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13
Dec-18
Thursday

Amazon ‘R’ Us?

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The Hustle reported that Amazon has started producing its own toys under its AmazonBasics private label, stepping into the giant hole Toys ‘R’ Us left in the US toy market. Private-labeling, Amazon’s next step on its march to ultimate e-commerce efficiency, sent shivers down the spines of toymakers from Mattel to the North Pole. But what would a future without toy stores look like? We all know how the story starts: Amazon targets an industry, undercuts existing sellers until they fold, and adds the leftovers into its marketplace (RIP Borders, Tower Records, Circuit City, Sears...). After the news of Amazon’s plans surfaced, Mattel shares dropped more than 3% and Hasbro shares dropped more than 1%.
12
Dec-18
Wednesday

The Dollar General story

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The Hustle reported that Dollar General became the fastest growing retailer in the US by catering to low-income consumers with no other options. Now, Dollar General and Dollar Tree are expected to have 50k stores in the next few years - roughly 10x as many as Walmart. But, dollar stores can be a discounted devil in disguise: Dollar store “deals” are often more expensive than bulk-bought alternatives due to deceptive packaging, and they often leave consumers with fewer options by driving local stores out of business. Box stores like Walmart cost millions to open, but Dollar General can open a store the size of a basketball court for US$250k, and turn a profit even in low-income communities with just 1,000 homes. And, the formula works astonishingly well, Dollar General has posted 28 straight years of same-store sales growth by serving as the lucrative last resort to America’s “permanent underclass.”

Uber's new advertising system

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TechCrunch reported that Uber revealed plans to build a new advertising system into its UberEats platform. The revamped food delivery service will now allow restaurants to strategically boost sales of their Eats - for a price. Uber confidentially filed for an IPO last week, and this new ad-based product launch promises investors a tasty new revenue stream. Uber will first offer restaurants rankings boosts in exchange for discounts. But Uber could also use what it calls its “logistics expertise” to sell restaurants data to target new customers, predict demand spikes, and boost rankings. It’s a complicated system, but it provides a straightforward takeaway: Uber has another new way to make money. Something that will definitely assist with its IPO valuation.  

Major US ports set import record in October

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The NRF reported that major US container ports set a new monthly imports record in October. Container volume was up 9% from September's level and 13.6% year over year, according to the NRF's Global Port Tracker report released last week. The record was set as retailers continued to bring merchandise into the country ahead of a now-postponed increase in tariffs on goods from China. NRF officials said, "President Trump has declared a temporary truce in the trade war, but these imports came in before that announcement was made." While cargo numbers do not correlate directly with sales, the import surge also is being driven by this year's strong retail sales, NRF officials said.
11
Dec-18
Tuesday

Walmart snaps up Art.com

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The Hustle reported that Walmart acquired Art.com last week, adding the company’s home decor business to its growing roster of acquisitions. To challenge Amazon’s e-commerce dominance, Walmart has spent hundreds of millions acquiring successful companies that enhance its “category expertise” and “assortment” - and Art.com now sits alongside past buys like Shoes.com, ModCloth, and Bonobos, giving Walmart a strong (and immediate) foothold in the US$10 billion art and wall decor market. The short story: Amazon kills off its e-tail rivals, Walmart just buys them.

Customer (dis)satisfaction with supermarkets

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Inside Retail reported that “Foodland beats Aldi for customer satisfaction.” According to research by Roy Morgan, Foodland scored 91%, against Aldi's 89%.  We think that this is bad news for Foodland.  If a premium supermarket is only 2% ahead of a discounter in the customer satisfaction space, then, given the price differential, they have little hope for long-term survival. BTW: Inside Retail noted that Coles was at 85%, Woolworths on 84%, and IGA at 80% - so these chains have even less chance to compete with Aldi (and soon Kaufland). Without doubt, wherever Aldi opens an outlet, it will take a market share from them.  Overall supermarket customer satisfaction declined by 6% compared to this time a year ago.
10
Dec-18
Monday

Sears Chairman makes US$4.6b bid for bankrupt retailer

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Reuters reported that Sears Holdings Corp Chairman Eddie Lampert’s ESL Investments Inc has made an offer valued at US$4.6 billion to buy the bankrupt US retailer, one of the only options that would prevent the department store chain from shutting its doors for good. The offer calls for about 500 Sears stores to remain open and would keep 50,000 of the retailer’s workers employed, according to a letter from his hedge fund filed with the Securities and Exchange Commission last week. The 125-year-old company faces a series of deadlines this month to find a buyer that would keep it in business as some of its creditors call for it to shut down. Many US retailers that have filed for bankruptcy in recent years, including toy seller Toys R Us Inc and department store Bon-Ton Stores Inc, have liquidated after no viable offers to keep the companies open were made.  

Costco tightens standards for antibiotics use by meat producers

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The Seattle Times reported that Costco, in the midst of developing its own poultry processing plant to go with an already substantial company-owned beef supply operation, has set out new standards and monitoring requirements for antibiotic use in animal agriculture, making it one of the largest food retailers to take on the issue. Antibiotics have been overused in meat production, contributing to the development of antibiotic-resistant bacteria, which the World Health Organization warns could cause 10 million deaths a year by 2050. Costco’s enormous size - it sold more than 61 million rotisserie chickens alone in its 2017 fiscal year - gives it a great deal of influence on the supply chain.  
7
Dec-18
Friday

Only 6 years behind

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Business Insider reported that Walmart is introducing a new app meant to make it easier for in-store shoppers to place orders online. If shoppers can't find what they're looking for in one of Walmart's stores, employees with the app installed on their in-store touchscreen devices can offer to help the shopper place an order for any item shipped and sold by Walmart online. Customers can choose to have items sent to their home or the store for free pickup. The new app allows for the payment of online sales in cash, which has been something of a holy grail for retailers like Walmart with a large base of low-income consumers. Retail Directions is very proud to set the benchmark in omni-channel retailing, we introduced similar "Endless Aisle" technology for our clients back in 2012.

Laura Ashley up for sale

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We noticed in today's AFR that homeware and fashion brand Laura Ashley's Australian business is up for sale, withg administrators seeking urgent expressions of interest. Earlier this week, the Sydney Morning Herald reported that the retailer had gone into administration - the second time it has collapsed in two just years.

How wise is it for Aussie retailers to play Amazon at its own game?

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The AFR reported that retailers are looking at ways to offer free deliveries for online orders through loyalty schemes or subscription-based programs to match or counter Amazon Prime, which has helped fuel the e-commerce giant's Australian growth. For example, Super Retail Group is working on plans to offer free online deliveries through its Club program. Woolworths and Coles are investing in digital capabilities to create seamless omni-channel shopping experiences. Several other bricks and mortar retailers offer free deliveries for orders over a certain threshold. However, not all Aussie retailers are diving in head first. JB Hi-Fi's CEO said the retailer was keeping a watching brief on the market, "but subscription style services is not a current consideration. Our primary focus is on providing customers with great value, transparent and reliable delivery choices across our products for both JB and The Good Guys."  
6
Dec-18
Thursday

Dollar General focuses on food as it eyes expansion

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The Wall Street Journal reported that US discount retailer General Dollar plans to open 975 new stores, remodel 1,000 stores and relocate 100 stores as part of its fiscal 2019 plans. With plans to expand in rural and metro areas lacking affordable and healthier food options, the retailer is betting that more food choices, including fresh produce, will boost its revenue and traffic. Dollar General operates 15,227 stores in continental US, and believe that there is an opportunity to add a further 12,000 to 13,000 stores in the future.