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Court approves Oroton DOCA

Inside Retail reports that accessories retailer Oroton has been given leave by the Supreme Court of New South Wales to transfer all of the company’s issued shares to Manderrah Pty Ltd at the previously agreed value of nil, fulfilling part of the Deed of Company Arrangement (DOCA). The accessories retailer entered into the DOCA with Manderrah in April in order to secure the future of the business, which fell into administration last November due to declining sales and high rental costs. Privatisation now frees the struggling retailer from the demands of the sharemarket, allowing it to focus on its long road to recovery.

Anti-trust pressure mounts for tech giants

The AFR reported that the size of the tech giants, such as Google and Amazon, is becoming a problem in terms of fair competition. On Thursday, Amazon reported a revenue jump of 39% to US$52.9 billion (almost double analyst predictions) for the quarter ending June 30. A few days earlier, Google's parent company Alphabet posted quarterly revenue of US$32.7 billion. For perspective, BHP has annual revenue of around US$50 billion. Now it seems like the regulators are closing in. This week, a prominent Amazon critic named Lina Khan joined the office of the US Federal Trade Commissioner as part of the office's increasing scrutiny of tech companies from a competition point of view. Khan's central question will be: how do competition laws need to change to reflect the "realities of how dominant firms acquire and exercise power in the internet economy?"

Online retailers grapple with low trust rating

The Herald Sun reported on the findings from the first annual Australian Consumer Trust Index, which assessed how consumers rate businesses to do right by them. The project leader noted that "public trust in institutions, including businesses, is at an all-time low." In retail, the study showed that supermarkets and pharmacies are the most trusted verticals, while online-only stores are deemed untrustworthy due to perceived product inferiority and information security vulnerability. This data reinforces the relevancy stores still have in retail, and many pureplay retailers, including Amazon, have recognised that having a brick-and-mortar presence reinforces their online efforts.

Australia’s best performing e-commerce websites

Inside Retail reports that JB Hi-Fi is Australia’s most visited e-commerce website, according to a new study. The retailer drew in 74.02 million visitors to its site between January and June. was second with 68.87 million visitors and third with 53.65 million visits. However, when you add international players to the mix the results look very different. attracted 404.67 million visitors for the same period, pulled 111.82 million, more than double the 52.44 million visitors to marketplace.

FANG takes Wall St on a bumpy ride

Reuters reported on Wall St's wild day yesterday with Facebook shares suffering the biggest one-day wipeout in US stock market history following executives forecasting years of lower profit margins. Facebook shares closed almost 19% down at $176.26, wiping more than $120 billion off the company's value. However, Wall St found relief after's quarterly results beat estimates, sending the online retailer’s stock to a record high and alleviating fears of deepening troubles across the FANG group (Facebook, Amazon, Netflix, and Google). Amazon said it expects an operating profit between $1.4 billion and $2.4 billion, up from $347 million a year earlier. Analysts were expecting around $843 million.

Gimmicks Max

We just learned that Coles will be introducing a premium subscription to its Flybuys loyalty program, which will offer discounted groceries, free home delivery, and access to online video streaming. Known as ‘Flybuys Max’, the program is currently being tested with a small group of members before the subscription is rolled out nationally. Apparently, the membership will cost $10 a month or $99 a year and will entitle members to a 5% discount on all fresh produce at Coles supermarkets. We struggle to see how further increasing the cost base can help a business, which is already too expensive to run.

Confusing Aldi with Coles

Inside Retail reported that Dick Smith Foods will be closed due to increased competition from German-based discount supermarket Aldi. Dick Smith said that problems have arisen because Aldi’s “method of business is ‘not sharing the wealth’ - they do this by having less and less staff, and Coles and Woolworths will have to match that; They’ll have to put off a tremendous amount of staff so they can get their overheads down to compete with Aldi.” Dick Smith has missed the key point: the problem is not with Aldi but with Coles and Woolworths. Aldi didn’t cut any staff – they just don’t need so many people because their business model is based on Operational Excellence.

Cotton On's e-commerce journey

During the 2018 Online Retailer conference in Sydney, Cotton On Group's GM of E-commerce (Brendan Sweeney) shared key data about the recently launched and highly successful Perks loyalty program, now rolled out worldwide. By linking the underlying technology from Retail Directions with their website, Cotton On was able to set up the program "within a couple of months". Over 3 million customers have joined the scheme in 2018. The Perks program is another powerful tool in Cotton On's multi-channel journey, following the previously deployed 'Store to Door' service, also supported by the Retail Directions platform. Brendan pointed out that 50% of in-store customers who use the service convert into multi-channel customers.  

Grocery wars in the UK

The Daily Mail reported that Tesco has decided to launch a chain of discount shops to take on cut-price retailers Aldi and Lidl at their own game. Apparently, 60 locations have been earmarked to be rebranded. On the surface, the move is understandable, as Aldi and Lidl have doubled their share of the UK grocery market to almost 13% in five years. However, in our experience, running an operationally excellent, discount retail chain requires a totally different culture. We can't see how a business, which doesn't have such a culture at present, could suddenly acquire it overnight.

The mystery of AI resolved

We have been attending Online Retailer conference in Sydney and one of the recurring topics is AI and its likely impact on retail and the society in general. We have sensed considerable confusion regarding the meaning of the term and the perceived capabilities of this fascinating technology. Retail Directions' delivered a keynote address to clarify the essence of AI, what are the pre-requisites to deploy it in a retail enterprise, and what it can do for retailers. Monitor Insights section for a full briefing - coming soon!

Levelling the tax playing field

The NRF reported that the US Congress' House Judiciary Committee has been conducting hearings on the impact of the Supreme Court’s South Dakota v. Wayfair decision on businesses and consumers.  The ruling requires goods sold over the Internet to be properly taxed if shipped from another US state. The NRF representative commented on smaller retailers often been the victim of “showrooming,” where consumers come into the store to take advantage of sales associates’ expertise and see merchandise in person, then order from an out-of-state online competitor to avoid paying 7-8 percent state and local sales tax. It is fortunate that the Australian Federal Government, after years of hiatus, finally resolved this issue for Australian retailers.

The taxman always needs more

Reuters reported that European finance leaders called for global rules to tax the digital economy at a meeting of G20 finance ministers and central bankers in Argentina on Sunday. Some 200 companies would fall within the scope of the new turnover tax, with an estimated additional annual revenue of about 5 billion euros ($6 billion). US G20 delegates objected: “One of the big challenges is that taxation of the digital economy is mostly, of course, a taxation of American companies - because they are the key players in the world - so the United States feel that this is an attack concerning their digital economy.”