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15
Mar-19
Friday

Kogan launches online marketplace

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The AFR reported that Kogan.com has taken a leaf out of Catch Group's playbook, launching an online marketplace to boost sales and better compete with Amazon and eBay. The marketplace enables third-party traders to sell goods on Kogan.com, as they do on Amazon.com.au, Catch.com.au and eBay, and increases the range of products available to customers, without Kogan.com having to buy or hold the inventory. Kogan.com said many leading retailers and brands had already signed up, boosting the number of products to more than 100,000, including brands such as Microsoft, Breville, Lego, Fisher-Price, Paw Patrol, SodaStream, Gillette, Gucci and Philips. The new marketplace promises to reinvigorate Kogan.com's sales growth, just as it has at Catch Group, which launched a marketplace in June 2017.

Zip targets everyday spending in share grab

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The AFR reported that Afterpay competitor Zip Co will target daily spending such as groceries and fuel in its rush to grab a share of the growing alternative payments market, the company's co-founder Peter Gray said after the buy-now, pay-later group raised $42.8 million from institutional investors to fund further investment in products, customer acquisitions and strengthen its balance sheet. Zip's capital raising comes after a strong run for Zip and Afterpay, and as a host of me-too offerings are being brought to market from the controversial buy-now, pay-later segment. Unlike Afterpay, Zip has said it will focus on growing in the local market, though it is planning to expand to New Zealand.

Technology expertise matters

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The Wall Street Journal reported on a recent study conducted by the Massachusetts Institute of Technology’s Center for Information Systems Research. MIT found that companies with experienced technologists on their board outperform others in multiple areas. Revenue growth over three years for boards with tech-savvy directors was 17.6% compared with 12.8% for boards without technology experts. Similarly, market capital growth over three years was 31.3% compared with 23.3%. The study covered 1,233 publicly traded companies with revenues over $1 billion.
 
14
Mar-19
Thursday

Sigma rejects API takeover bid

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Business Insider reported that Sigma Healthcare has turned down a merger offer from Australian Pharmaceuticals Industries, saying it stood to gain more if it continued operations as a standalone company. API, which owns the Priceline chain of pharmacies, quietly lobbed a $727 million bid for Sigma back in October, though it was not announced publicly until December, when API upped its shareholding in Sigma to 13%. Investors were not impressed with the news, wiping almost $82 million off Sigma's market capitalisation. Citi analysts estimated API would need to lift the bid price to about 73¢ per share from its offer that valued Sigma at 69¢ per share. If the two companies were to come together, the single entity would be the country's biggest pharmaceutical wholesaler. Sigma and API together would account for 45% of the market, which would make it larger than EBOS, with 36% share, according to UBS.

Zip in trading halt ahead of capital raising

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The AFR reported that Afterpay Touch rival and buy-now, pay-later provider Zip Co has gone into a trading halt before a capital raising announcement. Zip said in an ASX announcement that it would raise capital from "sophisticated and professional investors". Its shares last traded at $1.66 on Tuesday and will stay halted until Friday or when the proposed raising is completed. The credit card disrupter narrowed its net loss to $6.8 million for the six months ended December 31, from a $14.6 million loss a year earlier. Its revenue more than doubled to $34.2 million in the same period after signing up major retailers including Bunnings, Target and Officeworks. Unlike its competitor Afterpay, Zip's immediate focus remains on expanding in the Australian market.

Kathmandu in damage control after data breach

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The AFR reported that outdoor clothing retailer Kathmandu is in damage control after discovering its online store was breached by unidentified parties and sensitive customer information may have been stolen. Kathmandu revealed the breach yesterday, saying it had recently become aware that an unidentified third party gained unauthorised access to Kathmandu's online platform for more than a month, between January 8 and February 12. Cyber attacks on major retailers are rare in Australia but are increasingly common overseas as new payment technologies transform the way people shop and provide new entry points for cybercriminals. We have repeatedly advised that cybersecurity needs to be at the core of loss prevention for modern-day retailers.
13
Mar-19
Wednesday

The lesson in Shoes of Prey's collapse

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The AFR reported that Shoes of Prey co-founder Michael Fox says he has learned the hard way that shoppers have a subconscious desire to be shown what to buy, despite market research suggesting customers would be keen to create their own unique styles on the shoe retailer's website. Mr Fox conceded that mass-market customers would really rather buy exactly what celebrities and Instagram influencers were wearing rather than create their own shoe styles. The Shoes of Prey business model – delivering made-to-order shoes in just two weeks – was a financially, legally and ethically unsustainable business model. Customers who visited the retailer's website suffered "decision paralysis" when faced with the time-intensive task of producing their own shoes, which led to lower conversion rates, according to Mr Fox. The business also had high fixed costs but could not fall back on scale to break even because each shoe was custom designed. Shoes of Prey stopped trading in August last year while it explored options to raise more capital or sell the business.

US retail sales rebound not enough to jolt slowing economy

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Reuters reported that US retail sales rose modestly in January after a December drop that was even larger than originally estimated, but the recovery was not seen as strong enough to alter the course of a US economy that was losing momentum in early 2019. The report from the Commerce Department on Monday was welcome news for the economy after a raft of weak December data, as well as a sharp moderation in the pace of job growth in February. Still, January’s increase in retail sales recouped only a fraction of December’s plunge, leaving expectations for a slowdown in consumer spending in the first quarter intact. The drop in December was the biggest since September 2009 when the economy was emerging from recession. Economists polled by Reuters had forecast retail sales to be unchanged in January. Sales in January increased 2.3% from a year ago. Economists now expect GDP growth will be lowered to a 2.1% pace when the government publishes its revision later this month.
12
Mar-19
Tuesday

Supermarket $8b spending spree one more nail in the coffin

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The AFR reported that Coles, Woolworths and Metcash will spend $8 billion over the next three years refurbishing stores, building new stores and distribution centres and improving digital capabilities to keep up with changing consumer trends and become more efficient ahead of a new wave of competition. Investors in the supermarket chains say the added capital expenditure is needed to protect market share from Aldi, Kaufland and Amazon and restore margins, which have fallen over the past few years as the major chains have cut prices to compete with Aldi. However, there are concerns that instead of gains going to shareholders they will go to shoppers in the form of lower prices and better service. We feel both shareholders and the consumers will lose - we have repeatedly warned that the high cost of operations incurred by local grocery operators make them sitting ducks for the operationally excellent international invaders.

Costco beats on profits as online sales surge

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Markets Insider reported that shares of the wholesale retailer Costco jumped 4% at the close of last week after the company reported second-quarter profits that topped Wall Street's expectations, though sales fell short of estimates. Costco reported adjusted earnings per share of US$2.01 versus US$1.69 expected, and revenue of US$35.4 billion versus US$35.7 billion expected. Costco's quarterly results show its e-commerce sales are far outpacing other segments of its business. The company's adjusted comparable sales for the second-quarter (the 12 weeks ending February 17) surged 25.5% across e-commerce. In-store sales rose by 7.2%, 6%, and 4.8% across US, Canada, "other international" markets, respectively. Costco was up 11% this year, but is still 12% below its record high of $245.16 set last September.
11
Mar-19
Monday

Amazon shuts pop up stores as it tinkers with store strategy

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The Wall Street Journal reported that Amazon.com Inc. is shutting down all 87 of its US pop-up stores. Amazon has pop-ups inside Whole Foods locations, Kohl’s stores and malls around the US. The shops let customers try Amazon products. The company will instead focus on expanding Amazon Books and Amazon 4-star, as well as on opening dozens of new grocery stores around the country, with the first expected in Los Angeles sometime this year, according to a separate Journal report last week. The closures also don’t affect cashierless Amazon Go stores, with the business considering opening as many as 3,000 Amazon Go locations by 2021, according to a report from Bloomberg in September 2018.

Kaufland first stores approved in Victoria

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Inside Retail reported that the big players on the Australian supermarket scene will be buckling up for some stiff competition following the announcement that German hypermarket Kaufland has received planning approval for its first three stores in Victoria and Australia’s largest distribution centre. The first stores at Chirnside Park, Dandenong and Epping received planning approval after an independent Advisory Panel process and despite the objections of many other players in the market. The state-of-the-art distribution centre to be located in Mickleham, will be the largest in Australia and will act as the point of consolidation and distribution of goods to its supermarkets. The proposed Melbourne headquarters was also approved.