Weekend Surge May Not Rescue Retailers' Holiday Slump

American consumers, uneasy about the economy and unimpressed by the merchandise in stores, delivered the bleak holiday shopping season retailers had expected, if not feared, according to one early but influential projection.
Spending between Thanksgiving and Christmas rose just 3.6 percent over last year, the weakest performance in at least four years, according to MasterCard Advisors, a division of the credit card company. By comparison, sales grew 6.6 percent in 2006, and 8 percent in 2005.
“There was not a recipe for a pick up in sales growth,” said Michael McNamara, vice president of research and analysis at MasterCard Advisors, citing higher gas prices, a slowing housing market and a tight credit market.
Strong demand at the start of the season for a handful of must-have electronics, like digital frames and portable GPS navigation systems trailed off in December. And robust sales of luxury products could not make up for sluggish sales of jewelry and women’s clothing.
What did eventually sell was generally marked down — once, if not twice — which could hurt retailers’ profits in the final three months of year. “Stores are buying those sales at a cost,” said Sherif Mityas, a partner at the consulting firm A.T. Kearney, who specializes in retailing.
A surge in spending during the weekend before Christmas may not have been enough to rescue Target Corp., Sears Holdings Corp. and Macy's Inc. from the slowest holiday spending season in five years.
MasterCard Inc.'s consulting unit said today that sales from Nov. 23 to Dec. 24 gained 3.6 percent. Spending in the week through Dec. 22 declined 2.2 percent, the fourth week of declines, even after sales increased almost 20 percent over the last weekend before Christmas, Chicago-based ShopperTrak RCT Corp. said yesterday.
``It's not going to overcome the negative forecasts,'' Frederick Crawford, managing director at Southfield, Michigan- based AlixPartners LLP, said of the weekend in a Bloomberg Television interview. ``It's going to be a good start, a very weak midsection, and a strong finish.''
Gasoline at $3 a gallon and rising food prices have discouraged shoppers from spending during November and December, which account for 20 percent of retailers' annual revenue, according to the National Retail Federation in Washington. Target, the second-biggest U.S. discounter, said yesterday that sales at stores open more than a year may decline in December after customer visits slowed in the weeks after Thanksgiving.
Five-Year Low
Sales in November and December this year may rise 4 percent, the slowest growth since 2002, according to the National Retail Federation. ShopperTrak has predicted a 3.6 percent increase. MasterCard's holiday growth figure was the lowest in at least three years.
Costco Wholesale Corp., the largest U.S. chain of wholesale clubs, said the holiday season ``went well,'' the Wall Street Journal reported today. Costco Chief Financial Officer Richard Galanti didn't immediately return a call left at his Issaquah, Washington, office today.
Sales rose 19 percent from Dec. 21 to Dec. 23 as U.S. shoppers took advantage of discounts and extended hours, ShopperTrak said.
Less than one-fifth of consumers had finished their holiday shopping as of Dec. 16, according to the International Council of Shopping Centers in New York. J.C. Penney Co., Sears and Toys ``R'' Us Inc. tried to lure late buyers with discounts over the weekend, helping boost U.S. retailers' sales by 7.6 percent on Dec. 22, the Saturday before Christmas.
Chris Lewis, a cleaning-franchise owner, began shopping for his two children on Dec. 21, and may buy more items after Christmas.
Staying Frugal
``I try to stay kind of frugal,'' the 35-year-old resident of Silver Spring, Maryland, said. ``I'm not going to give everything I have in one day.''
Shoppers buying online led the growth in spending, with Internet sales gaining 22 percent from Nov. 23 though Dec. 24, Michael McNamara, vice president for research and analysis at MasterCard Advisors, said in an interview today.
``If you were expecting this holiday season to stimulate a new ramp-up in growth, I think you'd be disappointed,'' McNamara said. said. ``I think the vast majority of people in the marketplace had modest expectations.''
Apparel rose 1.4 percent from a year ago, McNamara said. Men's clothing climbed 2.3 percent, while clothes for women fell 2.4 percent.
Luxury Gains
Luxury goods, excluding jewelry, rose 7.1 percent compared with the same period last year, and footwear sales increased 6 percent.
MasterCard Advisors' SpendingPulse surveys retailers across the U.S. Its figures are based on sales in the MasterCard network and estimates of other forms of payment, including checks and cash. MasterCard is the second-biggest U.S. credit- card company.
Last year's holiday season grew 6.6 percent over 2005's holidays. Two years ago, retail sales grew 8 percent from the previous year, MasterCard said.
Although Target's customer visits increased for the week ended Dec. 22, ``this increase was not sufficient to compensate for the unfavorable traffic trends that carried over into December from the week following Thanksgiving,'' the Minneapolis-based retailer said on a recorded call.

Albert Fert & Peter Grünberg, Physics of Hard Drives Wins Nobel

Two physicists who discovered how to manipulate the magnetic and electrical properties of thin layers of atoms to store vast amounts of data on tiny disks, making iPods and other wonders of modern life possible, were named winners of the Nobel Prize in Physics yesterday.

Albert Fert, of the Université Paris-Sud in Orsay, France, and Peter Grünberg, of the Institute of Solid State Research at the Jülich Research Center in Germany, will share the $1.5 million prize awarded by the Royal Swedish Academy of Sciences.

They will receive the money in a ceremony in Stockholm on Dec. 10.

Dr. Fert, 69, and Dr. Grünberg, 68, each working independently in 1988, discovered an effect known as giant magnetoresistance, in which tiny changes in a magnetic field can produce huge changes in electrical resistance.

The effect is at the heart of modern gadgets that record data, music or snippets of video as a dense magnetic patchwork of zeros and ones, which is then scanned by a small head and converted to electrical signals.

"The MP3 and iPod industry would not have existed without this discovery," Börje Johansson, a member of the Royal Swedish Academy, said, according to The Associated Press. "You would not have an iPod without this effect."

In remarks broadcast over a speakerphone at the academy in Stockholm, Dr. Fert said: "I am so happy for my family, for my co-workers. And I am also very happy to share this with a friend."

Experts said the discovery was one of the first triumphs of the new field of nanotechnology, the science of building and manipulating assemblies of atoms only a nanometer (a billionth of a meter) in size.

The scanning heads in today's gizmos consist of alternating layers only a few atoms thick of a magnetic metal, like iron, and a nonmagnetic metal, like chromium. At that small size, the strange rules of quantum mechanics come into play and novel properties emerge.

The Nobel citation said Dr. Fert and Dr. Grünberg's work also heralded the advent of a new, even smaller and denser type of memory storage called spintronics, in which information is stored and processed by manipulating the spins of electrons.

Engineers have been recording information magnetically and reading it out electrically since the dawn of the computer age, but as they have endeavored to pack more and more data onto their machines, they have been forced to use smaller and fainter magnetic inscriptions and thus more and more sensitive readout devices.

It has long been known that magnetic fields can affect the electrical resistance of magnetic materials like iron. Current flows more easily along field lines than across them. The effect was useful for sensing magnetic fields, and in heads that read magnetic disks. But it amounted to only a small change in resistance, and physicists did not think there were many prospects for improvement.

So it was a surprise in 1988 when groups led by Dr. Fert at the Laboratoire de Physique des Solides and by Dr. Grünberg found that super-slim sandwiches of iron and chromium showed enhanced sensitivity to magnetic fields - "giant magnetoresistance," as Dr. Fert called it. The name stuck.

The reason for the effect has to do with what physicists call the spin of electrons. When the magnetic layers of the sandwich have their fields pointing in the same direction, electrons whose spin points along that direction can migrate freely through the sandwich, but electrons that point in another direction get scattered.

If, however, one of the magnetic layers is perturbed, by, say, reading a small signal, it can flip its direction so that its field runs opposite to the other one. In that case, no matter which way an electron points, it will be scattered and hindered from moving through the layers, greatly increasing the electrical resistance of the sandwich.

As Phillip Schewe, of the American Institute of Physics, explained, "You've leveraged a weak bit of magnetism into a robust bit of electricity."

Subsequently, Stuart Parkin, now of I.B.M., came up with an easier way to produce the sandwiches on an industrial scale. The first commercial devices using giant magnetoresistance effect were produced in 1997.

Dr. Grünberg was born in Pilsen in what is now the Czech Republic and obtained his Ph.D. from the Darmstadt University of Technology in Germany in 1969. He has been asked many times over the years when he was going to win the big prize, and so was not surprised to win the Nobel, according to The A.P.

He said he was looking forward to being able to pursue his research without applying for grants for "every tiny bit."

Dr. Fert was born in Carcassonne, France, and received his Ph.D. at the Université Paris-Sud in 1970. He told The A.P. that it was impossible to predict where modern physics is going to go.

"These days when I go to my grocer and see him type on a computer, I say, 'Wow, he's using something I put together in my mind,'" Dr. Fert said.

iPods, Better laptops Stemmed from Nobel Prize Discovery
The 2007 Nobel Prize in Physics goes for the discovery of Giant Magnetoresistance, a nanotechnology that enables more compact disks to be squeezed into laptops, iPods, and other such devices.

The 2007 Nobel Prize in Physics has been awarded to two researchers for their discovery of Giant Magnetoresistance (GMR), a sort of nanotechnology that enables more compact disks to be squeezed into laptops, iPods and other such devices.

The discovery was made separately in 1988 by Albert Fert of France and Peter Gr|nberg of Germany, though the technology didn't really take hold until the late 1990s.

GMR technology allows for data to be read from very compact disks. Here's a description from the Royal Swedish Academy of Sciences, which doles out the Nobel Prizes:

"A hard disk stores information, such as music, in the form of microscopically small areas magnetized in different directions. The information is retrieved by a read-out head that scans the disk and registers the magnetic changes. The smaller and more compact the hard disk, the smaller and weaker the individual magnetic areas.

"More sensitive read-out heads are therefore required if information has to be packed more densely on a hard disk. A read-out head based on the GMR effect can convert very small magnetic changes into differences in electrical resistance and therefore into changes in the current emitted by the read-out head. The current is the signal from the read-out head and its different strengths represent ones and zeros."

More background about the discovery is available here.

Last year, the prize went to John Mather and George Smoot "for their discovery of the blackbody form and anisotropy of the cosmic microwave background radiation."

The real Nobel Prizes are being announced a week after the quirky Ig Nobel Prizes for weird science were announced at Harvard University.

Research into the mystery of wrinkles on bed sheets, the bottomless bowl of soup and the effect of Viagra on hamster jet lag dominated those awards.

For more on network-oriented research, read our Alpha Doggs blog.

Technorati : Albert Fert, Peter Grünberg

The ecosystem of the mobile phone and iPhone,

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Just 74 days after launching its iPhone, Apple announced it had already sold 1 million of the things - a milestone that its previous blockbuster product, the iPod, took almost two years to reach.

And yet, to judge by the industry's chatter, the iPhone is already old news. More excitement swirls around rumours that Google, the Web-search giant that is Apple's neighbour in Silicon Valley, could enter the market with its own "gPhone." Google's boss, Eric Schmidt, has already said that the firm plans to bid for a prime slice of the wireless spectrum in a forthcoming auction, something Apple is also said to be considering.

In short, both mobile operators and handset-makers could soon be confronted with two of the world's sexiest brands as direct rivals. Publicly, Apple and Google are being diplomatic.

The industry is a stool with three legs - network service, devices, and the software and content that goes on them - and "I don't think any player in the ecosystem trying to glue it all together will be very successful," says Dipchand Nishar, who leads Google's mobile-phone strategy.

By this he may simply be conceding the obvious, which is that Google would not build hardware, even if it made the other two legs.

But Google seems to be up to something. It bought a company called Android in 2005 that specializes in mobile-phone software. It has Google Talk, a free Internet-calling service. In July it bought GrandCentral Communications, a firm that gives users one single phone number for life. And it recently filed a patent application for a new mobile-payment technology.

It would certainly be tempting to tie all these bits together into a new software "platform" for mobile phones and offer it to handset-makers as an alternative to existing smart-phone operating systems such as Symbian, Palm or Microsoft's Windows Mobile.

Naturally, Google's search, email and document services would be tightly integrated, along with its advertising technologies, which might pave the way for mobile service that is partly or wholly subsidized by advertising.

As a strategy, this might be just different enough from Apple's to assure harmony with its ally.

It would suit neither firm to open hostilities. So Google may concentrate on software for cheaper, mass-market devices, leaving Apple to make elegant, high-end hardware.

Technorati : ecosystem

On the Internet, A Tangled Web Of Classified Ads

A few years ago, a classified ad for Andrew Davis's 2001 Mitsubishi Montero SUV might have been limited to two lines of descriptive shorthand: A/C, pwr pkg, 6cyl AT, 2wd, $9k firm.

Today, in ads on the Internet, Davis is posting pictures of his car in an off-road setting and sharing such details as the replacement of the timing belt and water pump 5,000 miles ago. He has even included a link to a feature article about his car's model in Popular Mechanics.

Buy This Photo Andrew Davis prepares his 2001 Mitsubishi Montero for sale after placing ads on multiple Web sites, which he found "a confusing jumble" both for seller and buyer.(By Bill O'leary / Post)

Davis, a Clemson University graduate who moved to the Washington area only a few weeks ago, posted free classified ads on Craigslist and the Marketplace area on Facebook, the social-networking site. He also paid for an ad in The Washington Post, a bundled deal that also put his listing on Cars.com and other Web sites.

His approach of putting his vehicle in front of as many potential buyers as possible illustrates how dynamic the process of classified advertising has become. For sellers, the options have moved beyond newspaper ads and fliers on coffee-shop bulletin boards. And for buyers looking for a car, an apartment, a job or a new puppy, it means better chances of seeing relevant ads on a variety of sites.

This push into online classifieds -- a business dominated by newspapers for more than a century -- is still very much in flux, said Greg Sterling, principal analyst with Sterling Market Intelligence in Oakland, Calif. While classified revenue has been shrinking at newspapers across the country, a growing number of Web companies, both established and new, are moving into the business, although not necessarily dominating the market.

Newspapers have lost their grip on classifieds in recent years. Once a steady source of revenue, classified advertising at some of the larger chains has dropped 14 to 20 percent over the past year, notably in once-lucrative segments such as automotive, real estate and employment ads, according to Fitch Ratings. Fitch, a credit ratings agency in New York, said this week that newspaper performance has been weaker than it originally forecast for the year.

Online traffic to classified sites, meanwhile, has grown 23 percent, to more than 46 million unique visitors in July, up from about 37 million a year earlier, according to the market research firm ComScore in Reston. Traffic has declined on some sites, among them Yahoo Classifieds, where it fell by 13 percent. But it has grown on some newer sites such as MySpace, where classified listings have jumped 33 percent since their August 2006 debut.

The classified market has become increasingly fragmented as a growing number of companies search for the best way to convert offline newspaper ads into a Web format.

"It becomes a confusing jumble of sites," Sterling said. "If you're a seller, that's a problem, and if you're a buyer, that's a problem."

What is emerging are two primary online approaches. One is simply to shift the traditional classifieds model to the Web, aggregating ads to a single site. The other involves distributing those aggregated ads to as many Web sites as possible.

EBay has backed some of the biggest and best-known classified sites. It partially owns Craigslist, the popular no-frills site that collects local listings, and allows buyers and sellers to post listings free. EBay recently introduced its U.S. users to two similar sites, Kijiji and Gumtree, both of which started overseas.

Geebo, based in McLean, is another online listing site trying to compete against Craigslist by creating a brand name that will draw buyers and sellers to its site.

"When I think about classified sites, outside of Geebo, I can only think of one, and that's Craigslist," said Geebo chief executive Greg Collier. "It's not like I can think of 10 or 12 of these right off the top of my head. There may be a lot out there, but nobody knows they're there."

In contrast, such companies as Edgeio and Oodle are less concerned with creating a site that buyers will view as a destination. Instead, they are pushing their way into the marketplace by acting as a go-between, cutting deals with newspapers, as well as Web sites, to increase the number of places where their listings appear.

Edgeio collects classified listings through individual sellers, as well as listings on sites like Geebo, or from traditional publications. Using software, it then distributes those ads to Web sites with specialized audiences.

For example, a niche Web site for fans of cocker spaniels might partner with Edgeio to display ads from a local breeder selling puppies. The ads might come from an individual or an ad posted in the community newspaper, but are then distributed to the cocker spaniel site through Edgeio.

"Our goal is to get more traffic to the [Web site] publishers," said Edgeio co-founder Keith Teare. "As money flows through the system, we take our share."

Like Edgeio, Oodle acts as a middleman, but is positioning itself to be more like a buyer's agent, offering such tools as e-mail alerts. Oodle's service searches classifieds and finds products a prospective buyer is looking for. In addition, it analyzes its listings for trends and other market data for buyers to use in their research. For example, someone shopping for a 2002 Honda Accord will also get information about that car, such as the average price for that year and model, in Oodle's listings.

Oodle chief executive Craig Donato said his model is a new approach to classified advertising. The challenge now is to get those ads in front of a local audience in a creative way so that buyer and seller can find each other and complete the sale.

"What's happening essentially is that companies are trying to do things online that lead to offline transactions," he said. "The transaction always occurs between two humans offline. . . . You would never rent an apartment without seeing it first or take a job without interviewing. That defines classified ads."

For that reason, local papers say they will be key players, even as classifieds find more venues online.

Forging partnerships with sites like Oodle have allowed newspapers to test some different approaches without having to build their own technologies, said Mort Goldstrom, vice president of advertising for the Newspaper Association of America in Arlington.

But Fitch Ratings analyst Mike Simonton said newspapers have a long way to go in making up for eroding classified revenue.

"We don't think that online classifieds have replaced or are successfully replacing the print classifieds," he said. "There's just a lot more competition in that market."

Technorati : Classified Ads