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One third of households to adopt 5G for their internet

The AFR reported that new research found that one in three Australian households are interested in subscribing to 5G wireless services for their home internet connection. The finding further threatens the already troubled NBN - the fixed-line network has been plagued with endless rollout and performance issues. 5G is capable of speeds up to 20Gbps, which is much faster than the 100 Mbps most NBN customers are limited to. We called out this situation back in 2015 in an article about how misguided the NBN is as a national technology initiative.

Aldi calls out supermarket loyalty schemes

235 reported that Aldi has hit out at Woolworths and Coles in a new campaign, calling their loyalty programs ‘schemes’ that benefit shareholders, not shoppers. Aldi's view is that supermarket loyalty programs “manipulate” shoppers potentially costing Australians up to $1500 each a year as they desperately try to accrue enough points for a toaster while forgoing actual savings at the checkout. But Woolworths and Coles have said Aldi’s calculations aren’t a true reflection of how customers accrue points and rewards can be earned far quicker. However, a lecturer in Psychology at the University of Tasmania said loyalty programs can make people “less rational” with their shopping. You don't have to be a professor to know that both Woolworths' loyalty scheme and Coles' wingless Flybuys are pretty much gimmicks. BTW: Aldi doesn’t have any loyalty programs and each location it opens takes customers away from Coles.

Advertisers ditch Google for Amazon

CNBC reported that advertisers are increasingly ditching Google and putting their search budgets into Amazon ads instead. It’s not just a handful of companies, according to execs at multiple agencies, the moves, so far, have amounted to hundreds of millions of dollars. Amazon is making huge headway in the advertising game, becoming the 3rd largest US digital advertising platform behind Google and Facebook. It also doesn’t hurt that around 49% of product searches begin on Amazon, meaning that Google is becoming an unnecessary middleman.

Walmart patents biometric shopping handles

CB Insights reported that Walmart aims to use biometric shopping handles to track customers' heart rates, temperatures, and stress levels. The company’s recently published a patent application titled “System And Method For A Biometric Feedback Cart Handle”, which aims to equip shopping cart handles with the ability to gather biometric data to determine when customers might need help. The system would continuously monitor these metrics throughout the customer’s time in the store, measuring them against the baseline. The retail giant says the data would be used to help identify shoppers in distress and to improve their overall shopping experience, without collecting personal data.

Amazon shelves sexist AI recruitment tool

The UK Daily Telegraph reported that Amazon has ditched a "sexist" internal tool that used artificial intelligence to sort through job applications. Created in 2014, the program was used to sort through submitted resumes and pick out the most promising candidates. However, it taught itself to prefer male candidates over female ones, repeatedly penalising resumes that included the word "women's". The problem stemmed from the fact that the system was trained by people over a 10-year period, most of which came from men. In fact, the danger of inherent bias in the use of algorithms is a common problem in the technology industry. This stems from the fact that artificial intelligence doesn't exist, what we deal with is actually artificial instinct - machines equipped with pattern-based learning, which gives the Appearance of Intelligence. You can read more about Artificial Instinct here.

Will Baby Bunting get the last laugh?

Multiple media outlets reported that Baby Bunting looks poised to shine in the children's retail space now that the clearance sales of its market-exiting competitors are over. In a Morgan’s Conference presentation to shareholders earlier today, Baby Bunting said that  FY19 EBITDA is expected to be in the range of $24 million to $27 million, representing growth of between 30% and 45% – the guidance assumes the opening of six new stores during FY19, as planned. Baby Bunting plans to build a network of more than 80 stores, with just 49 at present there is a long way to go, but its online strategy seems to be in line with its bricks and mortar growth to drive customer interaction.

PM confident that company tax cut laws will get across the line

Australia Associated Press reported that Prime Minister Scott Morrison has expressed confidence that his government can pass laws next week to bring forward tax cuts for small and medium-sized businesses by five years at a cost of about $3 billion. Under the plan, companies with annual turnovers of less than $50 million will have their tax rate cut to 26 per cent in 2020/21, then 25 per cent the following year. The cuts build on last year’s reduction to 27.5 per cent for the same business groups, from 30 per cent.

Secret Amazon brands put the squeeze on 3rd-party products

The Hustle reported on Amazon’s private label business, which after quiet growth is on track to hit US$25 billion by 2022. Amazon sells 70+ in-house brands with names like “Lark & Ro” and “Arabella” that are nearly indistinguishable from 3rd-party products, often advertising private label products below competitors’ products. Its private label strategy aims at slowly reducing its reliance on 3rd-party sellers and increasing its profit margins. The company has also launched an “Amazon Accelerator Program” to develop even more private label brands. This is what invariably happens when a large retailer starts dominating its market segment – ‘home brands’ begin to sneak into the mix, to the detriment of the normal suppliers who helped the retailer grow in the first place.

The end of Sears?

Fox Business News reported that iconic American department store chain, Sears is spiraling downward and fast. Sears stock lost 90% of its value over the past 12-months, now trading below US$1.00. This week reports surfaced that the retailer may close 11 more stores across the US, including one of chain’s most profitable US stores, which according to retail experts could drive Sears out of business. The company has already closed hundreds of stores and sold off assets in recent years. The article goes on to say that while some of the issues at Sears are unique to the company, the broader retail landscape is suffering as competition from the likes of Amazon gets even tougher. We don't buy this point of view, retailers who have adapted to provide a holistic Digital Path to Purchase focused on all sales, not just online, are thriving - e.g. Nordstrom.

French Connection shares rise on sale rumours

Reuters reported that French Connection shares rose as much 45% on Monday after the British fashion retailer said the company could be sold as it reviews its strategic options. The statement follows a weekend report from Sky News that Founder, CEO and Chairman Stephen Marks, the largest shareholder in the business, had approached bidders to offload his stake. The company, whose brands include its namesake French Connection, Great Plains and YMC, has struggled to differentiate itself from rivals such as Inditex’s Zara, which offers a greater variety of clothes at cheaper prices. Once known for its provocative FCUK brand of clothes and accessories, French Connection is struggling and has been in the red for six years. In March, it said that it was close to turning profitable, adding that it would consider restarting dividend payments when it did. It will be interesting to see how this story plays out.

Woolworths picked as the winner in Wesfarmers-Coles demerger

The AFR reported that Woolworths is tipped to emerge as a major winner in Wesfarmers' demerger of Coles "as a decade of aggressive price cutting comes to an end". Fund managers are speculating that the demerger will lead to the most benign industry conditions in almost a decade as a stand-alone Coles will have less capacity to invest heavily in price while spending $1 billion automating its supply chain and distributing 80%-90% of earnings in dividends. Once again, fundamental information was missing from the article. What about the impact of Aldi, Costco, and soon Kaufland on the supermarket segment? Both Woolies and Coles will come under ever-increasing pressure from the international raiders.

Keeping the market honest

According to The Mail in the UK, Tesco's CEO has called for a tax on the sale of online goods to prevent the demise of brick-and-mortar stores. Apparently, the UK Chancellor of the Exchequer acknowledged that the government would need to tax internet giants such as Amazon and Google. We are all for levelling the playing field, but we think that such tax penalties shouldn’t be related to the size of the organisation but to its Profit and Loss statement. If a company runs at a loss for a number of years, it should be investigated, as it's clearly burning borrowed, or shareholders’ funds in order to distort the market.