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Crying wolf about 'waste'


When it comes to retail, even the most respectable media sources struggle to provide meaningful information.  Fox Business lamented about Burberry destroying U$37 million worth of merchandise last year, "sparking concerns about wasteful practices".    They conveniently failed to mention that annual turnover of Burberry is around U$3.6 billion, so this was a mere 1% of sales.  They didn't comment as to what portion of the destroyed stock related to faulty goods and returns that couldn't be re-sold either.  Furthermore, Burberry probably lost more than U$37 million due to 'shrinkage' caused by staff, customers and suppliers.  We can't see how plucking an isolated number from a financial report, and then building a story around it, could be helpful to anyone.



Coles contradictory plastic toy giveaway


Australian Associated Press (AAP) reported that Coles got slammed on social media after the grocer contradicted its ban on single-use plastic bags by giving away collectible mini products made of plastic. AAP asked Coles for a formal response, including how many individual mini grocery items, and storage folders, have been ordered for the promotion, which runs for a limited time. If the 800 or so Coles supermarkets across the nation each gave away 1,000 complete sets, that would amount to almost 25 million individual items, most of them entirely or partially made of plastic, entering homes and potentially the waste stream. And, let's not forget the massive gross profits Coles will make from selling 15c multi-use plastic bags.

Afterpay shines on the sharemarket

According to the AFR, "buy now, pay later" leader Afterpay's market value lifted to almost $3 billion, as robust growth in sales transactions and earnings overshadowed concerns about potential lending losses from the fast-paced growth of the service in the retail market. Afterpay has told investors that the company now processes more than 10% of all 'physical retail' in Australia. The Afterpay platform is used by 16,500 retailers, up from 6,000 a year ago.

Amazon closes in on trillion dollar valuation

The AFR reported that Amazon's stockmarket value reached US$900 billion, with shares peaking at US$1,858.88 off the back of record-breaking Prime Day sales. The online giant now threatens to dethrone Apple (US$934 billion sharemarket value) as Wall Street's most valuable business. These are incredible results for the 21-year-old company, however a word of caution. As evidenced by Google's recent $5 billion penalty in the EU, we feel it is just a matter of time before antitrust laws put the brakes on the massive growth of technology giants like Amazon and Google.

Alceon seeks new acquisitions in the retail space

According to an article in the AFR, investment group Alceon is eyeing more retail acquisitions. Over the last several years, the group has spent more than $100 million snapping up brands in such as Noni B, Katies, Autograph, Crossroads, Rivers, Pretty Girl, Cheap as Chips and online retailers EziBuy and Surfstich. Alceon's retail investments now generate $1.5 billion of sales from 1,400 stores and account for about 75% of investment capital.

The cost of self-service in retail

The AFR reported that a recent CPM Australia and the ACRS Omnibus Tracker's The State of Customer Service in Australia Report shows that mediocre customer service is at an all-time high in Australia. The article notes that in retail an ever-increasing number of tasks are being automated to make transactions faster, more efficient and more consistent i.e. self-service. However, unsurprisingly, research shows that many consumers still view customer service as a social experience. With the number of self-checkout terminals around the world predicted to reach 325,000 by 2019, it is being revealed that self-service business models could actually be costing businesses money, not making it. And, the article doesn't really factor in the high levels of theft at self-checkouts either.      


Google faces a $5 billion penalty

The Wall Street Journal reported that the European Union has hit Google's parent company Alphabet with a record antitrust fine over its Android operating system. The EU's regulator has been investigating whether Alphabet abused Andriod's market dominance to promote its products. As we have suggested before, the market dominance of technology giants means that they will face ever-increasing pressure from anti-trust laws globally.  

Amazon's US site crashes on Prime Day

The AFR reported that Amazon's US site crashed under unprecedented demand minutes into the launch of its annual Prime Day promotion. Much to the anger of its patrons, glitches prevented many Prime members from accessing time-limited deals for several hours. Down under, despite small Prime membership numbers, Amazon's Prime Day faired better with sales surpassing the e-commerce giants Boxing Day performance.

Hong Kong retail soars


The South China Morning Post (SCMP) reported that eight out of 10 Hong Kong retailers plan to expand as sales in the first half have increased appreciably and are expected to grow further, thanks to a rise in tourists and an uptick in local consumption. This is up from six out of 10 a year ago, according to a JLL survey. Retail sales recorded a fourth consecutive month of double-digit growth in May, jumping 12.9% to HK$40.5 billion (US$5.1 billion), according to The Hong Kong Retail Management Association. The growth is led predominately by the luxury sector, and the adoption of millennial-centric strategies that focus on experiential shopping and digital platforms by retailers and shopping malls.

Are US retailers using new tariffs to grab extra margin?

According to a Wall Street Journal report, washer and dryer prices in the US climbed 20% in the three months through June - the steepest rise in at least 12 years. It appears as if US retailers are increasing prices in excess of what would be expected from the impact of the recently introduced tariffs. Are they using it as an opportunity to grab extra margin?  A 20% tariff applies to the cost price, so its impact on the retail price should be considerably less.

Netflix subscriber growth slows

The Wall Street Journal reported that Netflix added 5.2 million paid subscribers during the second quarter, which was around one million subscribers shy of the company's forecast. Despite its slowing momentum, Netflix still confirms, as evidenced by Blockbuster's demise, that certain retail verticals will progressively shift exclusively online. Netflix isn't the only video content streaming service, and every customer that shifts to digital in this space means fewer DVD sales.    

Google's AU chief engineer calls for AI rules

The AFR reported that Google's chief Australian engineer has called for government and businesses to decide rules for Artifical Intelligence (AI), sooner rather than later. The article notes that there are many ethical, societal and economic questions about AI that still need to be resolved. For example, governments are grappling with the impending challenge of automation-led jobs disrupting multiple sectors and the increasing sentience of systems will soon pose science-fiction-like ethical questions about how humans should interact with AI. Contradictory to many media reports, and inline with our own thinking, the Google boss believes that AI should be viewed as a multiplier of human ingenuity and not a replacement for it.