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Posted
Sep 05 2008, 12:23 PM
by
Anthony Mirhaydari
Rating:
A weakening employment outlook only adds to a dismal economic picture for millions of Americans. Retailers have quickly realized that price has superseded factors like quality and brand as middle-class consumers struggle to maintain their lifestyle. Increased interest in private-label products and promotional items is a testament to this.
Month after month, we are reminded of how Wal-Mart's business model is perfectly positioned for the current recessionary environment. But Wal-Mart isn’t the only beneficiary. Although some grocers have gone up-market in recent years, Kroger has committed itself, through investments in its supply chain, to a low-price position without sacrificing incremental improvements to the quality of its food.
So low, in fact, that in some areas the supermarket chain not only beats its peers on price, but Wal-Mart too
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Posted
Sep 04 2008, 11:11 AM
by
Anthony Mirhaydari
Rating:
Burger King has made brilliant progress with its turnaround following a leveraged buyout in 2002 and IPO in 2006. Recent economic weakness helped, as quick-service restaurants took advantage of newfound frugality and curtailed visits to sit-down restaurants.
But now, even $1.39 meals wrapped in tortillas and jovial marketing campaigns can't stop the next phase of our consumer-led recession from striking the world's second-largest fast-food chain. The company's 18 consecutive quarters of global same-store sales growth looks especially vulnerable as new menu items fail to compensate for reduced traffic.
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Posted
Aug 27 2008, 12:34 PM
by
Anthony Mirhaydari
Rating:
At last, Wal-Mart's new Marketside grocery concept has a look: It's purple and neon-green, with natural wood finishes.
Designed to break into the as yet untapped high-income urban demographic, shoppers who traditionally reject the company's 261,000 sq. ft. Supercenters as the epicenters of all that is wrong with consumerism, capitalism, and the plight of our planet, the new small-store format makes no mention of its corporate parent. Deep exploration of the concept's fancy website finally reveals the master.
The first four 15,000 sq. ft. stores will be down in Arizona and are designed to go head to head with outfits like Whole Foods, complementing Wal-Mart's existing Neighborhood Market concept that takes on traditional grocers like SuperValu. Wal-Mart isn't alone in its thinking, as U.K.-based Tesco and Safeway are both ramping up small grocery concepts in response to an emerging urban living renaissance and shift towards healthier living with fresh fruits and vegetables.
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Posted
Aug 21 2008, 09:06 AM
by
Anthony Mirhaydari
Rating:
Some of the best investments you can make during economic downturns are those that capitalize on basic human desires.
Consider International Flavors & Fragrances, maker of the tastes and smells we experience in a variety of foods and consumer products. A company that provides simple and inexpensive pleasures is well positioned to soothe the unprecedented pressure on the American consumer.
This is especially true because consumer goods and packaged foods need to appeal to the senses to justify premium pricing over private-label store brands. An example would be Tide's Water Lily and Jasmine laundry detergent.
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Posted
Aug 18 2008, 07:47 AM
by
Anthony Mirhaydari
Rating:
Shares of both Lowe's and Home Depot have rallied more than 20% over the past month, partly because investors are starting to realize a silver lining to the housing-market downturn.
Demand for the quickly aging stock of existing U.S. homes will increase over the next few years as new home inventories are depleted, especially now that home builders are sitting out the market or going bankrupt. The retailers' fortunes should improve in the coming years as older houses start to require significant outlays on flooring, landscaping, paint, and appliances
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Posted
Aug 13 2008, 11:47 AM
by
Anthony Mirhaydari
Rating:
Oil prices are now well below their peak of a few months ago, which means gas prices may finally be poised for a decline.
Although the fundamental issues plaguing our economy remain, cheaper gas will surely help consumer stocks pummeled by the "consumer is dead" investing mindset.
So where should we fish for deep-value plays? To help us in the search, a team of economists and equity analysts at Citigroup looked at which sub-sectors had the greatest statistical relationship to crude oil prices.
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Posted
Aug 06 2008, 11:41 AM
by
Anthony Mirhaydari
Rating:
It looks like there's a positive side to the economic slump after all: Consumers are quickly changing their spendthrift ways.
During the second quarter, Americans lifted their savings rate to 2.6% from a pitiful 0.3%, while real consumer spending net of medical care, food, and utilities clocked in at only 0.8%. It's "a vivid sign that frugality is now replacing frivolity," in the words of Merrill Lynch economist David Rosenberg.
This means healthy market-share gains for private-label groceries from companies like Supervalu, Kroger, and Safeway. The transition away from expensive brands is especially noticeable
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Posted
Aug 05 2008, 09:28 AM
by
Anthony Mirhaydari
Rating:
Everyone loves a pretty face. And as women in the developing world gain disposable income, more are able to afford one.
The powders, potions, and primers sold by the global cosmetics industry have become hot sellers overseas, even as a slowdown in the United States and Europe tempers demand from the traditional consumers.
The trend comes just in time for 120-year-old Avon Products, the world's largest direct-sales cosmetics company and the command-and-control center for legions of perfumed Avon ladies -- and a few Avon guys too.
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Posted
Jul 29 2008, 05:04 PM
by
Anthony Mirhaydari
Rating:
Confirming a trend we discussed last week, the corporate parent of Bennigan's and Steak & Ale restaurants filed for Chapter 7 bankruptcy protection as consumers continue to shy away from dining establishments in favor of home-cooked meals.
The closures affect only 0.5% of the U.S. bar-and-grill sector -- but they're a warning of tough times ahead for the $43 billion casual dining industry.
The rapid plunge into oblivion shocked patron Donna Wimes, who noted that "the food was good; they always seemed to generate a crowd." Others are reminiscing about Bennigan's deep-fried mozzarella sticks, while also noting that locations "looked full" anytime they passed by
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Posted
Jul 24 2008, 10:07 AM
by
Anthony Mirhaydari
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Rising food and energy prices are forcing McDonald's to take aim at its popular Dollar Menu. "In this current environment, we've got to make sure we're pricing smart, not just pricing low," COO Ralph Alvarez said as the chain reported better-than-expected quarterly results.
For hurried moms, nocturnal teens, lunch-run dads, and anyone who appreciated the food-inflation hedge of one dollar double cheeseburgers, the news comes as a super-sized disappointment.
Investors should be worried too.
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