Spots N Dots
The Daily News Of TV Sales
June 29, 2017

AMAZON RISING IN RETAIL SALES RANKING

CHIEF RIVAL WALMART STILL #1

Amazon moved up another notch in this year’s ranking of the nation’s largest retailers by the National Retail Federation (NRF) in its Stores magazine. The annual list is based on data from Kantar Retail. Many analysts see Amazon as being in a long-term battle to topple retail giant Walmart—most recently with its deal to acquire Whole Foods and establish a bricks and mortar presence along with its online sales. While Walmart remained #1 in the Top 100 list at $362.8 billion in U.S. sales, its year-over-year growth from 2015 to 2016 was only 2.7%. Amazon’s sales shot up 24.6% to $77 billion as it moved up to #7 from #8 the previous year.

“At 55 years old, Walmart may be the oldest new kid on the block, but it still has the energy and mindset of a startup as it continues to successfully battle the competition,” said Stores media editor Susan Reda. Nine of the Top 10 posted year-over-year sales growth (#8 Target was the exception, falling 5.9% to $69.4 billion and slipping two spots from #6), which she credited to big retailers “embracing creative disruption, reinventing physical stores as places for brand experiences and exploring new ways to connect with the consumer.”

Along with Walmart, the next three retained their positions. #2 Kroger grew sales 6.1% to $110.2 billion; Costco 2.7% to $85.7 billion; and The Home Depot 7.3% to $85 billion. CVS Caremark moved into the #5 position as sales rose 13% to $81.4 billion. It bumped pharmacy rival Walgreens Boots Alliance to #6, with sales up 3.5% to $79.2 billion.

Following Amazon and Target, Lowe’s was up 5% to $60.4 billion in the #9 spot. It had moved up one position and Albertsons Companies slipped one to #10, with sales up 0.1% to $58.6 billion.

Poised to possibly move into the Top 10 in the future was Royal Ahold Delhaize USA, which rose to the #11 spot from #17 after spending nearly three years upgrading its stores.

Another notable change was the success of dollar stores, where revenues have grown drastically over the last year. Dollar General (previously #22) edged into the Top 20 for the first time after seeing an 8.5% percent increase in revenue to $22 billion.

“This year’s Top 100 manifests a number of trends we see across the industry,” Kantar Retail chief insights officer Leon Nicholas said. “Multi-format retailers are powering growth, online is ascendant and aggregation by traditional channel definitions doesn’t provide the same scale advantages it once did.” Indeed, Stores quotes several retail real estate experts who say the shrinking of bricks and mortar outlets will continue for some time.

ADVERTISER NEWS

Retail Dive reported last night that Staples is being acquired by private equity firm Sycamore Partners for approximately $6.9 billion. And Sycamore Partners plans to take Staples private. The retailer tried - and failed - to merge with Office Depot in 2015....After Fiat Chrysler displayed some new vehicles to journalists earlier this week and The Detroit Free Press says the emphasis is on horsepower and luxury. The 2018 Dodge Durango with up to 475 horsepower will arrive at dealerships during the third quarter and a new Ram Limited Tungsten Edition, also set to arrive during the summer, is said to be the most luxurious Ram offered to date with a suggested retail price at $55,120...... That franchisee dispute with Tim Hortons that started in Canada has now spread to the U.S., with almost half of franchisees here forming an association and hiring a franchisee attorney. Nation’s Restaurant News says franchisees have a number of concerns with parent Restaurant Brands International including “abuse of procurement powers,” franchisee intimidation and the use of the advertising fund, as well as the metrics RBI uses to judge franchisee performance. RBI also operates the Burger King chain and recently bought Popeyes Louisiana Kitchen…… Target has started its Target Restock delivery plan in hometown Minneapolis, a next-day service for dry grocery items and household needs. Only Target Redcard members can utilize the service right now, at a flat fee of $4.99 per box……Home Depot has been beating Lowe’s in same-store sales gains in recent quarters and some analysts have said the difference could be attributed to Home Depot’s better position with professional customers. Perhaps to improve its position with pros, Lowe’s has just completed a $512 million acquisition of Maintenance Supply Headquarters, a Texas-based distributor of maintenance, repair and operations products with 13 distribution centers in the West, Southeast, and South Central areas……Many major food producers have been struggling as American’s tastes have changed and General Mills is no exception. Its total fourth fiscal quarter sales were down 3% as were “organic” (disregarding any acquisitions or divestitures) sales. For the full fiscal year organic sales were down 4% with total sales down 6%.…Here’s an interest tidbit about retail advertising from Advertising Age’s annual Leading National Advertisers analysis: Amazon’s spending increase last year ($602 million) nearly equaled Sears Holdings Company’s entire U.S. advertising budget. In total Amazon spent about $2.6 billion in ads and promotions last year, about 3.7% of total sales. Ad Age notes the majority of Amazon’s bricks-and-mortar competitors now devote a smaller percentage of their already-declining sales to advertising budgets.

NETWORK NEWS

ABC News has reached a settlement with a South Dakota meat producer in a lawsuit over a 2012 report that referred to the company’s beef products as “pink slime”. Beef Products Inc. originally sued ABC News anchor Diane Sawyer, reporters Jim Avila and David Kerley, and former U.S. Department of Agriculture microbiologist Gerald Zirnstein seeking $1.2 billion in damages after a series of broadcast reports on the company. Beef Products Inc. ultimately had to close three plants and undergo layoffs at corporate headquarters. ABC’s new division said in a statement, “Although we have concluded that continued litigation of this case is not in the Company’s best interest, we remain committed to the vigorous pursuit of truth and the consumer’s right to know about the products they purchase.” …… CBS News will launch a new primetime summer series next month. CBSN: On Assignment will feature what the network is calling “experiential reports” from around the world by more than a dozen CBS correspondents. The series will air four consecutive Mondays and will be presented in what CBS calls a “distinctive storytelling style” used by CBSN, the network’s 24/7 streaming service. Each hour-long edition will include multiple stories, including a report on grassroots efforts to combat inner-city gun violence and investigations into new terrorist threats. Among the CBS correspondents contributing will be Elaine Quijano, Reena Ninan, Seth Doane, Ryan Chilcote and James Brown. CBSN: On Assignment will kick off Monday, July 31st at 10 PM (ET) on both CBS and CBSN……This year’s ESPY Awards will honor Master Sargent Israel Del Toro of the U.S. Air Force with the Pat Tillman Award for service. While serving is Afghanistan, Del Toro’s Humvee rolled over a buried pressure-plate bomb that exploded. The blast severed most of his fingers, burns over most of his body and left him in a coma for nearly three years. During his rehabilitation, Del Toro was introduced to adaptive sports as a therapeutic outlet. He eventually set world records in shot put, discus and javelin, and won the gold medal at the 2016 Invictus Games. Emmy Award-winning host, writer, and producer Jon Stewart will present the honor during the live telecast on Wednesday, July 12th at 8 PM (ET) on ABC……Johnny Galecki, one of the stars of the CBS hit The Big Bang Theory, lost his home Monday night to a massive fire. TMZ reported that the 1,200-acre fire burned down the ranch and other property on the estate in San Luis Obispo, CA. Galecki was not at home.

INTERNET VIDEO TAKES A BITE OF TV REVENUE

Mediapost reports on an report from MoffettNathanson, based on Magna Global estimates, that forecasts U.S. Internet/online video will record 24% average annual ad revenue growth rate, rising to $20.4 billion in 2021 — from $7 billion in 2016.

At the same time, traditional U.S. TV spending will have a 2% average annual ad revenue decline per year, totaling $60.4 billion. That’s down from $67.1 billion in 2016.

ANALYST LOOOKS AT SNEAKER SALES DROP

U.S. sales of athletic footwear dropped in the spring and haven’t recovered. At The NPD Group, analyst Matt Powell says he accurately predicted the soft spring sales, due to tax refund checks being late. But then he was puzzled at the lack of a recovery and went diving into the data.

One explanation he found: “Sales of sneakers to Hispanics in the U.S. have slowed dramatically from the previous trend,” he wrote on the research company’s blog. Data from The NPD Group’s Consumer Tracking Service shows that sales of athletic and outdoor footwear to Hispanics grew in 2016 in the mid-teens, and accounted for nearly all the growth seen last year. Hispanics represented about 23% of sneaker sales in 2016. Since the beginning of 2017, however, sales of sneakers to Hispanics slowed to a high-teens decline.

Powell says the change in behavior has most impacted shoe chains, followed by sporting goods and national chains. “However,” he notes, “no channel was immune to the slowdown.” And the analyst has dialed back his shoe sales projections for the back-to-school season.

From a brand point of view, the slowdown in purchases by Hispanics greatly impacted Vans, Nike, Skechers and Brand Jordan. Adidas and Puma (two hot brands right now) actually strengthened.

As for why the change has occurred, Powell notes a recent comment in USA Today from Robert Kaplan, the president of the Federal Reserve Bank of Dallas. He said that millions of immigrants have become “more likely to save than to spend,” and this will “have some muting effect on consumer spending and therefore GDP growth.”

TV HOUSEHOLDS UP, PAY-TV NETS DOWN

Once again, the monthly cable network universe estimates from Nielsen indicate an ongoing decline in pay-TV network penetration rates, led by lower traditional MVPD subscription levels. Excluding distribution through virtual MVPDs, analyst Brian Wieser at Pivotal Research Group says the median cable network entity tracked by Nielsen lost 2.5% of its subscribers despite an estimated 1.7% growth rate for total TV households in the July estimates.

Excluding virtual MVPDs such as Sling, Playstation Vue and DirecTV Now (which add an incremental 1.4 million homes to a broader definition of “Total Cable Plus” homes data vs. zero a year ago) and OTT service subscribers, the data shows a 1.6% median decline in pay TV homes. Including vMVPDs, Wieser figures the decline would be more like 1%.

Among the major publicly owned network groups, July figures showed median network distribution via traditional MVPD services posting declines ranging around 2-4% for Discovery, Disney, NBCU, Scripps, Time Warner and Viacom. Fox’s median cable network was down by less than most, falling by only 1.

BUSINESS BYTES

Despite announcements about the closings of hundreds of retail stores, the vacancy rate at malls increased just marginally during Q2, according to analysis done by real estate research firm Reis Inc. The national retail vacancy rate rose to 10.0% from 9.9% in the first quarter, while vacancies at malls rose just slightly, from 7.9% to 8.1%. Some of the increase was due to new construction that was not fully absorbed by new leases. Asking rents and “effective rents” were both up 0.4% above Q1

A new study from Sense360 has found that restaurant customers who download delivery apps do not compensate by actually visiting physical restaurants fewer times—in fact, at least in the short run, deliveries appear to be creating their own set of business, according to Nation’s Restaurant News. The study looked at the 90 days before a customer downloaded the app and 90 days afterwards, and while it is possible the customers’ behavior could change over a longer period of time, “in the short term, we didn’t see any impact” according to Sense360 CEO Eli Portnoy. “I was sort of expecting we’d see a little decline in grab-and-go visits. It seems like on the whole there was no real change.” NRN adds that results could change as delivery expands and consumers become more accustomed to ordering via delivery, but for now it appears the services are giving restaurants the incremental business they had hoped for.

FOX REMAINS CABLE NEWS LEADER

Despite some recent headlines to the contrary, Fox News remains the leading cable news channel. In primetime, for example, Fox scored aan average 472,000 viewers compared to 389,000 for 2nd place MSNBC. CNN posted a narrow No. 3 with an average 370,000. Q2 was good for all of the above. FNC, CNN and MSNBC were up double digits among total viewers and the news demo of adults 25-54 in both total day and primetime.

THIS AND THAT

Pending home sales dropped 0.8% in May according to the National Association of Realtors (NAR). The monthly index is now 1.7% below a year ago. But the problem is not lack of demand—it’s lack of supply. According to NAR chief economist Lawrence Yun, “Buyer interest is solid, but there is just not enough supply to satisfy demand. Prospective buyers are being sidelined by both limited choices and home prices that are climbing too fast”……ABC has settled a defamation lawsuit against the network by Beef Products Inc. (BPI) which objected to a series of ABC News reports in 2012 referring to a BPI product as “pink slime.” The Sioux City Journal says the judge presiding over the case in a South Dakota court announced the settlement as day 18 of the trial was set to begin. BPI had sought $1.9 billion, but terms of the settlement were not disclosed…… The U.S. population is getting older. The Census Bureau reports that the number of Americans 65 and older grew from 35.0 million in 2000, or 12.4% of the population, to 49.2 million and 15.2% in 2016.