Diapers.com Has A New Idea: Keep The Customer Satisfied

From the Wall Street Journal

What Zappos.com did for shoes, Diapers.com is seeking to do for all manner of baby products.

Red Bank, N.J.-based Diapers.com, which just raised $30 million in funding from several venture firms, is known for its over-the-top focus on customer service.

Owned by Quidsi Inc., Diapers.com provides free shipping and delivers overnight to two-thirds of the country if an order is received before 6pm; the rest of the country gets orders within two days. The company also has a no-questions-asked return policy with free shipping on returns.

“We empower our reps to take care of the customer at really any cost,” said Marc Lore, co-founder and chief executive of the company. “If we don’t have something in stock we’ll point to a competitor that does. We do just about anything to insure customers have a good experience with the Web site.”

Sound familiar? Zappos, which recently agreed to be acquired by Amazon.com Inc. for $847 million in cash and stock, is known for its attention to customer service in the kids shoes and clothing business.

Diapers.com and its investors hope the company can turn doting parents into its own fanatical customers. Underneath a snazzy Web site with cute pictures of babies are three warehouses that efficiently churn out thousands of products like diapers, car seats and strollers. The 130-employee company has invested heavily in its infrastructure, building its own customized system for supply chain and inventory management and fulfillment, complete with robots moving products around.

“We live and die by the ability to get our products shipped out as fast and at low cost as possible,” Lore said. “It’s as much a logistics play as a front-end play.”

That’s different from Lore’s previous venture. Lore and his partner Vinit Bharara previously founded ThePit.com, an online marketplace for trading baseball and sports cards that was acquired by Topps Co. Inc. in 2001 for $5.7 million in cash.

Lore wouldn’t disclose Diapers.com’s revenue but says the company is on track for 100% growth this year compared to last year. The company was recently named the fastest growing retailer by Inc. magazine.

Diapers.com’s latest Series E funding was led by New Enterprise Associates, with participation existing investors Accel Partners, Bessemer Venture Partners and MentorTech Ventures. Diapers.com will use the new funds to build out its selection of products offered and build out its site. The company already has a feature that customizes the homepage for people based on their children’s age and other factors. Next month Diapers.com will add a baby registry service that will make it easy for friends and family to buy baby products for others.

Kids Shoes – Secrets of Shopping for Them

From Article Base

Unlike adult’s footwear, kids shoes should be selected with utmost care and concern in mind about the little feet. In fact it’s healthy for the little feet to walk barefoot most often to strengthen the supple soles of the kids. But shoes too are necessary to protect the little feet from getting injured while walking on uneven surfaces.

An array of kids shoe styles and models are available in the market ranging from kids dress sandals to sneakers catered to the comfort and style needs of your child. So, choosing one right pair of footwear among many models will be quite a difficult task to do. One should be very alert and conscious while shopping kids shoes, as picking a wrong pair will ultimately affect your child’s growing feet. To make your difficult task of shopping this footwear easy, this article is providing you the best tried and proved secrets of shopping kids sandals. Below are some secrets that will be of great help to you when shopping for kids shoes;

• Shop footwear in a specialized children shoe store where the sales persons and other staff are well-versed with the hook and nook of kid's shoes.
  
  
• Instead of spending much money on any single pair of stylish kids footwear for a special occasion, it’s always wise to prefer a fine pair of comfortable children footwear to allow the little tootsies walk freely without any worries.
  
  
• Have your child’s feet measured every time you shop for kids shoes. Because the shoes that prove to snugly fit your child’s feet for a moment in shoe store may prove unfit or uncomfortable after a day spending in the shoes or playing in them for a long time.
  
  
• Prefer shoes with half inch free space in the toe region to allow the little toes wiggle freely inside the footwear without any discomfort.
  
  
• Never buy kids shoes that are too big thinking that your child’s feet grow faster. Wearing kids shoes that are too big will trip the child to fall and may also develop foot problems in the future.
  
  
• Make sure the footwear fits snugly in the heel part without causing any discomfort. The shoe should snugly fit in the heel area but it should not be too tight or too loose.
  
  
• Avoid preferring backless or slip-on kids shoes that may cause them to trip or fall. Prefer footwear with laces, Velcro straps or any kind of fasteners that hold the feet firmly in a good position.
  

Payless Shoe to Expand Into Russia

By The Wall Street Journal

Collective Brands Inc. is expected to announce Tuesday that it is expanding its Payless ShoeSource retail chain into Russia with franchise partner M.H. Alshaya.

The Topeka, Kan., footwear company, known for its affordable line of kids shoes and adult shoes by top fashion designers, plans to open stores beginning in 2010 in Russia. The agreement calls for between 95 and 150 stores to be built within five years. Alshaya will own and operate the stores, but Collective Brands has the option to buy into them.

At the end of the first quarter, the company, which also owns the Stride-Rite chain, operated more than 4,500 stores in more than a dozen countries, including Canada and nations throughout Central America, the Caribbean, South America and the Middle East. The retailer's sales have fallen in the recession despite its discount prices.

The company first began franchising its stores this year in the United Arab Emirates, Saudi Arabia and Kuwait.

Emerging markets such as Russia and the Middle East have two common traits -- income growth and real [gross domestic product] growth.

M.H. Alshaya Co. is the retail business of the Alshaya Group, which has interests in hotels, real estate and investments that was founded in Kuwait in 1890.

Weak retail report cards likely for back-to-school

By The Associated Press

It may be the beginning of the year for students, but for retailers, it's report-card time. Analysts expect the early grades on the back-to-school selling season to be weak when retailers report August results Thursday.

The results will give insight into whether consumers opened their wallets after months of keeping them closed amid the recession, and how well back-to-school offerings such as trendy jeans, dresses, T-shirts and kids shoes are being received.

Analysts say poor sales would raise already-high fears about the crucial holiday selling season.

Labor Day falls a week later this year and several states' tax-free shopping weeks occurred in August this year rather than July, both making comparisons from a year ago difficult.

Thus, retailers and analysts said August and September taken together will likely paint a more complete portrait of back-to-school sales, crucial for kid and teen retailers. The back-to-school season can make up about 20 percent of their annual revenue.

Back-to-school selling picked-up later in the month, concurrent with more school openings, and helped by weather that was drier and more seasonable than last year. Encouragingly, mall traffic was flat for the month, versus down 4 percent a year ago.

Companies that focus on low prices will beat expectations, while higher-priced companies will miss expectations.

Sales likely built toward the end of August driven by pre-Labor Day sales and promotions as well as by some newness and pent up demand in certain categories, such as outerwear, sweaters and kid's shoes.

Outside of the kid and teen stores, August results are expected to continue weak sales seen in the second quarter as consumers continue to cut back amid the recession.

Inventory at retailers remains lean, potentially holding back sales, but possibly contributing to better margins. Consumers, facing unprecedented economic uncertainty, continue to behave frugally, spending cautiously and saving vociferously, while contributing to sales weakness among apparel retailers.

Still there have been a few encouraging indicators the economy may be stabilizing. On Tuesday, the Institute for Supply Management showed the highest number for its manufacturing index since June 2007. New customer orders jumped to a level not seen since late 2004.

J.C. Penney Nearly Breaks Even

Quarterly Sales Fall 7.9%, but Lower Costs Aid Retailer's Profit Forecast

J.C. Penney Co. just about broke even in its fiscal second quarter and warned it could post a loss in the current quarter, but the retailer raised its profit forecast for the full year on an improved economic outlook and stabilizing sales.

"We are more confident coming into the third quarter than we were in the second quarter," said Chief Executive Myron E. Ullman III in a Friday conference call. Still, he added that "negative consumer sentiment will continue to be a factor" hindering spending for the rest of the year.

For the quarter ended Aug. 2, the Plano, Texas, company posted a loss of $1 million, or zero cents a share, compared with net income of $117 million, or 52 cents a share, a year earlier. The latest results included a pension expense of $83 million. Sales fell 7.9% to $3.94 billion, with same-store sales down 9.5%.

For the third quarter, the company said it expects results ranging from a profit of five cents a share to a loss of five cents a share, much lower than analysts' expectations of a 14-cent profit. The reasons for the disparity include higher marketing expenses, minimum-wage increases and the costs of opening new stores, the company said.

In response to the third-quarter forecast, Penney's shares fell $2.11, or 6.3%, to $31.23 in 4 p.m. composite trading on the New York Stock Exchange.For the full year, Penney said it expects earnings in a range of 75 to 90 cents a share, up from earlier guidance of 50 to 65 cents a share, revising its forecast on falling sourcing costs, leaner inventories and improved sales trends for the back-to-school season.

"Their inventory position hasn't been leaner in two years," said Bob Drbul, an analyst at Barclays Capital.

Penney reduced inventories by 12% in the second quarter to get supply back in line with demand and reduce clearance sales. Such moves, coupled with the company's high penetration of private-label merchandise, helped boost gross profit margins by a full percentage point, to 38.5% of sales.

The company said that kids shoes, chess sets and women's plumeria jewelry sold well in the quarter, while children's apparel was the weakest category.

Mr. Ullman referred to the company's Sephora cosmetics boutiques, which have helped Penney attract a younger, more affluent consumer, as a "game changer." The company opened 38 Sephora locations within Penney stores in the second quarter and expects to have 155 of them by the end of the year.

Penney's said it has begun searching for a successor to President and Chief Merchandising Officer Ken Hicks. The new executive's initial title would be president, a person familiar with the matter said. Mr. Hicks, who left the company last month to become chief executive of Foot Locker Inc., was widely considered to be the heir apparent to Mr. Ullman.

Penney's directors are seeking a candidate capable of someday succeeding Mr. Ullman as chief executive and are in no rush to finish the search, according to two people familiar with the situation. On the conference call, Mr. Ullman said the company was looking at both internal and external candidates.

Kids' Execs Rally Against Safety Law
Story from wwd.com

WASHINGTON — Children’s footwear companies struggling with stricter lead standards and new testing requirements are pushing for changes to a consumer product safety law.

Hundreds of executives, claiming they will be forced out of business because of the new rules, held a rally on Capitol Hill last Wednesday urging lawmakers to amend the law — the Consumer Product Safety Improvement Act — which was enacted last year.

“Our industry has seen companies go out of business as a result of this act,” said Kevin Burke, president and CEO of the American Apparel & Footwear Association, who spoke at the rally. “Our members are laying off people, and our industry has incurred severe financial losses.”

With the law, Congress aimed to improve product safety and strengthen the understaffed Consumer Product Safety Commission in the wake of a string of contaminated imports from China last year that created a public panic.

The legislation set up a broad range of new rules, including significant reductions in lead allowances in children’s footwear, apparel, jewelry and toys. It also increased the age level that defines children’s products to 12 years from 8 years and increased fines for violations to a maximum $15 million from $1.8 million. The penalty for individual violations, assessed per product, increased from $5,000 to $100,000.

Rep. Joe Barton (R., Texas) and 16 House Republicans introduced a bill last Tuesday to make changes to the CPSIA, including setting specific dates for products to meet the standards and allowing retailers to sell off inventory for one year after the manufacturing standards go into effect. It also creates regulatory flexibility in exemption authority and labeling authority for the consumer product commission and permits component part testing.

But Democratic leaders, who control the agendas in both the House and Senate, supported the bill last year, and any attempts to change it could be difficult.

For kids shoes manufacturers opposed to the new legislation, it’s not a dispute over the responsibility of companies to produce safe products for children, but rather a question of the necessity for such rigorous laws.

“I, of course, don’t question Congress’ intentions, but I do think there are mistakes in the legislation — that it’s not as appropriately crafted as it could be,” said Bernard Leifer, president and CEO of Hackensack, N.J.-based SG Footwear, which has sent numerous letters to local congressmen and senators to urge them to consider modifications to the legislation.

“It is a question of degree. In this case, Congress has been overzealous. The new safety rules are too strict.”

Leifer said he believes the legislation will have repercussions for the children’s footwear industry, particularly for smaller companies that can’t easily absorb the high cost of product testing. “Hopefully the protestors will be heard and Congress will start to see the light,” he said.

Collective Brands Inc., parent of Payless ShoeSource and Stride Rite Corp., is taking the legislation changes in stride. “We take children’s safety seriously and work closely with our suppliers to ensure our products are safe and [that they] comply with all applicable laws, including the new U.S. requirements,” said Matt Rubel, CEO of the Topeka, Kan.-based company.

According to Rubel, the company has for several years utilized an independent lab to test its products, so the more stringent legislation is not expected to have much of an impact on its manufacturing process.

“We had been monitoring the new initiative since 2007 and took proactive steps as early as last fall to train and inform our manufacturing partners and other agents,” he said.