Store TrackerWeekly Store Openings and Closures Tracker 2018, Week 45: Destination Maternity to Close 117 Stores Coresight Research November 9, 2018 Executive SummaryCoresight Research tracks store closures, openings and bankruptcies for a select group of retailers in the US and the UK. Our Weekly Store Tracker focuses on department stores and specialty retail stores, including, but not limited to, those selling softlines, hardlines, consumer electronics, groceries and furniture. Click here to view our full collection of Weekly US and UK Store Trackers. Highlights from this week’s Store Tracker: Year-to-date (YTD) 2018, the number of US store closure announcements stands at 5,468 and the number of store openings is 3, Lowe’s has announced plans to shut 20 US stores. Destination Maternity will shut 117 stores. Amazon has opened two 4-Star stores. YTD in the UK, there have been 1,320 store closure announcements and 777 store opening announcements. New Look plans to close 85 stores. Homebase is to shut 17 stores in the next six months. Already a subscriber? Log in You are currently viewing a preview of this report. Please select an access option to view the full report. Hide Options - Show Options + Get unlimited access to all our research with one of our subscription plans. View Subscription Plans or Contact us to purchase this report. Contact us ✕ This document was generated for
Analyst CornerWeinswig’s Weekly Nov 9, 2018 Coresight Research November 9, 2018 Executive SummaryNovember 9, 2018 This week’s note “From the Desk of Deborah Weinswig” discusses the trend of Amazon expanding its warehouse capacity vertically rather than horizontally. Walmart announced plans to expand its technology center in Austin to help associates make better use of digital data and improve operations. Engineers from Walmart and Microsoft will work together at the center as Walmart seeks more convenient ways for customers to shop. Retail sales in the UK grew by 1.3% year over year in October. Comparable sales grew by a negligible 0.1% year over year as consumer spending continued to be cautious into the last quarter of the year. E-commerce behemoth Alibaba has launched China’s biggest robotic warehouse through its logistics affiliate, Cainiao Network, in anticipation of the expected rush from the Singles’ Day shopping event on November 11. Please Login to read the full report. Not a member? To access this content for free, register for a free account. This document was generated for
Company Earnings UpdateSainsbury’s (LSE: SBRY) 1H19 Results: Further Tepid Retail Sales Growth; Exceptional Costs Hit Bottom Line Coresight Research November 9, 2018 Executive Summary In 1H19, Sainsbury’s reported further modest growth in comparable sales, with comps up 0.6%. Total retail sales were up just 1.2%. Revenues and adjusted pretax profit came in ahead of expectations. The company has delivered its target of £160 million in EBITDA synergies from its Argos acquisition nine months ahead of plan. Please Login to read the full report. Not a member? To access this content for free, register for a free account. This document was generated for
Insight ReportCoresight Research Countdown to 11.11 Series, #15: Singles’ Day 2018 is Nearly Here Coresight Research November 8, 2018 Executive SummaryAlibaba’s 11.11 Global Shopping Festival, also known as Double 11 or Singles’ Day, takes place on November 11 every year and it has become the world’s biggest 24-hour online sale. This is the concluding report in our series covering the various shopping festivals and developments in New Retail in the lead up to this year’s Double 11. We continue to see New Retail as the backbone of this year’s Double 11 and increased spending on imported goods. The 11.11 Countdown Gala will be held in Shanghai this year. The curtain-raiser to Double 11 will feature super-stars and there will be audience interaction through the Taobao, Tmall or Youku apps. The latest pre-sales data for Tmall Double 11, as of October 31, show that 3C Products (computer, communication and consumer electronics) and Home Appliances has become the top-selling category on the platform. Away from Double 11, Alibaba and YOOX Net-a-Porter will be establishing a joint venture to connect with China’s luxury shoppers. The Double 11 Global Shopping Festival Is Just Around the Corner We are now just three days away from Double 11, also known as Singles’ Day and 11.11. The shopping extravaganza is held every year on November 11 and has become the benchmark of Chinese consumption. This is the concluding report in our series covering the various shopping festivals and developments in New Retail in the lead up to this year’s Double 11. New Retail will Re-Invent Double 11 This Year, Consumption of Imported Goods Expected to Rise We believe this year’s Double 11 will be powered by Alibaba’s New Retail, which is about the seamless integration of offline and online retail, besides achieving recording-breaking sales figures. Focus on New Retail: This year, Alibaba will be showcasing its New Retail initiatives and it will be seen how the company’s investments and partnerships with physical retailers play out. At this year’s edition of the event: Alibaba will partner with the approximately 200,000 mom-and-pop “smart stores” that participate in its Ling Shou Tong program. The stores will incorporate a range of New Retail experiences such as cloud shelves, product vending machines, facial recognition payment and scan-and-deliver shopping; Around 100 Hema and 400 RT-Mart supermarkets will be turned into Double 11-themed stores to provide New Retail services. We are seeing a much higher number of offline stores participating, which will further boost New Retail initiatives. Foreign Goods’ Consumption: This year’s Double 11 will be of an unprecedented scale with 180,000 global and Chinese brands participating. In addition to that, Tmall Global will offer 3,700 categories of imported goods from 75 countries and regions to encourage cross-border sales. Despite the prevailing fluid macroeconomic conditions, we expect Chinese consumers’ spending on imported goods to continue growing this year, thanks to their aspirations for high-quality products. Even the 2017 edition of Double 11 saw impressive consumption of foreign merchandise and data from Azoya, a Chinese e-commerce solutions provider, show that during last year’s Double 11: British beauty and personal care brand Feelunique and French fashion brand La Redoute registered year-on-year growth of 75% and 200%, respectively, in sales; and, Baby product brand BabyHaven saw the number of orders and sales revenues rise 420% and 375%, respectively, higher on Singles’ Day, compared to the year’s average in 2017. The 11.11 Countdown Gala The 11.11 Countdown Gala—which will be held in Shanghai this year—will start in the evening on November 10 and lead up to the event’s midnight launch. The show has been broadcast on live TV since 2015 and this year’s gala will be broadcast live nationwide on platforms including the Taobao and Tmall apps, social media platform Weibo, news aggregator Toutiao, Youku.com and two domestic TV channels. Like in previous years, even this year’s gala will be a mix of entertainment and variety shows blended with New Retail. The domestic and international celebrities at the show will include Miranda Kerr, Zhang Jie, Xie Na, Luo Zhi Xiang and Angelababy. In previous years, international artists such as Katy Perry, Nichole Kidman and Jessie J, and renowned athletes such as David Beckham, Maria Sharapova and LeBron James have participated in the curtain-raiser, along with vast Chinese audiences, to witness Double 11’s launch. Zhang Jie, Xie Na and Miranda Kerr will participate in this year’s 11.11 Countdown Gala Source: Youku.com As in previous years, even this year’s countdown gala centers on audience interaction. The participating celebrities will be divided into two teams, Red and Blue, for four rounds of battle. Before the start of each battle, the audience can bet on their favorite team through the Taobao, Tmall and Youku apps. Those who bet on the winning team in each round can further win a chance of buying any product at ¥1 (USD0.15) and will also get a key to unlock the grand prize. From those who win all four keys after the battles, one final winner will be selected to win the grand prize of 1,111 gifts from 1,111 brands on Tmall Global. The 11.11 Countdown Gala will continue to raise the passion, which has already been built up by pre-sales activities, to drive the shopping cart through Tmall once the clock strikes midnight on November 11. 3C Products and Home Appliances Lead in Tmall’s Double 11 Pre-Sales In our previous report in this series, we noted that that the 3C Products (computer, communication and consumer electronics) and Home Appliances category had ranked second in Tmall’s Double 11 pre-sales chart for October 20–22. This week, the category has climbed up to first place by registering ¥6.88 billion (US$1 billion) sales in the period October 20–31, according to data company ECdataway. Beauty and Personal Care has dropped one place to become the second-highest sales category with sales worth ¥5.82 billion (US$0.85 billion) in the same period. Source: ECdataway According to 100EC.CN, a Chinese e-commerce intelligence website, nine brands in the 3C Products and Home Appliances category had already achieved impressive sales of over a hundred million Chinese yuan as of November 2 in the pre-sales period starting October 20. These brands are Apple, Huawei, Haier, Xiaomi, Midea, Siemens, Gree, Dyson and Ecovacs Robotics. For Apple and Huawei, their latest phone models—iPhone X and Mate20 Pro—alone also registered over a hundred million Chinese yuan in sales during pre-sales. What’s New in New Retail? Alibaba and YOOX Net-a-Porter to Launch Joint Venture Alibaba and YOOX Net-a-Porter, a subsidiary of luxury conglomerate Richemont, have announced the launch of a joint venture to connect with China’s luxury shoppers. In the partnership, two mobile apps—Net-a-Porter for women and Mr Porter for men—will be launched for Chinese customers, and Net-a-Porter and Mr Porter will also launch online stores on Tmall’s Luxury Pavilion. This is another major move by Alibaba in the luxury market following its launch of the Luxury Pavilion on Tmall in 2017. Having luxury brands online is an embodiment of Alibaba’s New Retail push where one sees an integration of online and offline commerce. The partnership reflects brands’ recognition of the untapped potential of China’s luxury market and conviction of its strong growth in the near future. According to McKinsey & Company, Chinese consumers are expected to account for nearly half of the global luxury market by 2025. This and other New Retail developments in China are listed in Figure 2. Source: Company reports/Coresight Research Investments and Acquisitions in New Retail To expand their New Retail capacities, Alibaba, Tencent and JD.com have invested in logistics firms, online marketplaces, content creation companies, brick-and-mortar stores, etc. Listed in Figures 3, 4 and 5 are recent investments of and acquisitions by these companies, along with investment dates, investees and the industry segments they are in, and funding details. Source: Company reports/Coresight Research Source: Company reports/Coresight Research Source: Company reports/Coresight Research This document was generated for
Insight ReportBeauty Insights, Part 2: Men’s Grooming Category Is Ready for Disruption Coresight Research November 8, 2018 Executive Summary Global sales of men’s grooming products reached nearly $50 billion in 2017 and are on track to grow by 16% by 2020, according to Euromonitor International. The men’s grooming market accounted for 10.7% of the $464 billion global beauty and personal care market in 2017. According to Euromonitor, American men, on average, use 4.1 grooming products and spend 48 minutes on grooming per day, which includes washing, conditioning and styling their hair; shaving; and body and facial care. According to survey data from Prosper Insights & Analytics, Walmart, CVS, Target, Walgreens and Amazon are the five specific retailers where American men purchase skincare and cosmetic products most often. Millennial men surveyed by Prosper shop at specialty stores such as Sephora, Ulta, Macy’s and Bed Bath & Beyond for skincare and cosmetic products more often than their Gen X and baby boomer peers do. Gen X and baby boomer men shop for these products more frequently at value retailers such as Costco, Dollar General, Dollar Tree, Sam’s Club and Family Dollar. In September 2018, luxury cosmetics maker Chanel launched Boy de Chanel, a makeup line for men that includes tinted foundation, eyebrow pencils and lip balm. Men’s Grooming Products Account for 10.7% of the Global Beauty and Personal Care Market and Are on Track to Grow by 16% by 2020 Global sales of men’s grooming products reached nearly $50 billion in 2017 and are on track to grow by 16% by 2020, according to Euromonitor International. Globally, the largest male grooming market in absolute terms is Western Europe, where category sales totaled $12.3 billion in 2017 and are projected to grow at a CAGR of 3.1% from 2017 to 2022, while the Eastern European category sales totaled $3.6 billion in 2017, and are projected to grow at a CAGR of 4.4% from 2017 to 2022. The market is smallest in the Middle East and Africa region, where men’s grooming product sales reached $3.4 billion in 2017 and are expected to grow to $4.7 billion in 2022. The market in Latin American is growing the fastest: men’s grooming product sales in the region totaled $11.3 billion in 2017 and are expected to grow at a 7.1% CAGR to 2022, to reach $15.9 billion. By way of comparison, the global men’s grooming market is expected to grow at a CAGR of 5.2% to 2022, according to Euromonitor. Source: Euromonitor International Skincare, Haircare and Fragrances Are Driving Men’s Grooming Sales Sales growth of men’s toiletries—which Euromonitor defines as men’s bath and shower, deodorant, skincare, and haircare products—is outpacing sales growth of men’s shaving products. Men’s toiletries are expected to grow at a CAGR of 5.8% from 2017 to 2022, from $18.9 billion to $25.0 billion, while shaving products are expected to grow at a CAGR of 3.4% from $14.5 billion to $17.1 billion, over the same period. Men’s fragrances are expected to grow the fastest among the three categories, at a 6.0% CAGR from 2017 to 2022, from $16.2 billion to $21.6 billion, according to Euromonitor. Source: Euromonitor International According to Euromonitor’s annual Beauty Survey, men’s personal grooming routines are driven by haircare and shaving, with more than 40% of men globally reporting that they wash their hair daily with shampoo, versus 25% who use facial cleansers daily. The graph below highlights the top 10 grooming products used by men globally. Base: Online panelists ages 15–70 in 20 emerging and developed markets, surveyed June–July 2018. More than 20,000 online panelists participate in the Beauty Survey annually, with 1,000 respondents per market. Source: Euromonitor International According to Euromonitor’s survey, American men use an average of 4.1 beauty products daily. This compares with 4.9 products in Brazil, 2.0 in Russia and 2.8 France. The Beauty Survey also highlighted men’s beauty concerns by region. In terms of haircare, these include: Gray hair (36% Russia, 23% France) Greasy or oily hair (27% Brazil) Thinning hair (20% US) Men’s top skincare concerns include: Blackheads (39% Brazil, 18% US) Dark circles (21% France) Wrinkles (35% Russia) Some 5% of US Men Purchase Body Moisturizers, Facial Cleansers, Facial Moisturizers and Hand Moisturizers Once a Week While most men focus on routine grooming needs, there is an opportunity for brands and retailers to expand their men’s grooming portfolios beyond haircare and shaving products, as many men are also interested in skincare, anti-aging, sun protection, sleep, and overall health and wellness products. According to US survey data from Prosper Insights & Analytics, approximately 50% of American men regularly purchase body moisturizers, facial cleansers, facial moisturizers and hand moisturizers. Approximately 5% of men in the US purchase these products as frequently as once a week, and approximately 7% of them purchase such products two or three times per month. As men become more interested in skincare and health and wellness, brands and retailers can seize the opportunity to meet their needs by expanding product assortments beyond the basics to include, for example, products that offer anti-aging, sun protection or acne solutions. Base: 3,357 US male Internet users ages 18+, surveyed June 29–July 8, 2018 Source: Prosper Insights & Analytics More than a Quarter of American Men Shop Most Often at Walmart for Skincare and Cosmetic Products According to Prosper’s survey data, Walmart is the top destination for skincare and cosmetic product purchases among American men, with 27.3% of survey respondents saying they shop there most often for such products. While 21.8% of survey respondents said that they had “no preference” with regard to where they buy skincare and cosmetics, 8% said that they buy these most often at CVS, 7% at Target, 4.3% at Walgreens and 3.7% at Amazon. Some 13.1% of respondents named “other” as the location where they most frequently buy such products. The top five retailers named above accounted for 50.3% of responses. There were 19 retailers named by survey respondents that each accounted less than 2% of responses. Base: 3,357 US male Internet users ages 18+, surveyed June 29–July 8, 2018 Survey respondents were asked to write in their responses. Source: Prosper Insights & Analytics Millennials Shop More Often at Beauty Specialty Stores than Gen Xers and Baby Boomers In the US, millennial men (ages 20–35) are more likely than their Gen X (ages 36–53) and baby boomer (ages 54–72) counterparts to shop for skincare and cosmetic products at specialty stores such as Macy’s, Sephora, Bath & Body Works and Ulta, according to Prosper’s survey data. Some 3.9% of millennial men surveyed said that they shop most often for skincare products at these four retailers, compared with 2.1% of Gen X men and 1.7% of baby boomer men. Stores such as Costco, Dollar Tree, Dollar General, Sam’s Club and Family Dollar ranked higher among the value-conscious Gen X and baby boomer demographics in Prosper’s survey. Base: 3,357 US male Internet users ages 18+, surveyed June 29–July 8, 2018 Survey respondents were asked to write in their responses. Source: Prosper Insights & Analytics Globally, Beauty Brands Are Targeting Men and Branching into Men’s Skincare and Even Some Beauty Product Categories In September 2018, Chanel launched its first makeup line for men, Boy de Chanel, which features tinted foundation, eyebrow pencils and lip balm. The company said in a statement, “Beauty is not a matter of gender, it is a matter of style.” The foundation comes in eight sheer shades and offers SPF 25 protection. The brow pencil comes in four colors and the clear lip balm has a matte finish. Chanel first launched its men’s line in South Korea on September 1 and is set to roll it out internationally between November and January 2019. Chanel’s was the first mainstream men’s beauty product launch by a major luxury cosmetics brand, and it signals that the men’s beauty market is poised for further growth. Source: Chanel.com Hims is a brand that focuses on haircare, skincare, and health and wellness products for men. Along with hair kits to “cover all bases,” Hims’ haircare offering includes products to treat male pattern baldness and edible kits with vitamins that promote thicker hair and stronger nails. The brand’s skincare solutions include anti-aging kits, acne solutions for inflammation, vitamin C serums and wrinkle cream. Source: ForHims.com Lab Series offers products for men that are marketed based on type of solution. The website includes an e-magazine with articles such as “Should You Use a Serum, a Moisturizer, or Both?” and “7 Tips for a Better-Looking Movember: Quickly Improve Your Look.” The company reported that its best-sellers include its Daily Moisture Defense Lotion, Multi-Action Face Wash, All-in-One Face Treatment, Age-Less Power V Lifting Cream, Future Rescue Repair Serum and Max LS Power V Instant Eye Lift. The company also sells a BB tinted moisturizer that offers SPF 35 protection. Source: LabSeries.com Dr. Barbara Sturm is a German doctor who has translated her orthopedic research and practice into advances in aesthetic nonsurgical medicine. She is recognized for offering nonsurgical anti-aging treatments and rejuvenation of the skin matrix. One example is her incubation, centrifugation and reintroduction of a patient’s own blood proteins. When combined with hyaluronic acid and injected, this treatment is claimed to have an anti-inflammatory and highly regenerative effect on the cellular level that returns a youthful glow to the skin and combats some of the central causes of skin aging. Dr. Sturm has a cultlike following among influencers and celebrities and has created a men’s line of skincare and face creams. Source: Molecular-Cosmetics.com This document was generated for
Company Earnings UpdateMarks & Spencer (LSE: MKS) 1H19 Results: Food Underperforms, Clothing Improves; Company Beats Bottom-Line Expectations Coresight Research November 8, 2018 Executive Summary In 1H19, Marks & Spencer (M&S) reported a slightly improved performance in its UK Clothing & Home segment, as it seeks to reshape its clothing offering with streamlined ranges that will help it to recapture family-lifestage shoppers. The UK Food segment turned in a disappointingly deep fall in comparable sales, impacted by a pivot away from promotions in favor of lower prices. Adjusted pretax profit was up 2.0% year over year and ahead of the consensus estimate of £200.5 million. Please Login to read the full report. Not a member? To access this content for free, register for a free account. This document was generated for
Company Earnings UpdateAdidas (ETR: ADS) 3Q18 Results: Misses on Revenues, Beats on Profits and Raises Full-Year Profitability Outlook Coresight Research November 8, 2018 Executive Summary Adidas grew 3Q18 revenues by 8% at constant currency but the missed consensus estimate. Earnings before interest and taxes (EBIT) and earnings per share (EPS) came in ahead of consensus. Gross margin improvement of 140 basis points (bps) was driven by improved pricing and channel and category mix. Management lowered FY18 guidance for sales growth to 8%–9% from the previous target of 10% at constant currency. It raised guidance for net income growth to 16%–20% from the 13%–17% range it stated previously. Please Login to read the full report. Not a member? To access this content for free, register for a free account. This document was generated for
Company Earnings UpdateUnder Armour (UA) 3Q18 Results: Restructuring On Track, EPS Beat Consensus Coresight Research November 7, 2018 Executive Summary Under Armour’s international and apparel segment sales drove 3Q revenue growth, up mid-teens and 4.2%, respectively. Adjusted EPS of $0.25 beat the consensus estimate of $0.12. North America sales declined 1.6% and segment profits rose 17.7%. Adjusted operating income guidance was lifted to $150–$165 million and adjusted EPS guidance was lifted to$0.19–$0.22, from $0.16–$0.19. Please Login to read the full report. Not a member? To access this content for free, register for a free account. This document was generated for
Company Earnings UpdatePRIMARK (LSE: ABF) FY18 Results: Strong Summer Sell Through, Weakening US Dollar Revives Margins Coresight Research November 7, 2018 Executive Summary Associated British Foods (ABF) reported results for FY18 ended September 15. This report focuses on results for Primark, the company’s retail business. Primark grew FY18 sales by 5.2% at constant currency, driven by a strong UK performance. Operating profit jumped 15% (13% at constant currency) to deliver an operating margin of 11.3%, up 90 basis points (bps) from FY17. During the year, Primark expanded retail selling space by a net 0.9 million square feet. The retailer plans to add over 1 million square feet of net selling space in FY19. Please Login to read the full report. Not a member? To access this content for free, register for a free account. This document was generated for
Insight ReportCostco: A Timeline of Key Events – 2018 Coresight Research November 7, 2018 Executive SummaryIn this report, part of our Retailers’ Timelines series, we examine a timeline of key events in Costco’s recent history that have shaped it into the retailer it is today. Costco has focused on expansion in recent years. The company opened its first store in Iceland in May 2017 and its first store in France in June 2017. In October 2015, the company announced plans to open 12 new warehouses worldwide by the end of 2015. In 2014, Costco entered China by opening a store on the Tmall Global platform. In March 2009, Costco announced that it planned to begin operations in Australia and to open its first store in the country in July 2009, in Melbourne. Click here to read our full collection of Retailers’ Timelines. Already a subscriber? Log in You are currently viewing a preview of this report. Please select an access option to view the full report. Hide Options - Show Options + Get unlimited access to all our research with one of our subscription plans. View Subscription Plans or Contact us to purchase this report. Contact us ✕ This document was generated for
Insight ReportZalando (XTRA:ZAL) 3Q18 Results: Misses on Both the Top and Bottom Lines; Guidance Lowered Coresight Research November 7, 2018 Executive Summary In 3Q18, Zalando grew revenues by 11.7% year over year but missed the consensus estimates for revenues and EPS. A decline in gross margins and higher SG&A costs, mainly driven by a rise in fulfillment costs, led to a contraction in the operating margin. Management revised its FY18 guidance and now expects full-year revenue growth to be at the lower end of the previously stated 20%–25% target range. *Not meaningful Source: Company reports/Coresight Research 3Q18 Results Zalando grew revenues by 11.7% year over year to €1.20 billion in 3Q18, slightly below the consensus estimate of €1.22 billion and a sequential slowing from the 20.9% growth in 2Q18. Growth in revenues were driven by a 16.6% increase in gross merchandise volume (GMV) and a 22.8% increase in the number of orders. A long, hot summer resulted in a late switch to fall and winter shopping and weighed on sales growth. The company reported an increase in the number of active customers to 25.1 million. Zalando reported an operating loss of €55.7 million in the quarter, compared to an operating loss of €5.9 million in the year ago period. After adjusting for equity-settled share-based payments, restructuring costs and one-offs, EBIT came in at €(38.9) million, compared to €0.4 million in the year-ago quarter. Zalando attributed the increased expenses to the grant of further tranches under its share-based payments. The EBIT margin was also hurt by increased SG&A costs, including rising fulfillment costs. Fulfillment costs added 3.1 percentage points to EBIT margin decline and included costs related to logistics and technology, as the company plans to expand its logistics network. Logistics costs were also impacted by a decrease in the average basket size and an increase in carrier prices. Zalando reported a 7.3% year over year decline in the average basket size to €57.5, mainly due to the seasonal mix as a higher proportion of orders was for lower-priced summer articles available at higher discounts than fall articles. Diluted EPS of €(0.17) fell short of the consensus estimate of €(0.13). Segment Performance Fashion Store: This segment, which comprises full-price websites, grew revenues by 10.8% year over year and reported EBIT of €(54.8) million. Off price: This segment grew revenues by 40.2% year over year and reported an EBIT of €7 million. All Others: This segment, which includes private labels and various emerging businesses, reported 23.0% year-over-year increase in revenues and posted an EBIT of €(6.5) million. Outlook Management lowered its FY18 guidance and now expects full-year revenue growth to be around the lower end of the previously stated 20%–25% target range (lowered from 2Q18 guidance of the “lower half” of this range). It expects adjusted EBIT in the €150–€190 million range, revised from the previously stated €220–€270 million range. The company plans to continue its investments in logistics and technology and anticipates spending €300 million in 2018, which is slightly lower than the previous estimate of €350 million. This document was generated for
Insight ReportOcado’s Robot-Staffed Distribution Centers: Automating Grocery E-Commerce Coresight Research November 6, 2018 Executive SummaryOcado has been evolving from an e-commerce grocery retailer to a technology company that develops innovative approaches to warehouse automation. This report illustrates Ocado’s dramatic transformation into a company that develops innovative and cutting-edge warehouse automation solutions, even as it continues with its core business of selling groceries online. Ocado’s transformation into a technology provider has enabled it to diversify its sources of revenue and profitability. Ocado’s latest-generation distribution center includes a dense 3D-grid—dubbed the Hive—in which layers of crates containing grocery products are stacked. Swarms of robots move across the grid to collect crates and take them to picking stations where (human) employees pick the individual items needed to fill customer orders. Retailers that have started using Ocado’s warehouse automation solutions are enjoying the benefits of Ocado’s innovative systems but have risked giving away control of their distribution operations. Ocado is redesigning grocery e-commerce warehousing with its robot-staffed customer fulfillment centers (CFCs) and the Ocado Smart Platform (OSP). Introduction Ocado has evolved from an e-commerce grocery retailer to a technology company that develops innovative approaches to warehouse automation. It has sold its technology to grocery retailers such as Kroger in the US, Sobeys in Canada, Groupe Casino in France and ICA in Sweden. This report illustrates the company’s transformation into a technology provider and gives an overview of how the company’s robotics distribution centers and the suite that supports e-commerce distribution—Customer Fulfillment Centers (CFC) in Andover, UK, and Ocado Smart Platform (OSP) respectively—work. Ocado’s Journey from Grocery Retailer to Technology Vendor Founded as an online-only supermarket in April 2000 by former investment bankers Jonathan Faiman, Jason Gissing and Tim Steiner, Ocado has made a name for itself in recent years as a technology company with expertise in warehouse automation. The company’s success in transforming its own online grocery business was a process that required in-house research and development of proprietary robots, machinery and software. Ocado now licenses the use of its warehouse automation technology to third-party retailers. Figure 1 is a timeline of the key events of Ocado as a technology company. Source: Ocado Technology/Coresight Research Ocado’s technology business already generates an additional stream of revenue and profits. Ocado’s valuation rests in part on that technology increasing its contribution in the long run as the company inks deals with more retailers. Though the company’s e-commerce business is currently a more profitable business, Ocado Technology is growing at faster rate, as shown in Figure 2. Data are for the fiscal year ended December 3, 2017. Retail includes online groceries and general merchandise offerings to customers in the UK; Solutions includes end-to-end online retail solutions provided to corporate customers in the UK and internationally. Source: Company reports/Coresight Research Diversification should help mitigate Ocado’s relative lack of scale: as we show below, Ocado has a UK grocery market share of just over 1%. Source: Kantar Worldpanel Ocado is planning to expand the scope of its logistics management technology beyond grocery e-commerce to cover other sectors such as automotive and transportation, which will soon see the entry of autonomous vehicles. Ocado’s Robot-Staffed Distribution Centers At CFC3 in Andover, UK, Ocado has developed a new approach to warehousing automation, shifting from a system based on conveyor belts (in operation in other Ocado sites, including Hatfield, UK) to one centered around a dense 3D-grid—dubbed the Hive—in which layers of crates containing grocery products are stacked. Swarms of robots—which communicate with each other using a proprietary 4G-based protocol—move across the grid to collect crates and take them to picking stations where (human) employees pick the individual items needed to fill customer orders. The proprietary 4G technology used at CFC3allows connections with a frequency of ten times per second with the 1,000+ robots moving around the warehouse and working within a 150 meter radius, according to Ocado Technology. The advantages that the Hive’s system has over the traditional warehouse structure (based on conveyer belts) include easier scalability, and reduction in both the warehouse space required and average time taken fill customers’ orders. Ocado Technology says that the Hive’s system can “pick”a grocery item every six seconds and fill a 50-item order in around five minutes. Source: Ocado Technology Robotic Arm and Collaborative Robot Ocado is continuing with its research and development to improve the logistics of grocery e-commerce. The company is carrying out high-profile research projects, including SoMa and SecondHands, which are a soft manipulation system and a robot assistant, respectively. The SoMa project is a European Union-funded, Horizon 2020 programme for research and innovation in the field of humanoid robots, and the Ocado’s partners in the SecondHands project are four eminent institutions: Karlsruhe Institute of Technology, which is building the robot; University College London, which is providing the robot’s vision system; Sapienza Università di Roma, which is supplying the actual intelligence for the system; and Ecole Polytechnique Fédérale de Lausanne, which is providing the robot with bi manual manipulation. Ocado Technology has also been developing a robotic arm capable of picking up the 50,000+ items that feature in the company’s online catalog. The arm is equipped with a pipe running to an air compressor, which is capable of lifting items regardless of their deformability and shape, as long as they are within the weight restriction and the suction cup at its end can create an airtight seal with the item’s surface if it has a big enough surface available and is not porous (Figure 5). Source: Ocado Technology The arm is designed to integrate with OSP and can move items from the storage crates into the delivery crates. It is run by artificial intelligence (AI), computer vision and sensors that enable it to have an understanding of where the crates are, where the items to be picked are located inside the crate, and in what order and where to put the picked items inside the delivery crates. The suction system does away with the need of remodeling the items in order to make them manageable by the robot arm, and allows the technology to be potentially scaleable and applicable to a variety of enviroments where items need to be handled. Ocado has also been developing the prototype of a collaborative robot called ARMAR-6, which will be able to someday work alongside humans in warehouses. For example, if it observes a technician attempting to change a panel and requiring a set of tools, it will come and offer its assistance—either by holding the panel for the engineer or grabbing the various tools that are needed.ARMAR-6 will use AI and machine learning (ML) and will also have a speech recognition system. OSP: Ocado’s Proprietary Solution for Operating Online Retail Businesses OSP is a suite for the management of e-commerce logistics operations that includes and integrates automated warehousing and software applications. The platform enables retailers to apply Ocado’s logistics and fulfillment expertise to their e-commerce operations. OSP comprises the following three components: E-commerce and app: Platforms tailored to the partners’ requirements, and include a website content management system and and the algorithms to enable personalized customer reccommendations and other features. CFC: Ocado’s proprietary mechanical equipment and software installed in the client’s warehouse to run logistics. The equipment is serviced and maintained by Ocado. Last mile software: To run operations including home delivery and click-and-collect services. Aside from the robots and 4G technology used to operate the Hive in CFC3, the OSP operates through a combination of technologies including big data, cloud computing, AI, ML and the Internet of Things (IoT), to perform predictive analytics, process orders, optimize operations and to manage the operational complexity of the system in a efficient way. Figure 6 illustrates how the key OSP components work together. Source: Ocado Technology By using OSP, retailers are effectively outsourcing to Ocado their grocery e-commerce distribution, leveraging the experience of the company, benefiting from the flexibility and scaleability of the platform, and forgoing the costs that the development of their own fulfillment structure would have entailed. The downside, however, would be for partner retailers using Ocado’s platform to retain less control over their supply chain and becoming reliant on a third party provider for their logistics operations. Key Takeaways Operating as a technology provider enables Ocado to diversify in terms of industries in which it operates, as the technology developed by the company will also be transferable to partners operating in industries beyond retailing. In running its core grocery e-commerce operations using the technology developed in-house, Ocado is also able to collect large amounts of shopper data which will prove to be invaluable in the future when the adoption of smart-home technologies increases and starts reshaping grocery retailing. Ocado’s proprietary technology, in particular its automated warehouse technology, is redesigning grocery e-commerce warehousing, making it more efficient. Retailers partnering with Ocado for the use of its technology take advantage of this innovative system without the research and development (R&D) investment that would have been required for the development of their own in-house technology. This document was generated for
Insight ReportSeptember 2018 Monthly Consumer Update: US, UK and China Coresight Research November 6, 2018 Executive SummaryCoresight Research’s monthly reports keep you up to date on US and UK retail sales, US retail traffic and in-store metrics, selected US retailers’ same-store sales and key global consumer indicators. Click here to view our full collection of Monthly Reports. Our Monthly Consumer Update rounds up key metrics that reflect consumer demand in the US, the UK and China. We focus on direct, leading indicators of the health of the consumer economy: wage growth, price changes and retail sales growth. Highlights from our September Consumer Update: Year-over-year growth in US retail sales excluding automobiles and gasoline slowed to 3.1%. UK retail sales growth remained solid, registering a 4.2% increase year over year. Chinese retail sales growth accelerated for a second month, rising by 9.2%. Already a subscriber? Log in You are currently viewing a preview of this report. Please select an access option to view the full report. Hide Options - Show Options + Get unlimited access to all our research with one of our subscription plans. View Subscription Plans or Contact us to purchase this report. Contact us ✕ This document was generated for
Insight ReportEstée Lauder (EL) 1Q19 Results: Company Beats Expectations and Raises Guidance Coresight Research November 6, 2018 Executive Summary Estée Lauder reported fiscal 1Q19 revenues of $3.52 billion, up 7.6% year over year and higher than the consensus estimate of $3.47 billion. Adjusted earnings per share (EPS) was $1.41, higher than the consensus estimate of $1.22 and higher than the EPS of $1.21 in the year ago period. Comparable sales were up 11% at Estée Lauder. For the second quarter, the company provided EPS guidance of $1.47–$1.50, compared to the consensus estimate of $1.63. Net sales are forecast to increase 4%–5%, compared to consensus estimate of 4.6%. For the full year, Estée Lauder raised its EPS guidance to $4.73–$4.82, up from $4.62–$4.71, compared to the consensus estimate of $4.77. The company provided revenue guidance of 4.5%, implying $12.75 billion. Source: Company reports/Coresight Research Fiscal 1Q19 Results Estée Lauder reported fiscal 1Q19 revenues of $3.52 billion, up 7.6% year over year and higher than the consensus estimate of $3.47 billion. Adjusted earnings per share (EPS) was $1.41, higher than the consensus estimate of $1.22 and higher than EPS of $1.21 in the year ago period. The company reported that comparable sales were up 11% overall in the period, which made it the sixth consecutive quarter of double-digit sales increases. Segment Update: Skin Care Increasing in Nearly Every Channel By segment, net sales in Skin Care grew by 16.5%, from $1.28 billion to $1.49 billion on a reported basis. The company reported that Skin Care grew in nearly every channel and segment, and experienced particularly strong growth in Asia, travel retail and online. The segment saw growth in La Mer (Estée Lauder’s luxury skin care brand) with net sales increasing in every region and channel, driven by higher net sales of both existing and new products, which includes The Treatment Lotion Hydrating Mask. Estée Lauder also launched the Advanced Night Repair Eye Supercharged Complex, which also contributed to overall sales in Skin Care during the quarter. The Makeup segment’s net sales increased by 2% on a reported basis, from $1.37 billion to $1.41 billion, driven by increases in MAC, Estée Lauder and Tom Ford Beauty. Estée Lauder’s Double Wear line of products drove double-digit growth, as did Tom Ford’s lip- and eye-shadow lines. These increases were offset by lower net sales of Clinique and Smashbox makeup sales. Net sales in the Fragrance segment decreased by 1% on a reported basis, from $476 million to $472 million, driven by the adoption of the new accounting standard, ASC 606; excluding the adoption of ASC 606, the fragrance segment saw increased net sales in Tom Ford Beauty, Le Labo, By Kilian and Jo Malone London, and growth in “Private Blend” fragrances including the launch of Tom Ford’s Ombre Leather and the extended reach of Jo Malone with the launch of the fragrance on Tmall in China. Net sales in the Hair Care segment increased by 5.1% on a reported basis, from $136 million to $143 million due to growth from Aveda’s Invati Advanced product line and the launch of Cherry Almond Softening Shampoo and Conditioner. Geography Update: Strongest Growth in APAC By geography, APAC led net sales, growing by 24% on a reported basis. The company highlighted that sales in China and Hong Kong rose in strong double digits with broad-based growth across brands, categories and channels, and prestige beauty growth and department stores continued to grow more than 20%, and online sales more than doubled. The company reported that net sales in Europe, the Middle-East region and Africa rose 14% on a reported basis, driven by strong double-digit increases in the global travel retail business and emerging markets. Net sales in the Americas declined 7%, while North America continued to achieve double-digit growth in specialty multi-retail and online. Third-Party Platform Expansion: Tmall, ASOS and Global Travel Retail Estée Lauder reported that it is continuing to expand its brand on third-party platforms; it launched its Jo Malone fragrance brand on Tmall in China and launched five more brands on ASOS in the UK. The company highlighted that its Global Travel Retail business is rapidly growing and is experiencing broad-based growth across brands and countries, with eight of the top 10 brands growing in double digits in retail in the channel. Outlook For the second quarter, the company provided EPS guidance of $1.47–$1.50, compared to the consensus estimate of $1.63. Net sales are forecast to increase 4%–5%, compared to the consensus estimate of 4.6%. For the full year, Estée Lauder raised its EPS guidance to $4.73–$4.82, up from $4.62–$4.71, compared to the consensus estimate of $4.77. The company provided revenue guidance of 4.5%, implying $12.75 billion. This document was generated for
Company Earnings UpdateClorox (CLX) Fiscal 1Q19 Results: Company Exceeds Expectations but Lowers Full Year Guidance Coresight Research November 6, 2018 Executive Summary Clorox reported 1Q19 revenues of $1.56 billion, up 4.2% year over year and beating the consensus estimate of $1.54 billion. EPS was $1.62, up 11% from the year ago quarter, above the consensus estimate of $1.58 and above last year’s EPS of $1.46. Three of the company’s four segments showed positive or flat sales growth. Cleaning sales grew by 2%, Household sales remained flat, Lifestyle sales grew by 26% and International sales decreased by 5%. Clorox maintained its full year sales growth guidance of 2%–4%. The company lowered its full year EPS guidance to $6.20–$6.40 from the previous $6.32–$6.52. Please Login to read the full report. Not a member? To access this content for free, register for a free account. This document was generated for
