Inside Retail reported on a cash flow statement and trading update released by Kogan.com today. The online retailer revealed a $23.7 million full-year EBITDA in FY18, a 90% increase from FY17. Kogan.com's revenue in FY18 was up more than 40% on FY17, indicating that the business brought in more than $400 million. These are solid results in the age of Amazon operating in Australia. If any business has cause to be concerned by Amazon's arrival Down Under, it was Kogan.

The Hustle reported on how electronics retailer Best Buy has been able to thrive despite Amazon's dominance in the market. The retailer's secret weapon? Real, live Geeks. Best Buy acquired a 50-person startup called Geek Squad in 2002, today the Squad is a 20,000-person IT army. By leading with human-led customer service, Best Buy has exceeded earning predictions for 22 consecutive quarters and quadrupled its stock price. In a world increasingly depersonalised by technology, customers covet customer service as a social and informative experience.  

The AFR reported that Sony has shut its CD, DVD and Blu-ray disc factory in western Sydney after 25 years. In another article, the StarTribune informs that leading electronics retailer, Best Buy has relegated CDs to bargain bins as sales dwindle. Such is the fate of physical media in the age of booming digital content streaming. Very soon, retailers who have made a living selling CDs, and related products, will have nothing to sell. When was the last time you purchased a Compact Disk?

AFR published interesting statistics from PwC.  For the first time in the history of this survey (27 years) crime threats to companies from outside exceed the risks from inside.  The shift is mainly due to the increase in cybercrime.  Hackers, customers and organised crime now account for 64% of fraud activity.  Sobering news for retailers.  We have previously stressed the need for retailers to button up and get ready for the upsurge in cybercrime.

NRF's STORES published an article about theft at self-checkouts.   A recent survey of 2,600 people found that nearly 20% admitted to stealing from self-checkout in the past; half said they did so because they didn’t think they would get caught.  A 2016 study by the University of Leicester in the UK found that retailers which use self-checkouts had a loss rate double the industry average. In an audit of 1 million shopping trips, researchers discovered 850,000 of 6 million items purchased were not scanned.  Clearly, retailers should think twice before 'investing' in such technologies.

Reuters continues to publish meaningless retail statistics, this time about UK retail sales in the second quarter of 2018.  Apparently it was 2.1% up on ... the previous quarter.  No retailer or industry analyst would ever look at such a  number.  The figure that matters was June year-on-year growth, which was 2.9% - pretty competent outcome.  In May YOY growth was 4.1%.

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.

 

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.

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.

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.

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 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.