The AFR reported that pure-play online homeware retailer, Temple & Webster will now target the $50 billion home improvement market as a new source of expansion in an attempt to find its maiden profit this year. Calling a spade a spade, Temple & Webster is an example of a non-profitable business that sucks $70 million dollars (its annual revenue) from the market and gives it away at cost, causing considerable damage in its wake. Not dissimilar to Amazon.

According to an article in News.com.au, Australia is now Alibaba’s third biggest market outside China, behind the US and Japan. But despite its size, the firm seems happy to remain under the radar and isn’t looking to pick a fight with Amazon. Interestingly, Alibaba is one of the fastest growing retailers in the country — working with well-known names from Chemist Warehouse to Woolworths and Kathmandu. The article notes that "In its home market, Alibaba is rolling out vending machines that spit out cars, cash-free supermarkets where your shopping can beat you home and “magic mirrors” where you can virtually try on makeup. In Adelaide, shops still can’t open on a weekend later than 5pm." A top local executive at Alibaba said that "the company's rapid growth Down Under should be a wakeup call to laggard Australian retailers failing to keep pace with their customers."

Glossy reported that US department store, Nordstrom is testing new retail strategies to drive sales and promote customer loyalty - starting in Los Angeles, its largest market. The retailer has found that customers who shop both online and in stores spend five times more than customers who shop in a single channel and that customer profitability doubles. As such, the company is investing in new store strategies that can complement its growing online business, including a highly targeted marketing approach, and an improved localised supply chain. The key to Nordstrom's continued success is its holistic view of retail sales, the retailer does not report on in-store and online sales separately. The approach makes good sense. If your customers demand a consistent and seamless “one” brand experience, unifying the client engagement structure of the business becomes the only way to effectively meet and exceed such expectations.

The AFR reported that same-store supermarket sales slowed sharply in the first seven weeks of 2019 to 1.3% partially due to disruption from the ban on single-use plastic bags. We warned about mixing commerce with politics - some customers always get upset to the detriment of the business.

A Business Sales Indicator report released by Commonwealth Bank shows that spending was up across all industry sectors by 1% in July, pushing annual spending growth to a four-year high of 10.4%. The report indicates that retail deflation (i.e. lower prices) across a range of good and services has resulted in very stable spending so far in 2018, rising approximately 1% every month.    

Tiffany & Co has joined Burberry, Maserati, Hugo Boss, and La Mer on Alibaba's invite-only Luxury Pavilion. According to a post by The Hustle, after initially resisting the allure of Alibaba and Amazon due to their failure to crack down on counterfeiting, the ultra-luxury jeweler succumbed to the allure of gaining access to the growing Chinese luxury market. Alibaba's strategy to be the "gateway to China" seems to be paying off, enabling the marketplace to succeed in a challenging luxury market that has proved elusive even to Amazon.

The Seattle Times reported that Nordstrom surpassed its own forecasts, posting a profit of U$162 million, up about 46%, on U$4.07 billion in sales, up 7.3%. Comparable sales were 4% up.  Executives attributed the performance to strength across the board for the last quarter.  Most retailers would see this as an excellent result, but for a department store in 2018 we see it as truly remarkable.

Under the heading of 'Spin Doctor', The Wall Street Journal commented that in 2012 IBM pitched its artificial-intelligence system Watson as a breakthrough weapon in the fight against cancer. Billions of dollars later, it has had a limited impact on patient outcomes, and more than a dozen IBM clients or partners have stopped or scaled back their projects with the platform.  We have researched the AI area in depth and our findings can be found in the article covering Retail Directions' keynote address to the Online Retailer conference in Sydney in July 2018 (https://lnkd.in/gEDg75q).  AI demystified.  

Australian e-commerce operator, Kogan.com Ltd published impressive results, massively increasing revenue, profit, and its customer base.  The business put through close to A$500 million (although the revenue was actually around $410 million), making a gross profit of $80 million and EBIT of $21 million, more than double of EBIT the year before. Good to see an e-commerce operator who actually makes money.  Kogan has now expanded from its consumer electronic space into other verticals, including travel and insurance.  About 44% of profit comes from Kogan's exclusive brands, confirming the conventional wisdom that those retailers who manage to master private labels have a solid competitive advantage.

The Associated Press reported that Macy’s raised its annual profit forecast and sales are expected go up by 2.5% on like-for-like basis. The Cincinnati department store chain delivered its third straight quarter of higher profits, earning U$166 million for the quarter, against $111 million the year before. Sales were around $5.6 billion, so not a great result, but the trend is right.  Interestingly, Macy's shares dropped by 12% on the day of the results announcement, perplexing analysts.

Also from the ASX, Beacon Lighting Group has posted record net profit after tax of $19.6 million in FY18, a 17.7% increase from FY17. In its announcement, the retailer attributes the results to record-level store sales and strong trading by its commercial and international businesses, its wholesale globes business and its Roadway and Massons for Light businesses. Full-year group sales rose 9.7% to $236 million.

A results announcement lodged with the ASX shows that furniture retailer Nick Scali has posted a 10% increase in net profit after tax to $41 million in FY18, up from $37.2 million in FY17. The strong result was driven by a 20% increase in gross margin to 62.7% and an 8% rise in total sales to $250.8 million, helped by ten new store openings across FY17 and FY18, up from $232.9 million in FY17.