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Myer shares in trouble

The AFR reported that Myer is poised to drop off the S&P/ASX 200 Index. This would force index funds to sell their Myer stock.  Myers stock has fallen by 60% over the last 12 months, reaching a low of $370 million this week.  Considering that Myer spent around $500 million on IT over the last decade, it makes us wonder … what would have happened if they purchased normal rather than gold-plated systems and kept most of the money.  According to AFR, Myer is close to breaching debt covenants. Should this happen it will inevitably lead to board, management, and debt restructuring.

Costco never disappoints

The NRF reported that Costco's sales and membership fees rose 10.8% in the second quarter. The retailer also said it will use savings from the recent US Federal Tax Cut to lower prices and boost employee pay. In 1995, we came across a book titled ‘The Discipline of Market Leaders’, covering the concept of Value Disciplines.  According to the authors, great businesses focus on one of the disciplines and become leaders in the chosen space.  Costco purse the Operational Excellence discipline and they are exceptionally good at it.

Interesting stats about work shoes

The Washington Post commented that American women are increasingly trading their high-heeled shoes for flats and sneakers. As the workplace grows more casual people are finding ways to work more steps into their days. Women's' sneaker sales soared 37% last year, while sales of high-heeled shoes dipped 12%, according to NPD Group.  Something to note for Australian shoe retailers.

Continuing problems with taxation of online sales

Reuters reported that the US state of South Dakota is seeking to have the US Supreme Court reverse a 1992 ruling that limited the ability of states to collect sales tax from online retailers if they did not have a physical location in the state. The Federal government supports South Dakota's efforts to overturn the rule, citing that online retailers can now replicate the shopping experience without a physical location.  If the rule is overturned, this would mean billions of dollars in revenue for state coffers.

Phantom crime: synthetic-identity fraud

A new type of crime has started to emerge, called ‘synthetic-identity fraud’.  According to the Wall Street Journal, this has now become one of the fastest-growing forms of identity crimes and one of the hardest to combat. Because the person taking out the cards or loans isn’t real, there are no consumer victims to alert lenders. When companies and law enforcement discover something amiss, they often wind up chasing ghosts. Something to watch…

Be careful with customer service


We are participating in the Retail Leaders Forum in Sydney this week. It's a great event, with excellent speakers and a lively audience. However, one theme repetitively comes up that concerns us: a view that retailers must relentlessly pursue ever better customer service.  We continually urge retailers to have a diametrically different approach: be very clear what customer segment you work with, define the required customer engagement model, and then get ever better at delivering CONSISTANT rather than an ever better level of service.  It would make no sense for e.g. Aldi to aspire to offer Nordstrom’s level of service.

Amazon’s next big thing may not be what everyone expects

The Wall Street Journal has been pondering about “Amazon’s Next Big Thing”.  Apparently, Amazon is now in talks with big banks, including JPMorgan Chase, about building a checking-account-like product the e-commerce company could offer its customers.  WJS said that “with millions of customers, troves of data, access to cheap capital and seemingly unlimited leeway from its investors to enter new businesses, Amazon is a fearsome competitor.”  We have been watching Amazon with interest, wondering when the US Government will invoke the Sherman Act, to undercut Amazon’s influence on the US and global economy.  The last notable case was in 2001, against Microsoft.  It was settled and Microsoft avoided being broken up.  Other large corporations were not that lucky.

Seems like old is the new, new?

The Financial Post in Canada reported that the "grocerant" trend is catching on in Canada.  Supermarket chains such as Loblaw and Metro are adding more prepared foods and sit-down dining areas in their stores.  Prepared meals on supermarket shelves are nothing new, but the idea to have a dining area within the store may appear novel.  However, a short visit to a Costco store will prove that this too is an old hat…

NRF discovers old news...

Sometimes we get amazed.  The National Retail Federation commented that private brands are making a resurgence and proving to be a powerful differentiator. NRF mentions companies like Amazon, Brandless, ALDI and Trader Joe's, who “are using private brands to build relationships with customers in unprecedented ways”.  We just want to clarify that some of the smartest operators have been doing this for decades and we have been advocating the essential importance of exclusive brands for the last 10 years.  Businesses like Aldi and Marks & Spencer have been built around high quality, private brands. So, sorry NRF, you have just discovered some old news…

The US economic outlook remains strong

Fed Chairman, Jerome Powell told lawmakers this week during testimony on Capitol Hill that "US economic outlook remains strong".  The Wall Street Journal reported that US Consumer Sentiment index has reached its second-highest monthly reading since January 2004.  According to the Journal, US households have been upbeat about the economy in recent months, with growth supported by rising incomes and low unemployment. The recent package of tax cuts also has boosted most workers’ take-home pay.  Makes you wonder what has been added to the water in Canberra, because some Australian politicians have begun advocating tax increases, to “balance the books”.  What about spending a bit less?  Business and most people in Australia already pay plenty of tax.