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Black Friday Sales Bring Holiday Cheer to Nation’s Retailers

Tuesday, December 4th, 2012

Black Friday holiday sales set a record in 2012 with 247 million shoppers visiting the malls or shopping online. That’s 21 million more people than in 2011.  Total sales topped $59.1 billion.  The typical holiday shopper spent $423 over the weekend, a $25 increase over the $398 recorded last year.  The National Retail Federation (NRF) defines the “Black Friday weekend” as the Thursday, Friday, Saturday and Sunday after Thanksgiving.  One of the big stories is that online spending alone soared past the $1 billion mark for the first time ever, according to comScore.

Cyber sales rose 26 percent compared with one year ago, when shoppers spent $816 million.  This year, the average online shopper spent $172.42 over the Black Friday weekend, nearly 40.7 percent of their total purchases.  Of online shoppers surveyed by NRF, 27 percent reported making purchases on Thanksgiving Day, while 47.5 percent shopped on Black Friday itself. was the most-visited retail website, followed by Wal-Mart, Best Buy, Target and Apple.

Retailers’ door-buster specials drew shoppers to the stores.  “There’s no question that millions of people were drawn to retailers’ aggressive online promotions this weekend, making sure to research and compare prices days in advance to ensure they were getting the best deal they could,” said BIGinsight Consumer Insights Director Pam Goodfellow.  “However, with shopper traffic increasing at department, discount, and clothing stores over the weekend, it’s clear that consumers still recognize Black Friday as one of the biggest in-store shopping days of the year, as they have for decades.”

The NRF had forecast that worries over the possibility of the fiscal cliff and the anemic jobs market might put a damper on holiday spending.  Its guesstimate is that holiday spending will rise just 4.1 percent this year, compared with 5.6 percent in 2011.  A survey by ShopperTrak found that 307.57 million Americans shopped in stores, a 3.5 percent increase over last year.  Bill Martin, ShopperTrak’s founder, is more optimistic.  He notes that store traffic hasn’t reached this level since 2006, possibly marking a return to pre-recession levels and could be a sign of recovery.  “We’ve seen that consumers are willing to shop a few extra stores,” Martin noted.  “This could translate into more impulse buying and stronger sales.”

Burger King’s New Slogan? – “We Deliver for You”

Tuesday, May 8th, 2012

Couch potatoes of the world can find something new to cheer about.  If sitting at the drive-through at your local Burger King isn’t working for you,  a few stores in Virginia and Maryland are now home delivering meals — for a $2 charge on a minimum order of $8 to $10.  Burger King is is trying out home delivery in an effort to boost slumping sales and regain its position as the nation’s # 2 fast-food giant.  This is of an experiment, chains usually use discounts and other incentives at the start of the year to counter a seasonal sales slump.

During the fall, the Miami-based chain started testing delivery at four restaurants in the Washington, D.C., area. The company plans to expand the test to 16 more locations before deciding whether or not to make it a large-scale effort.  Customers can order online or by phone.  Although home delivery is widespread for some fast foods — like pizza — it is much harder to do with burgers and fries can get soggy very quickly, so fast delivery is key.   Jonathan Fitzpatrick, the chain’s chief brand and operations officer, notes that Burger King has developed new packaging technology “which ensures the Whopper is delivered hot and fresh, and the french fries are delivered hot and crispy.”

“There are some real food-quality issues here,” said Ron Paul,  president of the research firm Technomic. “But there’s no question that consumer expectation for having things delivered has risen.”  In some markets, delivers books the same day they’re ordered. Groceries are being delivered more often. And retail giants, such as Target, even offered home delivery of fresh-cut Christmas trees.

To promote its home delivery, Burger King has established a dedicated web page that makes it easy for customers in the right area send in their orders.  Delivery is available between 11 a.m. and 10 p.m. and does not include breakfast food (including coffee), milkshakes or fountain drinks. The drivers will “try to deliver” within half an hour.

Writing for MSNBC, Marisa King notes that “Why delivery? Burger King has run a delivery service outside the U.S. for many years and has had great success with it all across the globe including in Mexico, Turkey, Brazil, Columbia and Peru, according to a company spokesman.” But another reason for Burger King’s foray into delivery service could be that it’s about to be unseated by Wendy’s as America’s No. 2 burger chain (behind No. 1 McDonald’s) for the first time since Wendy’s was founded in 1969.

According to Burger King, it will use “new delivery packaging technology, in conjunction with thermal bags,” that will keep deliveries fresh. In a major metropolitan area like New York City, delivery service from big box retailers down to the local corner bodega is all but expected.  Hundreds of restaurants have signed on to Web delivery services such as Seamless and GrubHub as a hassle-free way to transport food to customers’ doors. Grocery delivery sites such as Fresh Direct and have thrived in the Big Apple as a convenience for busy shoppers who want to avoid crowds.

Carmen Lobello of Death and Taxes magazine, takes a more negative note.  “While totally unnecessary, given that pizza home delivery has been standard for years it’s almost a wonder it’s taken so long for burger joints to catch on. Though not quite. One of the main problems with Burger King’s food — other than taste and ingredients — is that there’s a huge difference between a fresh fast food burger and fries and one that’s been hanging out in a bag for thirty minutes. The moment the temperature of a BK meal passes from hot to room temperature, it transforms from food into garbage.”

Domino’s, whose business is 70 percent delivery, is watching  with a smile. “We wish them luck,” spokesman Tim McIntyre says. “There is a reason that not all pizza places deliver: It isn’t easy.”

Is AirBnB Becoming the eBay of Vacation Rentals?

Wednesday, January 25th, 2012

The global apartment sharing startup AirBnB has raised $112 million at a $1.3 billion valuation, confirming rumors about the fast-growing company which books rooms, apartments and houses in destinations from New York to San Francisco to Hawaii to London to Paris to Barcelona to Buenos Aires.  The round was led by Andreessen Horowitz (AH).  Reports are that Andreessen invested $60 million; another $40 million came from DST; $5 million from General Catalyst, and the rest from earlier investors and Amazon CEO Jeff Bezos.  The round is the second for the San Francisco-based company, bringing its total amount raised to date to $119.8 million.  The firm lets people travel to places more affordably by letting them book places to sleep from people around the world.  AirBnB plans to use the capital to fund its worldwide growth of private properties, often at amazingly low prices.

“Over the past three years, we’ve built a community marketplace for unique properties and brought it into the mainstream and into almost every country on the planet,” said Brian Chesky, co-founder and CEO of AirBnB.  “Today is a watershed moment – both for AirBnB as a company and for our community – that will enable us to touch new markets and expand our vision to make the world’s most interesting and inspiring places accessible to our users.”

At present, AirBnB has more than two million nights booked, more than double its rate of bookings just four months ago.  Its website receives more than 30 million hits per month and the number of AirBnB social connections has tripled to 54 million since the feature launched in May.  AirBnB has the capacity to rent properties by the night, owned by real people in 16,702 cities in 186 countries.

“We started realizing there is a growing trend of people who are doing this and making a living on Airbnb,” said Chesky, who founded the company in 2008 with Joe Gebbia and Nathan Blecharczyk.  “That’s what turned this into a movement and tipped it into the mainstream.”

AirBnB tries to prevent bad behavior on the part of the host or visitor by allowing people to post ratings and reviews of both hosts and travelers on their website, similar to eBay.  Users who connect to the site via Facebook can see if they and a potential guest or host have any mutual friends or a shared alma mater.  The site lets hosts ask for a deposit to cover damage or other problems.  To use the AirBnB website, visitors search for listings in the location they want to visit.  Once they have found the preferred location, they send a message to the host with any questions about the room or its location.  Next, users pay for their stay using a credit card or PayPal.  AirBnB holds the money until the day after the guests check in, assuring that the hosts are not cheated out of their cash.  The site profits by charging a transaction fee for each reservation.

When a young Toronto woman’s roommate moved out, she decided to rent out her extra bedrooms to travelers. The service has unexpectedly made her a bed-and-breakfast owner, bringing in approximately $1,800 a month, a nice cushion as she works on starting her own business.  “It pays my rent with a little left over,” she said.  “I’ve been able to upgrade my place, paint and get new furniture, which in turn means I can charge more.”

“The AirBnB movement has changed the way people experience the world,” Gebbia said.  “This investment will help us respond to increasing international demand by accelerating hiring, and the opening of offices around the world, in order to support our growing community on more local levels.”

On the Forbes website, Nicole Perlroth says that “Venture firms have been salivating to get a piece of AirBnB for months.  Union Square Ventures’ Fred Wilson famously referred to AirBnB as the one that got away. Other investors have been falling all over themselves trying to back AirBnB copycats for office space, tutoring, cars and even, experiences. The round, pricey as it may be for a three-year-old startup, is still coup for the VCs involved.  Andreessen-Horowitz initiated talks with AirBnB about a potential investment long before Jordan joined the firm last month.  (Andreessen-Horowitz’s newest partner Jeff) Jordan, a former eBay executive, says he was eager to lead the deal for AH because ‘(AirBnB) reminded me more of eBay in its early days than any other business I had seen.’”

Bill Gates, Sr.: The Rich Must Pay More Taxes

Monday, December 19th, 2011

Bill Gates, Sr., a retired attorney in Washington state, supports a ballot initiative that would require the state’s highest earners — including himself and his son — to pay an income tax.  Currently, the state does not collect personal income taxes.

The father of billionaire Microsoft founder Bill Gates, Jr., believes that the poor pay too much tax, and that the rich don’t pay enough.  Washington’s school system, which is a catalyst for future economic growth in the high-tech state, suffers from too little funding because the wealthy aren’t paying their fair share, according to Gates.  His 1098 initiative — an income tax on adjusted earnings that exceed $400,000 a year per couple or $200,000 for an individual — is drawing protest from Washington business leaders, as well as anti-tax groups.

Initiative 1098 would give tax credits to approximately 80 percent of Washington-based businesses and slash the state share of property taxes by 20 percent for businesses and homeowners.  According to critics, the legislation would harm the economy by taxing the earnings of people who own the businesses — money that would be used to put people back to work.  The opposition’s Defeat 1098 campaign believes that an income tax on 38,400 of the state’s highest earners would take away vital competitive advantages and drive away entrepreneurs.  Even Governor Chris Gregoire’s Commerce Department has publicized Washington’s lack of an income tax in statements about the state’s business climate.

Gates considers Washington state’s tax system to be “dramatically regressive”, something that was proved in 2002 when he led a commission created by the Legislature to study the state tax system.  The commission recommended replacing the sales tax or property tax with an income tax that would rebalance the load.  Gates cited data gathered by the national Institute on Taxation and Economic Policy that show Washington’s poorest 20 percent pay 17 percent of their income in sales, property and other taxes.  By contrast, the wealthiest one percent pays less than four percent.

The initiative would impose a state income tax on individuals earning more than $200,000 and couples earning upwards of $400,000.  In other words, single people would pay a five percent tax on income over $200,000 and nine percent tax if they earn more than $500,000.  Couples would pay five percent over $400,000 and nine percent if they earn a combined income that exceeds $1 million.

“It’s not a matter of picking on someone,” Gates said.  “It’s a matter of correcting to some extent a bad historic situation and arguing — I think absolutely persuasively — that this is a proper source for a serious financial shortfall in our operations, namely the public education system.”

Gates’ proposal also has met opposition from Steve Ballmer, Microsoft CEO, and Jeff Bezos, President of, both of whom donated $100,000 to anti-tax groups.

Another voice of opposition is Stephen Moore, who wrote in the Wall Street Journal, “I wish I had a dollar for every time a wealthy liberal has declared he thinks he should pay more taxes. That list includes Warren Buffett, George Soros, Bill Gates Sr., Mark Zuckerberg and even Barack Obama, who now says that not only should rich people like him pay more taxes, they want to pay more.”

Gates is joined by Berkshire-Hathaway CEO Warren Buffett in calling for higher taxes on the wealthy.  President Obama supports “the Buffett Rule”, a guiding principle to ensure that the rich pay as large a percentage of their income as the middle class.  Some millionaires insist that Buffett doesn’t speak for them.  “There is more of a difference between my financial position as a multi-millionaire and Buffett’s than there is between mine and a guy that makes minimum wage,” one CNN Money reader said.  “Why am I grouped with him and why does he feel he can speak for me?”

Just 24 percent of millionaires said higher taxes on large incomes is the optimal solution, according to a survey from Spectrem Group, a research firm specializing in the finances of affluent Americans.  The largest group of millionaires, 44 percent, believe that a flat-rate tax across all income brackets is the fairest system.

2011 Black Friday Pays Off for Retailers

Monday, December 5th, 2011

A record 226 million Americans shopped in stores and online during the four-day Thanksgiving holiday, an increase from 212 million last year, according to estimates by The National Retail Federation (NRF).  These eager shoppers also spent more: The typical holiday shopper spent $398.62, an increase from the $365.34 reported last year.  Approximately 24 percent of Black Friday shoppers were waiting at stores for a midnight opening, a 9.5 percent increase when compared with 2010 when only a few stores were open at that time.  Some 37 percent of midnight Black Friday shoppers were in the 18-to-34 age group.  “Black Friday has evolved from an early morning shopping activity to a late night entertainment,” said Ellen Davis, spokeswoman at the NRF.  “A lot of people stayed up until 1 a.m. or 2 a.m. to go shopping, and then went to bed.”

Sales soared 16.7 percent over the same period last year to $52.4 billion, according to the NRF. “American consumers are taking a deep breath and making the decision that it’s okay to go shopping again, in spite of high unemployment and uncertainty over the stock market and housing market,” Davis said.

The results for the initial holiday shopping weekend are proof that retailers’ efforts to tempt shoppers during the weak economy are working.  Some like Wal-Mart and J.C. Penney are making a stronger push online to compete more effectively with rival  Major chains like Macy’s, Target, Best Buy opened their doors at midnight on Thanksgiving evening instead of the pre-dawn Friday hours of years past.  The question remains whether retailers’ will be able to hold shoppers’ attention throughout the rest of the season, which can bring in 25 to 40 percent of a merchant’s annual revenue.  Americans remain driven by deep discounting and they’re conscious of their spending budgets.

Even as they spent money, shoppers said that with the high price of gas and other goods, this is not a good time to spend, according to the Bloomberg Consumer Comfort Index.  Retail sales grew a paltry 0.5 percent in October, slowing from 0.7 percent in September, according to the Department of Commerce.  In the weeks just prior to Black Friday, ShopperTrak reported sales had risen 3.6 percent during the week of November 12 and 3.8 percent during the week of November 19, compared to last year.

Analysts were surprised by the number of shoppers and the amount of spending; they had expected sales to be dampened by the nine percent unemployment rate, the high costs of gas and concerns about fiscal upheaval in Europe.  It is uncertain whether retailers will be able to maintain the early momentum for the rest of the season.  “One swallow does not a holiday season make.  After the deepest recession in decades, the solid Black Friday weekend is welcome news, but we’re only in the second quarter of a long playoff game,” said Craig Johnson, president of the consulting firm Customer Growth Partners.

According to ShopperTrak founder Bill Martin, “This is the largest year-over-year gain in ShopperTrak’s national retail sales estimate for Black Friday since the 8.3 percent increase we saw between 2007 and 2006.  “Still, it’s just one day. It remains to be seen whether consumers will sustain this behavior through the holiday shopping season.”

On the whole, holiday spending is expected to grow by a fairly small 2.8 percent to about $466 billion, according to the NRF.  For now, experts agree that retailers will likely have to continue to discount to get shoppers to spend.  “The big question is: How do you close the season?” said Hana Ben-Shabat, a partner at A. T. Kearney’s retail practice.  “This is a very promotional driven shopper.”

American shoppers spent $816 million on Black Friday without leaving the comfort of their computer chairs, a 26 percent increase over 2010, according to ComScore data.  The results reinforce numbers released by IBM Coremetrics that showed online sales on Black Friday grew by 24.3 percent compared with the same period in 2010.  Approximately 50 million shopped online Friday, a 35 percent increase over last year, ComScore reported.

“Each of the top online retailers generated significantly greater Black Friday activity compared to last year,” ComScore Chairman Gian Fulgoni said.  “ once again led the pack, with 50 percent more visitors than any other retailer, while also showing the highest growth rate versus last year.  However, it is telling that the top multi-channel retailers also showed strong growth in visitors, demonstrating the importance of the online channel to the retail industry as a whole.”  Amazon, Wal-Mart and Best Buy all reported double-digit percentage gains over last year.

Visionary Apple CEO Steve Jobs Dies at Age 56

Monday, October 10th, 2011

Apple’s  iconic co-founder and CEO Steve Jobs, who altered the habits of millions by reinventing computing, music and mobile phones, has died at the age of 56.  With Jobs’ passing, Apple has lost a visionary leader who inspired personal computing and products such as the iPod, iPhone and iPad.  These innovations made Jobs one of his generation’s most significant industry leaders.  His death, following a long fight with a rare form of pancreatic cancer and a liver transplant, set off an outpouring of tributes as world leaders, business rivals and customers mourned his early death and celebrated his historic achievements.

“The world has lost a visionary.  And there may be no greater tribute to Steve’s success than the fact that much of the world learned of his passing on a device he invented,” said President Barack Obama.  Even Bill Gates, his rival at Microsoft, joined in the laments.  “For those of us lucky enough to get to work with him, it’s been an insanely great honor,” Gates said.

With a passion for minimalist design and a genius for marketing, Jobs laid the groundwork for Apple to flourish after his death, according to analysts and investors.  A college drop-out, Jobs altered technology in the late 1970s, when the Apple II became the first personal computer to gain a wide following.  He repeated his early success in 1984 with the Macintosh, which built on the breakthrough technologies developed partially at Xerox Parc to create the personal computing experience. 

“Steve’s brilliance, passion and energy were the source of countless innovations that enrich and improve all of our lives. The world is immeasurably better because of Steve,” Apple said.  “His greatest love was for his wife, Laurene, and his family.  Our hearts go out to them and to all who were touched by his extraordinary gifts.” 

According to Apple co-founder Steve Wozniak, “We’ve lost something we won’t get back,” he said.  “The way I see it, though, the way people love products he put so much into creating means he brought a lot of life to the world.”  Wozniak said that Jobs told him around the time he left Apple in 1985 that he had a feeling he would not live beyond the age of 40.  Because of that, “a lot of his life was focused on trying to get things done quickly,” Wozniak said.  “I think what made Apple products special was very much one person, but he left a legacy,” he said.  Wozniak hopes the company can continue to succeed despite Jobs’ death.

Computerworld raises the question “Where will that excitement come from now?”  When Jobs stepped down as CEO in August, industry analysts said that Apple, with a team of talented, creative employees, will be able to continue his tradition for ingenuity, if not all of his passion, perfectionism and energy.  “Steve’s excitement for technology will still come from Apple and from the team that Jobs carefully built that worked with him to give us the iPhone and iPad and many other successful products,” said Carolina Milanesi, a Gartner analyst.

“Jobs didn’t just change mobile phones — he reinvented them,” said Ken Dulaney, an analyst at Gartner.  “That was typical Steve.”  In another example, the iPad took user-centric values inherent in the touch-screen iPhone and larger-screen laptops, and found a useful compromise — a classic expression of Jobs’ ability to combine technological concepts, art and ideas and deliver a product that was termed “magical,” according to analysts.  “Apple, under Jobs’ leadership, focused on the user experience first and the technology second,” said Jack Gold, an analyst at J. Gold Associates.  “This focus was groundbreaking in that most tech companies were just the opposite.  Apple pioneered hiring many usability specialists, human factor engineers and designers before it was fashionable to do so.  Jobs’ vision of technology was to make a smooth intersection into our lives and our work, and that was what put Apple ahead of the pack.  He redirected engineering from technical engineering to engineering for usability.”

One question that has industry analysts abuzz is whether Apple will be able to maintain its dominant position now that Jobs is gone. Jobs’ passing and the industry’s mixed response to the recent iPhone 4S model create challenges for Apple in coming quarters,” said Neil Mawston, an analyst with Strategy Analytics.  “Industry eyes will inevitably turn to the iPad 3 launch next year to see whether Apple can continue the company’s impressive legacy of innovation created by Steve Jobs,” he said.  In a sign of deepening competition, recently unveiled its Kindle Fire tablet at an affordable $199 that could pose a serious threat to the iPad.  “Apple is facing a competitive firestorm from not just one company but a coalition of rivals that are trying to beat it, including some of the largest consumer electronics companies on the planet,” said Ben Wood, head of research at British mobile consultancy CCS Insight.

Writing in the Washington Post,  Melissa Bell believes that one of Jobs’ longest-standing legacy will be the recognition that his illness and death are bringing to pancreatic cancer.  According to Bell, “Steve Jobs knew the art of keeping your cards close to your chest.  Though  leaks did spring from the closely guarded Apple world, Jobs was a master at unveiling his secrets only when the time was right for him.  As with his business ventures, so it was with his cancer.  Jobs ‘kept his illness behind a firewall,’ the Associated Press reported.  Apple released no more of a statement than that they lost a ‘visionary and creative genius, and the world … lost an amazing human being.’  It was not known whether Jobs died from the rare form of pancreatic cancer that plagued him for seven years, or from complications from a liver transplant two years ago.  Despite the lack of details, Jobs’ role as the very public face of Apple put his illness on display along with his products.”

High Gas Prices Sending Americans to Their Computers to Shop

Tuesday, May 17th, 2011

Online shopping grew at its fastest pace in nearly four years in April as soaring fuel prices sent Americans to their computers instead of the malls to shop on the internet instead, according to MasterCard Advisors.  Consumers spent $13.8 billion online in April, a 19.2 per cent increase over the same month of 2010, according to the SpendingPulse survey, which is based on spending using MasterCard credit cards and estimates of other forms of payment.  Mike Berry, MasterCard Advisors’ director of industry research, said “We’ve started to see demand distortion, with people pumping fewer gallons and driving less.” reported sales had increased as much as 45 percent, while eBay reported a 10 percent rise.

In general, April sales trends are mixed, with some sectors showing continued year-over-year growth.  Others are flat or even negative, according to the report, which tracks sales across all payment methods.  A late Easter, which shifted some sales from March into April, may skew interpretations, although data suggests that high gasoline prices are impacting consumer behavior.  April marked the sixth straight month of double-digit growth in online shopping, according to Berry.  Online shopping has risen from 0.6 percent of all retail spending at the end of 1999 to 4.3 percent in the 4th quarter of last year, according to Census Bureau statistics.

We can expect consumers to make fewer shopping trips,  especially on weekends, and this may contribute to an ever stronger growth for e-commerce,” says Michael McNamara, vice president, research and analysis for SpendingPulse.  Several retail sectors saw online sale increases during April.  For example, online shoe sales rose 20 percent compared with 2010.  Women’s clothing rose by 15 percent, the second consecutive month to record that large an increase.  By comparison, clothing sales in actual stores rose 10.4 percent.  Consumer electronics purchased online grew 9.1 percent, for the eighth consecutive month of growth.  Electronics and appliance sales, including brick and mortar purchases, declined 1.8 percent in April.

Referring to continually rising gas prices, McNamara said,  “Our experience over the past several years suggests that this can have a variety of repercussions for retail.  First, we can expect consumers to make fewer shopping trips, especially on weekends, and this may contribute to an ever stronger growth for e-commerce.  Fewer miles driven also reduces demand for auto parts and services.  Finally, casual dining restaurants can be negatively impacted.”

Surprisingly demand also hasn’t yet been hurt by the sharp rise in gasoline prices brought on by the uprisings across the Middle East, according to Berry.  Still, he warns the trend bears watching as he expects that spending levels are only just starting to see the impact of soaring gas prices.  “We haven’t reached that point yet, but it is something to keep an eye on,” he said.