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US shoppers in the mood to spend

An article from Associated Press reports that many traditional retail chains such as Home Depot, Kohl's, Best Buy and Target have posted strong sales in the US, both online and in stores. The piece suggests that four trends are driving the retail revival: a strong economy with unemployment at an 18-year low and average hourly wages up 2.7%, store experience enhancements including delivery, curve side pickups and self-checkouts, revamped websites targeted at competing with Amazon, and alluring private label brands. The news is a welcome reprieve from the media's hyperbole talk of the retail apocalypse for brick and mortar stores.

Mecca tops the list as the best AU retail employer

Great Place to Work released its annual Best Places to Work study yesterday. In retail, Mecca, with 2,587 employees, made the list for the fifth consecutive year. Kennards Hire was the only other retail business with 1,000 employees or more to make the list, and L’Occitane Australia was the only retail business with 100 to 999 employees to be recognised. No retailers with fewer than 100 employees were on this year’s list. Mecca Brands ranked fifth in its category, behind tech companies Salesforce, Atlassian and Cisco Systems, and the Hilton hotel chain.

Best Buy reports solid growth

Best Buy in the US reported another quarter of solid growth. According to the Wall Street Journal, “Same-store stores rose 6.2% in the second quarter, its sixth straight quarter of gains. Online sales rose 10%, slower than previous quarters. In the past five years, Best Buy has doubled its online sales, which now are about 15% of its total annual US sales.” Looking at the retailer's online performance in context with its 1,000 store footprint, U$244 million profit during the quarter, and $9.4 billion revenue, some quick math tells us that this translated into a contribution of about 1.5% towards its annual overall growth. The creation of a truly omni-channel business model has been an important factor inBest Buy’s success.

Coles' plastic bag tactics pay off

Coles' plastic bag backflip has been criticised by customers and environmentalists and undermined its sustainability claims. The motives behind the move may appear to be about soothing angry shoppers, but closer reflection reveals that it's more focused on getting under the skin of arch-rival Woolworths. Most interestingly, Coles' decision to hand out free plastic bags for two months after banning single-use bags on 1 July appears to have paid off where it counts the most –  at the checkout. The AFR reports that the retailer is on track to post the strongest sales growth in more than two years, with Morgan Stanley analysts forecasting same-store sales growth to reach 2.5% in the September quarter compared with 0.3% growth in the same period a year ago.

Shoes of Prey ceases trading

The AFR reported that online retailer Shoes of Prey has ceased trading, after a nine-year journey of mixed fortunes that took the business from pureplay online into stores and back again. According to the article, Shoes of Prey is currently exploring a dual-track process to either raise more capital or sell. Reading between the lines brings a different perspective. Last year the retailer turned over $7 million and lost $6 million. The venture is another example of when investors capital is used to suck revenue out of the market and give stock away. Seems to be a common pattern.

Myer's brand quest

An article in today's AFR covers Myer's search for new brands to replenish its range after losing key brands Country Road and Mimco to rival David Jones. When South African retailer Woolworths Holdings acquired David Jones, Country Road, and Politix, it initially stated that it would not remove company-owned brands from Myer. However, Woolworths has reversed that decision as part of a strategy to differentiate David Jones from Myer. An obvious blow to the already struggling department store, Myer has declined to comment on the impact of the loss of the brands, which follows the exit of Espirit earlier this year.

Lifeline for Metcash?

The AFR reported that Metcash has signed a new long-term agreement with Foodland Supermarkets and multiple Foodland stores including Romeo's and Chapleys in South Australia. Foodland has committed to being supplied from Metcash's proposed new distribution centre in Adelaide for a decade. The deal is a lifeline for the grocery wholesale after supermarket chain Drakes announced earlier this year that it will leave the Metcash supply chain, which resulted in a $125 million off-market buyback, which reduced the business's issue capital by about 5.3%.

Michael Hill loses its sparkle

The AFR reported that the closure of its US and Emma & Roe stores dragged jewellery retailer Michael Hill International's net profit down 86% to $4.6 million. Overall, group sales rose 4.4% to $575.5 million but the $25.5 million in one-off restructuring costs materially impacted the retailer's bottom line, along with investments aimed at boosting online sales in Australia and New Zealand.

Adairs off to a strong start in 2019

The Australian Financial Review reported on homewares retailer Adairs' plans to deliver another year of record profits, driven by a new range of boho-syle bed linen. The business has forecast same-store sales to rise between 5% and 8%, compared with 14.3% in 2018 and negative 1.4% in 2017. The retailer closed three poor performing concessions in Myer this week but plans to open between 7-10 standalone stores in 2019, lifting its network to more than 170.

Toys 'R' Us Australia e-comm up for sale

The sale of Toys 'R' Us Australia's (TRUA) e-commerce business and assets is covered in the AFR today. It's noted that TRUA's online store contributed $39.5m of FY17 revenue, around 14% of the TRUA group's total sales. If profit was material in the deal it would've been mentioned. Interestingly, it's not.

Aldi retains title of fastest growing UK grocer

The Retail Gazette reported that Aldi has maintained its position as the UK’s fastest growing grocer amid a summer of huge growth in the sector thanks to the hot weather. According to the latest figures from Kantar Worldpanel’s UK Grocery Market Share analysis, the UK's grocery sector grew 3.5% over the period. All of the UK's Big 4 grocers enjoyed growth: Morrisons with a sales increase of 2.7%, Asda reported 2.6% growth, Tesco at 1.8%, and Co-op at 7.8%. However, the German discounters dominated the market with Lidl's sales increasing by 8.6% and Aldi's sales spiking 12.6% (bringing its market share to 7.6%).

EBOS Group coming to terms with massive Chemist Warehouse deal

The AFR reported that the EBOS Group has vowed to maintain standards servicing his pharmacy clients as the company comes to grips with the mega Chemist Warehouse contract it recently won from rival Sigma Healthcare. The pharmacy and animal healthcare company in early July said it had won a five-year contract to supply more than 400 Chemist Warehouse and My Chemist stores in Australia. EBOS CEO told the AFR that its customers wanted to make sure they would not be neglected in favour of the company's big new customer, which is expected to add $1 billion in sales over the next five years from July 1, stating "We are highly confident in our ability to serve all our customers." While EBOS will gain the revenue, will they make any profit? Such ‘super’ deals usually come at a heavy price (unavoidably for its current base of clients too).