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Foot traffic lures car dealers to the mall

The AFR reported that $1.3 billion car dealership operator AP Eagers is emerging as a partial saviour for the ailing department store group Myer as it negotiates with a shopping centre owner to take over a large chunk of Myer floorspace in a new-age approach to vehicle retailing. AP Eagers said it was talking to a landlord to take up to 3000 square metres of space from Myer in a Brisbane shopping centre as it gets on the front foot in an industry bracing for big changes to traditional retailing models, with shopping centres offering more foot traffic to lure car buyers. Myer's new management aims to downsize some store footprints and reduce rents in a race to try to resurrect the fortunes of the venerable department store chain that has lost its way as online retailers chew into its market share.

Amazon ditches plans for New York hub

Reuters reported that Inc abruptly scrapped plans to build a major outpost in New York that could have created 25,000 jobs, blaming opposition from local leaders upset by the nearly US$3 billion in incentives promised by state and city politicians. The company said on Thursday it did not see consistently “positive, collaborative” relationships with state and local officials. Opponents of the project feared congestion and higher rents in the Long Island City neighborhood of Queens, and objected to handing billions in incentives to a company run by Jeff Bezos, the world’s richest man. Amazon said it would not conduct a new headquarters search and would focus on growing at other existing and planned offices.

Baby Bunting delivers 28% increase in half year profits

In results lodged with the ASX, Baby Bunting reported strong sales and profit growth in the first half of FY19, despite the major shake-up in the category following the of Toys ‘R’ Us and Babies ‘R’ Us at the start of the fiscal year. The brand expanded its store count to 52 stores, increased online sales by 61% to account for 11.5% of sales and focused on strong market share growth in the half. As a result, net profit after tax for the period grew 27.8% to $5.2 million, based off of a strong total sales result of $177.7 million – a 17.2% increase on the prior corresponding period. Looking at the remainder of the financial year, the group is expecting FY19 EBITDA to reach $25 to $27 million – growth of approximately 34 to 45% year over year.

Retail tech expectations for 2019

An article in Forbes states that it's no longer a question of if AI, predictive analytics and robotics will usher in a new era in business, but how this technology will continue to redefine the retail space. The piece postulates that winning companies will leverage technology at all levels of their organisation to gain mindshare with customers. It predicts that in 2019, the ability of 3D tech to dramatically streamline design and supply chain processes will become more mainstream. It also suggests that we will see the continued explosion of AI across retail, particularly as it relates to informing product recommendations for consumers. Personalisation will become more relevant than ever with innovative technology allowing brands to provide a deeper connection for consumers as they try out and explore purchasing items. And, finally, 2019 will not be the year of augmented reality changing rooms at apparel stores as technology providers and brands work to craft a customer experience that feels more natural and less intrusive.  

City Chic posts strong results

According to the results announced to the ASX, plus-sized fashion brand City Chic has done well in the first six months in FY19. Achieving 9.6% comparative growth is impressive, particularly in the current retail environment. Profitability and return on capital are excellent. It is clear that the decision to offload non-performing brands such as Millers, Katies and Rivers in June 2018 was a smart one. The brand, now trading as a part of City Chic Collective Ltd, reached revenue of $75.4 million. City Chic's CEO stated that the business has plans to expand its store portfolio further across Australia and New Zealand. Yesterday's ASX announcement was followed by a very positive review in today's Financial Review.

Ikea may launch an open online marketplace

The Financial Times reported that Ikea is exploring the launch of an online sales platform offering furniture not just from the famous flat-pack retailer but also from rivals as part of its big transformation. The world's biggest furniture retailer is finalising the details on its first test of selling on a third-party website such as China's Alibaba or Amazon. Ikea is not yet in talks with any of its rivals but it has noted that it would like to be involved in the creation of any industry-wide sales platform. Ikea is undergoing some of the biggest changes in its history as it tests concepts from leasing furniture and selling it on other websites to having city-centre shops and offering home assembly to its customers.

Lego shop headed for Sydney's east

The AFR reported that investment company Alceon Group has snared the rights to open stand-alone Lego stores in Australia and New Zealand under a partnership with The Lego Group. A flagship Lego store will open in March at Westfield Bondi Junction, just in time for the release of the second Lego movie. Under the partnership, Alceon has the licence to open and operate Lego-certified stores and Lego Group will be actively involved in site selection, store design and merchandise, leveraging its knowledge from establishing stand-alone stores overseas. The stores will stock exclusive Lego products not available at other retailers such as Myer, David Jones, Kmart, Target and Big W and will feature hands-on interactive experiences, including Lego's signature pick-a-brick wall and large 3D models.

Chinese shoppers still lapping up luxury brands

The AFR reported that despite tougher economic times, China's bling-happy upmarket shopaholics are still stocking up on luxury goods. Gucci posted a 25% jump in reported sales to €3.8 billion ($6.1 billion) in the fourth quarter of last year, with Gucci's Asia-Pacific sales growth motoring along at an annual rate of 45%. A few days earlier, LMVH – owner of Louis Vuitton and Christian Dior – reported that Asia-Pacific was its fastest-growing market, with sales revenue climbing 5.5% to €13.7 billion. An accepted data point is that Chinese shoppers account for more than a third of global demand for luxury goods. China's fourth-quarter GDP growth of 6.4% was the slowest since the global financial crisis, and the annual rate of 6.6% was the slowest in 28 years. Retail sales, though, bucked the downtrend, rising 8.2% for the year. But, not all companies shared in the luxury goods makers' bonanza. Apple reported a 27% drop in gadget sales in the fourth quarter.

Debenhams secures 40m pounds in extra funding

CNBC reported that Debenhams has secured 40 million pounds (US$51.45 million) in additional funding from some of its lenders as it strives to find a longer-term solution to its financial problems. Once Britain's biggest department store chain, the firm has been struggling with net debts of almost 300 million pounds and has given a string of profit warnings as it failed to keep pace with consumers moving online and to cheaper outlets. It said the new loan, agreed for a period of 12 months, would act as a bridge to "facilitate a broader refinancing and recapitalisation", adding it was still talking to its stakeholders and would conclude a "comprehensive refinancing".Shares in the company were on course to rise around 10% at opening, according to traders in London.

Skincare products now earn more than makeup

Quartz reported that skincare products have overtaken makeup products as the highest-earning big beauty category in the US. And, skincare is forecast to outperform all other cosmetics categories this year - propelling skincare supergiants like Estée Lauder and L’Oréal to record revenue. Last year, the skincare category grew 16% and the makeup category only grew 3%. Estée Lauder did US$4B in sales last quarter, and L’Oréal’s stock hit a record high. Part of the reason that skincare products are so valuable is that they sell at premium prices. However, some skincare forecasters predict that consumers won’t be willing to shell out hundreds of dollars for anti-aging serums forever and that the premium skincare bubble will burst once consumers become better educated.

Reality finally bites for Amazon's Whole Foods venture

The Wall Street Journal reported that Whole Foods is raising prices, again. Amazon slashed prices at the grocer after acquiring it in 2017, but pressure from consumer-product makers to cover rising costs for packaging, ingredients, and transportation has led Whole Foods to lift prices this month on hundreds of products.  This is in line with our earlier expectations covered in previous posts, that acquisitions of brick and mortar businesses would eventually bring Amazon more down to earth, which at some stage will put a big question mark over its vastly excessive market valuation.

Mars One Ventures crashes to earth

The Hustle reported that Mars One Ventures, a space startup that planned to establish a permanent human settlement on Mars, has quietly filed for bankruptcy. Rocket scientists, journalists, and investors insisted the project was impossible when it launched in 2012. But in spite of sustained skepticism, Mars One exploited starry-eyed space-cases for 7 years before burning up on re-entry to reality. A cosmic con of interstellar proportions: Mars One claimed to have received 202k applications from aspiring astronauts after going live in 2013. In reality, it received less than 3k. A failed Swiss mobile company called InFin bought Mars One for $92m in 2016 after T-shirt sales and donations brought in only about $1m. Ultimately, Mars One will never get off the ground: InFin filed for bankruptcy in Switzerland this past January with less than US$25k in the tank.