FIELD MARKETING ORGANIZATION TREND WATCH – 7/16/2010

HEADLINE OF THE WEEK Girls gone viral: On-line fame from shopping http://abcnews.go.com/GMA/Weekend/haul-videos-turn-tech-savvy-shoppers-web-stars/story?id=10158339 Source: ABC News/David K. RETAIL Industry places bets on Back-to-School The back-to-school blitz is around the corner — and the stakes are higher than ever. The season comes as there are growing fears among executives and analysts of “a double dip” recession. On top of that, weak consumer demand in May and June has created rising inventories and the potential of steeper markdowns in a reminder of the nightmare days of late 2008. Stores ranging from Macy’s to J.C. Penney to Wal-Mart by mid-July will begin to bombard families with b-t-s campaigns, and the agenda is robust, built around digital initiatives, celebrity tie-ins, price promotions and new merchandise they can call exclusive, as retailers scramble for market share amid consumer lethargy. For these retailers, b-t-s represents the second-biggest volume period of the year, behind only Christmas. Store executives are seeking low-single-digit gains for the season and are prepared to face the worst, having kept inventories and expenses down. According to Mike Berry, director of industry research for MasterCard Advisors SpendingPulse, current spending trends suggest flat to moderate growth. “Until consumer confidence recovers, consumers will be cautious with discretionary spending,” Berry said, explaining that kids are waiting until school is in session to shop for apparel, and that retailers probably won’t see a bump in sales until September or October. But he added: “I don’t want to paint a bleak picture….Kids grow, even in a recession.” More hopeful was Betty Chen, an analyst at Wedbush Morgan Securities. She expects the bulk of b-t-s shopping to occur in August, as consumers look to take advantage of tax-free apparel periods in various states, such as in Florida from Aug. 13 to 15 on books, clothing and footwear under $50 and school supplies under $10. There may be some residual shopping in September and October, she added. “Consumers are very event driven this year. Back-to-school will be a catalyst for them to spend.” Among the retailers she cited as potentially faring well were Aéropostale and Gymboree, for the values they offer based on their prices and level of quality, but other sources see fast-fashion retailers Forever 21, H&M and Zara eating into such businesses as Abercrombie & Fitch and Aéropostale. Generally, pricing will be competitive, Chen said, though she doesn’t see price wars as part of the scenario, with retailers preplanning

promotions, unless something “catastrophic” occurs or if there’s a cold snap. Source: WWD/Sandra Economy + Technology = Xtreme Shoppers

Follow the link: http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=131671 Source: MediaPost/Sandra

Former McDonald’s execs plan to compete with Ronald A duo of former McDonald's executives — former president and COO Mike Roberts and former communications head Mike Donahue — are planning to launch a healthy lifestyle brand comparable to Starbucks, Nike or Apple, but in the “fast casual” food services vertical. With backing from Chicago-based entrepreneur Steve Sidwell, the startup's brand name, for now, honors Sidwell’s daughter Stephanie. Plans are to open the first restaurant in 2011 and grow to 250 locations by 2016, but Donahue told Ad Age, there’s "no tangible goals other than to do one really good location, get the taste profile right and the affordability right.” McDonald's, which is promoting healthy eating with spots such as its recent Yummivore campaign likely isn't too worried. And its former execs are looking to fill a niche, not pursuing global domination. The proposed menu will include items such as: apple-cinnamon steel-cut oats and pita pockets for breakfast; smoked-chicken sweet-pea soup and pork-and-sweet-potato kabobs for lunch; and dinner entrees priced between $8 to $12. For further distinction from competitors, “Stephanie’s” is considering roof herb gardens, grass parking lots, biodegradable cutlery, and fresh flowers on the tables. They may also sell their food products in Whole Foods and offer home delivery (by electric car, of course). Source: Brandchannel/Mary McDonald’s introduces new smoothie line Fourteen months after the successful launch of the McCafe brand of specialty coffee drinks, McDonald’s aims to stake a big claim on the launch of their new smoothie line of beverages. Tuesday, July 13 marked the launch of two new flavors: Strawberry Banana and Wild Berry. Each flavor comes in three sizes, ranging in cost from $2.29 for 12 ounces to $3.49 for 22 ounces. In addition, McDonald’s will host a national sampling of the smoothes July 22-24 from 7 a.m. to 7 p.m. McDonald has reported that adding espresso-based drinks and frappes boosted sales in the U.S. by $125,000 in annual sales to the average U.S. store. The new smoothie line is expected to further boost the smoothie market as a whole and increase sales at smoothie giants such as Jamba Juice Inc., Starbucks Corp. and Panera Bread Co. Source: http://chicagobreakingbusiness.com/2010/07/mcdonalds-smoothies-go-nationwide-tuesday.html/Kate Newman Christmas savings clubs and layaways

Retailers are increasingly creating ways for consumers to save early this holiday season. Toys R Us is the latest retailer, after Sears and Kmart launched a similar program in 2009, to offer their customers an option for putting away money toward the 2010 holiday season. They recently announced their first-ever Christmas Savers Club where shoppers can load as much as $2,500 on each club card. Shoppers who sign up for the program between now and Oct. 16 will earn a 3 percent bonus on their total funds. Shoppers can use their cards any time after Oct. 31. The program has no fees, can be started with a $1 buy in and never expires. Options similar to the Christmas Savers Club card are not a new phenomenon; they started during the Great Depression as a way for consumers to save money. However, once banks added weekly payments and fees, the cards quickly decreased in popularity. Today, these options are becoming popular once again to budget conscious consumers and to consumers who either do not want to put purchases on their credit cards or can no longer get credit. Source:http://www.cnbc.com/id/37710449/Toys_R_US_Unveils_Christmas_Savers_Club/Kate Islamic women opt for more fashion Fashion designer Hind Beljafla makes abayas to match the Gucci shoes and Hermes handbags of high-spending women in the Gulf. Now these women can buy her elegant versions of the black Islamic robes, which obscure the contours of a woman's body, when they head to London this summer to escape the Arabian peninsula's sweltering heat. Harrods started selling abayas by Beljafla's DAS Collection in June, a month after Qatar's sovereign-wealth fund bought the landmark store. "Muslim women are like any women around the world: they love fashion and love shopping," said Beljafla, 24, in an interview in her Dubai store. Together with her 26-year-old sister Reem, she uses splashes of color, embroidery and even leather and metal studs on the plain black abaya. Fashion houses in Milan and Paris are waking up to the commercial potential for Muslim women's clothing that respects religious values and sets new style standards. The global Muslim fashion industry would be worth $96 billion if half of the world's 1.6 billion Muslims spend just $120 a year on clothing, according to French Fashion University Esmod in Dubai. Qatar ranks among the wealthiest nations, with a gross domestic product per capita of $121,000, while Saudi Arabia sits on a fifth of the planet's oil reserves. John Galliano was among 21 designers who participated in a Paris show in June 2009 at Hotel George V, owned by Saudi Prince Alwaleed Bin Talal. The made-to-measure abayas displayed there, worth up to $10,000, were donated to buyers, including members of the Saudi royal family. Saks Fifth Avenue, which hosted the event, then put designer ready-to-wear abayas on sale for as much as $12,000 at its stores in the Saudi cities of Riyadh and Jeddah. In the United Arab Emirates and Qatar, women can be seen walking around high-end shopping malls with bouffant hairstyles that at times allows the headscarf to expose some of their hair. Islamic fashion has a potential that has "not been completely estimated yet," said Italian designer Alberta Ferretti, who took part in the Paris

show. The market extends from the Mideast to Muslim-populated countries in Southeast Asia, Europe, Africa and North America. The Islamic Fashion Festival started in 2006 in Kuala Lumpur, Malaysia, and Jakarta, Indonesia, and expanded to Dubai in 2008, with more than 200 designers participating. Dato Raja Rezza Shah, chairman of the festival, said he wants to establish the three cities as the Islamic fashion capitals of the world, just as London, Paris, New York and Milan are for Western labels. Source: Bloomberg/Seattle Times/Mary Retail sales slow after holiday Weather Trends International reflected, "Back-to-school apparel better be shorts and tees as demand for fall items will be very slow this year! Follow the headline link for the full story. Source: UPI.com/Mary ECONOMY/CULTURE The meaning of luxury USA Today reports that for Americans, the meaning of luxury has shifted with the ongoing recession. While the affluent class is still spending money on luxury, its on things that add value to their lifestyle, be it expensive yet useful home appliances or top-end technology products, both of which create a life-long experience. Then there are people who are buying luxury items only when they are available on discounted prices. Seeing this trend, luxury companies too responded by having regular discount sales and launching new lines of ‘economical’ products. Follow the link to read the full story: USA Today: “A shift in meaning for ‘luxury’ as shopping habits change” Source: USA Today/Melinda GGP Malls located in top two U.S. cities Money Magazine featured their annual “100 Best Places to Live” article for 2010 including four cities with GGP malls making the top ten. Two GGP malls are located in the first and second best places to live, Eden Prairie Center located in Eden Prairie, MN, which came in first, and The Mall in Columbia located in Columbia, MD, which came in second. Eden Prairie ranks in first place with its unemployment rate one percentage below the county rate and four points below the national average. Eden Prairie, MN also houses major fortune 500 companies, 17 lakes, and 125 miles of nature trails also ranking high among the healthiest residents in the nation. The second best city, Columbia, MD, features grand yet affordable homes, a quaint 18th-century downtown, many restaurants, tons of parkland and a major music venue. It also helps that Baltimore and Washington D.C. are both within commuting distance. The other two places featuring GGP malls are Foothills Mall located in Fort Collins, CO as the sixth best place to live and Pinnacle Hills Promenade located in Rodgers, AK as the tenth best place to live.

Source: http://money.cnn.com/magazines/moneymag/bplive/2010/Kate Christmas in July kettle campaign The salvation army is launching its Christmas in July campaign in cities across the U.S. to raise funds during its off-season for The Salvation Army Camp Ladore overnight summer camp and others in need. Usually, bell ringers with The Salvation Army are out during the holiday shopping season, but this summer The Salvation Army has deployed their famous bells and red kettles at participating centers. Cities, some in their third year hosting the campaign, are excited because Christmas in July helps support seniors isolated in sweltering apartments and young people in need of structure and guidence. Other retailers are following the Christmas in July trend, trying to boost sales by bringing the holiday spirit for the back-to-school season. Retailers such as Toys R Us and Sears plan to embody yuletide images and santa hats later this summer. Source: https://www.use.salvationarmy.org/use/www_use_philadelphiadhq.nsf/vw-news-34/D47749F448C5EF278525775B00061C77?opendocument http://www.reuters.com/article/idUSTRE56G5M420090717/Kate More Americans' credit scores sink to new lows The credit scores of millions more Americans are sinking to new lows. Figures provided by FICO Inc. show that 25.5 percent of consumers - nearly 43.4 million people - now have a credit score of 599 or below, marking them as poor risks for lenders. It's unlikely they will be able to get credit cards, auto loans or mortgages under the tighter lending standards banks now use. Because consumers relied so heavily on debt to fuel their spending in recent years, their restricted access to credit is one reason for the slow economic recovery. FICO's latest analysis is based on consumer credit reports as of April. Its findings represent an increase of about 2.4 million people in the lowest credit score categories in the past two years. Before the Great Recession, scores on FICO's 300-to-850 scale weren't as volatile, said Andrew Jennings, chief research officer for FICO in Minneapolis. Historically, just 15 percent of the 170 million consumers with active credit accounts, or 25.5 million people, fell below 599, according to data posted on Myfico.com.

More are likely to join their ranks. It can take several months before payment missteps actually drive down a credit score. The Labor Department says about 26 million people are out of work or underemployed, and millions more face foreclosure, which alone can chop 150 points off an individual's score. Once the damage is done, it could be years before this group can restore their scores, even if they had strong credit histories in the past. On the positive side, the number of consumers who have a top score of 800 or above has increased in recent years. At least in part, this reflects that more individuals have cut spending and paid down debt in response to the recession. Their ranks now stand at 17.9 percent, which is notably above the historical average of 13 percent, though down from 18.7 percent in April 2008 before the market meltdown. Source: AP/Seattle Times/Mary How innovation and entrepreneurship can bring societal change New technologies and a growing capacity for innovation are playing fundamental roles in the search for answers to the current economic downturn. At the Wharton Global Alumni Forum in Madrid, speakers from Spain, Rwanda and Nairobi took part in a panel that looked at the social and economic applications of technology and innovation, and how support for entrepreneurship can help raise the standard of living for those in developing countries. Follow the link to see the fully story: http://knowledge.wharton.upenn.edu/article/2549.cfm Source: Knowledge@Wharton/Dana Cycling culture on the rise London’s cycling culture is becoming increasingly popular by the day, and with a new bike-sharing scheme launching this month, the city, notorious for its vehicular traffic, can breathe a sigh of relief. It’s no surprise then, that bike cafes such as Rapha Cycle Club and Lock 7 are among the city’s popular hangouts. The latest entrant in London’s Bike Cafes is Look Mum No Hands, a bar, cafe and bike workshop all rolled into one that has already become a haven for serious bike addicts who bring their machines for repairs, and commuters who simply want to use the free Wi-Fi or eat snacks and salads while watching live screenings of cycle races. Look Mum No Hands has an interesting decor, with vintage bikes and heirloom tomatoes on display in the windows, and a few desks and benches for furniture. The bar is stocked with microbrews from all over Europe, and hosts weekly route planning sessions and bicycle film nights. Check out the website: Look Mum No Hands Source: NY Times/PSFK/Mary Media/Marketing BrandWeek magazine highlights digital trends Gaming Gaming has come of age. Joystick-obsessed guys who once hunkered down in basements for hours and dominated the medium now have guests. Women and kids are latching onto smartphones and other devices to play. Whether families—armed with Wii remote controls—bond bowling the night away or consumers on the go play individual or social networking games, the medium is reaching new

audiences and heights. Marketers are tapping into the zeitgeist that people like to play and that their lives are more fun when a little competition is involved. Read Full Article Eyes on the Prize The combination of digital tracking technology that collects huge amounts of data with social media platforms for broadcasting minutiae has spawned a cottage industry of applications that promise a dizzying array of options for tracking and comparing daily activities. These applications, if widely adopted, could hold the key for marketers looking for new ways to influence consumer behavior. Read Full Article Gaming Tree Socially conscious games—as well as educational ones that raise social issues—have increasingly been making headlines. Games that blend play with advocacy and learning clearly have gotten users' attention. But do they have the power to effect serious social change in the long run and actually have a broad impact on how people act? Those at the heart of the movement, of course, say absolutely. Read Full Article Source: BrandWeek/Dana Cold Stone looks to drive store traffic with Facebook e-gifts Cold Stone Creamery is the latest brand to embrace social media applications on Facebook. Starting this week, the ice cream chain will allow consumers to send tangible gifts to friends via the social network. Using the e-gift app, developed by e-commerce firm First Data Corp., consumers can select one or more friends to send gifts to, either by adding them from Facebook or entering their e-mail address. Unlike virtual gifts on Facebook, however, the Cold Stone app sends a code for a physical product that can be redeemed at any of the chain's 1,300 locations. Cold Stone's vp of marketing Suzanne Schutz said franchisee profitability is the main focus for this program, as well as increasing store traffic and transactions by 3 percent this summer. Cold Stone joins a long list of other brands that are using Facebook to reach potential customers. Among them is Coca-Cola, Best Buy, Starbucks and Microsoft, to name a few. When it comes to gift-giving specifically, virtual goods in the U.S. are estimated to be a $1.6 billion market this year, according to Inside Network, a research firm that specializes in social media. Justin Smith, Inside Network's founder, said that while brands are still new to using social media to drive retail sales, consumers are willing to pay for compelling interactive experiences. "Brands have an opportunity to benefit from Facebook users' engagement with social apps by sponsoring the content that users want to buy and share," Smith said. "Of course, the trick is always to do so in a way that is congruent with the context of the application." Source: Brandweek/Dana Travel/Hospitality

A catalyst for new models in the global tourism industry For years, the tourism industry grew almost effortlessly. Those days are over. Tough economic conditions have awakened companies in the industry to the fact that they must better anticipate customers' needs and reinvent their business models. That was the theme of a panel discussion at the recent Wharton Global Alumni Forum in Madrid. Panelists spoke about population shifts, the need for greater concentration in the sector and the rise of new middle class consumers with a desire to travel. Follow the link to read the full story: http://knowledge.wharton.upenn.edu/article/2547.cfm Source: Knowledge@Wharton/Dana FASHION The 80-year hunt for 'it' fashions Fashion bloggers, who spot local trends around the world and post new photos constantly, also help retail buyers, and they do it free of charge. Follow the headline link for the full story. Source: Wall Street Journal/Mary Sports Who's a fan of big-league baseball? Take me out to the ballgame? These days, many Americans would say "no thanks" to that proposition. A Harris Poll released on the eve of the All-Star Game finds just 36 percent of adults saying they follow the Major League game, down from 41 percent last year. Even among male respondents, fewer than half (46 percent, vs. 27 percent of women) said they're fans. Apart from this gender gap, findings from the survey (fielded last month) challenge much of what's popularly assumed to be the demographics of fandom. There's been concern in baseball circles in recent years that a decline in the number of black players in the big leagues would lead to a decline in interest in the game on the part of black consumers. The Harris findings suggest this hasn't happened yet, at least. In fact, black respondents were more apt than their white counterparts to say they're fans (41 percent vs. 36 percent). Also contrary to what conventional wisdom would suggest, both of these cohorts have a higher proportion of baseball fans than is true for Hispanic respondents, among whom just 34 percent said they follow the big-league game. There tends to be an assumption that baseball's fan base is disproportionately composed of old folks and soon-to-be-old folks. Here again, the poll's numbers say otherwise. Thirty-eight percent of the 18-33-year-olds and 39 percent of the 34-45s said they follow Major League baseball, vs. 36 percent of the 46-64s and 30 percent of the 65-plusers. How about the stereotype of the baseball fan as a blue-collar bleacher bum? Wrong again! In a breakdown by household income, the $75,000-plusers were the most likely to say they're baseball fans (45 percent) and the under-$35,000s the least likely (27 percent). Likewise, 46 percent of college graduates in the survey identified themselves as fans, vs. 29 percent of those with a high school diploma or less.

Another part of the survey asked people who follow big-league baseball to say which team is their favorite. The New York Yankees topped the voting, as they have each year since 2003. The Boston Red Sox came in second (as they did last year), followed by the Atlanta Braves (also No. 3 last year), Philadelphia Phillies (up from No. 7) and the Chicago Cubs (down a bit from a fourth-place tie). Filling out the top 10 were the New York Mets, San Francisco Giants, Los Angeles Dodgers, Minnesota Twins and St. Louis Cardinals. Source: AdWeek/Dana Food/Beverage Innovate to interest post-recession consumers, says GMA Consumer packaged goods companies need to change tactics as America emerges from recession, say the Grocery Manufacturers Association (GMA) and PriceWaterhouseCoopers (PWC). Brand divestment and cost-cutting is out, innovation and targeting niche markets is very much in. The advice to food firms is contained in a new report from the GMA and PWC, Forging Ahead in the New Economy. The top line message is that now the USA is emerging from recession, innovation is critical to encourage house-hold spending – especially in mature food markets and those aimed at baby boomers, potential big spenders who may be watching their dollars in preparation for retirement. Strategies that dominated last year, such as divesting non-core brands, conserving cash, and cutting costs – are no longer deemed appropriate by the senior leadership of GMA members quizzed during the survey, which also drew on companies’ published data, analyst reports and government statistics. The researchers point out that consumers are being more careful about their spending, buying different pack sizes and benefiting from volume discounts. Emerging markets are also attractive, especially in China, Brazil, Russia, India and Southeast Asia, where middle class spending power is growing and competition to serve them is becoming stiffer and product growth cycles are a short 12 to 18 months. Source: FoodNavigator.com/Dana TrendWatch is compiled from various sources and created weekly by GGP Marketing. Thanks to our contributors. Submission Guidelines and past editions are posted on the Marketing Desktop. If you have trouble accessing the documents, please contact Melissa Meyer or Mary Vermillion for help.