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We have noticed that Amex is attempting to enter the space populated by deferred payment providers such as Afterpay and ZipPay. Amex now offers interest-free repayments on large purchases in installments over 3 months. An interesting move, but probably too late and the question needs to be asked about its demographics - Amex operates in a somewhat different segment to Afterpay, ZipPay and all the other "Pays" in the market.

Billboards are back in vogue for brands

The Hustle reported that despite being dismissed as irrelevant just a decade ago, today, in the midst of an online marketing boom, billboards are one of the fastest-growing ad commodities on the market. What’s driving this renewed interest? By working with digital instead of fighting against it, the billboard industry has managed to stay relevant and effective. A recent Nielsen study found that combining billboards and digital ads can lead to a 4x increase in online activation. Other studies show billboards can lead to lifts of 54% in search traffic, 38% in Facebook interaction, 25% in Instagram engagement, and 47% in sales activation. That’s better than radio and print - and just below what you get from a TV ad, for the fraction of the price. Billboards are one of the few mediums with some assurance you have the audience’s attention. Given that every retail storefront is essentially a branded billboard, this trend is important to note.      

Consumer spending key for economists

The AFR reported that economists are awaiting indications that wage growth has ticked higher in the second half of the year, with consumer spending set to be the key focus when Australia's third-quarter GDP figures are released on Wednesday. GDP growth for the three months ending September is set to be just slightly weaker than the previous quarter at 0.6%, according to market consensus, falling from 0.9% in June. That figure is expected to take the annualised growth to 3.3%, still well above the five-year average. Australia's wage price index rose 2.3% year-on-year in the third quarter as signs emerge that wage growth is rising.

eBay tips today for online shopping peak

The AFR reported that eBay Australia says today will be its busiest day of the year as people begin their gift shopping in earnest, with an estimated 2.6 million visitors predicted on the site. The busiest hour is expected between 8pm and 9pm - when dinner is over and Australians are settled down with their devices - with the most manic 15 minutes of 2018 anticipated to come between 8.30pm and 8.45pm. More than three-quarters of visitors will be shopping on mobile devices. Past trends suggest consumers will be thinking of their children first, with a toy predicted to be sold every three seconds. But, fear not, as they won't be neglecting their own Christmas cheer, with a bottle of alcohol forcast to be sold every 42 seconds.

Myer board face strike over pay

The AFR reported that Solomon Lew is expected to deliver a second "strike" over pay at Myer's annual meeting today, but the besieged retailer is likely to avoid a spill of their board. The Australian Securities and Investments Commission is understood to be examining two letters from Mr Lew to Myer shareholders which the board  questioned. Speaking after the Premier Investments AGM on Thursday, Mr Lew repeated his criticism of Myer's board. Myer were recently forced into a trading halt to announce their sales figures for the first quarter had declined by 4.8%, after information was leaked to The Australian Financial Review.

Amazon undercuts Woolworths and Coles on household staples

The AFR reported that Amazon has launched an assault on Australia's $100 billion food and grocery market, prompting complaints from Woolworths that multinational suppliers are favouring the e-commerce giant with lower prices. After stepping up pressure on Woolworths and Coles by adding food and beverages to its non-food pantry range last month, Amazon Australia is now undercutting the dominant supermarket chains by as much as 50% on household staples. Woolworths, which accounts for about 38% of the food and grocery market, plans to seek a "please explain" from suppliers, threatening to remove underperforming brands from its shelves. It seems to us like Woolworths' reaction is exactly the PR Amazon was seeking.

Celebrity and ethical brands upend US$52 billion beauty industry

The Wall Street Journal reported that independent cosmetic companies such as Anastasia Beverly Hills Inc., Glossier Inc., Kylie Cosmetics and Milk Makeup are among dozens of brands wooing millennials and younger consumers away from traditional beauty companies. These retailers are giving the industry a makeover by offering a more diverse range of natural products and by using celebrity founders, such as Kylie Jennier, and social media to engage consumers. The results are significant: independent makeup brands' sales grew 24% in 2017, compared with the market average of 5.9%, according to research.

US tax code typo

An article in The Hill covered an error in a US tax reform law, which has had a material impact on retail store renovation projects. The mistake means retailers are required to depreciate remodeling work over 39 years rather than taking the immediate write-off Congress intended. The Tax Cuts and Jobs Act of 2017 was supposed to eliminate the previous 15 year depreciation period on renovations by allowing retailers and restaurants to write off the full cost immediately. But in the rush toward passage, a mistake in wording meant that improvements at stores and restaurants fall into a category intended for constructing the building itself, which lasts for decades and has to be depreciated over 39 years. This "typo" definitely affects Australian retailers operating in the US as well.

Sales are reshaping the retail calendar

An article on the ABC covered the trading shift generated by shopping events such as Black Friday, Cyber Monday, and China's Singles Day, which are reshaping the retail calendar. The change is beginning to show through in the statistics, with last year's November sales spiking, while December disappointed. The Australian Bureau of Statistics' seasonally-adjusted figures showed November retail turnover coming in at $26.4 billion, beating December. However, according to the ABS original figures, December sales were actually still ahead at $33.6 billion. NAB's group chief economist Alan said it indicates the ABS is not yet used to accounting for a bigger November and it will take about three years for the seasonal factors to essentially allow for this new change in behaviour. In response to this increasing trend, retailers need to reforecast and plan staffing and inventory levels accordingly, rather than assume the traditional Christmas boom will continue.

Buy now, pay later sector booming but are regulations coming?

The AFR reported that the Australian Securities and Investments Commission (ASIC) has expressed concern about Afterpay being used as the lender of last resort by debt-ridden consumers. It has also warned the entire buy now, pay later sector that it is prepared to use new powers to intervene against harmful products. After investigating six players including Afterpay, ASIC found one in six users of the service became either overdrawn, delayed bill payments or borrowed additional money. The ASIC report shows the sector has grown dramatically to include two million users in the 2018 financial year compared to 400,000 consumers two years ago.    

US Black Weekend results

Bloomberg reflected on the Black Weekend sales results in the US - their takeaway from the past few days is that Americans are spending at unprecedented levels, and the overwhelming majority of that growth is online. While brick-and-mortar chains can rightfully claim their stores help boost web sales by giving shoppers a chance to see products in person, the growth in web sales means lower margins. The shift online means that chains have to spend more on already-elevated shipping costs, and many now offer zero or reduced rates for mailing packages during November and December, which only exacerbates the hit to results. In general, physical stores had a disappointing four-day period with visits down 6.6%, but not all brick-and-mortar chains and categories are the same. For example, sales of electronics and appliances rose 6.4% over the weekend. The four-day Black Weekend delivered $60 billion in sales, compared to $41 billion in 2012 and $57 billion in 2017.

Omni-channel retail keeps expanding - in both directions

DigiDay reported that Parachute, a US-based born-digital bedding and bath brand, is now expanding into physical retail - two years after opening its first retail store in Venice, California. Parachute has six physical stores and plans to open 20 by 2020.  The company commented that its online and physical stores are profitable. Parachute joins a growing group of brands, born online, that are building store networks. Casper (online bedding specialist), announced in August that it plans to open 200 stores in the next three years. Warby Parker (online eyewear)  intends to have 100 stores up and running by the end of this year.  What encourages Parachute to expand into brick and mortar is the realisation that where there is a Parachute store in an area average online spend increases ten-fold. We have pointed out on a number of occasions that a strong driver for online sales is an on-the-ground presence.