To follow is a brief review of retail news from around the world:
March 31 – Amazon in Australia Not the End of Retail There
After months of teasing, Amazon will reportedly “greatly expand” its online offer in Australia over the next year. The move has been predicted to “decimate retailing as we know it”, but the sky will not fall in. Shopping centres won’t close and retail will survive. Amazon has not committed to opening physical stores in Australia, and it recently announced a temporary hold to the rollout of its Amazon Go convenience stores. With no physical stores, Australia represents a very small market for the retail giant. Shoppers in Australia spent just A$21.65 billion online in 2016. While that may seem significant, it only represents 7.1% of what was spent in “bricks and mortar” shops. And as a result of a weak Australian dollar, 80% of the money spent online last year was with Australian retailers and online shops. For further insight, go to Inside FMCG.
March 31 – Walmart Chile Announces Investment Plan
Walmart has announced it plans to invest USD800m in Chile over the next three years, the latest in a series of financial commitments to its Latin American markets. Walmart plans to open 55-60 stores between 2017 and 2019. These will mainly be medium-sized formats like Express de Lider and SuperBodega aCuenta. This type of store best meets Chilean shoppers’ desire for a quick, comfortable shopping experience. Walmart will also remodel around 50 stores. Walmart is transforming Ekono discount stores into convenience outlets, for example adding more perishable foods. The stores’ low price focus will remain. These stores were previously caught in a gap between discount and convenience – lacking the breadth of range typical of a discount store and the fresh and mission focus required of a convenience store. This move should therefore help the format to develop a more distinct positioning in the market, as a value-oriented convenience store with a fresh focus – something few are doing well in Chile. See Retail Analysis for additional info.
March 29 – Amazon to Shut Down Unprofitable Quidsi Division
Amazon.com Inc said Wednesday it is shutting down the company behind Diapers.com that it bought for more than $500 million because it was unprofitable. Amazon struck a deal for Quidsi, which also ran Soap.com, in late 2010 after it rose to prominence shipping diapers and other household staples largely for free – a segment in which Amazon was also fiercely competing. “We have worked extremely hard for the past seven years to get Quidsi to be profitable, and unfortunately we have not been able to do so,” an Amazon spokeswoman said. Quidsi’s goods will be sold on Amazon.com, she said. Its software development team will be moved to AmazonFresh, the company’s grocery division, she added. For more details, go to WSJ Online.
March 28 – Amazon officially confirms purchase of Souq
Amazon today announced that it has reached an agreement to acquire SOUQ.com, an e-commerce leader in the Middle East. Joining the Amazon family will enable SOUQ.com to continue growing while working with Amazon to bring even more products and offerings to customers worldwide. Excerpt from Planet Retail.
March 27 – HGH India 2017 Taking Place from July 4-6 at Bombay Exhibition Centre
In a matter of 5 years since its inception, HGH India has emerged as a trusted trade show for home textiles, home décor, housewares and gifts for both Indian trade buyers and sellers from India and other countries. With exhibitors from over 30 countries, HGH India expects approximately 25,000 attendees in 2017. For further details, see HGH India.
March 27 – Poundland-owned 99p Stores (UK) Falls into Administration
Value chain 99p Stores has tumbled into administration less than two years after it was bought by Poundland, Retail Week reveals.
March 27 – More Chinese Consumers Say No to Fake Goods
The world’s workshop for counterfeit goods is getting a taste for the real thing. Fueled by their rising spending power and familiarity with Western film and TV characters, Chinese shoppers are stocking up on licensed entertainment merchandise such as “Minions” school bags, Mickey Mouse sweatshirts and Bart Simpson baseball caps. The fakes haven’t gone away by any means. But there’s a growing number of Chinese consumers who are willing to pay more for authentic goods. Merchandise sales in China are expected to top $10 billion by 2020, when the country is projected to surpass Japan as the biggest market in Asia for licensed goods, said Tani Wong, China managing director of the Licensing Industry Merchandisers’ Association. For additional reading, go to WSJ Online.
March 24 – Amazon reportedly puts South-East Asia launch on hold
Amazon has postponed its much-anticipated entry into South-East Asia. The company initially planned to launch local e-commerce services in Singapore during the first quarter of this year. Excerpt from Planet Retail.
March 24 – Alibaba and Lazada Team Up in Singapore
Lazada has launched a dedicated website to sell selected products from Alibaba’s B2C marketplace Taobao. Singaporeans have been shopping on Taobao, but often through agents, due to the language barrier. The new website taobao.lazada.sg is all in English and shoppers can track their orders from end to end. Categories being sold on the new website include fashion, home and living, sport and outdoor, toys and electronic accessories. No food and grocery categories are available. Alibaba is expanding its footprint in Southeast Asia. It has invested in Singapore Post, signed an agreement with Thai government to support SMEs, and recently announced its plan to build a distribution centre in Malaysia. The launch of the website marks the first partnership of Alibaba and Lazada since the acquisition about a year ago. For additional reading, go to Retail Analysis.
March 23 – Carrefour extends its China e-commerce offer to five new cities
Carrefour China is deploying e-commerce in five new cities: Tianjin, Nanjing, Shenyang, Shenzhen, and Harbin. The service now covers a total of 12 cities in China. Taken from Planet Retail.
March 22 – Sears Warning Slams Mall Stocks
Shopping-center landlords around the U.S. are weighing their options over a possible bankruptcy filing by Sears Holdings Corp. after the retailer raised doubts about its ability to continue operating. Real-estate executives said Sears had generally held on to its stores longer than expected, and that lower-tier malls are likely to take a bigger hit if the retailer liquidates all its stores. Some landlords are studying their earlier agreements with Sears that govern modifications to the malls and parking spaces. Mall operators stress that department store closures have a varying impact in different locations. Some anchor stores that were previously counted on to draw customers to their centers are now among the least productive tenants. Landlords are looking to replace aging department stores with trendier stores and restaurants. For more reading, see the WSJ Online.
March 15 – Aeon to Open 5th Mall in Vietnam
Aeon opened two malls in Vietnam in 2014, and one each in 2015 and 2016. The retailer is now planning a fifth mall in the west of Hanoi in 2019. Ha Dong district is receiving investments in an extended ring road system, a bus rapid transport system connecting to downtown Hanoi and an urban railway line. The area is also known to have one of the fastest growing population in Hanoi, with new housing development projects being built. The retailer will invest USD 200m in the new mall as part of its overseas expansion. Aeon has a network of around 300 consolidated subsidiaries ranging from convenience store chains and supermarkets to shopping malls and specialty stores. Under its 2020 strategy, it will add three more malls in Ho Chi Minh City. Outside Vietnam, the company is also running shopping malls in Malaysia, Cambodia and Indonesia. It is looking at the feasibility of new developments in Thailand, Laos and Myanmar. Taken from Retail Analysis.
March 13 – Rustan’s (Philippines) Loyalty Program Upgraded
Rustan’s Department Store has refreshed its Frequent Shoppers Program (FSP) and is launching a mobile app. Rustan’s loyalty program was introduced in 1995 as the first of its kind in the Philippines. Its new premium program offers wider acceptance across the Rustan group of companies, more chances to earn points and rewards in partner establishments, and borderless rewards through its international retail partners. Customers will now be able to earn points at Rustan’s Supermarket and Marketplace, Adora, Debenhams and SSI brands inside the department store. Members are also entitled to privileges at Adventure International Tours, Cats Motors Philippines, Discovery Leisure Company, Salad Stop, Smart Infinity, Sta Elena Golf and Country Estate, TWG and Txanton. Abroad, Rustan’s loyalty program customers have special discounts in partner establishments such as the Central Retail Group in Thailand and Tang’s in Singapore. Meanwhile, the Rustan’s loyalty program mobile app can be downloaded free at the Apple Store and Google’s Play Store. Its features include scan and earn, in which customers earn points by scanning featured merchandise in-store; a check-in feature that gives points when customers check in; wish lists that can be compiled by scanning items in-store and sharing these through e-mail or social media; and integration with social media so customers can earn points by sharing merchandise picks and posts related to the department store. Taken from Inside Retail.
March 12 – Wal-Mart Doubles Down in Brazil Despite Sluggish Sales
Facing lackluster sales in the world’s fifth-largest consumer market, Wal-Mart Stores Inc. is making a contrarian bet in Brazil, investing heavily to revamp its U.S.-style big-box stores even as shoppers increasingly flock to smaller, cheaper options. Wal-Mart has said it plans to spend 1 billion reais, or some $320 million, over three years on upgrades to its hypermarkets in Brazil, mostly sticking with a strategy it has followed here for two decades. Wal-Mart’s net sales in the country have been sluggish in recent years compared with its other international markets, falling 4.1% for the three months ended Jan. 31, versus increases for the same period of 8.9% across Mexico and Central America, and 5.4% in China. For additional reading, see WSJ Online.
March 10 – Kaufland (Germany) Nearer to Entering Australia
The German retailer, part of Schwarz Group, has confirmed its intension to enter Australia with the launch of a new website, the recruitment of personnel and has started to actively seek new store locations. In November last year, Kaufland announced that it was actively conducting a feasibility study for entry into the Australian market. However, the retailer appears to getting closer to a full launch. Having chosen Melbourne as its Australian HQ, it has set up a new Australia website. Kaufland has kicked off recruitment, mainly focused on setting up a property function. It is also looking to start securing land or existing project developments. The website says that ‘Kaufland is coming to Australia’ and ‘has ambitious Australian investment and development plans’, a significant move on from where it was at the end of 2016. For additional reading, go to Retail Analysis.
March 9 – Warehouse (NZ) profit plummets
Warehouse Group reported a 76 per cent drop in first-half profit after the retailer took an impairment charge against its financial services unit, recognised restructuring costs and earned less from its Red Shed department stores. Profit fell to $13.6 million in the 26 weeks ended January 29, from $57.2 million a year earlier, the Auckland-based company said in a statement. Warehouse warned in December that it was facing a weaker-than-expected run-up to Christmas, its peak trading season, and that was confirmed today as the company said it endured a “subdued peak seasonal trading period and intense competition driving margin pressure. For more, go to Inside Retail.
March 7 – Retailer Hhgregg Files for Bankruptcy Protection
Appliance seller Hhgregg Inc. filed for bankruptcy protection Monday night, the latest retailer brought down by declining traffic and the proliferation of online shopping. “We’ve given it a valiant effort over the past 12 months,“ said Chief Executive Robert Riesbeck, adding the company ”has signed a term sheet with an anonymous party to purchase” Hhgregg’s assets. Hhgregg’s chapter 11 filing comes just days after store-closing sales were launched at 88 of its retail locations. The company said last week it was closing the stores and three distribution centers, cutting about 1,500 jobs. The closures will leave Hhgregg with 132 stores nationwide by mid-April. Founded in 1955, Hhgregg sold appliances, consumer electronics and furniture at its stores in 19 states. In recent years, the company has opted to rely less on the cutthroat consumer-electronics space in favor of furniture and appliances in hopes of stemming sales declines. But it hasn’t worked—in the most recent quarter, same-store sales tumbled 22%. For additional reading, go to WSJ.
March 5 – Chilean Government Signs Deal with Amazon Web Services
The government of Chile has signed a collaboration agreement with the US company Amazon Web Services, with the objective of promoting cooperation in innovation matters through education and training programs, support for the development of cloud-enabled business, especially For start-ups and exporters of services, and collaboration in processes of modernization of public management. Finance Minister Rodrigo Valdés signed the agreement with Jeffrey Kratz, Public Sector Director of Amazon Web Services for Latin America, Canada and the Caribbean. The authority said that countries “at the end of the day grow with productivity, nothing more. Accumulating capital and helping people, but only productivity is what makes the difference. We are in a time when knowledge and technology like this (in the cloud), which we do not see, is what ultimately drives the economy. ” The ceremony was also attended by the United States Ambassador to Chile, Carol Perez; The Undersecretary of Finance, Alejandro Micco; The executive vice president of Corfo, Eduardo Bitrán; And the director of the attraction agency of Inversiones InvestChile, Carlos Álvarez. For additional information (in Spanish), see Mundo Maritimo.
March 3 – Eurozone Retail Sales Continue to Fall
Retail sales across the eurozone fell for a third straight month in January, a sign that a recent surge in inflation may be damping consumer spending and retarding economic growth. The European Union’s statistics agency Friday said the volume of sales in the 19 countries that use the euro fell 0.1% from December. That was a surprise, with economists surveyed last week by The Wall Street Journal having estimated that sales rose 0.4%. It wasn’t the first month in which sales have proved surprisingly weak. Adding to that impression, Eurostat also cut its estimate for sales in December, and now calculates they fell by 0.5%, having previously recorded a 0.3% drop. The surprise drop in sales comes amid broader signs that the eurozone economy has strengthened over recent months. A survey of purchasing managers at manufacturers and service providers also released Friday pointed to a pickup in private sector activity, with the composite Purchasing Managers Index rising to its highest level in 70 months. But that pickup has in part been aided by the recent weakness of the euro, which has aided exports. Weaker consumer spending might not slow the recovery, but it would limit its potential if it were to be sustained. For more, see WSJ Online.
March 2 – Cencosud Reports Fourth Quarter and Full Year 2016 Results
Cencosud S.A., a leading South American retailer with operations in Chile, Argentina, Brazil, Peru and Colombia, today announced its consolidated financial results for the fourth quarter of 2016. For the fourth quarter, revenues were 6.5% lower to CLP 2,850,956 million due to currency devaluation. In local currency, Cencosud had positive revenue growth in all businesses across the region. Same store sales accelerated year on year across supermarkets in Chile, Argentina and Colombia, and in Home Improvement in Chile and Colombia. Cencosud cemented its position as South America’s retail leader against a challenging macro backdrop with strong FX headwinds during 2016 – executing on strategic initiatives, with a deeper focus on margins and profitability. For additional reading, visit Yahoo Finance.
March 2 – Burlington Posts Strong Fourth-Quarter Results
Off-price retailer upbeat about profit, sales for 2017. Burlington Stores Inc.’s profit climbed 27% in the latest quarter on rising sales and the company was upbeat about earnings this year, continuing to post solid results as the broader retail space remains pressured. Burlington said comparable-store sales increased 4.6% and inventory fell 9%. Analysts polled by Consensus Metrix expected 3.7% comp-sales growth. The fourth-quarter results come as brick-and-mortar retailers have reported sales declines or sluggish growth as shoppers have gravitated toward Amazon.com Inc. and fast-fashion shops. Burlington’s off-price retail has led the company to strong results recently as shoppers continue to shy away from traditional mall-based stores. The company said it plans to open a net 30 new locations this year. See WSJ Online for additional info.
March 2 – Dairy Farm: Positive Results in 2016
Dairy Farm, leading multi-format retailer in Asia, reports sound profit growth of 7% in 2016, despite soft consumer sentiment and intense pressure on pricing in most markets. Sales, excluding associates and joint ventures, of US$11.2 bn, were 1% ahead of the prior year in US dollar terms and 2% ahead in constant currency terms. The retailer opened 114 net new stores during the year. Sales of US$6.2bn from supermarkets and hypermarkets (excluding Yonghui) were in line with last year in constant currency while operating profit increased by 13% to US$194m. Large formats in Hong Kong, Macau, Taiwan, The Philippines, Vietnam and Cambodia saw positive sales growth, while sales in Malaysia, Singapore and Indonesia were down. Home Furnishings again achieved record sales and operating profit during 2016. In constant currency terms, operating profit rose by 12% to US$71m and restaurants business reported US$2.0 billion in total sales, an increase of 7%. For more, go to Retail Analysis.
March 2 – Fallabella Store Growth Remains Solid
The Falabella department store business grew by 1%. In the last year, the income of the Chilean giant chain stood at 2.7 trillion Chilean pesos (US $ 4.195 billion), which represented an increase of 1.15% over sales that department stores registered In 2015. The company, linked to the Solari family, operates this business in four markets in South America: Chile, Peru, Colombia and Argentina. Falabella concentrates the bulk of its turnover in its local market, where it operates 44 department stores, which in the last year billed 1.4 trillion pesos (2,270 million dollars). The group’s turnover in Chile represented an increase of 8.6% over the previous year’s turnover. Its local market accounts for 54% of the total department store business of the Chilean company. For more (in Spanish), see Modaes.
March 2 – OXXO: Targeting New Growth Opportunities
Following a strong set of full year results (7.0% same store sales growth over 2016), Oxxo’s parent FEMSA is planning next steps in expanding Mexico’s biggest convenience store retailer. The key driver of Oxxo’s same store growth was a rise in average transaction size, up 6.8%, and this, combined with the addition of over 1,000 new stores over the year, drove total revenue growth for Oxxo of 14.4%. A notable recent development has been the opening of the first Oxxo stores in the Mexico City subway, with five stores opening in the year at selected stations. Clearly, the footfall these locations boast is a key advantage, and this follows trends seen in many other markets. This is a relatively recent incursion for parent FEMSA, and forms a separate division from Oxxo, but it’s one where broader consumer trends are creating a long term platform for growth. With a presence in Chile (where it operates close to 680 drugstores and 160 beauty stores) and Colombia (180 pharmacies), we see substantial long term growth opportunities. Further international growth and “cross-format” development have already been cited by parent FEMSA as future growth opportunities, as it becomes a more significant player in this market. See Retail Analysis for additional reading.
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