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17
Apr-18
Tuesday

US retail sales up

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Reuters reported that US retail sales were up 4.5% from March 2017, as consumers spent more on goods including furniture and electronics.  Interestingly, some mainstream media only reported a 0.6% “increase since the last month”, after “two months of decline”.  Anyone who knows anything about retail knows that only year-on-year comparison makes any sense.

Dangerous waters for Myer

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The Age reported that Myer has brought in high-profile restructuring and insolvency administrator Mark Korda to help it try to squeeze out from under suffocating leases.  According to The Age, this could make landlords realise that they have the option of either cutting a deal with him now as an adviser or be left dealing with him as Myer's administrator.  It has been speculated that voluntary administration could be a way for Myer to exit or renegotiate its leases, but the company has said such action was not being considered.

Woolworths IT systems fail

32
The Age reported that Woolworths stores around the country shut their doors on Monday afternoon after a nationwide technical issue completely halted sales.  Around 4pm, customers began to report stores closing and they were told that an IT issue affecting the cash registers was to blame.  This highlights the essential importance of a specialised systems architecture that is needed for retail chains, to prevent such mishaps.

Toys 'R' Us in play again?

32
The Wall Street Journal reported that MGA Entertainment CEO Isaac Larian has placed a bid to purchase Toys 'R' Us stores in the US and Canada for $675 million and $215 million respectively. Toy maker Larian plans to fund the purchase with his own money and bank financing.  When a manufacturer feels compelled to buy a retailer to secure continuing demand for its products, this usually just delays the inevitable...
16
Apr-18
Monday

Artificial Pseudo-Intelligence

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Inside Retail published an article written by Retail Directions, which dispels the myths surrounding ‘Artificial Intelligence’ and its purported massive impact on retail in the future.   We have stressed the point that technologies which have been available for quite a few years are now promoted as revolutionary, mainly because they have been combined with voice recognition, voice synthesisers, and made mobile.  This means that we now have access to increasingly smarter animated matter, but it has NO intelligence – it just gives the appearance of intelligence.  This realisation redefines the expectations we should have about the likely future of ‘AI’ in retail.

Thermomix mea culpa

26
The Australian published an advertisement, which we found quite surprising.  Not because of its apologetic tone and acknowledgment of the $4.5 million fine imposed by ACCC.  It was the numbers which we were able to distill from the ad - it looks like Thermomix Australia turns over around $90 million per year.  Hardly the mother-and-daughter business it claims to be in the ad.  It proves that there is a third way to success in retail - it doesn't have to be online or bricks and mortar - "Tupperware" parties remain very effective.
13
Apr-18
Friday

Afterpay running out of steam?

42
The AFR commented about Afterpay's share price drop - the business lost 30% of its market value since its March high, due to concerns about approaching market saturation - it now has 1.8 million customers.  We found other statistics mentioned by the AFR quite fascinating: 25% of all online apparel transactions in Australia are paid for via Afterpay, which translates into 8% of total online retail.  Given that a solid portion of new sales are brought in by Afterpay, we can understand why retailers accept their relatively high merchant fees.

Gap's multi-brand synergy

18
CNBC published an article about The Gap, mentioning a 24% increase in share value over the last 12 months and recently announced earnings in excess of market expectations.  The Gap's CEO was quoted, saying "We know a lot about our customers. We can see their lifetime value.  Structurally, because we have multiple brands and multi-channels, we've got something not a lot of other apparel companies have."  The Gap owns brands such as Old Navy, Banana Republic, and Athleta.  What we found particularly interesting was the CEO's comment that "the difference between a customer who's casually engaged and one who is really deeply engaged in our brands across channels, it's at least 10 times the value of that [first] customer."

Online can be overshadowed by brick and mortar

30
In their article about The Gap CNBC mentioned Athleta, the company's sportswear brand, which has grown to 140 stores from only selling online.  "Most retail came from physical and went online. Athleta came from online and catalog and is going physical. And we're very focused on making sure that we're building the retailer of the future,"  said The Gap's CEO.  Athleta's business is now half online and half brick and mortar, with plans to expand its physical store base.  Clearly, claims that online will replace traditional brick and mortar stores are not valid.
12
Apr-18
Thursday

Toys 'R' Us receives multiple $1b bids for its Asian business

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According to Reuters, Toys 'R' Us has received multiple bids of more than U$1 billion for an 85 percent stake in its Asian business as the bankrupt company moves ahead with plans to sell some non-US operations.  Apparently, there is also serious interest to purchase its Central European operations.  In the meantime, the US and UK operations are being liquidated.  Running a big business has its challenges, but shutting it down is not an easy task either.

Mr. Zuckerberg goes to Washington

52
According to the Wall Street Journal, US lawmakers gave Facebook CEO Mark Zuckerberg a (mostly gentle) grilling over the company’s handling of user privacy while signaling they are considering embarking on a new era of regulation for big tech companies. Investors reacted positively to Mr. Zuckerberg’s performance — the first of two days on Capitol Hill — sending Facebook shares up 4.5%. While the senators showed little consensus on how to force the protection of user data, Tuesday’s unusual joint hearing probably marked the beginning of a long deliberation on regulating the tech industry.  We too think that it’s about time.
11
Apr-18
Wednesday

Amazon vision or delusion?

40
The AFR reported that Amazon's VP in charge of international consumer business spoke at a conference in Sydney.  The VP said that Amazon plans over a five-to-seven year horizon, justifying underwhelming and patchy performance post its Australian launch. We appreciate the difficulties in starting a business in Australia, but one thing is certain: most predictions and related plans in digital and e-commerce will be rendered obsolete in much less than five years.