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November 2018 retail statistics

My Business reported on the latest retail turnover figures from the ABS, stating that they paint a bleak picture for bricks and mortar retailers. Covering November 2018, which included the Black Friday sales, the ABS said that retail turnover surged by 0.4 of a percentage point for the month, increasing on the 0.3 of a percentage point rise recorded in October. Online sales reached their highest level ever recorded in the ABS series, accounting for 6.6% of total retail turnover. A big jump from the 5.5% contribution that online sales made in the same month just a year earlier. However, as usual, the media neglected to include the YoY figures, with retail sales growing approximately 3.6% in November 2018 over the previous year it paints a much more balanced picture. All eyes will be on the December retail figures, to deliver a real snapshot of the state of the retail industry and consumer spending.

The new payment champions are...

The Wall Street Journal reported on the somewhat bewildering proliferation of ways to pay for things in recent years. Hardware companies like Apple and Samsung, online ones like Google and Amazon, banks like JPMorgan Chase and retailers like Walmart have all unveiled their own new ways for Americans to make purchases, especially with their phones. However, the vast majority of the time, all these methods are really just different means of delivering your credit or debit card information to the merchant. As a result, the centrality of Visa and Mastercard has only been reinforced. Disappointing news to many - especially merchants - who had hoped that the rise of digital payments would disrupt these incumbents and relieve them of the associated transaction fees. The new payment champions: well, actually, they're the same as the old ones.

Mixed trading results from the US

The Wall Street Journal commented that investor expectations for US retailers were high heading into the holidays. Low unemployment, rising wages and strong consumer confidence all boded well for spending. However, as sales reports for the Christmas period continue to trickle in, a divide is clearly visible between the weak and the strong operators. Macy's reported that its like-for-like sales during November and December were up just 1.1%. In contrast, Target reported 5.7% increase. Kohl’s same-store sales increased just 1.2%. J.C. Penney, which - according to WSJ - appears to be going the way of Sears, saw same-store sales fall 3.5%. With such diverse results, it looks like strong customer confidence is not enough to boost sales - the retailers have to be able to ride the wave as well.

Crabtree & Evelyn closure

Inside Retail reported that beauty and home products retailer Crabtree & Evelyn announced the closure of its entire network across Australia (12 stores).  Crabtree & Evelyn recently announced the closure of its 12 Singaporean stores and 19 Canadian stores after going into bankruptcy protection.

Samsonite opens first mono-brand airport store in Australia

Inside Retail reported that travel luggage retailer Samsonite has opened its first airport mono-brand store in Australia at the domestic terminal in Brisbane Airport. The new store, which features Samsonite’s latest fit-out design and “endless aisles” digital platform, also utilises the company’s new digital ordering platform to allow travellers to shop from the entire Samsonite offer with free home delivery anywhere in Australia. Samsonite Australia announced it will open more retail stores in other Australian airports in the next 12 months.

IKEA's digital revolution

The AFR reported that new IKEA Group global chief executive Jesper Brodin is looking to use big data, smaller-format stores, and next-day delivery to snare more customers' dollars as the Swedish giant makes a late push into the digital world. Despite being the world's largest home-furnishing retailer, IKEA did not launch a full e-commerce offer in Australia until about six months ago. In his first visit to Australia as CEO, Mr Brodin is clear that, despite being late to the online game, IKEA was undergoing a digital revolution. The IKEA footprint has doubled in Australia in the past five years. IKEA now has three distribution centres to support online shopping, which comprises 12 to 13% of its total Australian sales of $1.39 billion in fiscal 2018.

Noni B reports a Merry Christmas

The AFR noted that women's fashion retail group Noni B has reported that after acquiring Katies, Crossroads, Autograph, Rivers, and Millers in 2018 sales were up 140%. Like-for-like sales increased 1% in December, but the total first half-year like-for-like sales were down 3.1%. Substantial cost reductions were also reported. We remain cautious in our assessment as the true test after an acquisition comes in year two and three, when the retailer must switch to the business-as-usual model.  Continuing cost cuts could also have a detrimental effect, and apparently more are planned.  

2019, the year of 5G?

The AFR reported that Aussie consumers will be able to buy the first 5G-ready smartphones in Telstra stores by the end of June, after the telco giant revealed it had signed deals with "more than one" smartphone manufacturer to get exclusive access to their first 5G-ready handsets. The deal makes Telstra the first of Australia's three mobile network providers to commit to a clear timeframe for the launch of its 5G mobile network. However, no details were provided on how much the 5G plans would cost and about how these 5G-enabled smartphones would differ from 4G phones. One thing is for certain, end of days for the NBN looms on the horizon.

Overtired workers cost Japan US$138B

According to research reported by The Guardian, Japanese employees are the most sleep-deprived workforce globally, allegedly costing the economy US$138B per year. On average, Japanese workers get 6 hours and 35 minutes of sleep per night. To compensate, many Japanese proudly practice ‘inemuri’ -- the act of ‘sleeping while present’ in meetings or presentations, sometimes while standing up. Many Japanese companies discourage overtime and insist their employees leave by 9 pm to ensure they get enough sleep. Some companies are also building ‘strategic nap rooms’ to reduce in-meeting naps. Another Japanese company called Crazy created a sleep-monitoring app that rewards employees up to US$580 per year for getting more than 6 hours of sleep per night.

Amazon will use AI to deliver free samples

Axios reported that Amazon is testing an AI-powered program, partnering with brands like Maybelline and Folgers, to send free samples to potential buyers’ doorsteps through its delivery service. The new ad strategy could throw a monstrous haymaker to the jaws of Facebook and Google’s online ad dominance - if it connects. Makes sense. Alexa sees you when you sleep, she knows when you’re awake, and she knows what you shop for online. And, with more than 100m Prime services subscribers, analysts believe this is a major breakthrough in its efforts to throw Google and Facebook from their ad-dominated hills.

Kathmandu downgrades earnings, is The Reject Shop next?

The AFR reported on Kathmandu's softer than expected trading update last week. Given that that earnings downgrades rarely happen in isolation, analysts are signaling that The Reject Shop may be next. The company has already downgraded earnings once - at its annual general meeting in October - and since flagged further declines in sales. The Reject Shop's sales were down 4.9% year-on-year in the six weeks to late November, which was after the downgrade, and that the company needed to arrest the decline leading into Christmas to make its revised profit numbers. The other one feeling some heat is Myer - although its investors know it is as much a cost out story as sales story, at least in the short to medium term.    

Retailers stuck as shoppers stay home

The AFR reported that retailers are scrambling to avoid a "liquidity crisis"; after in-store foot traffic fell 8% between Black Friday and Boxing Day, compared to 3% over the same period in the previous year. "Foot traffic appears to have been weak as shoppers continue to shift December shopping trips online and pull forward purchases into Black Friday in November," said Citi in a note reviewing the past Christmas season. Citi said that discounting had not increased, and in some cases, retailers had pulled back after "several years of discounting ramping up to unsustainable levels in some categories". Analysts attributed the steep decline in foot traffic to three broader trends: the rise of online shopping, shifts in the retail calendar, and growing cost-of-living pressures.