USA Today reported that Amazon Prime discounts will now be available in all Whole Foods outlets.  This follows initial pilot stores, which were well received by customers (why wouldn’t they?).  USA Today commented that “Discounts and loyalty programs have long been a common strategy among grocery stores, serving a dual purpose. Discounts lure shoppers in and return visits provide the store with data on their shopping habits.” Sounds very cliché to us.  Since Amazon took over Whole Foods, they have been progressively changing the business, eroding its gross and net margins.  But, running a business at a loss is nothing new for Amazon, to the detriment of the competitors.

The Australian Financial Review must have made an error when it said that “Retail sales across the IGA retail network declined 0.9% on a like-for-like basis for the 12 months to April 2018” and then immediately followed that statement up with a quote from the new CEO of Metcash: “Now we need to figure out how to go faster.”  This sounds like a Freudian slip – Metcash is in trouble, mainly because of its business model rather than competition or so-called unfavourable market conditions.  The recent announcement of Drakes' switch to their own distribution network confirms this.  Any independent chain that reaches a size sufficient to support their own sourcing will walk away from Metcash.  Why wouldn’t they?

Inside Retail published an article endorsing the shift towards services as the way for shopping centres to stay relevant, “a strategy that has proved highly successful and created a new class of ‘super’ neighbourhood shopping centre.”  The article is timely, as it coincides with our observations that many recently refurbished shopping centres have an issue with inadequate car parking space.  During weekends it is near impossible to find a parking spot and the shift towards services will make matters substantially worse, as services require longer customer visits.  It is a vicious circle: online takes traffic away from the shopping centres, which then refurbish to become more attractive and in the process overstretch their car parking capacity, pushing more people to buy online.

Inside Retail reported that John Johnston has effectively secured the purchase of the business, with more than 91% of Godfreys’ shares now in his hands. He intends to delist the company, undertake an overhaul and rebuild it.  A big task, given the difficulties the company is in.  Delisting has some negative implications as well, particularly affecting relationships with banks and landlords.

The Australian commented on the plastic bags ban, in the context of a 2006 inquiry by the Productivity Commission into waste management. The report’s lead author said that “plastic bags are useful: hygienic, waterproof; they have multiple uses and functions.”  The report stated that “plastic bags take up little landfill space and their inert characteristics can actually help to reduce a landfill’s potential for adverse environmental impacts.”  Yet, because of a prevailing perception that the bags are bad for the environment, Coles and Woolworths decided to eliminate them.  A recent study in the UK found that reusable bags need to be used 173 (!) times before they have a lower environmental impact than ordinary plastic bags.  An economist from RMIT said that he was surprised that Coles and Woolworths decided to “deliberately pursue a policy that they know will reduce customer satisfaction”. Of course, we're advocates for sustainable environmental practices, but they need to be based on facts; the matter is too important to waste resources on ineffective initiatives. It's not plastic bags and plastic straws that have the biggest impact. Have you considered the tons of other waste generated by the supermarkets and fast food chains?

The New York Post reported that the Supreme Court has ruled that US states can now force online sellers to collect sales taxes, irrespective of where their customers live.  This changes a 50-year rule that exempted sellers from collecting taxes on out-of-state transactions.  The ruling can affect hundreds of thousands of sellers, including those selling via Amazon (about US$32 billion last year).  We reported on the Supreme Court suit earlier this year, initiated by South Dakota,  which claimed it was being robbed of millions of dollars in sales tax because internet sellers shipping to the state were not collecting sales tax.  We are seeing a clear trend of states beginning to impose taxes on e-commerce transactions.  This is (in our view) a good structural phenomenon, as it removes sales/VAT tax distortions and also repairs the sales tax revenue, eroded when sales moved online.