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12
Jan-18
Friday

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.  

Tax changes in the US to substantially boost the economy

7
The US National Retail Federation (the world’s largest retail trade association ) commented that the recently legislated tax changes will boost the US economy more than any other initiative in decades.  Retailers will benefit as employment grows and wages increase.  The NRF expects up to 1.5 million new jobs to be created as a result of the new tax regime.  Congressional estimates show a family on the average income of $73,000 pa will see a tax cut of over $2,000 in 2018.

Will Bitcoin boom or burn?

6
The main stream media continues to comment about Bitcoin and other emergent ‘crypto-currencies’, referring to it as ‘boom’, ‘investment’ and ‘currencies’.  Pity they didn’t take the time to read Extraordinary Popular Delusions and the Madness of Crowds.  Published in 1841, the book describes precisely what’s happening and what WILL happen.  Bitcoin is not a legal tender, it’s not represented via coins or banknotes, it is not supported by even a single nation, so the question arises whether it actually could be called a ‘currency’.  Anyone who put money into this pyramid scheme will get burnt, sooner rather than later.

Solid Christmas trading period for retailers

5
The Australian Financial Review commented on the Christmas trading period, which was quite solid for Australian retailers.  The AFR expressed surprise that Amazon’s Australian operations didn’t make any noticeable impact, which actually didn’t surprise us.  Every country has its specific environment, which leads to its own mix of over the counter vs. delivered retail sales.  The entry of another online player may alter the mix within the segment that sells via deliveries, but it was unlikely to move more sales away from brick and mortar stores.  We think that most of the shift from over the counter sales to delivered sales has already occurred.  Regrettably (for retailers) there is much less profit in a sale if delivery is required…