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Google to help tackle the environmental impact of fashion

The Independent reported that Google and Stella McCartney are teaming up to help reduce the environmental footprint of the fashion industry. At the Copenhagen Fashion Summit this week, Google announced that it is building a Google Cloud data analytics and machine learning service that will “give brands a more comprehensive view into their supply chain,” particularly at the level of raw production. The machine learning technology will be used to help brands estimate the environmental impact of particular items of clothing at the sourcing and design stages, and use this data to help companies take action. The pilot has been launched in response to the growing environmental impact of the fashion industry. According to Google, the fashion industry accounts for 20% of wastewater and 10% of carbon emissions globally.

Investors sour on UK's megamalls

The Business of Fashion reported that prime shopping venues across the UK have mostly avoided symptoms of retail decline, but that hasn’t stopped their values plummeting. Smaller malls and retail parks have been battered by the sluggish economy and fierce online competition from companies like Inc., resulting in vacant stores and slumping rents. Despite mostly avoiding a similar fate, the value of UK's megamalls has taken a knock due to investor skepticism. For example, British Land, a real estate investment trust, wrote down the value of its top five malls including Meadowhall in Sheffield by about 8% even though rents mostly held steady. Another retail landlord, Land Securities Group Plc cut the value of its malls by 11.7% in the year through March 31. At least landlords with a mixed property portfolio have options, unfortunately, pure retail landlords have fewer options.

Walmart mulling IPO for Asda

The AFR reported that Walmart has confirmed it is considering an initial public offering for its British supermarket unit Asda after British anti-trust regulators blocked a planned merger with rival chain J Sainsbury. The US retail giant could also revisit a sale of Asda, although interest from private-equity firms has been lukewarm. Walmart planned to take its time to analyse the most feasible strategy for Asda and could decide to keep the business. Walmart has revamped its international portfolio by selling a majority stake in its Brazilian business and acquiring a majority interest in Indian e-commerce leader Flipkart Group, in its biggest ever deal. A deal with Sainsbury would have allowed Walmart to keep a foot in the UK through a minority holding in the combined company, without the headaches of managing day-to-day operations in one of the world's most competitive markets. An Asda IPO could give the unit a similar structure to Walmart's separately listed Mexico and Central America business.

Costco store managers take home six-figure salaries

Fox Business reported on the take-home salaries of US store managers at Costo. Roughly a week after Walmart shared in a new report that its US store managers are taking home an average of US$175,000 a year, Reader's Digest resurfaced just how much Costco is shelling out in comparison. According to Glassdoor general managers at the chain get an average base pay of over US$106,000. Overall, their salaries range from nearly $50,000 to $180,000. But, as Reader's Digest points out, these totals don't even include the various benefits the employees enjoy throughout the year including bonuses, stocks, and commission which can tack on an additional $8,000 or so annually. In Australian terms, a US$180,000 salary translates to AU$260,000. At this same rate of pay, after tax, a US manager will take home roughly US$10,000 per month (~AU$14,500), while down under you would pocket AU$12,500. That's a 13%+ delta, interesting isn't it.

Retail revival, but what does the long-term hold?

An article in the AFR noted that retailers and other discretionary consumer plays are the surprising heroes of the ASX this year but fund managers are divided on whether the stellar performance can continue. The broader market has had one of the best starts to the year in its history, jumping 11.3% with consumer discretionary stocks putting in an even better performance, jumping 13.6%. However, consumer confidence has plunged along with property prices. Sydney property prices are down 14.5% and Melbourne prices are down 10.9% as at the start of May, with the drop from 2017 peak worse than the decline during the global financial crisis. In response, markets are expecting the central bank to lower its official cash rate to support economic growth, with a cut from 1.5% to 1.25% by August now fully priced in.

Woolies rekindles the discounting war

The AFR reported that Woolworths has slashed the prices of more than 1000 products by as much as 50% in an online super sale, opening a new front in the supermarket wars. The two-day sale is aimed at reprising the success of Woolworths’ online-only frozen food sale in March, which was taken up by social media and helped boost sales in the quarter. Woolworths is offering 50% discounts on only 76 food and grocery products in stores this week, according to its catalogue. Coles is offering 50% off about 64 food and grocery products. It appears Woolworths is offering deeper discounts on a wider range of products online to encourage customers to use its e-commerce site, which accounts for 3.7% of food and grocery sales, up from 2.87% a year ago. Yet, it wasn't that long ago when both grocers claimed that major discounting was over...

Buy your broccoli with Bitcoin?

The Hustle reported that a payment company called Flexa launched an app that lets people pay for a morning cup of coffee with Bitcoin. Flexa, which raised US$14.1m last month, enables shoppers to spend cryptocurrency at stores like Whole Foods, Barnes & Noble, Baskin-Robbins, and Petco. Flexa’s app is called “Spedn.” It works like this: Every time a shopper wants to buy a Jamba Juice etc, Spedn generates a QR code that, once scanned, immediately deposits the payment at the cash register. Then, Spedn withdraws the same amount of crypto from a user’s crypto wallet, using its own coin, called FlexaCoin, to secure and speed up the transaction. Until now, sluggish withdrawal times have proved problematic for bring cryto to the streets. But, by making payments first and debiting crypto accounts later, Flexa solved the problem of slow withdrawal, while exposing itself to the risk that its crypto checks won’t cash.

NAB learns about plumbing the hard way

The AFR reported that National Australia Bank (NAB) has blamed a legacy of outsourced technology service providers and challenges in moving off old technology systems for a recent series of outages, and pledged to bring thousands of jobs back in-house from external providers. The bank disclosed as part of its first-half results this month that it had suffered the worst rate of critical incidents to its service or payment channels in three years, with eight in the quarter. The bank has been undertaking a shift to the cloud since 2013 when it first moved its website to Amazon Web Services, but the bulk of its $4.5 billion three-to-five year tech transformation has been unfolding since late 2017. We have long warned that outsourcing critical business functions can be risky business and that the cloud is just plumbing - suitable for some applications but not always for high-throughput consumer-facing systems. For retailers, this highlights the importance of keeping the processing power of mission-critical systems closest to the end user i.e. Point of Sale should never be totally reliant on cloud infrastructure.  

The shopping mall pains

Inside Retail reported that a survey of 14,000 consumers by UBS Evidence Lab has revealed that the frequency of mall visits in Australia dropped 15% and the frequency of department store visits dropped 13% in 2018 from the previous year. At the same time South Korea, Vietnam and Taiwan, all saw double digit increases.  According to the survey, Australian consumers want better car parking rather than new services or dining precincts.  We have been complaining about the trend where malls are expanded with insufficient car parking, which is being made even worse as malls try to shift from retail to entertainment.  Our views have now been confirmed by solid statistics - the malls are self-suffocating.

Coles accelerates its convenience strategy

The AFR reported that Coles is fast-tracking its convenience strategy by adding 75 new products to its existing range – including smashed avocado and toast – and refurbishing 100 supermarkets in six months to stock more ready-to-eat food and semi-prepared meals. Coles managing director Steven Cain is aiming to accelerate same-store sales growth, which has lagged that at Woolworths for nine of the last 10 quarters, by tapping demand from time-poor consumers willing to pay more for convenience. In a sneak peek at a new strategy to be unveiled next month, Mr Cain flagged plans to convert about 200 Coles supermarkets to a new premium and convenience format and about 200 low-volume stores to a value format. We've noted before that a convenience strategy makes Coles reliant on location as a key differentiator, a risky game in a landscape of growing competition.

Singapore's news law government bias

This week, Singapore's parliament passed The Prevention from Online Falsehoods and Manipulation Bill, to broad criticism from rights groups, journalists and tech firms. An article in the AFR covers Google's warning against Singapore's new anti-fake news law, saying it could stunt innovation, prompting us to deeper at the new law. What we found is that it protects government interests, but still leaves business and individuals exposed.  If Singapore is concerned about falsehoods causing damage to the government’s interests, they should have protected their citizens as well.

Coles' drastic measure to curb self-service checkout theft

Nine reported that Coles is taking extreme measures to combat self-service checkout theft by installing tablet-sized cameras on top of its self-service checkouts in up to a dozen supermarkets across Victoria. The cameras are installed directly above the self-service monitor, with every move made at the checkout broadcast back to the shopper and recorded on file. Eight million self-service transactions are made each week at Coles, with the new security measure to be coupled with undercover security officers already deployed in stores across the nation. Overall, theft costs Australian retailers $9.3 billion per year - or 3% of their total annual turnover. Another example of Coles spending more money to solve a problem which didn’t have to be created…