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12
Jan-18
Friday

Print advertising remains strong in the US

5
The National Retail Federation in the US reported that print advertising (catalogues) remains strong, growing substantially over the last few years - still in favour with supermarkets and retail chains.  Over US$70 billion was spent last year in the US on catalogues and direct mail.

Nordstrom continues to perform well

7
According to the Wall Street Journal, Nordstrom continues to perform well, defying the pattern displayed by other department stores.  Speculations resurfaced about possible privatisation of the company, after a 20% rise in the retailer’s share price.  Nordstrom is an excellent example of a brick and mortar retailer who mastered the ‘digital path to purchase’ model.  Their online sales are growing, but so are their over the counter sales.

Are digitally native brands the future?

5
The US magazine, Fast Company recently published an interview with Walmart’s e-commerce CEO (Marc Lore), who expressed a view that ‘digitally native brands are the future’ because brands, by their nature, rely fully on a direct connection to customers.  We think that Mr Lore’s view is quite dangerous, as it seems to assume that Walmart’s existing business is obsolete.  The role of the e-commerce team in a modern retail enterprise must be to expand the existing brands into the digital space, so they remain relevant.  E-commerce must be about the ‘digital path to purchase’ (any purchase) rather than mere selling online.

2017 Christmas trade up 1.2%

5
More and more data keeps emerging confirming that 2017 Christmas trade was solid.  The AFR reported today that November sales were up 1.2%, driven by discounting and iPhone X sales.  Amazing what happens when retailers offer a product everyone wants…  Note that department stores did not disappoint – performing as expected – 1.1% down on the previous year.
11
Jan-18
Thursday

NAB: 7.7% of retail sales in Australia go through an online channel

7
NAB released statistics implying that 7.7% of retail sales in Australia go through the online channel, adding up to about $24 billion pa.  Homewares and appliances categories continue to grow rapidly (25% growth).  Other categories are more in line with brick and mortar sales growth, but still ahead (around 4%).

ASIC embarks on “a crackdown on company culture”

8
The AFR reported that ASIC is embarking on “a crackdown on company culture”.  AFR quotes a ‘governance firm’ Regnan, which worked with Griffith University to discover that companies with ‘high’ culture doubled in value over the last five years, while those with ‘low’ culture lost 50% of their value.  Just a reminder for those involved: W. Edwards Deming said 30 years ago that the most important things in business are unknown or unknowable.  And, in our experience, great performance doesn’t stem from ‘culture’ (i.e. sum total of behaviour) but from the thinking horizon.  Companies which operate with the long term in mind tend to do well, and the long term focus drives the right behaviour, aka culture.
10
Jan-18
Wednesday

Hard works pays off for Noni B

6
The AFR commented on Noni B’s results, which were 3% up on the previous year on a like-for-like basis.  The results reflect the hard work of the Noni B team and are 1% better than the underlying inflation rate.  So, overall the results are not overly material, but in comparison to many other retailers, Noni B owners and management have a good reason to be pleased.

NRF: retail uptick in the holiday season

7
The National Retail Federation in the US reported that a number of retailers saw an uptick during the holiday season, including Kohl's, Macy's, J.C. Penney and Lululemon, which all reported sales increases for November and December. The retailers benefited from an improving economy and a surge in consumer confidence.

Cue moves to provide same day deliveries

5
The AFR also mentioned Cue’s decision to provide free, same day deliveries.  Given that statistics show that such an offering generates an extra 10% of traffic to the e-commerce business, the question arises whether the extra sales will be profitable.  Same day, free shipments cut deeply into profits and one needs fat margins to accommodate such costs.

QLD government demands a share of income tax for the states

7
The AFR reported that the Queensland government demanded a share of the income tax for the states.  Ms Palaszczuk needs to be reminded that states already collect tax in relation to income, hidden under the moniker of ‘payroll tax’ and it’s already quite substantial.  Interestingly enough, this tax applies even to low salary earners, as long as they work for a larger enterprise.  Has anyone within the QLD government ranks considered the obvious alternative: if you don’t have enough money, reduce your expenses?

Cotton On thrives in the online space

10
The Herald Sun published an article about Cotton On and its success within the e-commerce space.  The author quite rightly pointed out that being a global operator, Cotton On had prior experience in markets where Amazon was active, so their arrival in Australian was ‘business as usual’ for the Group. One important area where we were able to underpin their excellent results was a new loyalty system, deployed using Retail Directions’ software, which already runs a large portion of Cotton On’s business.
9
Jan-18
Tuesday

Speculation that Amazon will buy Target

5
The Chicago Tribune speculates that Amazon will buy Target this year.  The Tribune thinks that this fits with Amazon's business model, which has been growing beyond e-commerce.  We beg to differ, but if Amazon does buy Target, it will be good news for traditional retailers.  The more Amazon moves into the traditional retail space, the more its absurd stock market valuation will be exposed to rational analysis.  Once its stock starts to be valued in the same way as normal businesses, they will lose the ability to operate at a loss, using the share market to cover this up.