TIME Retail

Zara Yanks Baby Shirt Likened to Concentration Camp Uniform

Now that's a fashion faux pas

Clothing retailer Zara hastily removed a baby shirt from its online stores Wednesday after social media users noted its resemblance to a concentration camp uniform.

The shirt has thin black and white stripes and a yellow star sewn on the front. The company described the design as “sheriff” themed, but the word “sheriff” was barely legible within the star, and to many outraged critics on social media the shirt was far more evocative of one of the darkest chapters of World War II history.

Zara removed the shirt from its site on Wednesday, according to the Israeli blogger for 972 Magazine who first broke the story, and its Israeli office issued an apology to any customers who might have been offended.

MONEY wall street

Burger King Wants to Cut its Exposure to Hamburgers, Not Just Taxes

While all the focus is on the tax savings Burger King could enjoy through a Canadian inversion, the real benefit of buying Tim Hortons is boosting breakfast and coffee sales.

The initial media reaction is that Burger King is turning its back on America by reportedly seeking to buy the Canadian coffee-and-doughnut chain Tim Hortons. After all, it can move its headquarters to Ontario to pay less in taxes.

In reality, Burger King BURGER KING WORLDWIDE INC BKW 2.3315% may be more interested in turning its back on the hamburger.

The $11 billion burger chain is in talks to buy Tim Hortons TIM HORTONS INC THI 0.1369% , Canada’s biggest fast-food chain with a market value of around $10 billion. The deal would reportedly involve a so-called inversion, where Florida-based Burger King would for tax purposes be headquartered in Canada, where the top corporate tax rate is 15%, versus 35% in the U.S.

But as The New York Times pointed out, Burger King’s tax rate is actually closer to 27%, and this inversion really wouldn’t cut its taxes that much because the majority of its revenues are generated in the U.S. Even if it moved to Canada, BK would still be on the hook for U.S. taxes on sales made on American soil.

No, there’s something else driving this deal, and it could be that Burger King wants to abdicate its rule over burgers and switch kingdoms.

As Americans’ tastes have changed, burger sales, which have long dominated the fast-food landscape, have started to stall. Last year, for instance, revenues at Burger King restaurants in the U.S. that have been open for at least a year fell 0.9%, while U.S. same-store sales at McDonald’s slumped 0.2%. By comparison, Starbucks STARBUCKS CORP. SBUX 0% reported an 8% rise in comparable store sales in fiscal 2013 while Dunkin’ Brands DUNKIN BRANDS GROUP DNKN -0.0689% , the parent company of Dunkin’ Donuts, enjoyed a 3.4% rise in revenues.

This isn’t just a short-term problem. Analysts at Janney Montgomery Scott recently noted that while three of the five biggest fast-food chains in the U.S. are still hamburger joints (McDonald’s, Wendy’s, and Burger King), by 2020 that number should drop to just one: McDonald’s.

Meanwhile, coffee chains Starbucks and Dunkin’ Donuts are expected to move up the ranks. And McDonald’s is itself doubling down on coffee, pushing more java not just in its restaurants but also on supermarket shelves.

Noticing a common theme here?

In the fast food realm, there are three buzzy trends right now. There’s the rise of the higher-end “fast-casual” restaurants such as Chipotle Mexican GrillCHIPOTLE MEXICAN GRILL INC. CMG 0.1195% . There’s the explosion of cafe coffee shops, which according to the consulting firm Technomic was the fastest-growing part of the fast-food industry last year, with growth of 9%.

Darren Tristano, executive vice president at Technomic, recently noted that “the segment continues to be the high-growth industry leader with Dunkin’ Donuts and Tim Hortons rapidly expanding.”

He added:

[The] coffee-café segment competition will heat up, and new national chain, regional chain and independent units will increase major market penetration. Smaller rural and suburban markets will be getting more attention. Fast-casual brands in the bakery-café segment like Panera Bread, Einstein Bros. Bagels and Corner Bakery will also create new options for consumers as more locations open. Quick-service brands like McDonald’s will provide lower-priced, drive-thru convenience that provide value-seekers with a strong level of quality that is also affordable.

And the third area of growth in fast food is breakfast. According to The NPD Group, while total “quick serve” restaurant traffic fell by 1% at lunch and dinner time in 2013, business at breakfast time rose 3%.

“Breakfast continues to be a bright spot for the restaurant industry as evidenced by the number of chains expanding their breakfast offerings and times,” says Bonnie Riggs, NPD’s restaurant industry analyst.

Now, while Burger King isn’t really positioned to go after the Chipotles of the world, the acquisition of Tim Hortons could quickly make it a bigger player in the coffee and breakfast markets, where it has languished far behind McDonald’s and Dunkin’ Donuts.

Tim Horton’s already controls 75% of the Canadian market for caffeinated beverages sold at fast-food restaurants, according to Morningstar, and more than half the foot traffic at the key morning rush hour.

Morningstar analyst R.J. Hottovy noted recently that same-store sales throughout the chain are expected to rise 3-4% over the next decade, which would be a marked improvement over the same-store declines that Burger King has been witnessing lately.

Even though Burger King is a bigger company by market capitalization, it generates less than half the $3 billion in annual revenues that Tim Hortons does. This means that by buying the Canadian chain, Burger King will be able to buy the type of same-store growth that it could not muster with hamburgers and fries.

So the next time you go to Burger King, don’t be surprised if they ask you “would like some coffee to go with that?”

SLIDESHOW: Burger King’s Worldwide Journey To Canada

 

 

MONEY deals

Labor Day Sale Prices Are Here—a Week Before Labor Day Weekend

Banana Republic 50% off promotion
Jin Lee—Bloomberg via Getty Images

In a brutally competitive back-to-school season for retailers, clothing stores like Banana Republic and Abercrombie & Fitch have busted out extra-early clearance sales to the tune of 40% and 50% off everything.

Check out some of the impressive sales taking place right now:

Abercrombie & Fitch: 40% off everything in stores and on the web;

American Eagle: extra 50% off items already on clearance;

Ann Taylor: 50% off a broad range of merchandise;

Banana Republic: 40% off your entire purchase online with the code BRGET40, or $50 off when you spend at least $100 in stores;

Gap: 30% off for everyone (use code AUGUST), or 40% if you have a Gap credit card (code: $40STYLE) now through August 24, plus $25 in Gap Cash for every $50 you spend now through September 1.

If you didn’t know any better, you might have assumed that these big, across-the-board discounts are for Labor Day sales, or for post-back-to-school clearance sales. Heck, 40% off everything has more or less been the standard markdown level to get shoppers to bite on Black Friday and Cyber Monday, renowned as the best sales days of the year.

So why are retailers pushing such hefty discounts at such a seemingly odd time? One reason is that right now is an especially competitive, arguably desperate moment for apparel stores in particular. Iconic retailers like Target, Walmart, and Sears have been struggling mightily of late, and a wide range of clothing stores are trying to cope with consumers’ shifting fashion (and shrinking household budgets) that have brought about the need for deals like $10 jeans.

According to the National Retail Federation (NRF), household spending on clothes during the back-to-school period is basically flat compared with last year. Shoppers said they planned on spending $231.30 on clothes this season, versus $230.85 a year ago. What’s more, more parents seem to be taking the slacker approach to back-to-school shopping, procrastinating on purchases rather than prudently completing shopping lists long before school starts. As of August 12, an NRF poll indicates, 24% of families hadn’t done any back-to-school shopping yet, compared with 21% at the same time last year. Though fashionistas would disagree, trendy clothing is less of an essential for the start of the school year—kids need notebooks and markers more than new outfits—so it’s a safe assumption that procrastinators have been shying away in particular from clothing purchases, especially if they’ve been avoiding back-to-school shopping because of a tight household budget.

All of these factors add up to a situation in which stores simply haven’t been able to convince shoppers to buy enough clothing yet during the end-of-summer, back-to-school period. They could have waited to drop their big discounts on Labor Day Weekend, but because stores are constantly trying to beat competitors to the punch nowadays, sales tend to start earlier and last longer than ever—hence back-to-school deals beginning in June and Christmas advertising starting just after Labor Day.

Speaking of the winter holidays, they’re a major reason why retailers are being especially aggressive in clearing out summer and fall inventory right now. The November–December period is by far the most important time of year for all of the retailers mentioned above, and to make the most of it, stores want to start with a clean slate (and cleaned-out stores) as early as possible, to prep for the busy months ahead.

In fact, the world’s largest retailer already announced the launching of a holiday season initiative two weeks before Labor Day. “At Walmart, we never stop thinking about the holidays,” a post from Walmart’s Duncan Mac Naughton, chief merchandising and marketing officer, stated in mid-August. And yes, he was referring to the winter holidays: Starting around Black Friday, Walmart plans to have all of its store registers open during peak shopping times, according to a new Checkout Promise introduced by Mac Naughton.

All of which is a roundabout way of explaining why stores are resorting to big, broad markdowns at a seemingly strange time. But before you bite, bear in mind that next week, the sales will probably be even better on whatever merchandise hasn’t already been snatched up. The folks at dealnews anticipate that many stores will offer deeply discounted clothing during Labor Day clearance sales, sometimes with markdowns or 70% or even 80% off.

MORE: Why Parents Should Procrastinate on Back-to-School Purchases

TIME Retail

One Problem With Plus-Size Fashion: Customers Aren’t Buying It

A model walks the runway at the British Plus-size Fashion Weekend show during London Fashion Week last winter.
A model walks the runway at the British Plus-size Fashion Weekend show during London Fashion Week last winter. John Phillips—UK Press/Getty Images

The fashion industry may deserve plenty of blame, but if consumers want options, they must vote with their wallets

If plus-size fashion is a $17.5 billion industry, why are plus-size consumers still marginalized? The fashion industry takes a lot of blame, and to some extent the blame is fairly placed, but not entirely. As a plus-size fashion blogger and veteran fashion marketing consultant, I talk to women every day who are looking for more from the fashion industry. Limited variety has forced us to take a utility-vs-style approach, which is often confusing for the few trend-driven retailers navigating the space. If you’re one of the reported 100 million plus-size Americans, your own retail behavior could be more to blame than you think.

Naturally consumer behavior informs retailer decisions, but the most perplexing insight of my career was when a plus-size retailer tested shoppers, showing the same styles on size 8 and 14 models, each to a different customer segment. The size 8 model translated into more sales nearly every time, even as customers demanded on social media that the brand use plus-size women in their product photography. This was not an isolated incident; industry friends shared similar anecdotes about brand after brand. And retailers are going to continue to create online shopping experiences that lead to higher sales. For example, brands frequently reshoot a slow-selling item on a “higher converting” model (to use the industry term for earning potential) to move inventory. As essential as clothing is to our lives, fashion is first and foremost a business.

Plus-size blogger Chastity Garner recently revived a movement to pressure Target into extending the sizes of their designer collaborations on the heels of Melissa McCarthy’s claim that she was unable to find fashion designers willing to create gowns for her red carpet appearances. Although the perception of fashion traditionally has been that plus-size women are not desirable customers, Lane Bryant is stirring up the industry, collaborating with Isabel Toledo, Sophie Theallet, and most recently Lela Rose. Partnerships like these raise the profile of plus in the wider fashion industry while utilizing a brand’s established fit, patterns, and silhouettes. The success, perceived or otherwise, of these collaborations is invigorating and inviting.

But real change for plus-size fashion will come when customers make more conscious purchasing decisions. Aimee Cheshire, co-founder of Hey Gorgeous, an online retailer that carries established and independent fashion sizes 8 and up, shared, “The difference will be seen immediately when the plus consumer breaks the cycle and starts to take risks buying beautiful, high-quality pieces that she is proud to wear.”

As brands continue to tune into plus-size consumer feedback and behavior, we as a community must acknowledge that every interaction we have carries a responsibility. When The Limited shuttered ELOQUII due to a lack of resources, passionate team members used the community’s outcry as validation of what they already knew – that women want quality, current fashion at any size – and independently revived the brand. (Disclosure: ELOQUII is among the brands for whom I do consulting work.) True variety, whether that be more trend-driven styles, better fit, higher quality fabrics, model selection, or extended sizes, will come from the accumulation of our choices. Product reviews, feedback, tweets, comments, photos, and blog posts all contribute to a brand’s success. And so does consumer behavior at the cash register.

Sarah Conley is a social media marketing expert and blogger; you can find her take on plus-size fashion, beauty, and technology at styleitonline.com.

MONEY

Why Nobody Calls Target ‘Tarjhay’ Anymore

140820_EM_OneStopShop_2
Getty

After another disappointing earnings report this week for Target, it's time to take stock of what has happened to the cheap-chic retail industry darling that everybody used to call "Tarjhay."

Target cut its profit outlook on Wednesday, while reporting poor earnings and continued sluggish sales in the latest quarter. While the news was more or less expected—Target recently hired a new CEO to address its well-known struggles in the marketplace—things look as grim as ever for the all-purpose retailer that few shoppers refer to as the fancier-sounding “Tarjhay” anymore.

“Target has given investors ZERO reason to be encouraged that a global turnaround is secretly emerging,” Brian Sozzi of Belus Capital Advisors wrote, responding to Target’s latest earnings report—and rating Target stock as a sell. “At the domestic store level, merchandising issues persist, including weak assortments in apparel (notably the hot category of athletic apparel) and the over-buying of seasonal categories in light of persistent negative traffic.”

“You have seen a brand that has lost its way,” Steve Beck, founder of the management consulting firm cg42, said of Target in early August, after it was revealed Target had lost $148 million as a result of last year’s holiday season credit card data breach, according to MarketWatch. “And the end result is poor performance.”

So how exactly did Target lose its way? Why don’t shoppers flock to Target for cheap chic fashion in the numbers they used to? Target itself deserves much of the blame, but the economy and big shifts in the retail landscape also factor in.

Part of the explanation is that one-stop shopping, which not long ago was perhaps the best sales pitch in retail, is not the draw it used to be. The concept of one-stop shopping made sense for retailers on several levels. All-purpose stores like Walmart and Target expanded grocery sections in order to offer more convenience and efficiency to harried, time-crunched consumers. Many dollar store chains followed the same playbook, pumping up selections of groceries and other household staples to give shoppers reason to pop in multiple times a week, rather than every so often when they needed cheap party favors or random craft supplies.

The idea is that shoppers will come in specifically for low prices on certain items, and perhaps—in the case of Target, especially—for exclusive designer goods that can’t be found elsewhere, and that while they’re in the store, they’d also pile up impulse buys and needed household products alike into their shopping carts. This is all possible when almost everything under the sun, from spicy mustard to designer end tables, fishing poles to kids’ winter coats, is available under one store roof.

Yet at Walmart supercenters, which represent the ultimate in one-stop shopping in America, foot traffic and sales are on the decline. Sales and customer visits have likewise been falling at Target, and even smaller, nimbler dollar stores have seen growth go flat, prompting the need for a dollar store merger that’s yet to be determined.

Many factors have affected sales recently at these outlets, notably the decrease in food stamps to America’s poor, who therefore have less money to spend at Walmart and dollar stores, as well as the monumental data breach at Target, which damaged the company’s reputation among shoppers. Stagnant wages among American workers, and general uncertainty in the economy have hurt sales too. But part of the equation is that, in the age of Amazon Prime, one-click buying, and a range of online grocery shopping services that eliminate the need to browse store aisles, the appeal of one-stop shopping has diminished substantially. If saving time is a primary concern for consumers, there are far better, far quicker ways to run errands and gather essentials than hitting a gargantuan Target or Walmart location out at the mall or by the side of the highway.

When Target was the media and shopper darling nicknamed “Tarjhay” for its chic fashions and dependable household staples, the perception was that it truly delivered on its slogan “Expect more, pay less.” Target’s big problem is that the motto has rung hollow for quite some time. “The dimension of ‘expect more’ is gone,” said Amy Koo, a senior analyst at Kantar Retail. “As for ‘pay less,” well, pay less than what? Folks are savvier today. They’ll order at Amazon. It’s easy to find products that are much cheaper online, and it’s much more convenient to a shopper’s needs.”

Similarly, Walmart’s slogan (“Save money, live better”) is less resonant with shoppers today because if they were truly living better, they wouldn’t be shopping at Walmart—at least not in the physical stores themselves. Today’s consumers expect more than ever, and they want to live better by burdening themselves as infrequently as possible with chores such as shopping for groceries and other boring basics. Essentially, they expect more than even the biggest supercenter can provide—which will inevitably pale in comparison to what shoppers can find in terms of pricing and selection online.

While Walmart has mostly competed on price to keep sales from drifting away to its online and brick-and-mortar rivals, and it’s been extremely difficult to fend off dollar stores, Amazon, and the rest, Target became a phenomenon back in the day by having a pretty good track record at picking styles and designs that suited shoppers’ tastes at the time. Then the Great Recession destroyed household disposable income streams, and even cheap chic wasn’t cheap enough. There were some big mistakes—developing an online presence very late in the game, the epic debacle that was the high-price Target-Neiman Marcus partnership, a largely unsuccessful expansion into Canada—but none has been bigger or more destructive for sales in the post-recession era than Target’s concentrated appeal to a core group of wealthier free-spending shoppers, said Kantar’s Koo.

“Target is saying: We don’t care about the low-income shopper, we’re going to focus on the people who can spend more money,” said Koo. As a result, the styles and prices at Target were “suddenly not in line with many shoppers. It’s no longer tailored to meet the mass audience.”

Lately, Target has been undergoing some soul searching. One Target location in Minnesota was turned into a test store for trying out new products and services to get the reactions of customers. A new CEO, Brian Cornell, was hired, and his first promise was to listen and learn rather than make any sudden dramatic moves. This week, the company announced some stores would stay open until midnight on a trial basis through the holiday season to woo night owls and people working odd hours.

Extending store hours will help Target make the case that it’s more convenient, and more in tune with what shoppers need today. It just appears unlikely that any of Target’s tweaks will prove to be game changers and turn things around quickly for the struggling retailer. It also appears pretty much an impossibility that the “Tarjhay” nickname will resurface anytime soon.

MONEY Housing Stocks

Smart Ways to Play the Uneven Housing Recovery

Home Depot shopping cart in store aisle
Jim Young—Reuters

While shares of homebuilders remain iffy, there are other attractive stocks in the broader real estate recovery.

The U.S. housing market roared in July, but investors may want to tiptoe rather than jump into the sector.

That’s because much of the 15.7% increase in new home construction in July, the first gain in two months, came from apartment buildings, which tend to attract lower income renters and do not generate as much overall economic activity as single-family homes.

The appeal of apartments to millennials, a generation laden with student loan debt that may make it difficult to afford a down payment on a home, is one reason why some noted investors, such as DoubleLine Capital’s Jeffrey Gundlach, have said they are betting against the shares of homebuilding companies.

Fannie Mae on Monday downgraded its outlook for home sales and construction, estimating that 1.4 million single-family units will be constructed during 2014 and 2015 combined, compared with an earlier forecast of 1.6 million units.

“From an investment standpoint the homebuilder trade has been one of the most hotly anticipated trades over the past few years. Yet it continues to be nothing spectacular,” says James Liu, a global market strategist at J.P. Morgan Funds.

Fund managers, as a whole, are not taking a rosy view of the homebuilding segment. Actively managed U.S. mutual funds, on average, devote just 1.06% of their portfolio to companies such as Toll Brothers TOLL BROTHERS TOL 0.3666% and KB Home KB HOME KBH 0.9096% , according to Lipper. That was unchanged from the end of 2013.

Yet analysts and strategists say there are some attractive pockets of the housing market.

Housing-Related Retail

Phil Orlando, chief equity strategist at Federated Investors, built up positions in select retail stocks throughout the summer in expectation that a slowly improving housing market would help retailers such as Home Depot THE HOME DEPOT INC. HD 1.0702% and apparel and home fashion company TJX TJX TJX -0.2677% , parent of TJ Maxx and HomeGoods.

Both companies should benefit not just from new home construction, which accounts for approximately 8% of the housing market, but from rising home prices, which could spur homeowners to upgrade their appliances or otherwise put more money into their homes, he says.

“I’m very comfortable that when the dust settles we will see a resurgent consumer in the back-to-school season,” he says.

Home Depot on Tuesday reported a higher-than-expected 6.4% increase in same-store sales in the United States and raised its full-year forecast. Shares of the company are up nearly 8% for the year, or nearly one percentage point more than the broad S&P 500 index.

Apartment Buildings

To be sure, some investors have already done very well betting on a 2014 multi-family housing market. Exchange-traded funds focusing on residential real estate investment trusts, which typically hold apartment buildings and other multi-family developments, have been on a tear this year. The iShares Residential Real Estate Capped ETF is up 22.3% year-to-date, while the Vanguard REIT ETF is up 17.6%.

Those gains raise the possibility that shares of the companies in the multi-family sector already reflect the boom in apartment buildings and have little room to run, analysts say.

“The data remains inconclusive and uneven, says Dan Veru, chief investment officer at Palisade Capital, “and that’s the nature of the housing recovery right now.”

TIME Retail

This Is Why Walmart Needs to Worry Now

Female shopper in Wal-Mart store aisle
Patrick T. Fallon—Bloomberg via Getty Images

Consequences for the fight over dollar stores

fortunelogo-blue
This post is in partnership with Fortune, which offers the latest business and finance news. Read the article below originally published at Fortune.com.

By Phil Wahba

Wal-Mart Stores executives could not have been too happy to wake up to the news this morning that dollar store dominator Dollar General offered$9.7 billion in an all-cash deal to buy out its smaller, struggling rival Family Dollar Stores, outdoing an earlier, accepted cash-stock offer by Dollar Tree.

Dollar General is by all accounts a supremely well run retailer: it has reported 24 straight years of same-store sales growth, all the while managing a massive expansion in recent years that has won it millions of shoppers looking to save money. Moreover, its operating profit margin has also improved in the last five years despite the costs of opening thousands of new stores.

That management prowess could turn Family Dollar into a far more formidable rival than it has been on the watch of CEO Howard Levine, whose father founded the chain in 1959. Family Dollar has expanded quickly but also has run into trouble in the last two years by misreading its customers and ramping up its offering of pricier items such as beauty products. It has since backtracked, ramping up its inexpensive offerings.

“Dollar General is going to do a better job of managing those Family Dollar stores,” BB&T Capital Markets analyst Anthony Chukumba told Fortune.

For the rest of the story, please go to Fortune.com.

MONEY Shopping

Why Dollar General and Dollar Tree Both Want to Buy Family Dollar

An unusual kind of price war is rocking the world of dollar stores, with two suitors seeking to buy out the same competitor. As you might imagine, a lot of dollars are involved in the competition—nearly $10 billion.

Three weeks ago, when Dollar Tree bid to buy Family Dollar for $8.5 billion, it seemed like more or less a done deal. On Monday, however, the biggest player in dollar stores, Dollar General, offered its own bid for Family Dollar, reportedly in the neighborhood of $9.7 billion. One way or another, it looks like one giant dollar store company will emerge after one of these bids is accepted.

But why are these companies involved in this unusual breed of “price war”? And what does it say about the low end of retail that either of these colossal mergers would make sense?

The dollar store has been one of the great success stories of the recession era, with chains such as Dollar Tree, Family Dollar, and Dollar General posting record sales figures, broad expansions, and soaring stock prices over the past half-dozen or so years. Ironically, though, the merger may be a sign that the era of rampant dollar store growth is plateauing, even while many household finances remain pinched and dollar store shopping continues to be popular.

Here’s a look back at the recent evolution of the dollar store, with a particular focus on why many shoppers have come to view them as handy neighborhood general stores—and not just for cheap stuff.

The Great Recession destroyed shopper budgets. In the late ’00s, the housing bubble burst, the stock market crashed, and the jobs market took an ugly turn. All of the factors combined meant that the free-spending habits developed by consumers in the preceding years would have to be broken and replaced by new strategies to live cheaply. The much-heralded demise of conspicuous consumption spelled trouble for products like GM’s Hummer, but it also meant boom times for low-price retailers—dollar stores especially.

With little money to spend, especially if they’d cut up their credit cards as many had in a move to a cash-only existence, consumers stretched what few dollars they had at dollar stores. Consequently, dollar stores flourished. Dollar General doubled its store locations in the first decade of the millennium, for instance. According to one study, by 2011 there were more dollar stores than drugstores in the U.S.

Dollar stores pushed one-stop shopping. Shrinking American household budgets helped the rise of dollar stores. So did the broad campaign by dollar stores to push beyond the idea that they were good only for junky throwaway trinkets, off-brand canned goods, and anything else that had grown stale on the shelves of mainstream stores.

Among the goods shoppers started seeing more of at dollar stores are groceries, home decorating items, and even beer and wine. In some cases, dollar store offerings have been celebrated as surprisingly chic: A New York Times columnist wrote about his adventures decorating his apartment with dollar store purchases, while the 99-Cent Chef developed a following based on recipes that use ingredients purchased only at 99¢ Only stores. According to one survey from 2010, 18% of shoppers said that they were buying food and drinks for holiday parties at dollar stores.

Chances are, they were also buying wrapping paper and some stocking stuffers at dollar stores too. And that’s the point. When a shopper can buy fresh bread, produce, a gallon of milk, birthday cards, laundry detergent, shampoo, Christmas presents, and maybe a few bottles of cheap Chardonnay at the dollar store, there’s less need to hit the supermarket, liquor store, drugstore, or big box retailer. Dollar stores have been actively promoting themselves as one-stop shopping options with almost anything you need to buy—and with more locations and a smaller, easier, more manageable layout than, say, the nearest Walmart.

They’re not as cheap as you think. While there are undoubtedly some great bargains at dollar stores, shopping experts also advise against the purchasing of certain items there. Like, say, electronics and pots and pans. If you’re surprised that dollar stores even have such items, bear in mind that oftentimes, not everything in a dollar store is priced at $1. Dollar Tree has stuck to $1 pricing for everything in its stores, but Family Dollar and Dollar General don’t bother abiding by the $1 price rule. Among other items, the Dollar General website lists a Craig Android tablet for $78 more than $1.

Dollar stores employ the age-old strategy of drawing shoppers in with bargains and hoping that they grab some other (non-bargain) goods while they’re at it. A Family Dollar spokesperson told the New York Times columnist mentioned above that low-priced cleaning supplies were “almost like the gateway product” for dollar store shoppers. “It starts with cleaning goods,” he said, “and ends up with a bedspread.”

Or perhaps a tablet, or a bottle of wine—which will also cost more than a buck ($2.99 and up, usually, when available.) Shopping centers have been embracing dollar stores in their slight turn upscale because they’re able to attract slightly better-off clientele. But budget-conscious consumers must be careful: In many cases, dollar stores charger higher prices per unit than what’s to be found at Walmart, Target, or a warehouse club such as Costco. It’s just that dollar stores seem like bargains because the items are low quality or they come in exceptionally small sizes. A few weeks ago, a controversy was stirred up when Dollar General offered a special on diapers in “all counts and sizes” that Walmart and Target failed to match, even though they have price matching policies. Why? Because Walmart and Target offer diapers in far bigger sizes than what’s available at dollar stores.

Speaking of Walmart and Target, they’ve slowly been rolling out a counteroffensive to dollar stores by way of smaller retail locations, often in the densely populated urban hubs where dollar stores are ubiquitous. Supermarkets have entered the battle too, with stores that are half the size of the usual grocery shop. The smaller size means these stores can easily fit in a strip mall or city block, making them a lot more convenient and practical for millions of shoppers.

So now we have a situation in which dollar stores do what Walmart and Target do best by stocking groceries, electronics, and a little bit of everything, and Walmart, Target, and grocery chains do what dollar stores do best by offering small, convenient locations (and more of them) and many bargain-priced goods. The retail lines are blurring. Every player wants to be the convenient, one-stop shopping destination for shoppers, and it has gotten much tougher for a dollar store or any retailer to stand out. When it’s hard to differentiate yourself in the marketplace, and it’s hard to grow, it’s probably time to combine with someone in the same boat to help you compete.

That’s what seems to be why both Dollar Tree and Dollar General want to buy Family Dollar. In today’s ultra-competitive marketplace, a merger represents their best chance to grow, or at least survive.

TIME Retail

A Target Near You Will Now Be Open Until Midnight

The chain is aiming to be more convenient for late-night shoppers as it steps up the fight against online retailers

Target is keeping its doors open until midnight at more than half of its U.S. stores in an effort to attract night-owl shoppers after a challenging year.

The chain’s 1,800 U.S. stores typically closed at 10 p.m. on weekdays and Saturdays, and at 9 p.m. on Sundays, but the new hours will keep many stores open until midnight on weekdays, the Wall Street Journal reports.

Target is betting that the 0.3% of people that a Labor Department survey found shop at 10 p.m. will be attracted to its open locations, and give the chain an advantage in its battle against online retailers.

The company has been cutting prices to woo customers, and recently cut its outlook for the year as it loses traffic and U.S. same-store sales.

Walmart keeps 70% of its stores open 24 hours a day.

[WSJ]

 

MONEY Health Care

WATCH: Walmart Wants to Be Your Doctor

Walmart is testing in-store health clinics in select parts of Texas and South Carolina.

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