THE NEW BACK-TO-SCHOOL: DEEPER DISCOUNTS, LONGER SALES

Original Story: USAToday.com

You may be basking in the last few weeks of summer and counting down to Labor Day getaways, but for retailers it was time to go back to school a month ago.

That's when many of them started promotions for one of the biggest shopping periods of the year — one that's also become perhaps the most prolonged shopping period of the year, with families buying back-to-school items from practically the fourth of July until after classes start. Deloitte's annual back-to-school shopping survey out last month found that more than a quarter of parents plan to finish their shopping after the start of the school year.

"We're seeing it expanded out throughout the season," says Steve Bratspies, executive vice president of general merchandise for Walmart. He says customers are shopping more frequently and making smaller basket purchases over a longer period of time rather than doing one huge buy.

And that means stores are throwing absurdly cheap prices — think 17-cent notebooks — and price-matching guarantees at customers in an effort to stay relevant and competitive over three months of back-to-school shopping.

• Staples is offering a 110% price-match: If a customer finds a product cheaper somewhere else, Staples will match the price plus give the customer back 10% of the difference. And those 17-cent notebooks are part of a list of items at low prices for the entire shopping season. Rulers, glue, paper, colored pencils, erasers, crayons, ballpoint pens and markers are all on sale for a dollar or less through Labor Day.

• Walmart has 30% more back-to-school items available online than last year and is reducing prices on 10% more back-to-school items than last year both online and in stores. This month, a price-matching pilot program rolled out store-wide. It allows customers to enter an ID code listed on their in-store receipt at Walmart.com and compare the prices of everything they bought to all advertised prices from that week. If Walmart's prices were more expensive, it will refund the difference in the form of an e-gift card.

• Old Navy, already known for its steep back-to-school promotions, has T-shirts starting at $4 and jeans starting at $8. "We obviously started early," says Jamie Gersch, vice president of marketing. "And then want to make sure we stay relevant through Labor Day." The retailer started back-to-school deals in mid-July.

• Sears is trying to make shopping more enticing by expanding in-store pickup across both Sears and Kmart stores. Customers can order items on Kmart.com but pick them up at a Sears, and vice versa. Sears customers don't even have to get out of the car if they opt for in-vehicle pickup for online orders.

The National Retail Federation expects families to spend $670 on average during the back-to-school season, up 5% over last year, on supplies, clothes and electronics.

Retailers are also sympathizing with teachers, who are increasingly paying for classroom supplies with their own money, by luring them with extra discounts. Walmart has a 10% discount for teachers throughout the season. Staples had a teacher appreciation weekend the first weekend of August — teachers who are rewards members got 25% off — and the company donated $1 million to Donors Choose, an organization that helps teachers pay for supplies.

Retailers are pushing a longer shopping season and earlier-than-ever deals to try to get customers to buy more over a longer period of time, says Mark LoCastro, spokesman for DealNews, which tracks price and discount trends across the Web.

"If they can push into your mind 'don't procrastinate, shop early,' they're hoping you'll do some impulse buys," he says. Plus retailers are also responding to competition. "If you're a major retailer and your primary competitors start to advertise in early June you're going to lose out on sales," LoCastro says.

With constant discounts though and 24/7 access to online retailers, shoppers have lost the sense of urgency that can lead to such impulse buys, says Simeon Siegel, retail equity analyst at Nomura.

"The days of catalyst-driven shopping have stretched," he says. "When you need to attract shoppers with something other than product, you use price and time."

Siegel says that means retailers are offering steeper discounts and for longer periods of time to try to get customers in the door. His research shows Gap has been offering higher discounts and longer promotional periods through July and August than in the comparable weeks last year. And discounts between 30% and 50% have become standard at many retailers.

Still, LoCastro says it pays to wait. DealNews finds the best prices are still at the end of August, when summer clearance and back-to-school promotions converge. LoCastro says that historically, August is one of the best times to buy laptops and apparel.

Meanwhile retailers are stuck serving the whims of millions of shoppers who seem to increasingly hold all the cards when it comes to getting cheap merchandise. Stores have always marked down items to clear inventory, Siegel says. Now they're doing it incessantly out of a need to keep shoppers with hundreds of other options interested, especially during crucial buying seasons like back-to-school.

"The reality is I think they need to do it," Siegel says. "It's somewhat of a prisoner's dilemma."

Edmonton Man in Contest to be World's Greatest Salesman

Vancouver Sun

EDMONTON — The salesman in Todd Herman was born when he was a little boy walking along the railway tracks with his cousin near the family ranch outside Medicine Hat.

Scattered throughout the tracks' rock bed were gold-coloured rocks of varying sizes.

Herman and his cousin hauled a bunch of the pyrite to the side of the road and set up a cardboard sign that read: "Big gold $25. Little gold $15."

An older couple came by and plunked down $15 for a piece of the mineral, often called fool's gold. Herman and his cousin spent their hard-earned profits at the local joke store.

Now, the 34-year-old Edmontonian is in the running to be the world's greatest salesman, after a friend tweeted him about a contest by advertising giant OgilvyOne to sell one red brick. The friend knows Herman is a huge fan of the company's founder, David Ogilvy.

"As soon as I saw it, I knew immediately how I would sell a red brick," said Herman, who owns two online businesses. One is a sports psychology and mental toughness coaching company called thepeakathlete.com.The other is trafficbakery.comwhich helps local businesses use the Internet to market their companies.

"My idea was if you can be first in a category, you usually win. So I wanted to be first in the video category because I thought I can dictate the bar that other people have to try to reach and the terms," he said.

Within eight hours of learning of the contest, Herman had the two-minute video shot, uploaded to OgilvyOne and a website created. He sold the brick, bought at Home Depot for 61 cents, on EBay using PayPal and donated the proceeds to aid the rebuilding of Haiti. He has actually sold the brick three times for a grand total of $53.91. Those who have bought the brick have told him not to bothering shipping it because they just want to donate to a worthy cause.

"I think the hallmark of a good salesperson is taking advantage of opportunity," said Herman, who believes the world rewards momentum.

In his video, he pitches a single, red brick as a symbol of something that can used as the first step in building something great, which is why all the proceeds are donated to the rebuilding of Haiti.

Herman said much of his philosophy when it comes to the art of selling comes from being a voracious reader of motivational mentors such as Ogilvy, Tony Robbins, Jim Rohn and Steven Pressfield, whose book The War of Art, he carries with him all the time.

"People always think of sales as the in-your-face-used-car salesman. But selling happens all the time. Really great selling is never noticed," Herman said.

"You should feel like you just bought something, not like you just got sold."

Being a great salesperson is also about communication and people skills. "And sometimes it is about just shutting up and really listening to the person speaking," he said, laughing.

As one of the three finalists selected out of more than 230 entries from 12 countries, Herman will travel to France for the Cannes Lions International Advertising Festival on June 21. The three finalists will do a two-minute pitch live on stage of a software product from one of OgilvyOne's current clients and be judged by an audience.

The winner of the coveted "World's Greatest Salesperson" will receive a three-month fellowship with Ogilvy-One to help craft the sales guide to the 21st century.

"We've been blown away by the creativity, enthusiasm and digital savvy that we've encountered on our quest to find the World's Greatest Salesperson," Mat Zucker, OgilvyOne's executive creative director in New York said in a release.

"Choosing only three finalists from such an impressive field has been the most challenging part for us so far -- but what impressed us the most about the finalists was their approach to the changing nature of sales," Zucker said.

Herman is looking forward to getting a chance to experience the Cannes advertising festival.

"I'm just more thrilled because it is Ogilvy's namesake advertising agency and I just think the world of it," he said.

Cyber Monday' Discounts Bloom

Online retailers plan to offer more deals and promotions to spur holiday shopping on the Monday after Thanksgiving this year, according to a new study.

The survey, commissioned by Shop.org, a division of the National Retail Federation, says 83.7% of retailers will have special promotions on that day, known unofficially as "Cyber Monday," up from 72.2% a year ago. Of those promotions, one-off deals, email campaigns and one-day sales are expected to be popular. Many people are shopping online for Herbal Tea, Kids Shoes, Green Tea, Childrens Shoes, Black Tea, Natural Lawn Care, Organic Kids Clothes, Organic Lawn Care, Natural Kids Clothes, Lawn Care and Foot Orthotics.

"Due to the economic circumstances, it's extremely competitive for every dollar somebody's going to spend," says Scott Silverman, executive director of Shop.org. "Retailers need to be aggressive with promotions."

E-commerce sales have already slowed significantly this year. Online retail spending grew only 1% in October from a year ago, its lowest growth rate since 2001, according to market research firm comScore Inc. The slower growth is part of a downward trend that started late last year.

To lure consumers, Mr. Silverman says retailers haven't pulled back on promotions such as free shipping, which isn't a cheap benefit to provide consumers. Free shipping across all products will be offered by 22.5% of all retailers surveyed.

Charming Shoppes Inc.'s FashionBug.com site, which sells women's apparel and accessories, says it will offer free shipping on Cyber Monday. It is also offering 40% to 60% discounts on all categories, which will last throughout that week.

"Shipping costs is one of the biggest barriers to buying online, and we want to take away that burden," says Tim White, senior vice president for marketing for Charming Shoppes.

Other retailers such as Chocoladefabriken Lindt & Sprungli AG aren't waiting until Cyber Monday to offer promotions. Last week, the Swiss chocolate seller began offering 50 free Lindor truffles valued at $25 to customers who purchased $50 or more on its Web site. The deal will still be available on Cyber Monday.

The Shop.org study, released Monday, also found that 55.8% of workers with Internet access at work, equal to roughly 72.8 million people, will shop for holiday gifts from work, up from 44.7% in 2005. Mr. Silverman added that most of those people shop during their lunch hour.

Intel Slashes Sales Outlook As Demand Slows for PCs

Intel Corp. slashed its financial forecast for the current quarter, the latest sign of how rapidly computer sales have turned sour because of the slumping economy.

The chip giant set a fourth-quarter revenue range that points to a sales decline of around 12% from the third quarter. In mid-October, Intel had projected sales would rise 3% over the same period.

Intel also said its closely watched gross profit margin would be considerably lower than its prior prediction.

Intel's shares dropped 7% in after-hours action, after ending the regular session at $13.52 on the Nasdaq Stock Market.

The company said "revenue is being affected by significantly weaker than expected demand in all geographies and market segments." The company added that companies that buy and distribute chips are "aggressively reducing component inventories."

An Intel spokesman said the company has experienced "a pretty rapid decline" in its business. He said Intel is ordering a hiring freeze and cutting other discretionary spending, but has no plans to reduce its work force.

Intel's projection portends a grim environment in what is traditionally the biggest quarter for electronic sales. The comments mirror those of players such as Qualcomm Inc., the biggest supplier of chips for cellphones.

Intel, of Santa Clara, Calif., had seen little effect from the slump through the third quarter, when its net income rose 12%. Since then, however, demand for computers has been hit hard -- both among corporate customers and consumers.

Gartner, a market research firm, last week sharply cut its estimate for semiconductor-industry growth in 2009 to 1% from nearly 8%, citing the impact of the economic crisis.

Intel is in better shape than many other chip makers, with bigger profit margins, a strong product line and a network of factories that have adopted advanced manufacturing recipes. But Intel's plants could become a liability if demand falls quickly and its production lines are no longer full, said Roger Kay, a market researcher at Endpoint Technologies Associates.

Intel said it now expects fourth-quarter revenue to be $9 billion, plus or minus $300 million, lower than its previous prediction of between $10.1 billion and $10.9 billion.

The company put its gross profit margin at 55%, plus or minus a couple of points, off from its prior prediction of 59%.

Tighter Terms for Car Loans Promise To Deepen Troubles for Sluggish Sales

The increasing inability of car buyers to find financing for new automobiles is adding to concerns hanging over a U.S. auto industry that has been blistered by high gasoline prices and a weak economy in 2008.
Auto makers will report September sales on Wednesday, and the pace of new-vehicle deliveries is expected to remain at a 15-year low. Research firm J.D. Power & Associates estimates that the seasonally adjusted rate of annual light-vehicle sales will dip to 12.6 million vehicles, compared with 16.2 million a year ago.
If the estimate holds, it would represent a decline of 26% compared with the same month in 2007. Such an outcome would shatter any notion that the auto industry has hit bottom following a dismal summer selling season, and turn up the spotlight on the cash concerns facing Detroit's Big Three.
The sluggishness has been largely pinned to an unwillingness of buyers to enter the new-car market at a time when gasoline prices are escalating and the economy is shaky. In recent months, however, domestic auto makers have mostly abandoned vehicle leasing, and lenders -- many of which are mired in red ink -- have significantly tightened terms.
"Decreased credit availability is constraining sales even at prime levels of credit quality," Goldman Sachs auto analyst Patrick Archambault said in a note to investors. This means that buyers are not only unwilling to buy, but they also are increasingly unable to buy.

By: John D. Stoll
The Wall Street Journal; September 30, 2008