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24
May-19
Friday

Is rent-ail the future of retail?

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The Hustle reported that Home Depot announced plans to double down on tool rentals to cater to pro builders and boost sales. Earlier this week, Urban Outfitters launched an online subscription service that will allow customers to rent up to 6 items per month before swapping them out for new threads. As traditional sellers embrace rentals, they raise the question: Is rent-ail the future of retail? The equipment rental market is expected to grow to US$60 billion by 2021, and the online clothing rental market, virtually nonexistent before Rent the Runway, is expected to grow from US$1 billion in 2018 to US$2.5 billion by 2023. These growing markets are great opportunities for rent-ailers to build giant catalogs of popular products and revamp sluggish sales. Renting provides value to some consumers - namely, the ones looking for specific, expensive products they won’t use much, like power tools or stylish dresses. But, for the majority, the deals can end up being wildly expensive.

Best Buy rides the web to lift sales

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The Wall Street Journal reported that electronics retailer, Best Buy's profit rose in the latest quarter as growing online sales of appliances and electronics offset flat sales in stores. Best Buy's comparable sales increased 1.1% in the first quarter ended May 4, slower than previous periods but the ninth consecutive quarter of growth. The company has undergone a striking turnaround in the last five years, defying the fate that has befallen Circuit City, Sports Authority, Toys "R" Us and other so-called category killers. Best Buy has implemented a template for competing in an Amazon-dominated segment, matching prices, adding services and using its stores to fulfill online orders. Most recently, it has actually struck a partnership with Amazon to sell smart TVs.

Reject Shop in the red, CEO departs

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The AFR reported that a series of blunders around product lines, randing and pricing have seen like-for-like sales drop 2.9% in the second half at The Reject Shop, costing CEO Ross Sudano his job. Chairman Bill Stevens says the business is squeezed in a vice between relentless discounting of the big supermarkets and intense competition. Stevens also says The Reject Shop is being hurt by falling foot traffic, with shopping centres spending big on refurbishments without success (maybe they should be spending big on parking rather?). Despite the poor performance, Stevens says he has no regrets about rejecting a $78 million takeover offer from packaging mogul Raphael Geminder, even though the retailer's value has fallen 23% since the offer closed. Reject Shop shares fell 6% to $2.13 on Thursday. It is set to lose more than $10 million in the June half.    

Kogan.com makes headlines for the wrong reasons, again

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The AFR reported that analysts say Kogan.com’s brand is likely to take a hit from allegations the online retailer offered fake discounts to consumers in a tax-time promotion last year. The ACCC alleges Kogan.com raised the prices of more than 600 products by at least 10% immediately before offering 10% discounts last June. The ACCC has instituted proceedings against Kogan in the Federal Court, alleging the company, run by co-founder Ruslan Kogan, made false or misleading representations about the promotion, breaching the Australian Consumer Law. Kogan denies the allegations. It is not the first time Kogan has been in strife with the competition regulator for making false and misleading statements. In January 2016, it paid $32,400 in penalties for a misleading Father’s Day promotion. True or false, the news is not good for Kogan's brand sentiment.  
23
May-19
Thursday

50 retail innovation stats

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Forbes reported on "50 retail innovation stats that prove the power of Customer experience". These statistics show the changing retail landscape and just how much customers depend on personalisation, convenience and great relationships with brands. For example, in 2018, 51% of e-commerce brands offered same-day delivery, up from 16% in 2017. Experts predict that within the next two years, 65% of retailers will offer same-day delivery. 87% of consumers begin their shopping journey with digital, a jump from 71% in 2017. 77% of consumers say discounts influence where they shop, and 48% say discounts can speed up their decision-making process. The majority of customers (58%) say their top reason for leaving a shopping cart is high shipping costs. Check out the full list here.

     

US retail's winners and losers

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CNBC reported that Target’s CEO thinks the retail industry is shaking out to show clear winners and losers. Target shares soared more than 9% Wednesday, on the heels of the retailer’s upbeat results. Its stock is up over 8% so far this year, bringing its market cap to roughly US$39.8 billion. Rival Walmart also recently delivered strong first-quarter results. Its shares were climbing about 0.5% Wednesday morning, having jumped about 8.5% so far this year. It’s US department store chains, however, that seem to be ceding market share, as they’ve been called out for taking too long to make investments in their bricks-and-mortar stores and websites. Kohl’s shares are down about 10% over the past 12 months, while J.C. Penney shares have fallen 55%, Macy’s shares are down 35%, and Nordstrom’s stock has dropped roughly 25% from a year ago.

Natura acquires Avon for US$2b

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The Wall Street Journal reported that The Body Shop parent, Natura Cosmeticos has reached an agreement to buy Avon Products Inc in an all-stock deal worth about US$2 billion. Avon has been under pressure from the rise of online beauty sales, which it was late to embrace, and news of the deal saw its shares surge 9% during regular trading and 15% in aftermarket trading. The combined cosmetics company is expected to have annual gross revenue of around US$10 billion and have locations in 100 countries. Natura said that it expects the combination will allow it to cut costs by about US$150-US$250 million annually.
22
May-19
Wednesday

The Iconic gets a capital injection

5
The AFR reported that online marketplace, The Iconic has received $18 million in capital from its European parent after reporting losses of $18.3 million in 2018. However, Australia's largest online fashion retailer appears on track to finally break even this calendar year after reducing operating losses to $3.3 million and breaking even at the EBITDA level for the first time. The online retailer, which sells more than 60,000 products and 1000 brands, has doubled its share of the Australian and New Zealand online clothing and accessories market, taking sales from retailers such as Myer, David Jones, Premier Investments and Sussan Group. About 15% of households now shop on The Iconic site, up from 9% in 2017, with 150 million customer visits annually. Erica Berchtold, the new CEO of The Iconic, aims to lift sales by expanding into new categories and private-label brands and developing technology to engage customers and personalise its offers.  

Home Depot warns of tariff impact

5
Reuters reported that Home Depot Inc blames wet weather in February and a slump in lumber prices for its slowest growth in quarterly same-store sales in at least three years, while warning of a US$1 billion impact from new tariffs on Chinese imports. Bad weather along with land and labor shortages have constrained builders’ ability to construct new houses, especially in the low-price segment, creating a supply glut for lumber, a key building material. Home Depot said weak lumber prices hurt its first-quarter sales growth by US$200 million and if prices do not improve for the rest of its fiscal year, it could dent overall sales by as much as another US$600 million. Still, the company’s net income rose to US$2.51 billion, or US$2.27 per share, and beat analyst average estimate of US$2.18 per share. Net sales rose 5.7% to US$26.38 billion, beating expectations of US$26.36 billion. It's worth noting that this is the retailer than Bunnings is based on.  
21
May-19
Tuesday

Retailers buoyant as Coalition tax cuts loom

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The AFR reported that retailers expect the Coalition's unexpected election victory to boost consumer confidence and discretionary spending while taking the pressure off wage costs and house prices. Retail shares rose strongly on Monday in a  relief rally triggered by the Coalition's decisive win, with discretionary retailers and housing-related stocks leading the gains. Retailers welcomed the end of a period of political instability, which had eroded business and consumer confidence, and said the Morrison government had a mandate for change. Retailers are now preparing for the first stage of the Morrison government's tax cuts, which are projected to pump as much as $8 billion into the economy over the next few months, boosting disposable incomes. The tax cuts, while modest, will put more cash in the hands of consumers, helping to offset some of the factors that have weighed on discretionary spending, including low wage growth and falling house prices.

Some US Democrats want to ban cashless stores

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Market Watch reported that a pair of bills introduced in US Congress over the past week would put a stop to retailers going cashless. Introduced by a Democrat representative from Rhode Island, the legislation, nicknamed the Cash Always Should Be Honored (CASH) Act, would require cash to be accepted as payment for any goods or services sold at a physical retail establishment. Retailers would not be required to accept cash for transactions that were made online or by telephone. The bill also would put the Federal Trade Commission in charge of enforcing the prohibition on cashless stores. While the Act has widespread support, the National Retail Federation believes that “retailers should have the right to choose which payments to accept and to decide whether going cashless makes sense for their business.”
20
May-19
Monday

Meccaland sets the standard for retail experiences

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Reporting back after attending Meccaland, cosmetic brand Mecca's annual beauty festival, the three-day event set the benchmark for captivating offline retail experiences. From local and international brand ambassadors and influencers, a Mecca-branded ferris wheel, an over-the-top drag queen, two oversized glitter rainbows, a disco dancefloor and dancing Mecca staff on rollerskates dressed as cheerleaders to complimentary beauty services, exclusive products and masterclasses, the event had it all. Such was the gravity of the festival that it drew a massive crowd of more than 15,000 beauty devotees, according to Inside Retail. While the event took place in Sydney, it will continue in selected stores around the country with various after-party events, including complimentary beauty applications, consultations, samples and free product offers.