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The wingless ‘Flybuys’

AFR commented about Wesfarmers selling off Coles but retaining a controlling stake in Flybuys, because of the perceived high value of this “lucrative retail asset – data on shopping habits of 10 million Australians.”  We find it quite amazing to keep hearing the same claims, for nearly 25 years now, glorifying retail 101: recording who buys what and where.  Most retailers who have half-decent systems already capture such data and actually use it.

Permanent store staff are more profitable

The New York Times published an article about a study conducted at The Gap.  The study revealed that more predictable and consistent hours aren’t just compatible with profitability, they can significantly improve a store’s bottom line. The average sale was 7 percent higher in stores that introduced consistent staff schedules, instead of rostering employees on an ad hoc basis.  This confirms how critical it is to have happy store teams.

Strong brands continue expanding

CNBC reported that US retailers have so far announced about 1,700 new store openings for 2018.  Retailers such as Ulta Beauty, Dollar General, Target, Ross, and Warby Parker continue to expand their brick and mortar portfolios. Who said that brick and mortar has become obsolete?

JD Sport Fashion buying Finish Line

Reuters reported that JD Sport in the UK has agreed to buy US retailer Finish Line for $558 million in cash. Finish Line is a listed company operating over 550 stores focused on selling premium multi-branded athletic footwear, apparel and accessories.  JD Sports has expanded overseas in recent years, gaining a presence in France, Spain, and South Korea. Growing demand for branded sports shoes and clothes has enabled JD Sport to become the UK’s leading sportswear retailer.

Cotton On launches Aussie loyalty program

Inside Retail reported that the Cotton On Group (COG) has launched a portfolio-wide loyalty program in Australia, following rolling out the program in New Zealand, Asia, and South Africa. COG's GM of e-commerce Brendan Sweeney told IR that "Nobody else has anything that spans across the whole family of brands.” Behind this impressive technological and customer engagement feat sits the Retail Directions Platform, powering Cotton On's selling, loyalty, and retail ops worldwide.

Aldi and Lidl expanding in the UK

According to Reuters, Aldi plans to grow its current 750+ locations in the UK to 1,000 by 2022, and its rival Lidl says it will increase its 700+ locations to as many as 1,500.  This tells us that a well-run supermarket chain wins, no matter in which country it operates, but it needs to have a strategic focus and absolute clarity about its value disciplines.  This is what Australian supermarkets lack and it is only a question of time before the first Lidl store opens down under, adding to the misery.  We have no doubt that the weather, ‘headwinds’, or ‘difficult market conditions’ will be to blame.

Will tariffs punish Americans?

We have a lot of respect for the National Retail Federation (NRF), but we wish that sometimes they looked at the world from many angles, not just from a short-term perspective.  The NRF released a statement from its President stating that ‘the tariffs proposed by the US administration will punish ordinary Americans for China's violations.’  If American cars sell poorly in China because of a 20% tariff, while Chinese cars continue to arrive in the US with a 2% tariff, sooner or later those who make cars in the US will lose their jobs. What could be a harsher punishment than that?

Store robots at Walmart

Business Insider reported that Walmart has expanded its in-store robots to 50 stores.  The robots are mobile and can scan for out-of-stock or misplaced items as well as missing shelf labels.  We are surprised that with its multi-billion dollar spend on IT Walmart still cannot track its store inventory and needs to look at the shelves to find out of stocks.  Retailers we work with track their store inventory with ease…

US - Chinese talks to sort out trade issues

The Wall Street Journal confirmed our earlier report from Geopolitical Futures that media talk about a global trade war makes little sense. According to WSJ, Washington and Beijing are quietly negotiating improved US access to Chinese markets. The US is seeking to narrow its merchandise trade deficit, including lower tariffs on US automobiles, more purchases of US semiconductors and greater access to China’s financial sector.

GST nonsense continues unabated

Inside Retail reported that eBay complained about the Australian Government considering a $5 charge on each overseas parcel, to cover the costs of bio-security screening.  eBay commented that ‘customers will be hit hard’.  Such complaints sound disingenuous and self-serving.  At $5 a parcel, the proposed levy would amount to, on average, 1% tax on overseas online purchases.  In the meantime, Australian retailers continue to suffer from the damage inflicted daily by overseas goods arriving in Australia at a 10% discount.  Surely, with some retailers pushed into liquidation, this causes much more harm to customers?

Global Trade War? Not yet

Mainstream media recently escalated their talk about a global trade war, to be triggered by the latest US tariffs aimed at China.  According to Geopolitical Futures, the tariffs are a mere shot across the bow designed to demonstrate US resolve to the Chinese when it comes to trade. GF expect China to make a token response for its domestic audience, but to avoid escalation.

Amazon’s strange moves

Bloomberg reported that less than a year after closing its acquisition of Whole Foods, Amazon is searching for bigger Whole Foods locations in cities that can serve as both grocery stores and urban distribution centers for delivering goods to online shoppers.  This kind of makes sense, but questions must be asked: if Whole Foods was a good business, why mess with it?  If it wasn’t, why did Amazon buy it?  The confusion at Amazon’s end seems to be confirmed by the news that they are also working on a project to convert parking areas at existing Whole Foods stores into stalls for Amazon delivery contractors to load up their orders. A word of advice to Amazon: if you reduce parking space at a supermarket, your sales will drop.  Just a basic law of nature as far as supermarkets are concerned.