Thursday, May 30, 2013 | Edited by Daniel Moores
||Home Depot's Strategy Nails Recovery
Home Depot still has a blueprint for beating Lowe's. That was abundantly evident in the companies' diverging earnings reports released recently.
Home Depot reported better-than-expected results as profit surged 18 percent over the year-earlier period, allowing the retailer to issue rosy statements about the housing recovery. Lowe's, meanwhile, posted a disappointingly small 2.5 percent profit gain and groused about how a colder-than-usual spring dampened returns for such things as hoses and gardening gloves.
The scripts and the underlying statistics were startlingly different, considering both retailers were dealing with the same forces: relatively crummy weather and a major improvement in the number of people buying and building houses.
Here's a look at how Home Depot came out so far ahead:
Much is made about what Home Depot and Lowe's retailers have done for do-it-yourself consumers, but when it comes to a real-estate recovery, contractors and developers are what really move the needle.
Last quarter was the first time since the 2008 recession that sales to tradesmen outpaced business from ordinary homeowners, and Home Depot was ready. It had loaded up on such products as plywood and fast-drying paint, set up dedicated checkout lines and loading services for contractors, and sent employees to make sales calls at building sites.
Home Depot also appealed to banks and private-equity firms with a turnkey program to spiff up properties in foreclosure. The result: Home Depot saw 35 percent of its revenue come from professionals, compared with 25 percent at Lowe's, according to JPMorgan.
Playing the Recovery
Home Depot was also better positioned in Sunbelt states, specifically California. Those areas are less sensitive to cold spring weather and include some of the country's fastest-recovering housing markets.
Home Depot gets about 10 percent of its revenue from California, compared with 6 percent at Lowe's, according to Goldman Sachs. It is also in better shape to cash in on Hurricane Sandy repairs in Connecticut, New York, and New Jersey.
Leveraging Online Orders
The recent period marked the first time Home Depot customers could route any online order to the nearest store. Customers chose this option in almost one-quarter of online sales, and one in five of those folks bought more items when they swung by to collect their wares.
Although Lowe's is rapidly trying to speed up its shipments and streamline mobile shopping, it is still playing catch-up online.
Home Depot executives quite simply run a leaner operation. Last year the retailer turned over its inventory in less than 80 days, compared with 93 at Lowe's, according to Bloomberg data. That kind of execution is one of the reasons the company had a slightly better operating margin and a much better return on assets last quarter.
Lowe's, meanwhile, was counting on spring. Although it tried to sync its supply chain to the weather, the retailer said it stocked up early this year on expensive warm-weather inventory such as lawnmowers and grills -- a decision that no doubt weighed on its balance sheet.
(Source: Bloomberg Businessweek, 05/22/13)
||Buying into Booze
Does the Future of Fast Casual Lie in Alcohol?
Fast-casual restaurants were once able to claim premium food, modern décor, and all-around upscale service as hallmarks of their category. But with more quick-service chains retooling in those areas to compete for post-recession consumers, fast casuals have been left to search for new ways to differentiate their brands.
For many, that search has turned up something typically better suited to fine- and casual-dining joints: booze.
"We're seeing a fair amount of it within fast casual; traditional limited service, not so much, although Starbucks obviously has been testing it," says David Henkes, vice president of Chicago-based Technomic Inc., adding that alcohol can account for 3–7 percent of a fast casual's sales. "For fast casual, it is a lot more in their wheelhouse than in traditional fast food."
At Blaze Pizza, based in California, beer and wine sales alone account for about 2 percent of sales, but president Elise Wetzel says food purchases with beer and wine sales account for another 3–5 percent. "Our estimate is that sales of beer and wine can boost our top-line sales by 5–7 percent," she says.
Fast casuals aren't just adding alcohol to steal back quick-service customers. Alcohol programs can eliminate the veto vote, in which patrons choose not to dine at a certain restaurant because it doesn't serve alcohol.
Pierre Panos, chief executive officer of Atlanta-based Fresh To Order, says he hopes to push alcohol sales to 10 percent at locations where it's served. Several Fresh To Order units serve beer and wine, while a new location just opened in Emory Point, Georgia, with a full bar.
The full bar removes the veto vote for nearby Emory University students, Panos says.
"We also want to further legitimize our excellent dinner offerings with alcohol, in order to reinforce that we are a solid choice for dinner," he says. "My goal is to get (Fresh To Order) to a 50/50 lunch/dinner mix from our current number of close to 40 percent (for dinner); the full bar will go a long way toward this."
While alcohol can improve sales and daypart opportunities, experts say fast casuals must consider the various ways in which it can change the brand before rolling out their own programs.
Henkes says alcohol doesn't just give customers a reason to choose a fast casual over a quick serve, but it also gives customers a reason to choose a fast casual over casual-dining restaurants.
Alcohol can also be an attractive menu option for several customer demographics, including Millennials, who have become an increasingly important consumer base for the fast-casual industry. A recent Technomic study, "Understanding the Foodservice Attitudes & Behaviors of Millennials," found that 41 percent of Millennials purchase food away from home at least twice a week, compared with 38 percent of Gen X-ers and 37 percent of Baby Boomers. Meanwhile, 20 percent of Millennials also agreed that it's important for restaurants to serve alcoholic beverages, compared with 12 percent of Gen X-ers and 10 percent of Boomers.
"Millennials certainly index a lot higher when it comes to fast-casual usage, and they're much more likely to experiment with different kinds of drinks," Henkes says.
Still, only 26 percent of all limited-service restaurants offer any type of alcohol, says Maeve Webster, senior director of Datassential, a market research firm. "So offering any type of alcoholic beverage -- whether that's beer, wine, or something else -- in that segment is going to set the operator apart," she says. Further, "of the (alcoholic) beverages offered, nearly 90 percent of all options are some type of beer or wine. Offering cocktails or some non-beer or wine options is going to set you apart even more so."
That's one of the reasons Fresh To Order's full bar serves liquor, including specialty cocktails that will change with the season. This past winter, it offered two hot drinks, including Açai Honeycomb, a mix of VeeV Açai spirit, honey water, and fresh lemon.
"Serving craft and seasonal liquor is once more a further differentiation, as almost no fast casuals offer a full bar. If they have beer and wine, it is almost an afterthought, and the sales reflect it," Panos says. "The bar now offers our guests that extra enticement and touch point to come into our restaurant."
The core concept
Fast casuals are always working hard to know their customers and identify their core concept. Implementing an alcohol program, the experts say, requires the same amount of due diligence.
Henkes says that because fast casuals have a more upscale image than their quick-service counterparts, they often skew toward more upscale alcohol choices, like craft beer. He says many chains will also use their alcohol program to complement what they're doing with food options.
"Chipotle obviously has Corona, and I think they have some domestics, too, but their big thing is Corona," Henkes says. "Smashburger's been really focused on offering craft beers, so I think the general expectation is that it's going to be a higher-quality beer or more of a craft or an import. But it definitely needs to match the menu orientation and sort of the quality tier that that fast-casual chain is going after."
Atlanta-based Uncle Maddio's Pizza Joint, which does 2–4 percent of its business in alcohol sales, serves bottled and draft beers in its stores, as well as wine. Cindy Wahl, field marketing manager for Uncle Maddio's, says the brand tries to shape its alcohol selections around its local communities. For example, because some stores have a large following of customers who order gluten-free pizzas, it now offers a gluten-free cider among its alcohol options, she says.
The same strategy is applied to Uncle Maddio’s beer options.
"We are always looking for ways to customize our beer selections to our specific markets," Wahl says. "We have brought in selections from several local breweries, as well. Wheat beers are popular, and we offer several other styles -- lagers, amber ales, and IPAs. We try to vary the craft-brew selection as best we can to match our customers' preferences."
Blaze Pizza locations also offer craft beers, plus some standards like Heineken and Amstel Light, along with red and white wines.
"It seems like a natural complement to our menu and really helps us drive our dinner business," Wetzel says. "As we expand our number of locations, we're letting each store pick local beers and wines that are most popular to that specific neighborhood."
In line with its fast-casual Mexican counterpart, Chipotle, Freebirds World Burrito is testing margaritas in its Kansas and Missouri locations, making a batch from scratch every morning using fresh-squeezed lime and lemon juice, simple syrup, tequila, and triple sec. The chain also sells draft, craft, and bottled beer, with selections tailored by market. Shiner Bock is popular in Texas restaurants, whereas Sierra Nevada or Lagunitas IPA is preferred in California, says Steve Byrne, vice president of culinary for Tavistock Restaurants, Freebirds' parent company.
Fresh To Order is also staying true to its core concept with its fresh-made cocktails.
"Using craft and seasonal liquors, wine, and beers that change regularly based on the seasons and the brewers, vineyards, and distillers we work with will allow us to always have something fresh, modern, and fun for our guests," Panos says. "Guests get to see a bartender build (the cocktail) in a (mason) jar. It's transparent; all the fresh fruit, herbs, and seasonings are in the jar. It feels, looks, and tastes more real." Jesse Gideon, corporate chef for Fresh To Order, adds that instead of offering common liquor brands, Fresh To Order sought out carefully crafted, artisanal liquors to pair with the brand's fine dining–style menu.
Datassential's Webster says that in addition to an increased interest in beverages that pair well with menu items, consumers are exploring more cocktails, mixologists, and fresh ingredients used in those types of creations.
"There's been significant growth in beverages from the country of the cuisine being served," Webster says. "It rounds out the experience of being at that operator. Experiences are, in particular, extremely important to Millennials, who are more likely to visit fast-casual operators than other demographics. There are popular alcoholic beverages that could be served regardless of cuisine, but part of the mixologist movement and cocktail renaissance is to make sure the alcoholic beverages complement the food."
Despite the benefits alcohol programs can offer fast casuals, Henkes warns that booze isn't necessarily the right solution for every operator.
"When you look at the upside for alcohol, and all the hoops that you have to jump through in terms of regulations, getting a license, all the additional insurance costs, and everything like that, if you're not generating a big number from alcohol, you really need to think twice about doing it," he says. "Not that it's not possible, but it's certainly not a slam dunk from any perspective."
Several challenges are inherent with a fast-casual alcohol program, including regulations. Because of the patchwork of local and state regulations and how hard it can be to obtain licenses, most fast casuals that Henkes has seen roll out alcohol programs have done so selectively based on where the unit is, the demographics, and if the restaurant can get a license.
"It's important that you make sure the CUP (conditional use permit from the city) on the location allows the sales of beer and wine," says Blaze Pizza's Wetzel. "If not, you need to go through the process to get it added. Employees also need to be well trained in handling this."
Freebirds is also putting up with the challenge of where to merchandise the beer. Because fast-casual dining rooms and kitchens are not typically designed with alcohol distribution in mind, there is no obvious place to stock the booze, Byrne says.
"We are testing a beer trough along the queue line in one of our Texas locations," he says. "Another challenge is that much of our business happens during lunch, and people are typically not drinking at lunch. It does help us capture more dinner business, though."
Henkes says fast casuals also struggle with the customer-service aspects of alcohol programs.
"The challenge for a lot of fast casuals is that they're not set up as bars, and integrating an alcohol system into their existing services system, just strictly counter service, can be challenging," he says. "I think one of the big things, from a service perspective, (is) fast casuals generally hire a lot of underage people, so depending on state laws, service can be a challenge in terms of just being able to make sure that your staff is legally able to sell alcohol."
Packaging and quantity are also challenges to consider. The easiest thing for a fast casual to offer is a single-serve product, like a bottle of beer or miniature-sized wine bottle, Henkes says. "And liquor, even at the Chipotles that I've seen that have the margaritas, it's premade, it's already in a cup, so they're not mixing it on property," he says.
(Source: QSR Magazine, 05/23/13)
||Long-Term Health Care: Considering the Options
Karen Thomas has learned the hard way about the harsh realities of long-term care.
Three years ago, her mother was diagnosed with Alzheimer's and the doctor said she could not return home. "I had never given it a thought that my mom one day would need long-term care," says Thomas, who lives in Atlanta. "I'm a professional business woman and yet I did not know where to begin. It was completely overwhelming."
Since then she has had to sort through the complicated and often expensive maze of long term care options for her mother. Thomas and her husband, Don, also realized that they should not put off planning for their own long term care.
Americans now put health problems at the top of their retirement worries, says a recent Bank of America's Merrill Lynch Retirement Study. And yet it's not a subject that people spend much time thinking about.
"But if you've done no planning or thinking about it, the likelihood is that the decision will be made a crisis situation," says Sally Hurme, elder law attorney for AARP. And because middle class families face the biggest financial squeeze, they don't have as many options.
Although long-term care insurance could help protect their retirement nest eggs, it is typically more expensive than the middle class can afford. And they will not be qualified for Medicaid unless they impoverish themselves.
And even if they qualify for Medicaid, they can't always count on it. For example, Thomas' mother lived on limited means and could qualify, but when she needed Medicaid she was put on a waiting list.
While Karen's mother waited, the couple helped to pay for the Personal Care Home where she became a resident and received around-the-clock care. "But to fork out $1,000 extra every month was not in our budget," says Karen. "That put a big dent in our savings."
Karen, who was then the CFO of a large frozen food company, decided to change her career so that she would not have to work 70 hours a week or often travel out of town for business.
Now, because she is the CFO of a non-profit organization, she is able to stop by and see her mother every morning on her way to work. At her new job, she was instrumental in starting a long-term care insurance policy for the organization's employees.
"The circumstances that occurred in my life gave me the opportunity to make things better for my entire organization," she says. Now she and Don can pay a portion of the insurance premium, making it affordable.
Americans need to start planning for health care needs in retirement before it's too late. At least 70% of people who are over age 65 are going to need long-term care, research shows.
Safeguarding a Retirement Nest Egg
Long-term care insurance is one of the few ways to protect retirement savings. But it's not cheap. The average insurance premium for those between age 55 and 64 was $2,261 a year for policies sold in 2010, according to a 2012 AARP report.
The price of long-term care premiums are not locked in, so the cost can increase over time, says Byron Udell, founder and president of AccuQuote. And people often don't like to buy a long-term care insurance policy because if they never need it, their money goes down the drain.
There is no cookie-cutter solution. "A lot of it comes down to figuring out your budget and your biggest risks," says Steve Sperka, Northwestern Mutual vice president of long-term care. If long-term care insurance seems too expensive, you can decide to only insure a portion of the risk. At least you would have some retirement security, he says.
The insurance industry also has begun to offer hybrid products that address some of the concerns. For example, some life insurance policies have a rider for long-term care insurance. If the policy holder never needs long-term care, the family receives the life insurance benefit.
Shopping for Long-Term Care
Many people associate long-term care with nursing homes. They are extremely expensive because they provide 24-hour-care. Fortunately most people have short nursing home stays, because the average national cost for a private room in a nursing home is $83,950 per year, according to the Genworth 2013 Cost of Care Survey.
Home care is much less expensive, and most people would prefer to stay at home as long as possible. Family members are responsible for finding and paying for a caregiver to take their parent to a doctor's appointment or go shopping for groceries. They also may need a home health aide to help with bathing, dressing and making sure the elderly person is taking their medication.
Some family members contact a home care agency for help. It can make them feel more secure, because the agency has screened the caregiver and is liable for their acts, says Robyn Grant, the director of public policy and advocacy at the National Consumer Voice for Quality Long-term Care, which provides information about the types of services available.
There are also a number of websites that help families find reliable and affordable home care, such as CareFamily.com, Carelinx.com, and AARP Care Scout Service.
Because CareFamily.com is very tech-savvy and automated, its costs are much lower. Compared with agencies that on average charge $21 an hour, it charges about $14 an hour, with $12 of that going to the caregivers, says founder Tom Knox.
The service is particularly helpful to family members who live far away from their parents. CareFamily.com makes it easier to hire a caregiver, remotely provide lists of things to do and receive audio updates from the caregiver during the day.
When Karen Thomas suddenly had to learn about long-term care services, she decided to rely on a Personal Care Home for her mother. It provides a cozy home with supervision and assistance. But when the home closed and the owner moved away, Thomas was not successful in finding a similar place for her mother.
The Thomas' didn't give up. Instead, they decided to buy their own Personal Care Home. They hired a staff and manager. And since the doors opened last November it is filled to capacity with six residents. "We provide services that big assisted-living facilities offer and yet maintain the more affordable prices of a Personal Care Home," she says. "And it's wonderful to have my mother there."
(Source: USA Today, 05/29/13)
Daily Sales Tip: Your Voice
We are all born with our voices, but they can in fact be trained. If you spend a lot of time on the phone conducting business perhaps it's time to assess your own voice skills. Your voice is in fact a tool. It's a tool that can gain you business or lose you that next business deal.
Five key factors when it comes to having a voice of success include:
What does the tone of your voice sound like? Does it reflect confidence? Strength? Assurance? Perhaps your tone reflects fear? Boredom? Immaturity?
Be honest with yourself; do you need to work on your tone? Grab a close friend or co-worker -- ask their honest opinion. It's important to find someone who will give you just that. Listen to what they have to say and take their criticism as constructive to help you develop a voice that will get you where you want to be in life.
When speaking and thinking about the key points you want to emphasize, make sure the inflection of your voice does just that. Inflection alone can change the meaning of a sentence.
Practice, practice, practice. The delivery of your message when training your voice is key. Don't be afraid to rehearse a pitch or a proposal or even just a phone call. You won't always have to do this; just long enough to where a good delivery is natural and you can do it with confidence.
What do you sound like? Have you ever really just listened to your own voice? For example, when you record your outgoing voicemail message what do others hear? A smile? Joy? Authority? Don't be afraid to use a tape recorder as you train your voice. A tape recorder will allow you to hear exactly what others hear.
Similar to tone, but different. The energy in your voice allows people to feel like they are in the room with you. Does your energy make them want to be in a room with you? Put it in check. One thing that I have to watch is the speed at which I speak. I can rattle things off faster than most people can keep up with. I always know when I'm doing this because I often get asked to repeat myself. Breathe, think about what you are going to say and fill it with the right energy for the moment.
Source: Marketing consultant Laura Lake