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4
Oct-18
Thursday

Concerns about the global economy

204
Geopolitical Futures predicted that the International Monetary Fund will release some pretty discouraging forecasts next week, as various risks in the global economy begin to materialise. Foremost among them, according to the IMF head, is the US trade war, which threatens to negatively affect trade, investment, and manufacturing worldwide. And, the bad news doesn’t stop there. The IMF reports also bode ill for emerging markets, whose portfolios could lose as much as $100 billion. Argentina, Turkey, Indonesia, South Africa, and Pakistan are especially vulnerable. Finally, the reports made sure to note how concerned the IMF was about total global debt, which now stands at $182 trillion.
3
Oct-18
Wednesday

Frictionless shopping

141
The NRF looked at Home Depot's digital strategy, aimed at "frictionless shopping".  It is pleasing to see that some retailers have clarity about the future and work on creating and refining what we call a 'Digital Path to Purchase'.  The key objective of the DPP is to generate sales - full stop. Not online sales, but simply sales - anywhere in the business. Home Depot does this really well, it's customers collect around 50% of their online purchases in-store (aka Click & Collect).    

The unstoppable Aldi

212
Reuters reported that Aldi is progressively claiming market share not just in Australia, but also in the UK. Aldi's UK CEO said the firm opened 70 stores in Britain in 2017 and was on track to open 70 more in 2018 and 130 between 2019 and 2020. After that, the grocer plans to open 50-60 stores a year to reach 1,200, focusing on towns where Aldi was not yet present.  In Australia, if Coles and Woolworths are not scared by Aldi, they should be.  It is very difficult to compete with a supermarket business that has adopted and perfected Operational Excellence as their underlying business model.  

Does Coles have a strategy?

175
The AFR commented on the approaching Coles ASX listing. A voluminous information memorandum is expected to be released on the 15th of October, to be focused mainly on the business as it stands. In the meantime, what fund managers are trying to figure out is Coles' strategy moving forward. A strategy typically has various components to it, including proactive and reactive elements. So far, we have only seen the latter, which won't stop Aldi, Costco and Kaufland from progressively eroding the Coles-Woolworths duopoly.
2
Oct-18
Tuesday

Suppliers in a frenzy about Woolies plan to cut data

131
The Australian reported that the nations' grocery suppliers are rebelling against a new Woolworths policy that from next year will shut them out from essential data that tracks the sales of brands within supermarket categories. Some fear that the lack of transparency around sales performance will leave suppliers defenseless when their product faces a threat of being delisted. Suppliers have also raised the issue of a potential conflict of interest around Woolworth's private label grocery business, FoodCo, gaining access to competitor data that could be used to outmaneuver other brands. Currently, Woolworths shares key data with its suppliers, for a fee.

Should you unfriend Facebook?

157
For many retailers, Facebook is an important marketing and customer engagement channel. It is also becoming increasingly transactional, along with its sister platform Instagram. But, times are tough for the social media giant. Last week, it notified users that hackers had attacked its network and accessed the personal information of nearly 50 million users. At the same time, Instagram's founders abruptly resigned, just months after WhatsApp CEO Jan Koum's departure. From a regulatory perspective, members of Congress have redoubled their criticisms of Facebook, which is still wrapped up in SEC, FBI, and FTC probes thanks to the Cambridge Analytica scandal. And, perhaps worst of all, Facebook's stock price fell 3.4% after the company announced the breach. Overall, its share price is down 10.3% on the year as the company struggles to rebound.

US retail according to the NRF

127
Forbes reported that the National Retail Federation (NRF) increased its retail sales forecast for 2018 to at least a 4.5% increase over 2017.  According to the NRF, 73% of US retailers are exceeding earnings estimates and 63% are beating revenue estimates in the second quarter – "The industry has the potential to achieve a truly ground-breaking year.This is despite concerns about the uncertainty of the escalating tariffs between the US and China. “We believe the future is bright for retail,” said the NRF’s CEO.
1
Oct-18
Monday

Debenhams to test viral visual merchandising

19
Bloomberg reported that the department store, Debenhams may link the viral reach of its products with its in-store visual merchandising. The UK-based multinational is considering stock at its "store of the future" location based on its popularity within a recently launched online social platform. Products that get a lot of buzz online will get prime placements in the physical store. Another example of Debenhams' innovation in the Digital Path to Purchase funnel is its first Melbourne store, which features a technology-led service offering including Retail Directions’ mobile POS in the hands of store staff, enabling sales to be completed anywhere on the shop floor.

Tinder for car buyers?

68
The AFR reported that Cars.com has mirrored popular dating platform Tinder, rolling out new matchmaking technology to make it easier for users to buy and sell vehicles. The US company's website and app now allow people to swipe left and right to refine their searches until they find their "perfect match". Tinder's "generation swipe" set the benchmark for millennial content curation by delivering a casual and immediate way to refine information. Perhaps "car dating" isn't as preposterous as it sounds.
29
Sep-18
Saturday

US Economy continues its strong run

7
NRF reported that rarely has it seen as many economic gauges of the US economy so strong, including employment, income, retail sales, business spending, manufacturing and small business. According to NRF, consumer spending remains robust, job and income growth remain exceptionally strong, and household wealth continues to set record highs - all three factors influence consumer confidence and ultimately spending.   In the second quarter the US GDP went up 4.2% year-over-year.
27
Sep-18
Thursday

Coles' plastic toy and bag strategy pays off (in the short-term)

42
The AFR reported that Coles' same-store supermarket sales grew faster than Woolworths for the first time in two years during the September quarter. Coles lifted profit by 6% and sales by as much as 7%, boosted by its Little Shop promotion and backflip over plastic bags.  The stronger sales and earnings momentum will serve Westfarmers well as it prepares to seek shareholder approval for the proposed $20 billion demerger of Coles in November. However, analysts believe that the gains are unlikely to be sustained, shoppers who switched to Coles during this period will switch back, and Coles' same-store sales growth will slow to around 2.5%.

Retail rents and e-commerce frenzy

34
The AFR reported that leading retailers like Premier Investments are threatening an avalanche of store closures unless landlords reduce rents as $2 billion a year in sales shift from bricks and mortar to online. Rents for specialty retailers are still rising an average 4% a year, while same-store sales are growing by less than 2%, increasing margin pressure on retailers. Consequently, major retailers including Premier Investments, Myer, Wesfarmers' Target, Lorna Jane, David Jones, and the Country Road Group are reviewing store networks and stepping up investment in e-commerce. On the other hand, while rents are still rising and vacancy rates remain low, behind the scenes landlords are striking off-lease deals, offering rental concessions and temporary abatements to avoid rows of empty shops. What we are witnessing is not the demise of stores, but a temporary moment of e-commerce frenzy. Huge capital investments are being allocated to online while stores are left to rot. This will level out as stores are here to stay for a plethora of reasons. In our experience: stay frugal and have the right stock, at the right price, in the right location – if you do, you will do exceptionally well.