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Weinswig’s Weekly

WEINSWIG’S WEEKLY JUNE 14 2019

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Coresight Research

Key Points

June 14, 2019

  • This week’s note “From the Desk of Deborah Weinswig” looks at Aldi’s entry into China – and how the company is using technology to appeal to local tech-savvy consumers.
  • Specialty apparel retailer Charlotte Russe is back before customers had the chance to say goodbye: The new owner will re-launch Charlotte Russe retail outlets across the US and opened the online store on June 3.
  • UK online supermarket Ocado has invested £17 million in vertical farming, and says the retailer hopes “to co-locate vertical farms within or next to” fulfilment centers to ensure delivery of fresh produce to its customers.
  • Shiseido Travel Retail has partnered with Singapore’s Jewel Changi Airport and Japanese art collective TeamLab to launch an art installation called Sense at the Shiseido Forest Valley in the Jewel Changi Airport mall.

FROM THE DESK OF DEBORAH WEINSWIG

Aldi China: A First Look

On June 7, Aldi opened its first stores in China with two locations in Shanghai, one in the Jing’an district and one in the Minhang district. The Coresight Research team visited the Jing’an store and, in this week’s note, we feature our observations, with a focus on how it is using technology in the store. 

Aldi made a soft entry into China in 2017 by selling products on Alibaba’s cross-border e-commerce platform Tmall Global. In 2018, Aldi launched an online flagship store on the domestic Tmall site. Business publication Manager Magazin reported Aldi plans to open 50-100 stores in China in the medium term. 

Surprisingly Strong Digital Deployment in Store

As a no-frills grocery discounter, Aldi stores are typically basic and, in almost all markets, it does not offer grocery e-commerce. We were surprised by the extent to which Aldi deployed digital technologies in its Jing’an store. A welcome screen allows shoppers to access information about Aldi, its promotions and the store. As we show below, this included a store plan to help shoppers find their way around.

Aldi’s in-store technology
Source: Coresight Research

 

The wine department includes a screen that allows shoppers to scan the barcode from a wine bottle to learn more about the product. Aldi is planning to target a more affluent customer base in China by providing sought-after imported products, according to German trade publication Lebensmittel Zeitung. Shoppers can also scan products using Aldi’s mini program on WeChat and skip the checkout line.

What Else We Saw

We saw a mix of imported and domestic products across most grocery categories including milk, snacks, baby products and meat. The store includes a fresh-food counter serving steamed buns, stuffed buns, sweet potatoes, German hot dogs and sandwiches, and packaged prepared meals. Fresh fruit and vegetables are prominently displayed at the front of the store. Overall, the store has a significantly higher-end feel than Aldi stores in its European heartland — with premium-looking fixtures and signage highlighting provenance, quality and freshness rather than low prices.

Aldi Shanghai
Source: Coresight Research

 

 

 

US RETAIL & TECH HEADLINES

Amazon Launches a Credit Card for the ‘Underbanked’ with Bad Credit

(June 10) CNBC

  • Amazon is finding a way to get its rewards credit card in the hands of more people. The e-commerce giant partnered with publicly traded bank Synchrony Financial to launch “Amazon Credit Builder” — a program that lends to shoppers with no credit history or bad credit.
  • The card has the same perks, such as 5% cash back on purchases, that come with the popular Amazon Store card, which Synchrony also powers. 

 

Barnes & Noble Is Sold to Hedge Fund After a Tumultuous Year

(June 7) The New York Times

  • Barnes & Noble has been acquired by hedge fund Elliott Advisors for $638 million, a move that has momentarily calmed fears the bookstore chain might collapse. Barnes & Noble is the largest book retailer in the US with 627 stores. 
  • The sale was announced after months of speculation over the future of Barnes & Noble. The acquisition follows Elliott’s purchase of the British bookstore chain Waterstones in June 2018. James Dunt, CEO of Waterstones, will also take on the role of CEO at Barnes & Noble.

 

Walmart to Begin Direct-to-your-Fridge Grocery Delivery

(June 6) Dallas Morning News

  • Walmart is ready to deliver groceries straight to your refrigerator or kitchen counter. After a six-month test in New Jersey, Walmart US e-commerce CEO Marc Lore said the retailer now understands the level of trust customers need to let a stranger into their homes.
  • The InHome service will begin this fall, reaching a combined one million households in Kansas City, Pittsburgh and Vero Beach, Florida.

 

You Can Now ‘Shazam’ Clothes on Amazon

(June 6) FashionUnited

  • Shazam, the wonder app that helps name that tune, has inspired a new world of AI-powered technology, including a new tool called StyleSnap that helps Amazon customers find clothes rather than finding a tune.
  • The US retail giant has built the digital tool into its mobile app, allowing users to either take a photo or upload an image to find a match of similar items available for sale on Amazon.

 

Charlotte Russe – Retail’s Latest Comeback Kid

(June 5) Chain Store Age

  • Specialty apparel retailer Charlotte Russe is back before a lot of customers may have had the chance to say goodbye. YM Inc, new owner of Charlotte Russe, is re-launching Charlotte Russe retail outlets across the US. 
  • Customers can also shop Charlotte Russe’s online store, which re-launched June 3, 2019.
EUROPE RETAIL EARNINGS

 

EUROPE RETAIL & TECH HEADLINES

Debenhams Announces Downsizing Stores

(June 10) RetailGazette.co.uk

  • British department store Debenhams has announced that nearly 30 stores will be closed amid fierce competition. This is part of the retailer’s recovery plan, which includes shrinking about a third of its remaining stores. 
  • Chairman Terry Duddy told The Mail on Sunday that the ideal size for a Debenhams store will depend on the size of the town in which it is located, but generally the retailer is looking to shrink sizes to 100,000 square feet, about half the size of many major Debenhams stores.

 

John Lewis Launches Augmented and Virtual Reality Trials in Three Stores

(June 10) ChargedRetail.co.uk

  • UK department store John Lewis is launching an augmented reality (AR) and virtual reality (VR) technology trial called “Visualize Your Space” at three of its stores. The program will be rolled out at stores in Kingston on June 26, Cambridge on June 28 and Horsham in early July.
  • Shoppers will be able to see what furniture looks like in the home using AR on an iPad or VR headset. A copy of the visualized room will be sent to the customer via email.

 

Gatemore Capital Buys 10% Stake in Moss Bros

(June 10) RetailGazette.co.uk 

  • British asset manager Gatemore Capital has disclosed that it holds a 9.57% stake in UK menswear retailer Moss Bros. The acquisition was announced on the London Stock Exchange on June 10. 
  • The acquisition makes Gatemore Capital one of the largest shareholders in Moss Bros. The news comes after Moss Bros. reported a full year loss last March due to supply shortages and heavy discounting.  

 

Ocado Invests £17 Million in Vertical Farming 

(June 10) ChargedRetail.co.uk 

  • UK-based online supermarket Ocado has invested £17 million ($21.6 million) to form a joint venture, called “Infinite Acres,” with US vertical farming firm 80 Acres Farms and Dutch horticulture technology company Priva Holding. 
  • Ocado CEO Tim Steiner said the retailer hopes “to co-locate vertical farms within or next to” fulfilment centers to ensure delivery of fresh produce to its customers. Ocado also announced it had acquired a 58% stake in one of Europe’s largest operating vertical farms, Jones Food Company, which grows around 463 tons of crops per year. 

 

Groupe Casino to Sell a Further Six Stores

(June 7) ESMMagazine.com 

  • French retailer Groupe Casino plans to sell six loss-making stores for a combined value of €18.3 million ($20.7 million). The deal is expected to close in the second half of 2019.
  • The deal involves the sale of four Casino supermarkets along with one Leader Price store to French supermarket brand Groupement Les Mousquetaires and a Géant hypermarket to a Leclerc operator.

 

ASIA RETAIL AND TECH HEADLINES

Parkson Extends China Store Lease

 

(June 10) insideretail.asia

  • Chinese department store Parkson Retail Development, a subsidiary of Parkson Retail Group Limited, has announced the company has a new lease agreement for an existing department store with China National Arts and Crafts Group.
  • According to the lease agreement, Parkson will pay a quarterly rent of ¥2.5 million ($361,800) for a 2,034 square feet area in Beijing’s Fuxingmen. This follows Parkson’s renewal of seven other leases in the same building.

 

Alibaba Forms AliExpress Joint Venture in Russia

 

(June 10) Company press release

  • Alibaba Group has formed a joint venture e-commerce business with Russian government-backed sovereign wealth fund RDIF called AliExpress Russia. Alibaba and RDIF will each invest $100 million in the new business. 
  • Megafon, Russia’s mobile phone operator, will sell its 9.97% stake in Internet group Mail.ru to Alibaba in exchange for a 24.3% stake in the new joint venture. Mail.ru will add its Pandao e-commerce business into AliExpress Russia.

 

Prada Group Partners with JD.com

(June 10) kr-asia.com

  • Italian luxury fashion brand Prada Group has partnered with China’s JD.com to launch three of its brands on JD.com — Prada, Miu Miu and Car Shoe — during JD’s 618 Shopping Festival which runs from June 1-20. 
  • Prada’s first partnership was with China’s luxury products and services platform Secoo, announced in May, and its second partnership is with JD.com. 

 

Aditya Birla Fashion and Retail Acquires Jaypore 

(June 10) livemint.com

  • Aditya Birla Fashion and Retail has acquired upmarket Indian ethnic apparel and lifestyle brand Jaypore with an investment of INR 1.10 billion ($15.83 million). This deal will give Aditya Birla Fashion and Retail access to the premium Indian ethnic apparel market.
  • The deal will be completed in 30-45 days, thereafter Aditya Birla Fashion will enhance Jaypore’s offline stores. 

 

Shiseido Travel Retail Launches Art Installation at Changi Airport

(June 11) retailnews.asia

  • Shiseido Travel Retail, a division of Shiseido Group, has partnered with Jewel Changi Airport and Japanese art collective TeamLab to launch an art installation called Sense at the Shiseido Forest Valley in the Jewel Changi Airport mall.
  • The art installation uses a combination of unique lighting, music tunes and a scent called Ultimune Scent to engage the senses of the customers through sound, smell, sight and touch. Customers can enrich their experience by interacting with the surroundings using the Shiseido Sense app.

 

LATIN AMERICA RETAIL AND TECH HEADLINES 

Ripley Launches Phone Payment App in Chile

(June 10) america-retail.com

  • Chilean department store Ripley has launched its own payment app called Ripley Pay. Customers can use phones to scan product QR codes and make purchases at Ripley stores.
  • Customers can also store money in the app’s wallet to make future transactions and pay bills. Ripley Pay will be operated by Chilean bank Banco Ripley.

 

L’Occitane Opens a Store in Bolivia

(June 9) fashionnetwork.com

  • French beauty brand L’Occitane has opened a store in Bolivia after four years of absence from the market. 
  • The store is in the Las Brisas shopping center in Santa Cruz de la Sierra and covers an area of 538.2 square feet.

 

Grupo Axo Introduces Three Brands at Premium Outlets Querétaro

(June 11) fashionnetwork.com

  • Mexican fashion retailer Grupo Axo has introduced three banners at the Premium Outlets Querétaro mall complex in Mexico.
  • The three banners are Brooks Brothers, Calvin Klein and multibrand retailer Urban Store. Grupo Axo already has a presence in Mexico and Chile and manages other brands in the region such as Victoria’s Secret and Guess.

 

Mercado Libre Mexico Adds Supermarket Category

(June 9) FashionNetwork.com            

  • Argentinian online retailer Mercado Libre has added a supermarket category “Supermercado Libre” to its Mexico platform. The category includes beverages, non-perishable food, baby items, personal care, home cleaning and pet products. 
  • The category will offer more than 20,000 products of which over 60% will be warehoused and distributed from the Mercado Libre fulfillment center. The rest of the products will be sent by a network of sellers who offer free shipping for orders over MXN 549 ($28.6) with delivery in under 48 hours.   

 

Victoria’s Secret Opens its First South American Flagship Store in Chile

(June 10) FashionNetwork.com

  • American specialty retailer Victoria’s Secret opened its first South American flagship store at Parque Arauco mega complex in Santiago, Chile, on June 6, in association with Mexican fashion retailer Grupo Axo. 
  • The boutique covers an area of more than 7,535 square feet. It will display the brand’s classic lingerie collection, the Pink collection, sports line, a variety of beauty products, accessories and fragrances.
MACRO UPDATE

Key points from global macro indicators released June 5-11, 2019:

  1. US: The unemployment rate was flat at 3.6%. Continuing jobless claims in the US increased to 1.68 million in the week ended May 25, from 1.66 million in the previous week.
  2. Europe: In the eurozone, retail sales grew 1.5% year over year in April, below the 2.0% growth recorded in March. In the UK, the unemployment rate was flat at 3.8%.
  3. Asia-Pacific: China recorded a trade surplus of $41.66 billion in May, versus the $13.84 billion surplus in April. 
  4. Latin America: In Brazil, the IPCA Inflation rate fell to 0.13% in June from 0.57% in May.
*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.
**Current period data is for the three-month period February to April; the previous period’s data is for January to March.
Source: US Department of Labor/US Bureau of Labor Statistics/Eurostat/Markit Economics/MINEFA, France/Office for National Statistics/GACC, China/Bank of Japan/Instituto Brasileiro de Geografia e Estatistica, Brazil/Coresight Research

 

EARNINGS CALENDAR
Source: Bloomberg

 

EVENT CALENDAR

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