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Should you unfriend Facebook?

For many retailers, Facebook is an important marketing and customer engagement channel. It is also becoming increasingly transactional, along with its sister platform Instagram. But, times are tough for the social media giant. Last week, it notified users that hackers had attacked its network and accessed the personal information of nearly 50 million users. At the same time, Instagram's founders abruptly resigned, just months after WhatsApp CEO Jan Koum's departure. From a regulatory perspective, members of Congress have redoubled their criticisms of Facebook, which is still wrapped up in SEC, FBI, and FTC probes thanks to the Cambridge Analytica scandal. And, perhaps worst of all, Facebook's stock price fell 3.4% after the company announced the breach. Overall, its share price is down 10.3% on the year as the company struggles to rebound.

US retail according to the NRF

Forbes reported that the National Retail Federation (NRF) increased its retail sales forecast for 2018 to at least a 4.5% increase over 2017.  According to the NRF, 73% of US retailers are exceeding earnings estimates and 63% are beating revenue estimates in the second quarter – "The industry has the potential to achieve a truly ground-breaking year.This is despite concerns about the uncertainty of the escalating tariffs between the US and China. “We believe the future is bright for retail,” said the NRF’s CEO.

Debenhams to test viral visual merchandising

Bloomberg reported that the department store, Debenhams may link the viral reach of its products with its in-store visual merchandising. The UK-based multinational is considering stock at its "store of the future" location based on its popularity within a recently launched online social platform. Products that get a lot of buzz online will get prime placements in the physical store. Another example of Debenhams' innovation in the Digital Path to Purchase funnel is its first Melbourne store, which features a technology-led service offering including Retail Directions’ mobile POS in the hands of store staff, enabling sales to be completed anywhere on the shop floor.

Tinder for car buyers?

The AFR reported that has mirrored popular dating platform Tinder, rolling out new matchmaking technology to make it easier for users to buy and sell vehicles. The US company's website and app now allow people to swipe left and right to refine their searches until they find their "perfect match". Tinder's "generation swipe" set the benchmark for millennial content curation by delivering a casual and immediate way to refine information. Perhaps "car dating" isn't as preposterous as it sounds.

US Economy continues its strong run

NRF reported that rarely has it seen as many economic gauges of the US economy so strong, including employment, income, retail sales, business spending, manufacturing and small business. According to NRF, consumer spending remains robust, job and income growth remain exceptionally strong, and household wealth continues to set record highs - all three factors influence consumer confidence and ultimately spending.   In the second quarter the US GDP went up 4.2% year-over-year.

Coles' plastic toy and bag strategy pays off (in the short-term)

The AFR reported that Coles' same-store supermarket sales grew faster than Woolworths for the first time in two years during the September quarter. Coles lifted profit by 6% and sales by as much as 7%, boosted by its Little Shop promotion and backflip over plastic bags.  The stronger sales and earnings momentum will serve Westfarmers well as it prepares to seek shareholder approval for the proposed $20 billion demerger of Coles in November. However, analysts believe that the gains are unlikely to be sustained, shoppers who switched to Coles during this period will switch back, and Coles' same-store sales growth will slow to around 2.5%.

Retail rents and e-commerce frenzy

The AFR reported that leading retailers like Premier Investments are threatening an avalanche of store closures unless landlords reduce rents as $2 billion a year in sales shift from bricks and mortar to online. Rents for specialty retailers are still rising an average 4% a year, while same-store sales are growing by less than 2%, increasing margin pressure on retailers. Consequently, major retailers including Premier Investments, Myer, Wesfarmers' Target, Lorna Jane, David Jones, and the Country Road Group are reviewing store networks and stepping up investment in e-commerce. On the other hand, while rents are still rising and vacancy rates remain low, behind the scenes landlords are striking off-lease deals, offering rental concessions and temporary abatements to avoid rows of empty shops. What we are witnessing is not the demise of stores, but a temporary moment of e-commerce frenzy. Huge capital investments are being allocated to online while stores are left to rot. This will level out as stores are here to stay for a plethora of reasons. In our experience: stay frugal and have the right stock, at the right price, in the right location – if you do, you will do exceptionally well.

Michael Kors to acquire Versace

The Hustle reported that US fashion company Michael Kors has agreed to buy Italian brand Versace for US$2.35 billion, positioning the retailer to challenge Europe's big luxury fashion brands. Preluding the Versace deal, Michael Kors also purchased British luxury shoemaker Jimmy Choo last year for US$1.2 billion. The acquisition is one of many in the high fashion space: Luxury Italian suit-maker Ermenegildo Zegna bought American menswear outfit, Thom Browne, last month, and Swiss luxury titan Richemont purchased luxury e-commerce platform Net-a-Porter in May for US$3.3 billion. But, here's the catch, not all investors are convinced Michael Kors can pull off the merger, with the retailer's shares falling more than 9.5% after the deal was announced.

Consumers remain wary of social media commerce

Australia Associated Press reported that new research shows that, despite the exponential growth of businesses selling through Instagram and Facebook, consumers remain wary of retail via social media. The latest PayPal m-Commerce Index revealed that 13% of Australian businesses are already selling via social platforms, with an extra 22% of businesses planning to do so in the next six months. Additionally, one-in-eight Aussies are now shopping on their mobile phone daily, highlighting the increasing importance of mobile-optimised e-commerce. Half of Australians in 2018 are using at least one subscription service and spend an average of $32 per month on subscriptions, with 86% of businesses who offer subscriptions seeing an increase in revenue. However, PayPal Australia's MD warned that one in three buyers remained nervous while buying as the lines between user-generated and advertiser content increasingly blurred.

Universal Store ramps up for growth after buyout

The AFR reported that youth fashion chain Universal Store is ramping up plans for new stores and online retailing following a $100 million management buyout backed by private equity investors Brett Blundy's BB Retail Capital, Trent Peterson's Catalyst Direct Capital Management and Adrian MacKenzie's Five V Capital. The Brisbane-based business has annual sales of more than $100 million and 53 stand-alone stores across Australia. The deal is a major vote of confidence in Universal Store's management team, which has delivered several consecutive years of double-digit same-store sales growth and maintained EBIT margins above 10% despite massive structural change in the clothing sector, including the growth in online and the arrival of global fast-fashion retailers Zara and H&M.

Myer's uncertain future

The AFR reported on Myer's share price rebound driven by the retailer's latest result and strategy reset. However, it remains near impossible to find an analyst with a positive view of the stock. One analyst group said that while Myer's latest results have met "muted expectations" and the revealed financing package provides the business with a stable funding platform. But, they added "we've heard the exclusive brand strategy before; products have not resonated sufficiently with customers in previous attempts. The product doesn't seem any more compelling now."

Shaver Shop expands private label range

The AFR reported that the Shaver Shop is stepping up a push into private label products to try and lift profit margins and attract more female customers. The retailer, which has 115 bricks and mortar outlets, is preparing to introduce a new range of hair dryers, hair straighteners and curlers under the new Flair brand it has set up, mirroring a strategy by big supermarket chains Woolworths and Coles. The goal is to increase private label sales from 2% of total sales to 5-10% to try to drive its share price up from 43c back towards the issue price of $1.05 in 2016. This sounds like a solid strategy for the business, as long as it keeps in mind the rule of thumb that once private label sales increase beyond 30% you can lose the support of your other suppliers.