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Clothing and footwear spend down 50% since 1984

The AFR reported that the share of household expenditure on clothing and footwear has more than halved since 1984, from 6.5% to 3.1%. This data dispels the myth that specialty retailers' woes have been caused by the emergence of e-commerce. Online retail handles just 8% of sales, translating to just 0.2% of the decline. The remaining 3.2% drop has been caused by changing spending patterns.

Another major bankruptcy in the US?

Reuters reported that Mattress Firm Inc, the largest mattress retailer in the US, is considering a potential bankruptcy as it seeks ways to get out of store leases and shut poor performers from its 3,000 locations. Mattress Firm’s deliberations offer the latest example of a US brick-and-mortar retailer struggling financially. Reuters think that the situation is due to competition from e-commerce firms such as Amazon, but we have a suspicion that it's more likely the consequence of the continuing escalation of lease costs. Interestingly, Mattress Firm is owned by Steinhoff International, which paid US$3.8 billion to acquire the business in 2016. When it rains, it pours.

Omni-channel games in the UK

The Retail Gazette in the UK reported that as struggling retailers leave High Street to focus on the less-costly online format, some successful online retailers are starting to take their place. A sign that the omni-channel game seems to be shifting, these once pureplay retailers now typically open only a few brick and mortar outlets, “to showcase their brands.” The article mentioned retailers such as Misguided, Boden, Joe Browns, Blaiz and Zalando as examples. In the meantime, the online sales in the UK keep growing and now account for 17.4% of the UK’s total retail turnover.

Australian retail statistics

Reuters reported that Australian retail sales have grown strongly in the last quarter. A figure of 1.2% growth was quoted, quite useless as it was in comparison to the previous quarter.  We had to do our own research and we discovered that the growth was about 2.8% in comparison to the corresponding period last year (the only number that really matters). Reuters also commented that retail prices fell 0.1%, but their assertion that this meant “no inflation” ignored the ongoing, behind the scenes, increases in government charges, health insurance premiums, and energy.

Point-of-sale lending on the increase in the US

The Economist reported on the rising popularity of point-of-sale lending in the US, noting that many retailers are now offering their customers the option to pay for goods over six to 12 months interest-free. Consumers who might have financed big-ticket purchases with a credit card are increasingly utilising these "point-of-sale" loans instead. The article noted that over-the-counter lending is being led by innovative tech startups. Interestingly, Australia seems to be well ahead of the US in this space, with AfterPay and ZipPay now processing a material percentage of all retail spend Down Under. Retail Directions' point-of-sale enables our clients to offer both payment options to their customers.

Amazon's AU scouting mission

The Sydney Morning Herald reported on Amazon's flat entry into the Australian market. Documents lodged with the Australian Securities and Investments Commission show Amazon Australia ran at an $8.9 million loss with just $16 million in sales for the 2017 calendar year. Not quite the retail apocalypse prophesised by much of the media in anticipation of tech giant's arrival Down Under, speculation which put local retailers on edge and played havoc with their share prices. We've always said that stores are Aussie retails' best defense against the online raider, while directly competing with Amazon online is a sure way to put your business under pressure.

Apple becomes the first trillion dollar company in the US

25 reported that Apple has become the first US company to reach a US$1 trillion sharemarket valuation. Buoyed by stronger than expected earnings for the second quarter, Apple shares rose 3% on Thursday to close at $207.39, and are up about 31% over the past year. Other tech giants in the hunt for a $1 trillion market cap are Amazon at $877 million, Alphabet at $851 million and Microsoft at $822 million. Facebook was in the hunt until last week's historic stock collapse cut the company's value to $504 million.

Google heading back to China?

The Intercept reported that Google is planning to build a censored search engine for the Chinese market, based on a leaked document. According to the article, the project, code-named Dragonfly, has been active since 2017 and recently accelerated after a meeting between Google CEO Sundar Pichai and a “top Chinese official.” Google shut down its search engine in China in 2010 due to the country's censorship policy, but now it appears that it wants back in. It is important to note that numerous companies have wasted time and cash trying to break into China’s massive market. Most recently, Facebook seemed to have finally made it behind the steel curtain until China slammed the door shut at the last minute, again.

Explosive mixture

The AFR released interesting information about Coles’ plastic bags debacle. Apparently, the ban (introduced on 1 July) has impacted sales and EBIT. Now that Coles has decided to provide free reusable bags to repair the damage, the media went into a hysterical spin, levying heavy criticism on Coles for backing out. Yet, the AFR revealed that a mere 5,000 people signed a petition demanding the re-introduction of the ban and Coles boycott. Arguably an immaterial group, but highly vocal. A lesson here for retailers: it rarely pays to mix politics and contentious issues with business. After all, Coles’ number one objective should be to supply groceries.

Instagram building direct shopping through app

The AFR reported that social media network Instagram is considering introducing a way for consumers to shop directly through the app. With more and more consumers, businesses and advertisers flocking to the platform, the introduction of direct shopping would be a boost for retailers. Instagram topped 1 billion users in June and analysts predict it to be generating US$22 billion in revenue by 2020.

News from the US

The Dallas Morning News reported that Rodd & Gunn will be opening its first store in Texas, continuing its retail expansion in the US.  founded in 1946, the business operates in 100+ locations around Australian/New Zealand, and it also sells through 66 Nordstrom locations.  Retail Directions are proud to be a part of Rodd & Gunn’s journey, providing core systems for the business around the world.

Zara to start shipping online orders from stores

The Wall Street Journal reported that Zara will roll out its ship-from-store system to around 2,000 stores in 48 countries, including the US, making it one of the largest-scale attempts by an apparel company to repurpose downtown shops to help fulfil online orders. Zara expects better stock availability and faster deliveries as a result. However, such fulfilment models come at a price: they impact store stock holdings (usually carefully crafted to meet the demand of walk-in customers), they require packing facilities within the stores, and they create additional workload in the stores. It goes without saying, that in order to be able to route customer orders to the right fulfilment store, the business must have precise information about stores' stock on hand - in real time. Not many retailers can boast this.