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Weinswig’s Weekly

WEINSWIG’S WEEKLY JULY 19 2019

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Coresight Research

Key Points

  • This week’s note “From the Desk of Deborah Weinswig” looks at the growing importance of Internet of Things technology in retail.
  • Fashion accessories retailer Charming Charlie will shutter all its 261 stores after filing for Chapter 11 bankruptcy, a casualty of intense competition in its core product line.
  • UK supermarket chain Waitrose will extend the trial of a home delivery service that lets delivery people enter customers’ homes using a temporary access code to put away groceries.
  • Alibaba hopes to extend the reach of its annual televised 11.11 Shopping Festival Countdown Gala Celebration to 10 cable networks in China, Southeast Asia, Africa and North America. The live variety show supports the shopping festival.
FROM THE DESK OF DEBORAH WEINSWIG

The Internet of Things Comes to Retail

The Internet of Things (IoT) has great potential to improve retail operations and transform the consumer shopping experience.

IoT architectures integrate several technologies deployed in-store — including sensors, cameras, WiFi, beacons, radio frequency identification (RFID), near field communication (NFC), artificial intelligence (AI), machine learning and autonomous mobile devices.

The technology can create more engaging in-store experiences and more-straightforward ways to shop and pay. Retail operations benefit from more efficient inventory and supply chain management, customized shopping capabilities, in-store layout optimization and increased automation. We expect IoT to play an increasingly important role in retail in the future as the technology improves and its applications in retail improve and evolve.

IoT describes a network of connected devices capable of collecting and sharing data about their working status with other objects within and outside the network. The data flowing through the system is used by analytics platforms to formulate actions for devices to execute. This architecture typically functions with little or minimal human intervention.

Retailers can use IoT to deepen engagement with the shopper in-store and to transform the customer journey. It can enhance several stages of the shopping journey: the initial engagement, in which shoppers receive tailored messages, recommendations, or directions; the purchasing decision, by tracking items into the changing room or enabling additional purchases in smart mirrors; the payment process, by using machine-vision technology; and stock replenishment, when the store generates demand-driven orders to replenish depleted inventory.

Retail operations can further benefit from using IoT in inventory management, supply chain, provenance, automated checkout, optimizing the in-store layout and by using automation or robotics, due to the technology’s strengths in determining the location and status of objects or people and communicating this information to the retailer’s systems.

Other benefits include a potential sales lift from customized shopping capabilities, in-store layout optimization, plus the benefits from increased use of automation.

Retailers can develop IoT technology in-house or by collaborating with external partners and providers. Technology firms with retail operations and large legacy retailers tend to adopt a hybrid strategy focused on in-house R&D and acquisition of external technology providers. Other companies prefer to collaborate with technology firms and startups that specialize in developing IoT systems for retailers.

We’re seeing increased investment in these IoT-related companies, which shows its growing importance. Investment in IoT companies grew to $23.7 billion in 2018, according to Index by TNW, an increase of 270% from 2016. And, the rapid pace of investment continues: Investment in IoT firms in the first six months of 2019 has already approached the total investment value for all of 2017.

In the future, IoT will likely play an increasingly important role in retail as the technology improves and its applications become more efficient. The application of emerging technologies in IoT architecture — including blockchain and 5G — should drastically improve the security, connectivity and scalability within IoT systems, significantly encouraging further adoption in retail.

Get more information from our deep dive: The Internet of Things in Retail.

US RETAIL & TECH HEADLINES

US Retail Sales Beat Expectations in June

(July 16) CNBC

  • US retail sales increased more than expected in June, pointing to strong consumer spending, which could help blunt some of the hit from weak business investment.
  • The Commerce Department said retail sales rose 0.4% last month as households stepped up purchases of motor vehicles and a variety of other goods. Data for May was revised slightly down to show retail sales increasing 0.4%, instead of 0.5% as previously reported.

Amazon Offers $10 to Prime Day Shoppers who Hand Over their Data

(July 16) Reuters

  • Amazon.com had a promotion for US shoppers on Prime Day: Earn a $10 credit if you let Amazon track the websites you visit. The deal is for new installations of the Amazon Assistant, a comparison-shopping tool that customers can add to web browsers.
  • It fetches Amazon prices for products as users peruse Walmart.com, Target.com or other online platforms.

Barneys New York Explores Options that Include Bankruptcy

(July 13) Reuters

  • US luxury department store operator Barneys New York is exploring options that include a bankruptcy filing, as it struggles with high rents and changing consumer tastes. The nearly 100-year-old retailer, known for its high-end designer collection, is working with law firm Kirkland & Ellis LLP to prepare for a potential bankruptcy filing.
  • Barneys has not yet made a final decision on whether to seek bankruptcy protection and is weighing other possible solutions to address high rents.

Charming Charlie to Shutter all 261 Stores after Filing Chapter 11 Bankruptcy

(July 12) FoxBusiness

  • Fashion accessories retailer Charming Charlie will shutter all its 261 stores in 38 states after filing for Chapter 11 bankruptcy. This is the second time the company filed for Chapter 11 bankruptcy.
  • In 2017, there were 390 Charming Charlie stores in the US, Canada, the Philippines and the Middle East, according to Fortune Opens a New Window. Stores have already started liquidation sales.

Costco Reports Sales up Despite Harsh Retail Environment

(July 11) FoxBusiness

  • Costco reported comparable sales were up last month even as many retailers have struggled. The membership wholesaler reported net sales this week of $14.57 billion for the five-week period ending July 7, up by 7.5% from the similar period last year.
  • Comparable sales, excluding changes in gas prices, currency values and an accounting change, were up 5.1% over the five weeks and 6.2% over 44 weeks. E-commerce comparable sales increased at a greater rate, 20.8% over the five weeks.
EUROPE RETAIL & TECH HEADLINES

Jumbo Acquires Agrimarkt Chain

(July 16) ESMMagazine.com

  • Dutch supermarket chain Jumbo has acquired its smaller supermarket contender Agrimarkt, a subsidiary of Cooperative Southern Purchase and Sale Association (CZAV, its acronym in Dutch). The move is designed to further strengthen its market position in the Netherlands.
  • The financial details of the deal, which includes six supermarkets in the southwest of the Netherlands, have not been disclosed.

LVMH Partners with Stella McCartney

(July 15) Company press release

  • French luxury group LVMH has partnered with British fashion designer Stella McCartney to further develop the Stella McCartney House.
  • Stella McCartney will continue as creative director and ambassador of the brand with a majority ownership.

Sports Direct Increases its Stake in Game

(July 15) Company press release

  • British retailer Sports Direct has acquired 83.9% of the shares of British video game company Game, and has also applied to have Game’s shares delisted from the London Stock Exchange by August 12.
  • Sport Direct has advised Game shareholders to sell their shares to the retailer within 20 business days.

Waitrose To Extend “While You’re Away” Trial

(July 15) ESMMagazine.com

  • British supermarket chain Waitrose plans to extend the trial of its “While You’re Away” home delivery service from 300 to 818 postcodes, following positive feedback and regular use by 50 trial customers.
  • The service lets drivers enter customers’ homes using a temporary access codes to a smart lock to put away groceries while the customer is away. Waitrose trialed the service in South London last October.

Pets at Home Acquires Stake in Tailster

(July 15) RetailGazette.co.uk

  • British pet supplies retailer Pets at Home has acquired a stake in pet care company Tailster, with an intention to generate 50% of its revenues from pet care services. Pets at Home will extend Tailster’s services to nearly 4.4 million of its VIP loyalty scheme customers.
  • This is Pets at Home’s first move in entering the £1 billion ($1.25 million) a year pet care market. The services include day care, boarding, sitting and walking, and customers can also track their pets’ activities via GPS.

Amazon Plans to Create More Jobs in Germany

(July 15) FashionNetwork.com

  • Amazon has announced it will create more than 2,800 new permanent roles across 35 locations in Germany by the end of this year, primarily at new and existing logistics locations.
  • This year, Amazon plans to open its 13th logistics center in Mönchengladbach, Germany. Ralf Kleber, CEO of Amazon Germany, said employees will work with the latest technology, will be offered higher pay and have better career opportunities.
ASIA RETAIL AND TECH HEADLINES

Alibaba Plans to Expand the Reach of Its Annual 11.11 Shopping Festival Countdown Gala Celebration

(July 12) Alizila.com

  • Alibaba announced on July 12 it plans to expand the reach of its annual 11.11 Shopping Festival Countdown Gala Celebration, a live variety show to support the shopping festival.
  • Alibaba wants a global audience and plans to broadcast the gala on about 10 cable networks in China, Southeast Asia, Africa and North America – although the overseas networks are yet to be confirmed. In China, the Countdown Gala will be shown exclusively on Zhejiang TV, Dragon TV and Youku.

Deoleo Launches on Alibaba’s Tmall

(July 12) Alizila.com

  • Spanish olive oil processing company Deoleo has opened a store on Alibaba’s online selling platform Tmall.
  • The new Deoleo store will offer a selection of extra-virgin olive oils from its Carbonell brand.

Cosmetics Brand WOMO to Enter the Indian Market

(July 15) Indianretailer.com

  • Genesis Luxury, a company owned by India’s Reliance Brands, has partnered with Italian firm Percassi to launch Italian men’s cosmetics brand WOMO in India. Genesis Luxury will launch the first WOMO store in Mumbai in the first half of 2020.
  • The new store will offer WOMO products as well as shaving services from Bullfrog, a barbershop owned by Percassi. The new store opening is part of WOMO’s global expansion strategy. The brand currently operates in Europe only.

Levi Strauss Asia Posts Strong Performance in the Second Quarter

(July 15) Insideretail.hk

  • US clothing company Levi Strauss posted strong performance from its Asian operations in the second quarter. Sales in Asia grew 12% in the second quarter on a constant currency basis with both the wholesale and direct-to-consumer sales channels posting good performance.
  • Operating income in Asia grew 15% on a constant currency basis and 4% on a reported basis.

JD Extends the Services of Its Robot Delivery Vans to Over 10 Cities in China

(July 16) Asia.Nikkei.com

  • JD.com has extended its self-driving delivery van service to over 10 cities in China. The delivery vans use cameras and sensors to monitor surroundings and reach their destinations.
  • Customers get a password via text before the delivery to unlock the van. The vans run only on predetermined routes in housing complexes and school or corporate campuses.

Aditya Birla Fashion Acquires 51% Stake in Finesse International Design

(July 15) Company press release

  • India’s Aditya Birla Fashion and Retail Limited (ABFRL) has acquired a 51% stake in Finesse International Design, an apparel brand run by Indian designers Shantanu and Nikhil, for INR 600 million ($8.74 million).
  • This acquisition will help ABFRL expand its presence in the ethnic apparel and accessories market in India.
LATIN AMERICA RETAIL AND TECH HEADLINES

Pandora To Open New Stores in Argentina

(July 15) fashionnetwork.com

  • Danish jewelry retailer Pandora has plans to open two new stores in Argentina in November at the Solar de la Abadía shopping mall in Buenos Aires.
  • Pandora has opened three stores in Argentina this year, the most recent on July 6 at the Alto Avellaneda shopping center. With the opening of the new stores in November, Pandora will meet its annual expansion goals for Argentina.

Ripley Delivers Orders in Less than 90 Minutes in Lima

(July 15) fashionnetwork.com

  • Chilean retailer Ripley is the first department store chain in the Peruvian market to launch a delivery service for online orders within 90 minutes or less. The service was launched at Cyber Wow, an online sales event that took place July 8-10.
  • The service is available in 14 districts in Peru’s capital Lima and will soon be extended to other locations.

Sneaker Fever Holds its Ninth Edition in Mexico

(July 14) FashionNetwork.com

  • The ninth edition of the Sneaker Fever fest, the largest urban fashion event in Mexico, was held at the Pepsi Center WTC in Mexico City on July 13 and 14. The fair spanned 51,667 square feet with an assortment of stalls for sneakers, streetwear, art, speakers and accessories.
  • The highlight was the announcement of a reforestation campaign in partnership with Mexican permaculture project Manos a la Tierra and the addition of iconic Mexican fashion brand Panam de Mexico.

Adidas to Open Two Stores in Colombia

(July 15) FashionNetwork.com

  • Adidas plans to open two new stores this month in Cúcuta and Cartagena. According to Colombian trade body Superintendencia de Industria y Comercio, Adidas led the Colombian footwear and sports segment with annual sales of COP 559.03 billion ($175 million) in 2018.
  • The local Adidas Originals store covering 861 square feet will be in the commercial center La Serrezuela in Cartegena. The new store in Cúcuta, covering a space of 1,076 square feet, will be in the Jardín Plaza shopping center.

Zoo Logic Partners with Mercado Pago

(July 16) FashionNetwork.com

  • Argentinian software firm Zoo Logic has partnered with Mercado Pago, Mercado Libre’s payment platform, and integrated its invoicing app Invoice zMobile on the Mercado Pago platform.
  • The integration allows stores to easily manage inventory and purchases, and simplify the customer checkout process.
MACRO UPDATE

Key points from global macro indicators released July 9-16, 2019:

  • US: The consumer price index (CPI) decreased 1.6% year over year in June, versus 1.8% in May, meeting the consensus estimate. The producer price index decreased 1.7% year over year in June from 1.8% in May, and above the consensus estimate of 1.6%.
  • Europe: In the eurozone, industrial production fell 0.5% year over year in May from the 0.4% drop recorded in April. In the UK, gross domestic product increased to 0.3% month over month in May from the 0.4% decline recorded in April.
  • Asia Pacific: China reported a trade surplus of $50.98 billion in June, up from $41.65 billion in May, above the consensus estimate of $44.65 billion. In South Korea, the unemployment rate was 4.0% in June, in line with the level recorded in May and above the consensus estimate of 3.9%.
  • Latin America: Inflation in Brazil stood at 0.01% in June, the lowest rate of the year and well below the 0.13% recorded in May and the consensus estimate of (0.03)%.
*Coresight Research’s evaluation of the actual figure’s impact on the economy relative to historical benchmarks and the current macroeconomic environment: + indicates a positive signal for the country’s economy, – indicates a negative signal and = indicates a negligible or mixed impact.
Source: US Bureau of Labor Statistics/Eurostat/Destatis/INSEE/Office for National Statistics/GACC/National Bureau of Statistics of China/Ministry of Economy, Trade and Industry Japan/Statistics Korea/IBGE/Coresight Research

 

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