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I had the pleasure of spending the last two weeks in beautiful Italy, and was able to speak with some locals about their shopping habits.  The conclusion was that they shop on more of a day-to-day basis as opposed to buying for longer periods.  This includes grocery items (and if I lived in Italy I would shop daily because they have the most wonderful famers markets with the freshest meats, fruits, vegetables, oils, nuts, etc.), as well as non-grocery items (such as shopping at Coin, a big Italian department store, more frequently).

Garlic hanging in a market in Florence, Italy

I found this interesting because the Italian economy is in a recession, with GDP dropping 0.2% from the second to the third quarter this year.  Despite the recession, consumer spending remains in tact, and most retailers remain profitable.  Smaller retailers, such as local jewelers, specialty markets, local tailors, are experiencing the effects of the recession as consumers prefer the larger retailers so the smaller players struggle to stay afloat.  One day on my trip, I came across a stitching store.  It was tiny, maybe the size of a large closet, and hung on the walls were aprons, bibs, placemats, all with hand stitching of either names or patterns.  There was an older woman sitting at a sewing machine working a way so I asked her (in my broken Italian) how business was and if she sells a lot.  She said it’s slowed down significantly in the last year because many people, especially younger people, don’t want stitched items.  She said many days in the winter (when tourism is down) she doesn’t even open her shop because it’s too expensive to operate when she’s not making any sales.  Now compare this to the aforementioned department store, Coin.  Coin has 81 stores across Italy, and has had more than 30 million visitors, with over 400,000 Coincard holders (credit card for the store).  Every time I walked by a Coin store, it was always crowded with people.  From my observation, Coin is similar in fashion and price to Macy’s department store here.

Coin Department Store

Despite a difficult economy, Italian shopping is plentiful.  I am very excited I was able to experience this first hand as a shopper myself, as well as discussing with shoppers and retailers while I was in Italy.  My findings were very interesting to me, and I’m glad I am able to share them through this blog.

Arrivederci!

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“The principles of cricket are very effective in business,” says Arif Habib, 59. “The goal is to stay at the wicket, hit the right balls, leave the balls that don’t quite work, and keep an eye on the scoreboard. I feel that my childhood association with cricket has contributed to my success.”

As a small business owner in Pakistan, Habib made the right investments and grew his business to a 13-company small empire that has invested $2 billion across the various industries he’s involved in.  So does this mean that the light is gleaming at the end of the tunnel for small business?  A recent poll in Gallup says that SBO are still feeling uneasy.  So uneasy that in the last 12 months and in expectations for the next year, confidence rates have dropped by 28 points as more businesses reported declining revenues, payrolls, and capital investment.

What is contributing to the lack in small business upswing despite the housing market recovery?  For Pakistan, “in 2008 regulators imposed trading limits on stocks during the global financial crisis. While the curbs prevented the KSE100 from falling for four months, the index fell 48 percent in less than two months after they were lifted. Habib’s stock market clients defaulted on their obligations.”  Another factor might be the political shifts and regime changes that many countries are witnessing.

One factor could be the encouragement by governments for investment in small business.  Congress contemplates the renewal of EB-5, “the decades-old federal program that makes green cards available to people who invest a minimum of $500,000 in U.S. companies that create or preserve at least 10 jobs in the country.”  However, if the program is not renewed, does that discourage countries from investing in one another?

In France, a program called auto-entrpreneur, “to help entrepreneurs cut through the traditionally complicated bureaucratic process of starting a small business – as well as easing up on the heavy taxes and social charges usually required.”  The program is successful so far and “France is on track to see 500,000 new small businesses launched compared to 328,000 in 2008 and 321,000 in 2007.”  If other countries took note and encouraged entrepreneurs to start up their own business, the economy could further be stimulated by the purchasing and job opportunities.

Another option is connecting across national borders to build new businesses.  Frank Lavin is using his connections from his stint as a U.S. Ambassador to educate SBO on how to enter international markets.  He’s also using angel investors and partnerships with state governments to create grants for SBO manufacturers.

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Dubai, Home to World’s Largest Mall, Plans Bigger One 

Bigger is hopefully better for the economy in Dubai.  Not only is Dubai planning going big on a retail level, they are going big on developing unheard of projects throughout the city.

Dubai’s ruler announced plans for a development boasting the world’s biggest shopping mall and gardens larger than London’s Hyde Park, as the emirate revives property projects on hold since the global financial crisis. (source)  This mall is expected to be the “mall of the world” that will cater to around 80 million shoppers a year.  Let me tell you, I have been to the Mall of America in Minnesota numerous times and have come out overwhelmed, tired, and excited all at the same time so I am interested to see how they expect shoppers to cover the entire mall in a day or is the point for them not to be able to cover the mall in one day so they have to come back?

Emaar Properties PJSC (EMAAR), the United Arab Emirates’ largest developer by market value, and Dubai Holding LLC will together build a district called “Mohammed Bin Rashid City,” named after the Persian Gulf emirate’s ruler. The project near central Dubai is to include 100 hotels, residential areas and green spaces 30 percent bigger than Hyde Park, according to an e- mailed statement on Monday. (source)

Dubai already has bragging rights to the biggest emporium by total area, Dubai Mall, which sprawls opposite the planet’s tallest skyscraper, Burj Khalifa. Between these two Emaar structures is a man-made lake where the world’s largest dancing fountain shoots water 50 stories high. (source)

These efforts further demonstrate how Dubai, along with many other countries around the world is trying to stimulate its economy through new and exciting retail developments.  Dubai currently has many projects that have been suspended due to the global credit crisis as well as the dramatic decrease in property values.   “Builders in the U.A.E. have aborted about $757 billion of projects since the crisis, Citigroup said in a report on Oct. 16. Dubai is the country’s second-largest emirate, after Abu Dhabi.” Another example of new concept of development is “Desert Venice” by Meydan City Corporation.  They are planning on building two developments, one being a low-rise building with lagoons and the other a higher-rise building that consists of nine swimming pools and “sky gardens.” Another concept Meydan City Corp. just got approval for is construction of a canal from the Business Bay commercial area to the ocean. An over-the-top project in the works is a replica of the Taj Mahal that is planned to be four times the size of the original.

Dubai racked up $113 billion of debt transforming itself into a tourism and commercial hub. The emirate has $7 billion of debt maturating next year and $32 billion in 2014, according to a Bank of America Merrill Lynch report Oct. 20. A construction boom in the emirate, where developers began selling property to foreigners in 2002, led to several large projects including the world’s tallest tower and man-made islands off the coast. Work on two of three palm-shaped residential islands was interrupted, as the bonanza turned to a bust in the third quarter of 2008. (source)

The overall theme and ambition in Dubai is “large” and that is why all of the projects in the making are going to be larger than life in size, scale, offerings and ideas.  The hope is that the larger the project, the larger the return.

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Black Friday, Small Business Saturday, and Cyber Monday are here once again. On a weekend that used to be consumed by family, football and the Macy’s Day Parade is now overwhelmingly focused on shopping.  Discounts, deals and price matching has become the competitive sport that requires early bedtimes for turkey stuffers.

It’s a Catch-22 for America.  You can be thankful and restful or you can help stimulate the economy.  So who does America think is the best retailer for Black Friday?  Amazon.com.  With brick-and-mortar stores grasping for straws to compete on value, the internet retailer has dominated the scales with a full 10 points above the second-ranked Target as determined by the BrandIndex report from YouGov.  Trailing are WalMart, Kohl’s, JCPenney, Old Navy, Ebay, Best Buy, Marshall’s and Sears, respectively.  Other retailers that possess consumer value are upscale brands such as Banana Republic, Saks, Neiman Marcus, and J. Crew.  Last year, retail records were broken as sales soared over 6% from the previous year.

Major corporations and internet retailers are not the only participants for the weekend.  Small Businesses are also looking to ramp up revenue with their own holiday designated by American Express: Small Business Saturday.  A day dedicated for shopping small and helping out the little man.  Stores are bringing in local artisans to create a festival feel and creating their own discount deals to encourage shoppers.  American Express has agreements with various retailers to provide a $25 rebate to cardholders when they purchase from a small business.

As many small business owners have noted, Black Friday does not help them because the shoppers are at the malls and major stores.  However, Small Business Saturday provides a yearlong impact versus a one-day uptick in their revenue.  While the dedicated day encourages consumers to shop small, it also drives visibility for the businesses that could provide new returning customers.

Shopping is just one half of the crazy pie.  Marketing, the other and more specifically, Twitter. Hashtags are the new wave of discount promotion.  Gone are the days of commercials, email blasts, and advertising circulars.  While hungry shoppers are searching online for the best deals, they are also seeking out their routes to the market via discount codes.  Retailers are taking their message to where the people are.  Instead of trying to make a campaign go viral like last year’s Kohl’s attempt at remixing Rebecca Black’s “Friday”, the head honchos are realizing that injecting their campaigns into mainstream is the mode of success.  American Express has not only designated a day for small businesses, but their hashtag for Small Business Saturday is effectively #SmallBizSat.  Instead of dumping the day on the end of a trend like #BlackFriday, other retailers are creating their own topic that defines their specific campaign such as Ben & Jerry’s #CaptureEuphoria or Starbucks #coffeepassion.  Even Mashable is jumping on the bandwagon with their #GivingTuesday to encourage internet users to give back to the local community.

After this blog entry was posted, Forbes.com and HootSuite analyzed the major retailers online and found that Kohl’s won the Twitter wars for Black Friday with a high positive sentiment rating and bountiful interaction with their customers.  WalMart had the most mentions, however, had only a 59% positive sentiment rating.

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For decades, diamonds have been the most coveted gem in the world.  Now, there is a new kid on the block.  Colored gems such as emeralds, rubies, and sapphires are gaining in popularity and giving the diamond sales a run for their money.  Recording losses for multiple quarters in a row, diamonds have not been dominating their market share as they used to.

However, with the global economic decline, lovers down on their luck are more inclined to invest in colored gems as opposed to the flawless diamond.  Another factor that has driven colored gem sales is the rise in celebrity showcasing of the baubles.  In 1953, Marilyn Monroe glistened in Gentlemen Prefer Blondes, and placed diamonds on the map as a symbol of luxury, opulence, and desire.  Now Gemfields CEO is looking for that same A-list power to be the new face of emeralds and give colored gems the same fame as the more pricey stones.  The Duchess of Cambridge, Beyonce, and Halle Berry are setting trends across the globe with their engagement rings.

Another major issue that has come to benefit the colored gem industry is the corruption of the diamond industry with DeBeers claiming guilty to price fixing.  The current chaos that is dictating price and supply has allowed colored gems to take more of the piece of the revenue pie.  There is less spending on diamonds and more on gemstones.

Even if Hollywood cannot formally endorse colored gems, they are still indirectly encouraging the public to take the road historically less traveled.

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Colombian Manufacturers Meet Up With West Coast Apparel Makers

On May 15th, a new free-trade agreement went into effect between United States and Colombia.  With the new free-trade agreement, all apparel and textiles made of regional yarns or short-supply fabric are duty free when shipped between the two countries, which is a considerable cost savings when you consider that synthetic apparel is subject to a 32 percent tariff. For years, Colombia was a member of the Andean Trade Promotion and Drug Eradication Act, a trade-preference system that gave Colombia, Peru, Ecuador and Bolivia duty-free status for most apparel traded between the United States and the region. But recently, the ATPDEA program had to be renewed every year by Congress, which sometimes was late in doing so. (Source)

Proexport Columbia organized in a sense a “matchmaking event” at the Langham Hotel in Pasadena, California over the November 8th weekend.  There were around 105 textile and apparel companies from Columbia that met with around 78 U.S. sourcing managers.  Buyers included companies like Target, Calvin Klein, and Perry Ellis to name a few. Proexport Columbia’s main purpose of the event was to educate U.S. manufacturers about how the US and Colombia could take advantage of the new free-trade agreement.  Buyers also took advantage of the event by exploring their options to produce more goods in Colombia to as well as expanding their sourcing venues. For example, Lindsay Vincent, director of sourcing and development for Simms Fishing, a company in Bozeman, Mont., that makes fishing gear and clothing, was seeking new factories to make some of the company’s knit sportswear as well as find companies that do sublimation. (Source)

According the to article, the buyers would stay at one table and around every 40 minutes, they would meet with a different textile, apparel or accessories company.  The idea of “speed-dating” is not just limited to the world of romantic relationships, it is being utilized at all forms of relationships now; personal to business connections.  In hopes to boost exports, Proexport Columbia is hosting events like this all over the country now.  Many countries and companies should adopt this idea of “matchmaking” not only to educate each other on possible business ventures, but to also explore new retail relationships with other countries.

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What is international retail?
This is an internatnal retailing blog, so I think it’s important to discuss what international retailing is.

International trade and commerce have existed for centuries and have played a large role in history, such as the way commodities likew spicesd were traded overseas via ship. However international retailing is a relatively new idea that has come to fruuition over the last few decades. The economic boom in several countries, coupled with globalization have given way to organizations looking at setting up retailing across borders. For exmaple, Ikea, a Swedish based company, opened in 1953 with one store and penetrated the Swiss border in 1963 when the company opened stores in Norway and Denmark. Now, Ikea has more than 260 stores in 25 countries around the world. This is just one example of international retailing. Since then, there has been a tremendous advance in technology that has helped facilitate international retailing. The Internet and multimedia has further changed the dimensions as far as international retailing is concerned.

According to the Wharton School of Business at the University of Pennsylvania, “the international retail market includes all buyers and sellers, regardless of their location throughout the world. Retail sales are no longer separated by different currencies, governmental or geographic borders, distance or language. Any buyer is reachable by any seller and any buyer is a potential customer for any seller, as long as the seller knows how to navigate within today’s global marketplace. The key success factors in international retailing are an e-commerce web presence, the accumulation of demographic data on Web users, and the maximization of global sourcing opportunities.” (Source.)

So who is an international retailer? As previously mentioned, open example is Ikea. Some other international retailers that come to mind include Wal-Mart, Gap, Gucci, Apple, and more. Today, many retailers penetrate country borders, and with Internet access, almost any company becomes “international.”

In today’s world, The adjective “international” is really embedded in the way we do business, so instead of calling it international retailing, consider calling it simply retailing.

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The World Health Organization is taking a stand on smoking.  More than just a stand, they are crusading for the health of all Australians.  According to Bloomberg Businessweek, mandatory picture warnings were first introduced in Canada in 2001.  Since then, 47 countries , 10 of which are the world’s largest tobacco markets, have added the pictorals. What started as the size of the postage stamp is now mandated in the country down under to consume 75% of the front panel, 90% of the back panel, and not reveal any branding.  (The images of the packages are too graphic to post.  You can Google “Australian cigarette packaging” and see more than what you probably wanted to see.)

Health Minister Tanya Plibersek said on television, “Young people are the ones most affected by the packaging and by the advertising, and no parent wants their kid to start smoking.”  Futhermore, the government reports a social and economic cost of about A$32 billion a year.  So how does this affect tobacco companies?

Currently, an average price tag of a box of cigarettes is $16.  In 2010, only 16.4% of men and 13.9% of women smoke in Australia.  Retail world reports an annual spending average of $4 billion in Australia and it is the 2nd highest product category as of 2007.  The previous 5 years have been steady, if not increasingly, profitable.  However, with the new regulations major tobacco wholly-owned subsidiaries of British American Tobacco, Philip Morris, Imperial Tobacco, and Japan Tobacco International.  Appeals have been launched by Honduras, Ukraine, and the Dominican Republic “claiming the law restricts the tobacco trade” (Businessweek).

CNN foresees the new restrictions as costing Australia more money from the black market in addition to the current upkeep of $1 billion.  In an average year, approximately $9.9 billion is spent in cigarette marketing and advertising.  In 2010, Philip Morris alone grossed $67.7 million in revenue and profits.  All of these numbers essentially mean the economic impact of reducing consumption of tobacco will not only cause repercussions to the industry, but also negatively affect the countries that export tobacco as a main entry to the world market.

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It’s sexy.  It’s sleek.  It’s the most talked about thing on the market.  Yep, you guessed it…I’m talking about the new iPhone 5.

Apple released the iPhone 5 on Friday September 21, 2012 worldwide on a rollout basis beginning in Austrailia, followed by Japan, Singapore, Hong Kong, France, Germany, and the United Kingdom, ending in Canada and the United States.  In the first three days, Apple sold more than 5 million phones, a 25% increase from the initial three days for the iPhone 4S.

Despite this significant increase in sales, the number fell short of Apple’s estimates of 6-6.5M sold.  It’s interesting to note, however, that this 5 million iPhones sold does not include those purchased online that are in transit, which are estimated to be in the millions.  So it’s very possible for Apple to have hit those numbers or even surpassed them.

On September 28, Apple will make this iPhone 5 available in an additional 22 countries, and more than 100 countries by the end of the year.  With the additional countries comes more demand.  After the launch, a majority of retail stores were sold out within the first 24 hours of the iPhone 5 being on the market.  This can be attributed to two factors:  1.  Apple underestimated their sales, and 2.  There was a significantly higher demand than what Apple anticipated.  The two go hand in hand.  Consequently, Apple has pushed back the expected ship date of their online sales and are trying to supply their retail stores with appropriate inventory.  With Apple trying to rectify the current supply/demand situation (i.e. meet demand), the Company should be developing strategies to preempt this if it were to occur when they enter the 100 additional countries by the end of the year.  If I put my investor cap on, my concern would be just that…how can they meet demand if they are struggling now?  Apple stock fell 1.33% after disappointing opening weekend sales (see below Friday 9/21-the iPhone 5 launch vs. Monday 9/24-market open post weekend):

How can I, along with any investor, trust that Apple can build a strategy to meet this when entering more and more markets?  How do I know the stock won’t fall further?

Well, it gives me comfort when I look at Apple’s market value compared to their competitors.

Apple’s market value is more than 63x higher than Nokia.  Analysts are estimating that if Apple stays on its current trajectory, it could become the first company to be valued at $1 trillion by 2015.

Apple certainly is a globally recognized and coveted brand.  Their products are sleek, sexy, and innovative, which leads to their ability to hit these record breaking sales with every new product.  As an avid Apple consumer, I look forward to seeing where Apple takes us in the future.

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