WEINSWIG’S WEEKLY JUNE 21 2019
- This week’s note “From the Desk of Deborah Weinswig” looks at how consumer expectations around sustainability are shifting – and what companies can do to meet these rising expectations.
- Target is bringing its same-day delivery to the masses — the latest move in an ongoing delivery war involving the big-box retailer, Walmart and Amazon. Online shoppers in 47 states can get same-day delivery for $9.99 per order.
- Swiss watchmaker Omega opened its first online store on China’s Tmall Luxury Pavilion. Omega will sell a limited-edition watch online for several weeks before it’s available in stores.
- Canadian footwear retailer Aldo has launched an online store in Colombia, its first in South America. Customers can pay in Colombian pesos or US dollars.
FROM THE DESK OF DEBORAH WEINSWIG
Retailers Increasingly Using Cleantech to Meet Consumer Expectations of Sustainability
“Cleantech,” or clean technology, makes use of renewable materials and energy sources, reduces the use of natural resources, and cuts or eliminates emissions and waste. Cleantech can help solve sustainability challenges at various stages in the retail supply chain.
Consumer expectations are shifting: Consumers are paying more attention to how products are made, and purchasing decisions are increasingly influenced by ethical and sustainability factors. According to a US survey conducted in March 2018 by business applications firm CGS, one of the main factors affecting consumer purchasing decisions included the material/fabric used to make the product and the ethical factors of the product. More than one-third of respondents stated that “where a product is made” would impact the purchasing decision.
According to a Natural Marketing Institute survey in January 2018, 64% of millennials and 51% of Gen Xers said they would buy environmentally friendly and sustainable products if they were more available. The Natural Marketing Institute found that millennials are 28% more likely than others to say they will pay more for sustainable and ethically produced products.
Blockchain technology promises to generate the visibility along the supply chain that is now lacking, as it helps companies track products from source to store. Tech company Provenance, a digital platform that allows brands to improve supply chain transparency, uses blockchain and a smart labeling system to help retailers track raw materials every step of the way through the production process.
Logistics is emerging as another key aspect of the sustainability equation. How a retailer imports and distributes merchandise can have a major impact on greenhouse gas emissions. The Retail Industry Leaders Association and Center for Retail Compliance has noted that retail sees various solutions to making logistics and transportation more sustainable. One example is applying data-rich management systems that allow detailed planning to cut the number of trips a vehicle would take, cutting emissions and reducing cost.
Several companies are working on making transportation more sustainable: Neste is an oil refining company from Finland and one of the world’s largest producers of diesel refined from waste and residue. Lanzatech is a biotech startup that has identified bacteria that can turn carbon emissions into ethanol. UK-based CGON has created a hydrogen additive product that cuts emissions up to 80% and delivers fuel savings up to 20%.
Energy is the fourth-largest in-store operating cost for retailers after labor, rent and marketing, according to a report by McKinsey. And, stores are an important touch point for customers: Making stores more environmentally friendly can deliver greater impact as it is something the customer sees, enters and interacts with, making it more tangible than a far-off manufacturing operation. Solutions to cut energy consumption include optimization of HVAC system controls, installation of variable speed and measurement, monitoring and benchmarking of site energy consumption.
Finally, packaging is coming under increased scrutiny from consumers, regulators and environmental groups who are looking for more environmentally friendly designs. National Geographic estimates that 79% of product packaging ends up in landfills and predicts that by 2050 there will be 12 billion metric tons of plastic in landfills.
Many consumer goods companies are tackling the plastics challenge. One example is Nestlé, which has said it wants to make all its packaging recyclable or reusable by 2025. Nestlé collaborated with PureCycle technologies, which provides recycled polypropylene with properties equal to virgin polymer.
Get more information from our report: Cleantech and Retail: Technology Offers Solutions for Some of Retail’s Most Vexing Sustainability Problems.
US RETAIL & TECH HEADLINES
US Retail Sales Rose in May, While April Was Revised Higher
(June 14) CNBC
- US retail sales increased in May and sales for the prior month were revised higher, suggesting a pick-up in consumer spending that could ease fears the economy was slowing sharply in the second quarter.
- The Commerce Department said retail sales rose 0.5% month over month in May as households bought more motor vehicles and a variety of other goods. Data for April was revised up to show retail sales gaining 0.3% month over month.
Francesca’s to Shutter ‘at Least’ 30 Stores this Year
(June 13) Retail Dive
- Apparel-boutique retailer Francesca’s plans to shutter at least 30 stores in the coming months. The company closed eight during a first quarter that saw revenue and profits continue their downward slide, though it did open three and will open one this year that “has already been built out.”
- That brings its fleet at the beginning of the current quarter to 722 locations, mostly in malls.
Kohl’s Shuts its Off-PriceExperiment
(June 13) Retail Dive
- Kohl’s has finished testing its off-price concept, Off/Aisle, and plans to close the four existing locations on August 3. It’s been four years since Kohl’s first said it was testing an off-price banner that would feature highly discounted merchandise that had been returned by online and in-store customers.
- Kohl’s already frequently sells merchandise at lower prices than other department stores and is not married to the indoor mall.
Target Expands Same-DayShipping Option in the Latest Move in the Delivery Wars
(June 13) CNBC
- Target is bringing its same-day delivery option to the masses — the latest move in an ongoing delivery war involving the big-box retailer, Walmart and Amazon. Target announced that online shoppers in 47 states will now be able to get items delivered same day by paying a flat fee of $9.99 per order.
- To do this, it’s using Shipt, a membership-based, same-day delivery platform it acquired for $550 million in 2017.
Walmart Eliminates Jet President Role as it Further Integrates E-CommerceBusiness
(June 12) CNBC
- More than two years after Walmart bought Jet.com, the big-box retailer is taking steps to more fully integrate the e-commerce platform into its business.
- Walmart announced in a blog post that it will merge the rest of Jet’s teams — including retail, marketing, technology, analytics, product and several others — into Walmart.
EUROPE RETAIL EARNINGS
EUROPE RETAIL & TECH HEADLINES
ASOS Adds AR “Virtual Catwalk” Feature to its App
(June 14) ChargedRetail.co.uk
- British online retailer ASOS has launched a new feature called Virtual Catwalk to its app, marking its first venture into augmented reality (AR). The new feature was developed in partnership with UK-based AR firm HoloMe.
- The feature allows customers to virtually visualize 100 new ASOS products by clicking the “AR” button on the product page. Users can point their smartphone cameras at any flat surface to visualize a virtual human model exhibiting the selected clothes on a catwalk.
Coop Norge Launches First Self-Service Grocery Store
(June 17) ESMMagazine.com
- Norwegian retailer Coop Norge has announced the launch of the country’s first unattended round-the-clock grocery store through its budget chain Extra in Oslo.
- Shoppers can authenticate their identity through the CoopKey app and BankID – a Norwegian online identity verification system – when entering the store. They can check-out the goods and pay at self-service counters.
Spain’s DIA to Seek Debt Refinancing Deal
(June 17) Reuters.com
- Spanish supermarket chain DIA has revealed that Luxembourg-based investment fund LetterOne, the company’s main shareholder, is pursuing a deal to aid its restructuring. DIA missed the June 15 deadline for an agreement with lenders to raise €500 million ($559.26 million) in share capital and restructure its rising debt.
- According to a source, LetterOne is negotiating a €380 million ($426.63 million) refinancing agreement with a group of 17 lenders, including seven investment funds.
Jean-Denis Deweine Appointed CEO of Auchan Retail France
(June 17) Company press release
- Edgard Bonte, Chairman of Auchan Retail, has announced the appointment of Jean-Denis Deweine as the new CEO of Auchan Retail France. Deweine will replace Ali Khosrovi who held the position since November 2017.
- Deweine has been with the company for 33 years and served as head of international product sourcing and purchasing since 2013.
Lidl to Invest Half a Billion Pounds in London Expansion
(June 13) RetailDetail.eu
- German supermarket chain Lidl has announced plans to invest some £500 million ($628 million) to add over 40 new stores in London in the next five years.
- The investment includes a new UK headquarters in Tolworth, southwest London, which can accommodate close to 800 employees. Lidl’s expansion would create nearly 1,500 new jobs in London.
Waitrose Invests in Service Counters
(June 14) Company press release
- UK supermarket chain Waitrose has announced plans to invest in fish and meat service counters staffed by experts and featuring distinctive products, such as Wagyu beef and Hebridean salmon.
- Waitrose will initially train 10 fishmongers and 10 butchers to broaden their knowledge of fish species and meat cuts. Over the next two years, Waitrose plans to roll out similar training to 200 existing staff.
ASIA RETAIL AND TECH HEADLINES
Omega Opens a Pop-Up Store on Tmall Luxury Pavilion
(June 17) alizila.com
- Swiss watchmaker Omega has opened its first e-commerce pop-up store on Tmall Luxury Pavilion, Alibaba’s shopping site for luxury and premium brands in China.
- Omega will hold a pre-sale from June 15 to August 7 of its new “Seamaster Aqua Terra Beijing 2022” limited-edition wristwatch for Tmall Luxury Pavilion customers. The watch will be available in physical stores only after August 7.
ABCDior Pop-Up Store to Launch in Singapore
(June 17) insideretailasia
- French luxury brand Dior will open its customisation offering ABCDior pop-up store in Singapore from June 20 to July 14. The pop-up store will be located at the Dior boutique in the Marina Bay Sands hotel.
- ABCDior allows customers to add initials, names or charms on a selection of Dior products such as its Book Tote, Diorcamp bags and Walk ‘n’ Dior sneakers.
Snapdeal Launches Miniso Products in India
(June 17) indianretailer.com
- Indian e-commerce company Snapdeal has launched products of Chinese discount retailer Miniso on its online platform. The products are designed to cater to the tastes and preferences of middle-class Indians.
- Over 150 Miniso products, from categories such as beauty, home furnishing, baby care, stationery, mobile accessories and décor priced between INR190 and INR790 ($3 to $12) are now available on Snapdeal.
Alibaba Plans Stock Split as it Prepares for $20 Billion Hong Kong Listing
(June 17) techcrunch.com
- Alibaba has announced plans for a one-to-eight stock split and will put the proposal up for voting at its annual general meeting to be held on July 15. Alibaba stated that the stock split will increase the company’s flexibility for future capital market activities.
- Alibaba’s plans for the stock split precede its preparation for a Hong Kong listing expected to happen in the third quarter this year, for a reported $20 billion.
Asics and Reigning Champ Collaborate to Release New Collection
(June 18) fashionnetwork.com
- Japanese sports equipment company Asics has partnered with Canadian streetwear brand Reigning Champ to release a new apparel and footwear collection for travel and running. The collection will be on sale at Reigning Champ flagship stores, select retailers, Asics and Reigning Champ online stores globally.
- The collection will be inspired by the cities of Kyoto, Vancouver, Paris and Tokyo. Work on the first edition, called the Kyoto Edition, will begin in early August in Japan.
Linkwiz Raises $8.3 Million in Series B Round
(June 18) dealstreetasia.com
- Linkwiz, a Japanese startup company specializing in robotic systems software, has raised ¥900 million ($8.3 million) in a Series B funding round led by existing investor Innovation Network Corporation of Japan and five other companies.
- Linkwiz said the funds will be used for overseas expansion by creating hubs to showcase smart production systems using industrial robots.
LATIN AMERICA RETAIL AND TECH HEADLINES
Cencosud Registers on the Santiago Stock Exchange
(June 14) FashionNetwork.com
- Chilean conglomerate Cencosud has announced plans to list on the Santiago stock exchange in Chile. Cencosud has not yet set a date of its listing.
- According to local media, Cencosud will trade under the acronym Cencoshopp and will list 30% of the company’s shares on the exchange.
Aldo Launches E-Commerce Site in Colombia
(June 17) FashionNetwork.com
- Canadian footwear retailer Aldo has launched its e-commerce site in Colombia. Customers can pay for online purchases in Colombian pesos or US dollars.
- Colombia is the first country in South America to have an online Aldo store. The store offers deliveries all over Colombia and same day shipment services in the city of Medellin.
Falabella Expands CMR Points Loyalty Program
(June 14) america-retail.com
- Chilean department store chain Falabella has extended the benefits of its CMR Points loyalty program to further modes of payment. Customers can now earn points when paying for purchases with a debit card, credit card or cash.
- Falabella hopes to access more information and understand its customers better by opening its loyalty program to more methods of payment.
Netshoes Announces the Completion of its Merger with Magazine Luiza
(June 14) Company press release
- Brazilian e-commerce conglomerate Netshoes announced it completed its merger with retailer Magazine Luiza on June 14. Netshoes received the approval of Brazilian anti-trust authorities and a 90.32% favorable vote from its stakeholders for the merger.
- The shareholders who agreed to the merger will receive $3.70 in cash per common share, excluding interest and withholding taxes.
DC Shoes Opens Second Store in Mexico
(June 17) fashionnetwork.com
- US footwear brand DC Shoes has expanded its operations in Mexico with a second single-brand store in the country, located at the Queretaro Premium Outlets Complex.
- The store will offer footwear inspired by skate culture and urban style clothing and accessories.
Key points from global macro indicators released June 12–18, 2019:
- US: The consumer price index (CPI) was up 1.8% year over year in May, below the 2.0% growth recorded in April. Continuing jobless claims in the US increased to 1.69 million in the week ended June 1 from 1.69 million in the previous week.
- Europe: In the eurozone, labor costs were up 2.4% year over year in the first quarter, slightly above the 2.3% growth recorded in the previous quarter. In Germany, the inflation rate was 1.4% year over year in May, below the 2.0% rate recorded in April.
- Asia Pacific: In Japan, industrial production fell 1.1% year over year in April, similar to the levels in March. In China, retail sales were up 8.6% year over year in May, above the 7.2% growth recorded in April.
- Latin America: In Brazil, retail sales rose 1.7% year over year in April, a recovery from the 4.4% decrease recorded in March.