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Updated: 7 months 1 week ago

Dow Slides Again; Longest Loss Streak in Six Weeks

Tue, 12/03/2013 - 3:37pm
U.S. stocks fell Tuesday. After a period of all-time highs before Thanksgiving weekend, both the S&P 500 and the Dow Jones Industrial Average extended losses into a third session. The Nasdaq Composite also fell. “We’ve been at all-time highs, and people want to protect themselves as we head into year-end,” JJ Kinahan, chief strategist at TD Ameritrade told CNBC. [CNBC]
Categories: Financial News

Here’s How Much Money Top Musicians Are Making on Spotify

Tue, 12/03/2013 - 1:00pm
Spotify, the on-demand music streaming service, has been under increasing fire from musicians who say it’s hurting the record industry. Radiohead frontman Thom Yorke pulled some of his solo work from the service earlier this year and said that the streaming service hardly pays new artists. Other artists such as Aimee Mann and the Black Keys have purposefully kept new releases off of the service for fear it would cannibalize sales. Though Spotify has long said it is  beneficial to artists, musicians remain skeptical. Now the startup is making an aggressive push to prove that it can make artists money. The company has launched a new Spotify Artists page which explains its business model and how royalties are distributed in extreme detail. Spotify has paid out $500 million in royalties to rights holders so far in 2013 and $1 billion total since 2009, about 70 percent of its total revenue. These rights holders, typically music labels and publishers, then pay artists a portion of the royalties, an amount that varies depending on individual record contracts. Spotify doesn’t pay on a “per song stream” model, exactly: the total royalty pie is split among all rights holders based on the percentage of total Spotify streams their songs garner. But the company estimates that the average song generates between $0.006 and $0.0084 per stream in royalties. This may seem like a pittance, but Spotify’s data shows that the numbers add up, at least for big artists. The company says the biggest album on the service each month typically generates more than $400,000 in royalties. A “current global star,” who Spotify chose not to disclose, generated more than $3 million in royalty payments between August 2012 and July 2013. Spotify expects these figures to increase dramatically as its revenue increases but the number of artists splitting the money remains more or less the same. (MORE: Radiohead’s Thom Yorke Removes Music From Spotify) Some back-of-the-napkin math using Spotify’s listenership data and these royalty figures provides a sense for how much money the hottest songs in music are
Categories: Financial News

The 4 Most-Wanted Shoppers This Holiday Season

Tue, 12/03/2013 - 12:16pm
Retailers tend to want one main type of customer: the kind with money and the willingness to spend. But some consumers are more desirable for retailers than others. Here are four kinds of shoppers that retailers especially want to attract this holiday season: Gen X The millennial generation gets a lot of attention from retailers. Americans in the mid-teens to late 20s represent the country’s largest demographic, so it’s understandable that retailers want to attract millennials now, with the hope of turning them into lifelong customers. It’s been estimated that by 2020, millennials will account for 30% of all retail sales. That’s why Macy’s, among others, are rolling out more youth-oriented lines of apparel and other goods, dubbed “Millennial merchandise” according to the Cincinnati Enquirer. Sure, these are plays to net sales right now (millennials have reputations for splurging and buying impulsively), but more importantly they’re strategies to build customer loyalty for the future. For the current season, however, relatively few young Americans have the money to go hog wild on holiday purchases (thanks a lot, economy and lame job market). According to the National Retail Federation, the four generations that came before the millennials will each spend substantially more, on average, than Americans in their teens and 20s. While millennials are expected to spend an average of $601 on holiday gifts, cards, decorations, food, and such, the so-called silent generation will spend $688 and baby boomers will drop $738. And the biggest spending demographic of all is anticipated to be Gen X, with an average of $847 in purchases for the 2013 season. Guys The assumptions that women tend to enjoy shopping and spend more time shopping than men may be true. But data from a new ESPN Research and Analytics study (summed up well by AdAge indicates that men spend more money than women during the holidays. Overall, guys spend 39% more than women on holiday purchases. Researchers said that men tend to be less price sensitive (“because they want to get it done and please the person”
Categories: Financial News

23andMe Faces Class-Action Suit

Tue, 12/03/2013 - 12:02pm
A California woman filed a class action suit against 23andMe last week, days after the FDA released a scathing open letter criticizing the DNA-testing service for operating without approval. Lisa Casey’s complaint, filed in a California court, is seeking at least $5 million in damages from 23andMe for allegedly making misleading claims about the tests’ ability to provide genetic information about conditions like breast cancer and diabetes, Gigaom reports. The complaint alleges the test results are “not supported by any scientific evidence.” The damages sought includes a $99 refund for “tens or hundreds of thousands” of people who purchased the test. The FDA requested the Google-backed firm stop marketing and selling its product last month unless it can provide evidence that the results are reliable. [Gigaom]
Categories: Financial News

Tesla Shares Spike In Trading

Tue, 12/03/2013 - 9:51am
Stock in the electric car company Tesla was up more than 10 percent on Tuesday morning to more than $135 a share, boosted by news that the German Federal Motor Transport Authority has given its approval to the company’s flagship vehicle, the Model S. The German regulatory body found that no manufacturing defects had been responsible for recent incidents in which the Model S had caught fire, Business Insider reports. The stock was also bolstered by Morgan Stanley naming Tesla its top pick among 26 U.S. automakers.
Categories: Financial News

Walmart’s Black Friday Bestseller Cost 29 Cents

Tue, 12/03/2013 - 8:18am
The hottest item from Walmart’s Black Friday sales this year wasn’t a flashy new game console, a sleek new television, or the must-have toy or the season. It was a 29-cent washcloth. The world’s biggest retailer announced it sold 2.8 million towels — $1.74 for a bath towel or a six-pack of washcloths — during this year’s holiday shopping bonanza, which started earlier than over with stores opening at 6 p.m. on Thanksgiving Day. That’s more than the 300,000 bicycles or 2 million televisions sold, and 1 million more towels than the company sold in last year’s Black Friday sales. “We’ve seen at-home items like towels and sheets and even Rubbermaid Tupperware become popular on Black Friday at our stores,” a Walmart spokesperson told NBC News. “A lot of people are either hosting guests for the weekend or preparing for guests for the holiday season.” [NBC News]
Categories: Financial News

5 Ways a Few Hundred Dollars Will Change Your Life

Tue, 12/03/2013 - 7:46am
Consumers appear determined to minimize financial strain this holiday season. The biggest retailer weekend of the year just passed with the average shopper spending an estimated $407, down 3.9% from last year. Such frugality and, dare I say it—common sense—are rarely evident in December. Some experts believe a spending binge will yet develop as the season advances. With that in mind, now may be the perfect time to consider your bigger financial goals—before you give in to the excessive Santa impulse. Here are some ideas for making an extra few hundred dollars work for you in the long run, not against you in the next billing cycle: Boost retirement savings Rather than bust your budget on gifts why not add to your 401(k) plan or IRA? Most people won’t be able to contribute the 401(k) max: $17,500 (plus another $5,500 if over the age of 50). But even a few hundred dollars that compounds over many years is significant, especially if it comes with a company match. Boosting pre-tax contributions before year end will also cut your 2013 tax bill. Start an emergency fund Putting away as little as $500—about what you’d spend on a new game console or other electronic toy—can make a big difference. Ultimately, you want six months worth of fixed expenses in a secure account to be tapped only for emergencies. But you have to start somewhere, and while a few hundred dollars won’t help a lot if you lose your job it will more than cover something like a major appliance breakdown without disturbing your longer term financial plans. Put your raise to work for your future Workers who get information about annual bonuses or pay raises at this time of year may be especially tempted to splurge on extra gifts. But using that incremental pay to boost your 401(k) savings by even a small amount can be worth many thousands of dollars 10, 20 or 30 years from now—after compound growth has worked its magic. Make the commitment before you head to the mall instead.
Categories: Financial News

The Downside of Corporate Social Responsibility

Tue, 12/03/2013 - 7:37am
The road to hell, they say, is paved with good intentions.  So too, apparently, is the road to corporate wrongdoing. At least that’s the conclusion to be drawn from a new study that asks what happens when companies (and their CEOs) engage in socially responsible behavior (and posturing). Short answer: Firms that are focused on pursuing a socially responsible agenda are more likely than other businesses to behave in a socially irresponsible ways. Longer answer: This tendency is even more pronounced when bosses are vocal about their inclinations to do the right thing.The study, by Elaine Wong of the UC-Riverside School of Business Administration and Margaret Ormiston of the London Business School, essentially merges two subjects that have been heavily examined in recent years: corporate social responsibility (CSR), e.g., when a for-profit company willingly acts in a way that benefits interests beyond those of the firm and its owners; and self licensing, a.k.a. moral licensing, or the non-conscious way in which behaving and/or thinking morally frees people to worry less about the consequences of being immoral in the future. (In other words, being good or simply talking about being good leads many individuals to subsequently be bad.) But in “License to Ill: The Effects of Corporate Social Responsibility and CEO Moral Identity on Corporate Irresponsibility,” Wong and Ormiston explore a new idea: They analyzed Fortune 500  companies to determine if prior CSR correlates meaningfully to subsequent corporate social irresponsibility (CSiR). Specifically, they winnowed down the 2002 Fortune 500 list to 49 companies for which they could assemble sufficient records of CSR-related activity and confidently develop a psychological profile of the man or woman in charge. (They explain their thoughtful methodology in the paper, which was published in the winter issue of  the journal Personnel Psychology.) (MORE: Congress Is Poised to Send Patent Trolls Back to Their Caves) The duo’s conclusion: CSR is measurably related to subsequent CSiR. Their rough assessment, in fact, is that for every five CSR actions a firm takes, you can expect it to commit one-act of
Categories: Financial News

Why the Next Three Weeks Will Be a Bargain Shopper’s Dream

Tue, 12/03/2013 - 7:32am
After a lackluster Black Friday weekend at the mall, there is extra pressure on retailers to goose sales during the particularly brief and intense period before Christmas 2013. Leading into the big Thanksgiving-Black Friday shopping weekend of 2013, in addition to rumors about discounts and speculation about which gadgets and toys would be hot sellers, there was a lot of talk about the calendar. Specifically, the discussion centered on how Thanksgiving is celebrated particularly late in November this year, meaning that there would be only four shopping weekends (not five as usual) between Thanksgiving and Christmas. Some have been worried that a shortened shopping season will translate into less overall spending by consumers. More likely, however, is that the quirks of the 2013 calendar mean that shopping efforts will simply be concentrated into fewer days. “Some years there are more or less shopping days, and sometime there are additional shopping Saturdays, but that doesn’t make much difference,” John Talbott, associate director of Indiana University’s Center for Education and Research in Retailing, explained to the Baltimore Sun. “The season is going to be what it’s going to be in terms of economic capacity.” Erik Karson, a marketing professor at the Villanova University School of Business, agreed with that assessment in a recent phone interview. “Have you ever heard someone say they cut back on their spending because they had a little less time to go shopping one year?” he said. “That’s silly. People are going to spend what they’re going to spend. They’ll just do it quicker.” (MORE: Why the Hottest Holiday Toys Are No Longer Toys) While the calendar cannot be blamed (or credited) for retail sales totals being bad or good in a given year, the 2013 calendar seems to be impacting the retail scene in one key way: With fewer days for shopping, “every day counts a bit more for retailers,” said Karson. “If sales aren’t going well for few days, that’s a really big problem.” In what’s been described as an especially desperate and competitive season for
Categories: Financial News

Congress Is Poised to Send Patent Trolls Back to Their Caves

Tue, 12/03/2013 - 7:32am
U.S. lawmakers are preparing to act on a pair of bills that aim to crack down on so-called “patent trolls,” which are firms or investment funds that don’t actually build anything, but whose main objective is to extract licensing fees or legal judgments from other companies. The action in Congress follows a recent proposal by the White House designed to “protect innovators from frivolous litigation and ensure the highest-quality patents in our system.” On Tuesday, a broad coalition of groups led by the Electronic Frontier Foundation, a San Francisco digital rights group, is launching a new digital tool as part of its “Trolling Effects” campaign to pressure Congress to crack down on patent trolls, or “patent assertion entities,” as they’re sometimes called. The coalition includes the public interest groups Public Knowledge and the Open Technology Institute; Engine Advocacy, a non-profit group that advocates for tech startups; and two major industry trade groups, the Consumer Electronics Association (CEA) and the Computer & Communications Industry Association (CCIA). Perhaps the most well-known “patent assertion entity” is Bellevue, Wash.-based Intellectual Ventures, which is run by former Microsoft chief technology officer Nathan Myhrvold and has garnered attention not for what it builds but for the patents it owns. Intellectual Ventures has amassed an estimated 70,000 patents since it was founded in 2000, which it uses to extract value — some $3 billion to date — through licensing and lawsuits. Stung by criticism, Intellectual Ventures has embarked on a campaign to change its image from patent troll to “innovation hub,” according to the Puget Sound Business Journal. (MORE: Comcast + Time Warner Cable: One Broadband Giant to Rule Them All?) Recently, a new breed of patent troll has emerged, targeting small businesses that use common, everyday technology products, in a development that has raised alarm in states across the country and prompted the latest calls for patent reform. The most notable example is a firm called MPHJ Technologies, which has used a series of shell companies to demand that hundreds of small businesses that use office document scanners — like the type sold at
Categories: Financial News

Black Friday Flopped, But Cyber Monday Clicked With Online Shoppers

Mon, 12/02/2013 - 8:12pm
After lackluster Thanksgiving weekend sales, early estimates indicated that online shopping was up by 17.5% compared to this time last year. Sales are expected to hit $2 billion, according to the research firm comScore. Last year, sales equated to around $1.47 billion. Mobile devices, from smartphones to tablets, accounted for more than 29% of online traffic, according to IBM Benchmark data. “2013 is the year online went mobile,” Josh Anderson, the president and CEO of Walmart.com told the Associated Press. Today’s results provide good news for retailers who were expected to experience a 2.9% drop in sales over the Thanksgiving weekend. [Associated Press]
Categories: Financial News

Hilton Says It Could Raise $2.4 Billion in IPO

Mon, 12/02/2013 - 5:55pm
(NEW YORK) — Hilton Worldwide Holdings Inc. said Monday that it could raise as much as $2.37 billion, making it one of the year’s biggest IPOs. The hotel operator said in a regulatory filing that the offering of 112.8 million shares is expected to price between $18 and $21 each. Hilton is offering about 64.1 million shares, and selling shareholders are offering 48.7 million shares. Selling additional shares to banks could put the IPO’s proceeds at as much as $2.72 billion. The initial public offering comes as the hotel industry has started to recover over the past two years from its battering during the recession and as the IPO market heats up. Roughly 200 companies have gone public in 2013 as markets hit record highs. If it prices above the middle of the expected range, Hilton will have the second- or third-largest IPO this year, surpassing Twitter’s $2.1 billion haul last month. It would trail oil and gas pipeline company Plains GP Holdings LP, which raised $2.9 billion in October. Depending on where it prices and if bankers buy up Hilton’s extra stock, it could also best Pfizer’s spinoff, Zoetis, which raised $2.6 billion in January. But assuming shares price at $19.50, the middle of the range, Hilton anticipates net proceeds of about $1.21 billion, which it plans to use to repay debt. That price would give the McLean, Va.-based company a value of about $19.2 billion. Hilton was taken private by The Blackstone Group, an investment firm, in October 2007 for $20 billion. Blackstone will still own a majority of the voting power of shares eligible to vote in the election of board members, according to the filing. The recession began soon after Blackstone bought Hilton. Hotel operators were hurt by a drop in business travel, fewer vacationers, falling real estate prices and a general oversupply in the U.S. market. In the past two years, the industry has started to turn around as business travel is improving and room rates are rising. Hilton has 4,080 hotels, resorts and timeshare
Categories: Financial News

Amazon’s Drone Strike

Mon, 12/02/2013 - 5:15pm
Amazon founder Jeff Bezos upped the ante in the delivery wars Sunday. On CBS 60 Minutes, Bezos revealed “Amazon Prime Air,” the company’s plan to launch a fleet of drones capable of gingerly dropping a 5-pound-or-less package at your doorstep half an hour after you order it. But Amazon’s move into drone-delivery isn’t just out-of-the-box business thinking; it’s an ambitious volley in the race to make deliveries faster than anyone else. As Michael Toscano, CEO of the Association for Unmanned Vehicle Systems International told TIME, “This is a leadership issue, and [Amazon] is taking a leadership role. Once this is opened up everybody will do it.” Like most drone-related news that periodically sets the Internet abuzz, Amazon’s announcement is a lot of hype—by Bezos’ own admission the system is half a decade away, at least. But it’s also a signal the Internet commerce goliath sees the writing on the wall. Near-instant delivery is poised to do to online retail what Amazon has been doing to brick-and-mortar retail for a decade, and Bezos doesn’t want to see Amazon go the way of Borders bookstore. If you live in an urban area—the kind of place near one of Amazon’s “fulfillment centers” from which it might someday send a drone to your doorstep—options abound to have stuff delivered to you the same day, or sooner, from area stores. As companies like Ebay Now, Deliv, Postmates, and Task Rabbit move in on the same-day delivery market, Amazon’s convenience advantage gets shaved away. With their big-box locations, Target and Walmart still have a network of “fulfillment centers” to inspire Bezos’ envy. Which is why Bezos announced Amazon Prime Air long before the system will be in operation. Once the technology, and regulatory permission exists, what’s to stop other retailers already angling on the delivery market from getting into drone delivery? As Slate’s Matt Yglesias noted Monday, “The question is whether ‘good enough’ drones will be available before Amazon manages to put all these companies out of business. Unless Amazon itself can be the company that develops the drones.” Which is
Categories: Financial News

Apple Buys Twitter Analytics Firm Topsy for $200 Million

Mon, 12/02/2013 - 5:10pm
Apple Inc. acquired the Twitter analytics firm Topsy — which uses tweets to determine consumer attitudes — for about $200 million on Monday. An Apple spokeswoman confirmed the deal to the Wall Street Journal, though the company’s plan for the firms were not discussed. Topsy, however, is one of a few companies that have access to the “firehose,” or every one of the billions of tweets posted to the service since 2006. The information is used by groups to determine how users feel about certain products and who influences consumer behavior. It also offers exact counts of who is tweeting what, which could have a huge impact on Apple platforms. While it is unclear exactly how Apple plans to integrate Topsy data, TechCrunch posits that Apple may use it analyze tweets in order “to recommend apps on a more personal basis, rather than ‘generically’ to everyone.” What’s more, “Apple could theoretically use social data to help advertisers display ads to more relevant viewers.” The San Francisco startup was founded in 2007 by its chief technology officer Vipul Ved Prakash, along with Rishab Aiyer Ghosh, Gary Iwatani and Justin Foutts. [Wall Street Journal]
Categories: Financial News

Take Off, Amazon: 5 Companies Already Trying Drone Deliveries

Mon, 12/02/2013 - 5:01pm
Jeff Bezos’ announcement Sunday that Amazon is planning to start delivering products by unmanned aerial vehicles set the Internet whirring like a fleet of delivery drones. Amazon won’t be delivering anything until the Federal Aviation Administration issues regulations governing the commercial use of drones, which won’t happen until 2015 at the earliest. Still, Amazon’s announcement, complete with a flashy video supposedly taken during a “recent test flight,” wasn’t the first time a company has drummed up press by announcing drone delivery. For instance… BurritoBomber Like many drone “delivery” systems, the BurritoBomber claims that it will let you place a burrito order from your smartphone and drop a delicious delicacy from above. If you order from them, we hope you’re standing in a big empty field, because parachute technology may not have quite the precision of a delivery driver. Oppikoppi South Africa’s OppiKoppi music festival claims to have dropped ice-cold beers from the sky, delivered safely to thirsty festival goers via parachute. See above for our big open field disclaimer but hey, cold beer from the sky? We’re not complaining. DonerCopter The doner is Germany’s version of the burrito. Use your imagination. DomiCopter Dominos Pizza’s drone will kindly deliver a pizza to the earth’s surface for you, skipping the whole parachute situation entirely. Flirtey If for some reason you want textbooks rather than food delivered to you by drone (what kind of monster are you?) this Australian startup could be your thing. Just stay away from subjects requiring big heavy textbooks. And don’t buy an e-reader, to which textbooks of the future could be digitally delivered sans drone.
Categories: Financial News

Stocks Down As Dow Notches Biggest Drop Since Early November

Mon, 12/02/2013 - 3:59pm
Stocks fell Monday, bucking a trend of record-breaking gains, amid mixed reports on Black Friday shopping and concerns that the Federal Reserve might soon end its stimulus policy. The Dow Jones Industrial Average fell more than it has since Nov. 7,  dropping 77 points, or 0.5%, to 16008. The S&P 500 index fell 4.9 points, or 0.3%, to 1800. Stocks fell despite—or because—of some improving economic markers that sparked concern that the Fed might decide the economy no longer needs its stimulus boosts. [Wall Street Journal]
Categories: Financial News

Fast Food Protests Planned in 100 Cities Thursday

Mon, 12/02/2013 - 2:27pm
An organized labor movement that began at a single New York McDonald’s about a year ago is planned to spread to around 100 cities this week. Fast-food workers nationwide are redoubling their efforts to earn higher wages with a more aggressive set of one-day strikes that organizers say will hit every region of the U.S. Low-wage workers at restaurants such as McDonald’s, Wendy’s and other fast food chains are expected to walk off the job on Thursday. The workers are demanding an increase in pay to $15 per hour—what they call a living wage—and the right to unionize. The federal minimum wage is currently $7.25 per hour, and fast food workers earn an average hourly wage of about $9, according to the Bureau of Labor Statistics. Over the course of the last year, the fast-food protests, which are being backed by union groups such as the Service Employees International Union, have expanded greatly in scope. Last November about 200 workers went on strike in New York, a number that was already the “biggest wave of job actions in the history of America’s fast-food industry,” according to the New York Times. By July thousands of workers in seven other cities had also engaged in strikes. A daylong strike at the end of August spread to more than 50 cities, including places in the union-averse Deep South. On Thursday, Charleston, South Carolina and Providence, Rhode Island and Pittsburgh, Pennsylvania will be among the new locations where workers will strike, according to organizers. (MORE: Fast Food Strikes Go Viral: Workers Expected to Strike in 35 Cities) During previous protests, the National Restaurant Association, the restaurant industry’s lobbying arm, has pointed out that only 5 percent of fast food workers earn the federal minimum wage and most employees earning entry-level wages are under 25. At least one fast food executives has claimed that a $15 per hour wage would kill jobs. It’s hard to say just how much a doubling of wages would affect menu prices because most individual fast-food locations are franchised to
Categories: Financial News

Calm Black Friday: Only 1 Death, 15 Injuries Attributed to Big Shopping Day

Mon, 12/02/2013 - 2:26pm
The official Black Friday tallies are in. On the negative side (for retailers and the economy), shoppers spent less than expected; yet on the plus side (in terms of safety and for the sake of humanity), there were fewer shopping-related casualties than there have been in the past. Every holiday season, it seems like the same story: Chaotic, violent scenes at shopping malls pop up during the Thanksgiving-Black Friday weekend as reliably as overhyped deals from retailers. Sure enough, brawls and assaults were reported soon after the stores launched Black Friday sales on Thanksgiving night. Even so, for the most part, Black Friday 2013 was fairly subdued—in some cases, shoppers used words like “quiet” and “relaxed” to describe the scene. “People are even nice to each other,” said one woman who was out shopping with her 10-year-old daughter early on Friday morning at the Town Center at Boca Raton, Fla., according to the Sun Sentinel. “It seems quiet,” she said. “This is beautiful. People are even nice to each other.” Another consumer, quoted at a mall in Fort Lauderale, said that Black Friday seemed “like a regular shopping day.” Likewise, “Shoppers in the D.C. region were surprised at how calm retail outlets were on Black Friday,” the Washington Post noted. (MORE: What You Need to Know About Cyber Monday) One explanation for why Black Friday wasn’t quite as crazed as it’s been in the past is that, thanks to the expansion of stores opening on Thanksgiving and Black Friday deals starting a week or more early, the usual Black Friday rush was dispersed over time. “The earlier start absolutely has helped,” one shopper at the Arundel Mills in Maryland told the Baltimore Sun. “It’s much more relaxed.” Another big reason why Black Friday was more relaxed (dare we say pleasant?) at malls this year is that more consumers turned online to do their shopping. According to the National Retail Federation, American shoppers spent an average of $407.02 from Thursday through Sunday, down from $423.55 for the same period in 2012.
Categories: Financial News

Meet the Two Retail Giants That Won’t Let You Buy Online Today

Mon, 12/02/2013 - 1:00pm
Shoppers won’t find any Cyber Monday deals today at Ross or Marshalls, the two discount retailers. Sure, they want your business. But you’ll have to get in your car and visit one of their bricks and mortar stores. Unlike virtually every other national retail chain, neither Ross nor Marshalls sells online. Yes, you read that right. Online shopping isn’t an option – not today or any day. Ross and Marshalls are among a handful of big stores that have avoided e-commerce, or at least got a late start. Their take-it-slow strategy is a sharp contrast to the intense online focus of rivals, many of which have been selling on the Web for close to 15 years. How can a retro retailer survive in the digital age? It depends. “If you’re a company that competes very heavily with Amazon, there is no option,” said Sucharita Mulpuru-Kodali, an analyst with Forrester Research. “But if you have unique products or you’re focused on your stores, you can afford to be a holdout.” Despite its outsized reputation, online shopping plays a relatively small role in retailing. E-commerce accounted for only 5.9 percent of overall retail sales in the third quarter, up from 4.7 percent a year earlier, according to the U.S. Commerce Department. Still, many bricks and mortar stores pay close attention to their online businesses and spend lavishly on them. Technology, staff and giant warehouses filled with merchandise are costly. A number of retailers have also gone so far as to open research labs in Silicon Valley to stay on the cutting edge of innovation. Bricks and mortar stores vary widely in their success online. Nordstrom’s direct sales business, which includes e-commerce, makes up nearly 14 percent of the company’s overall revenue. But for others, e-commerce remains insignificant. Target, for example, has said that online accounts for less than 2 percent of its overall sales. Whatever the case, the hype over online retailing reaches its annual zenith today. For the past eight years, the e-commerce industry has made a big marketing push the
Categories: Financial News

New Data Hint At Accelerating Economic Recovery

Mon, 12/02/2013 - 11:16am
While some economy watchers have been disappointed by lackluster retail sales over the long Black Friday weekend, two other data points released Monday suggest the economic recovery is picking up steam. The Institute for Supply Management’s index of manufacturing activity shot up to 57.3, its highest reading in more than two years and the sixth straight month of increases. Any reading above 50 suggests an expansion of manufacturing activity, and Monday morning’s number beat economists’ expectations of 55, suggesting that the manufacturing economy has more spring in its step than many had thought. Even more encouraging for the U.S. economy was a report from the Census Bureau showing that construction spending in October rose to an annualized rate of $908.4 billion, 0.8 percent above September’s level and 5.3 percent higher than October 2012. These increases suggest that the sharp spikes in housing prices over the past 18 months are finally leading home builders to ramp constructing the hiring that goes along with it. As the chart below shows, the economy still has a long way to go before construction spending once again achieves its pre-crisis highs, but the trend bodes well for the economy going forward. US Construction Spending data by YCharts Growth in construction spending is particularly important because the construction sector is one that normally provides relatively good paying jobs for lesser-skilled workers who have had a particular tough time finding employment following the financial crisis. According to a new report from Tom Teles, an analyst with Goldman Sachs Asset Management, “the US housing recovery to date has primarily been a story of increases in the price of homes and related assets,” rather than of aggressive building and hiring by U.S. home builders. But Monday’s numbers bolster the case that higher home prices might finally be translating into a stronger economy. Teles estimates that higher prices will finally motivate serious hiring to the tune of 300,000 to 500,000 new jobs per year. “Multiplier effects in other housing-related industries could create a similar number of jobs, doubling the overall
Categories: Financial News

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