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US home improvement stores disappearing

According to Market Watch, the home improvement sector has been shrinking in the US. The store count has declined nearly 12% since the peak level of 2007. The number of locations fell 1.1% year-over-year.  Home Depot and Lowe’s account for about 45% of the subsector’s sales. The downward US trend makes us wonder when will Bunnings start to level off?

Amazon launches international shopping from the US

Reuters reported that has launched an international shopping feature that will enable customers across the world to shop more than 45 million items that can be shipped to their country from the United States.  The international shopping feature will display pricing, shipping costs and import duty estimates, with Amazon managing courier service and customs clearance in case of potential surprises at the time of purchase or delivery.  This initiative will be welcomed by people who needed to purchase items other than books and movies in the US and were forced to use expensive re-mail services such as MyUS.

Grocery chains need to build brands to compete with Aldi

The AFR reports that grocery retailers need to shift focus from copycat private label products and focus on building strong brands to avoid losing share to discounters amid a Millennial-led shift in shopping habits. The AFR noted a statement by Boston Consulting Group MD, Gavin Parker saying, "the major chains risk losing market share to vertically integrated value retailers such as Aldi, which are increasingly popular with Millennials, and to major FMCG companies, which have started selling online directly to consumers, unless they develop real brands that build strong connections with customers." The article echoes a sentiment we've shared last week: that Coles and Woolworths progressive destruction of branded groceries and the narrowing of their range has taken them to a dark alley, where they have to compete on price with Aldi and this is a war they cannot win due to their high-cost structure.

US retail sales increase 5% over last year

According to the NRF, March retail sales increased 5% and NRF Chief Economist said that the increase "reflects a strong job market, gains in wages, improvements in confidence, rising home values and sensible use of credit."  Specifically, online sales were 7.5% up, while general merchandise and clothing were 6% up. Electronics and appliances, health and personal care, as well as sporting goods performed poorly.

The UK's key retail market players

Retail Gazette in the UK published a list of the region's largest retailers, with Amazon ranking number five.  Amazon has been estimated to have accounted for 33.5% of all online spend in 2017, rising from 29.6% in 2016.  Tesco leads at 12.5%, followed by Sainsbury’s at 6.8 %, Asda at 6.6 %, Morrisons at 4.4 % and Amazon at 4.2%.  The UK continues to lead the world in terms of the percentage of retail sales transacted online.  In our assessment this has to do with both: consumer culture, small distances and high population density, making deliveries more economical.

Toy makers bid for Toys "R" Us rejected

The Wall Street Journal received anonymous information that the bankrupt retailer Toys “R” Us has rejected an $890 million bid for some of its US stores and locations in Canada from the CEO of Bratz doll maker MGA Entertainment Inc. Apparently the liquidators expect to raise more from the failed retailer’s assets.

Taxify targets Uber down under

Taxify, one of Uber's main ride-sharing rivals, claims to be off to a strong start since launching down under roughly three months ago. The company claims to already have a fifth of the number of drivers Uber has locally and 350,000 registered users (Uber has 3.8m users in Australia). Promoted with aggressive discounts to offset longer wait times, Taxify's long-term goals is to be 5% cheaper than Uber. In the highly competitive and relatively small Australian market, time will tell if there's room for more than one dominant player in the ride-sharing space.

US retail sales up

Reuters reported that US retail sales were up 4.5% from March 2017, as consumers spent more on goods including furniture and electronics.  Interestingly, some mainstream media only reported a 0.6% “increase since the last month”, after “two months of decline”.  Anyone who knows anything about retail knows that only year-on-year comparison makes any sense.

Dangerous waters for Myer

The Age reported that Myer has brought in high-profile restructuring and insolvency administrator Mark Korda to help it try to squeeze out from under suffocating leases.  According to The Age, this could make landlords realise that they have the option of either cutting a deal with him now as an adviser or be left dealing with him as Myer's administrator.  It has been speculated that voluntary administration could be a way for Myer to exit or renegotiate its leases, but the company has said such action was not being considered.

Woolworths IT systems fail

The Age reported that Woolworths stores around the country shut their doors on Monday afternoon after a nationwide technical issue completely halted sales.  Around 4pm, customers began to report stores closing and they were told that an IT issue affecting the cash registers was to blame.  This highlights the essential importance of a specialised systems architecture that is needed for retail chains, to prevent such mishaps.

Toys 'R' Us in play again?

The Wall Street Journal reported that MGA Entertainment CEO Isaac Larian has placed a bid to purchase Toys 'R' Us stores in the US and Canada for $675 million and $215 million respectively. Toy maker Larian plans to fund the purchase with his own money and bank financing.  When a manufacturer feels compelled to buy a retailer to secure continuing demand for its products, this usually just delays the inevitable...