ETD: 850 Technology ROI; Power of Women; Americans Demand the
Luxury of Leisure
E-Tailer's Digest
etd_post at gapent.com
Tue Jan 11 12:50:19 GMT 2005
E-Tailer's Digest --- Everything for the Retailer
Issue #0850 January 11, 2005
George Matyjewicz, Moderator mailto:georgem at gapent.com
Published by: GAP Enterprises, Ltd. http://www.etailersdigest.com
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CONTENTS
[1] Greetings
[2] Technology ROI
[3] Power of Women
[4] Americans Demand the Luxury of Leisure
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[1] Greetings.
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Hi All:
If you are considering a new IT system, consider your ROI, especially with
intangibles. There are four areas where you can see significant savings,
especially if you control your business.
We all know the power of women. Now e-tailers now know their power.
List member Pam Danziger has more information on the leisure luxury
market. A great place to be if you are a retailer/etailer.
What are your goals for this year? Have you broken those goals down to
this month, and this week to measure results?
Tell us about your business, which will remain for posterity at
our "Members: Who Are You?" site. This is a courtesy to our members who
contribute to our forum, and not merely a way to advertise for free.
Anything to do with the retail world, i.e., supplier, retailer, consulting,
etc. http://etailersdigest.com/resources/members/index.htm And we have a
form there for you to tell us about you. As I said when I first proposed
this idea, we have "known" each other for a long time, yet we often don't
know anything about each other. So, tell us who you are and what you do.
Now, let's get to everything for the retailer.
Sincerely
George Matyjewicz, PhD
Chief Global Strategist, GAP Enterprises, Ltd.
mailto:georgem at gapent.com
http://www.etailersdigest.com
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[2] Technology ROI
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With the purchase of a new computer system, cost savings can be realized in
various areas - both tangible and intangible. Tangible cost savings are
direct replacement of costs, whereas intangible savings are as a result of
improved conditions in your business.
Intangible cost savings are often overlooked, and can be the most
significant savings. As a result of a new system, you should improve your
operations, which means you should realize savings - either one-time or
on-going. Some intangibles include:
o Improved inventory turns
o Reduction of markdowns
o Reduction of shrinkage
o Improved gross margins
o Improved sales
o Improved vendor discounts and terms
o More productive employees
For presentation purposes, let us assume your annual sales are $10 million
and that your statistics are like most companies. Four areas of specific
savings for your company include:
1. Inventory Turns:
Assuming you are turning your inventory 2 1/2 now times a year (industry
average), which is calculated by dividing your annual sales by your average
inventory. With the implementation of a new system, you should see an
improvement to 3 turns, which would result in the following savings:
Current average inventory $4,000,000
Reduced average inventory $3,333,333
Savings $666,667
Inventory carrying costs 10%
Annual savings $6,667
2. Markdowns:
Assuming your present markdowns are like the industry average of 19 % of
sales or $1,900,000. With a new system, you should see a 1% annual
reduction in markdowns for an annual savings of $10,000.
3. Shrinkage or loss:
Assuming your current annual shrinkage is like the industry average of 3
1/2 % of annual sales or $350,000 now. You should obtain a 1/2 %
improvement in annual shrinkage using a new system. At your current rate
of sales, you should see an annual reduction of $5,000.
4. Improved Gross Margin:
Assuming your present gross margin is 23% of sales. You should realize a
1% improvement in gross margin, which should yield $10,000 savings to your
bottom line.
In these four areas of intangible cost savings, you should see $76,667
annual savings. Divide that number into the cost of the technology and you
will have your Return On Investment (ROI).
George Matyjewicz
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[3] Power of Women
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Women's marketplace dominance is clear. Women are responsible for 83
percent of all consumer purchases, according to Marty Barletta, author of
Marketing to Women. Specifically, women are responsible for 94 percent of
home furnishing decisions, 92 percent of vacation decisions and 91 percent
of home buying decisions.
Analysts predicted that online shopping would increase 20 percent over the
last holiday season. Don't they know that you should never underestimate
the (spending) power of a woman?
There is no denying that female shoppers are flexing a lot more monetary
muscle on the Internet these days. E-commerce experts are reporting that
this demographic was a major factor in the 2004 online holiday shopping
season that soared to a 25 percent year-over-year increase to total US$23
billion in revenues.
Details at...
http://www.ecommercetimes.com/story/39429.html
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[4] Americans Demand the Luxury of Leisure
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American’s have an insatiable appetite for entertainment and recreation
which resulted in $705.0 billion in spending in 2004, an increase of 6.8
percent over 2003, according to a new Unity Marketing study Entertainment
and Recreational Products Report, 2005, on consumers’ entertainment and
recreational product purchases.
That makes the business of entertainment and recreation among the fastest
growing sectors in the consumer economy. By comparison, Americans spend
more to be entertained that the entire GNP of Canada. Powered by a feeling
of entitlement, Americans bring a unique achievement orientation to how we
‘recreate.’ We want to accomplish something meaningful and measurable
through our leisure pursuits.”
For more Americans, particularly affluent consumers who have already
achieved a high level of material well being, the goal of leisure and
entertainment is to reach greater self-actualization. Psychologist Abraham
Maslow placed ‘self-actualization’ at the pinnacle of the hierarchy of
human needs, to be satisfied only after the basic needs for food, clothing
and shelter, safety, belonging, and esteem. According to Maslow,
self-actualization refers to “man’s desire for fulfillment
to become
everything that one is capable of becoming.
Marketers and retailers that sell entertainment and recreation products
primarily serve consumers’ self-actualization needs. Through the use of
these products consumers gain a heightened sense of self and psychological
satisfaction that is so vital in today’s overstressed lifestyle.
Consumer spending on leisure and recreation will continue to grow in the
next decade with the prospects for a new Leisure-Time Age to emerge around
2015 as the current Information Age wanes. Experiential industries will
prosper in the future, including hospitality, recreation, entertainment,
travel and tourism and other diversionary experiences and pastimes, as
consumers seek new levels of psychological fulfillment,.
Typical American spends almost $2,000 on entertainment goods
In the latest survey among 1,000 U.S. consumers, books, magazines and
newsletters (purchased by 74 percent of shoppers in the past year),
prerecorded media (62 percent), and toys, dolls and games (50 percent) were
the most widely purchased categories among a total of 11 entertainment and
recreational products.
Total consumer spending on these purchases was $1,834 on average. For
certain category of goods, notably audio and stereo equipment, books and
magazines, computers and software for home, musical instruments and
sporting goods and exercise equipment, shoppers favor the extra service
they receive at specialty stores. But for everything else, such as
prerecorded media, toys, dolls and games, photography equipment and
supplies, pet accessories, TV, radios, DVD and VCR players and craft
supplies, consumers shop mass merchants and discount department
stores first.
‘Fantasy Fred’ and ‘Frugal Francine’ are most affluent
Unity’s research identified five psychographic market segments
distinguished by different emotional needs for entertainment. For example,
‘Fantasy Fred’ finds meaning in his life by connecting with other places
and times. This consumer, a highly educated, married baby-boomer with a
$75k plus income, uses entertainment to expand his mind through new ideas
and to express different aspects of his personality.
‘Entertainment Alex’ is the most active buyer of entertainment media and
spends the most in the category. But Alex’s lower income and younger age
means he spends a significant amount of his disposable income in the category.
‘Frugal Francine’ finds entertainment in shopping for bargains, and is more
involved in buying entertainment media than using it. An active consumer,
Frances is more likely to be an upper-income married woman aged 25-to-54
years old with children.
These three segments make up two-thirds of the total entertainment product
consumer market and represent the best prospects for marketers in the
future. Through this study marketers will be empowered with new
psychological insights about their consumers that will bring them more success.
The report can be ordered directly from this link:
http://www.unitymarketingonline.com/reports2/entertainment/
Pam Danziger
President
Unity Marketing, Inc.
717-336-1600
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