Bloomberg View published an interesting article pointing out that brick-and-mortar retailers may be gaining an advantage over e-commerce players, as retail rents dip and online advertising and shipping rates rise, quite substantially. Facebook's ad rates soared last year, and higher shipping costs lead Amazon to raise its Prime membership fee.

The Australians Financial Review posed an interesting question, whether Walmart will use the proceeds from the Asda sales to Sainsburys to acquire the demerged Coles supermarkets.  Apparently, some analysts have suggested that this as a possibility.  We don’t think so, for three reasons: 60% of the sale price will be covered by Sainsburys’ stock, Coles Supermarkets are too similar to Asda, and Walmart have their own impressive store format anyway – why not use it and grab a part of the market, without spending billions on an acquisition?

The Reserve Bank of Australia has left interest rates unchanged at 1.5%.  Most commentators viewed it as a positive sign and attributed it to a relatively steady economic environment – in terms of unemployment, inflation, and moderate housing market activity.  We see it a bit differently: low interest rates also reflect the general lack of positive economic expectations about the medium to long-term future.  Businesses are reluctant to borrow, because they don’t see opportunites for solid returns.  Every coin has two sides…

Walmart has announced the details of the deal which will create Britain’s largest grocer with revenue of around $70 billion.  Walmart will sell Asda to Sainsbury for $10 billion, of which close to 60% will be paid in stock, making Walmart a major shareholder in Sainsbury.  The newly merged business will surpass Tesco as the largest grocery chain in the UK, as Tesco turns over around $50 billion.  The Australian Financial Review commented that Sainsbury will gain more clout with suppliers, which is true, but to make matters substantially worse for some of the suppliers, Sainsbury will now go to every supplier that ever gave better deals to Asda and will apply pressure to reclaim the differential.

The Wall Street Journal pointed out an interesting trend in international shipping.  Refrigerated containers currently make up about 7% of total container volumes and the demand has been growing in excess of 5% per annum over the last five years, well ahead of shipping in general (around 2%).  Fresh produce, orange juice, pharmaceuticals and confectionery shipments are on the rise due to the growing affluence of the global population, especially in Asia.  The ‘Buy Local’ slogan doesn’t seem to be working that well.

The Wall Street Journal reported that some US convenience store operators are redefining the retail niche by combining c-store staples with fresh food options. Stores such as Denver's Choice Market and Chicago's Foxtrot are catering to growing consumer demand for fast-casual quality in a grab-and-go setting.  Apparently, they generate 8% of sales from fresh produce.  This is possibly something Coles should look at, given that their convenience segment has declined by 8% during the last quarter.

Reuters reported from Johannesburg that businessman Christo Wiese hit Steinhoff with a $5 billion lawsuit, sending shares of the South African multinational down 17%.  Wiese was chairman and the biggest shareholder until December last year. The claim related to the 2016 capital injection by Wiese to help Steinhoff pay its debt and fund the acquisition of the US company Mattress Firm.

CNBC reported that the discounted apparel brand will add 60 more stores across North America this year, pushing its total to more than 1,000 Old Navy locations in the US by the summer. Gap, which also owns the flagship Gap banner, Banana Republic and Athleta, currently operates more than 3,500 stores globally.  Gap is meanwhile trimming back its fleet of Gap and Banana Republic stores, which haven't performed as well as Old Navy and Athleta of late. This demonstrates that a brick and mortar fleet can be profitable, but its offer and brand mix must be morphed in line with evolving markets.