid=6awz

Postal Bill Moving Through House

The U.S. House of Representatives Committee on Oversight and Government Reform passed H.R. 756 or the Postal

Service Reform Act.

The Printing Industries of America is in full support of the bill. Michael Makin, president and CEO of PIA, said the associat ion

is looking to the full U.S. House of Representatives to urgently pass this much needed postal reform and modernization

legislation.

“PIA member companies are in constant innovation mode to offer new techniques that make the mail more relevant to

consumers,” Makin said. “A viable USPS offering affordable, predictable rates is a critical delivery partner for print. H.R. 756

— a truly bipartisan compromise supported by industry, labor and USPS — would provide necessary stability for USPS.”

http://www.newsandtech.com/dateline/article_0378bb40-0dba-11e7-99dc-1faf47a0c8ad.html

More Cost Cuts Likely for Newspaper Industry–Moody’s

The traditional newspaper business in the U.S. will continue its decline, according to Moody's Investor Services. One of the

few points of relief will be the ability to cut costs. Moody's believes this is the only way to possibly offset more drops in both

revenue and EBITDA

Moody's pessimism is rooted in one trend, essentially. This is that the pace at which print advertising continues to fall cannot

be made up by a transition to digital revenue, and cost cuts may not be rapid enough to close the gap of falling revenue,

either. Moody's expects industry EBITDA to drop by 7% to 10% through mid-2018

And, non-news related media will take more and more share from the newspaper industry. Alina Khavulya, Vice President

and Senior Analyst at Moody's, wrote in a research note:

Technology-driven shifts in consumer reading habits keep hurting newspapers, and competition for advertisers continues to

rise from search engines, social media and digital video.

One saving grace for the newspaper industry is that it has aggressively entered the digital video business and virtually every

local paper puts a major emphasis on video content.

Some of the large newspaper chains, particularly Gannett (GCI) and tronc (TRNC) may be able to use M&A to move out of

the revenue attrition bind. Each is large enough to afford the purchase of other media assets and to take out costs as part of

expense consolidations. Moody's pointed out:

Gannett, for example, made several acquisitions in 2016, including Journal Media Group for $261 million, assets of the

North Jersey Media Group for $39 Million, and ReachLocal for $163 million. While acquisitions increased Gannett's scale, its

organic revenue has actually declined at a rate of 8% to 10% annually.

So, while M&A many be a solution, it is not a panacea.

tronc has nearly $200 million cash on its balance sheet, some of it put in by chairman Michael Ferro who last February

bought 5.2 million of newly issued shares for $44.4 million. tronc considered a buyout of Us Weekly for a rumored price just

shy of $100 million. tronc dropped out of the bidding and Us Weekly went to American Media. Most outsiders believe that

Ferro is still in the market for other media properties.

Gannett showed its appetite for M&A last year when it offered to buy tronc. The deal did not close. However, Gannett

management continues to shop for properties, at least according to industry observers.

Gannett and tronc are among the few national publishers who have the capital, either in stock or cash, to make relatively

large acquisitions. One of the other huge U.S. chains, McClatchy (MNI) had $829 million in long-term debt at the end of

2016. Its operating income for the year was $22 million on revenue of $977 million. Debt service was $83 million which along

with other charges drove a net loss of $34 million

The Moody's note closes with this observation:

The newspaper industry will also keep reducing costs by low-to-mid single-digit percentages through mid-2018 to support

weakening earnings. Publishers will continue cutting production and distribution costs associated with print, eliminating local

coverage of national or regional issues in favor of single content across markets.

However, the credit rating agency did not say the entire industry is out of options.

http://finance.yahoo.com/news/more-cost-cuts-likely-newspaper-190019676.html