Sutherland insights retail news flash june 02, 2014

RETAIL NEWS FLASH June 02, 2014

Table of Contents Sales & Marketing ................................................................................................................. 3 Finance ................................................................................................................................. 6 Technology .......................................................................................................................... 12 Strategy .............................................................................................................................. 16

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Sales & Marketing Kroger investing in lower prices at Harris Teeter May 22, 2014 | Triangle Business Journal http://www.bizjournals.com/triangle/blog/2014/05/kroger-investing-in-lower-prices-at-harristeeter.html?page=all Think Harris Teeter’s prices are high? They’re higher than you thought, The Kroger Co.’s CFO says.

The Cincinnati-based grocery chain (NYSE:KR) acquired Harris Teeter for $2.5 billion at the end of January. And “the actual pricing at Harris Teeter, going into the time of the merger, was a little worse than the customer’s perception of the pricing,” J. Michael Schlotman, Kroger senior vice president and chief financial officer, said this week.

He made his comments in response to questions posed at the J.P. Morgan Consumer and Retail Conference in London.

In April, Matthews-based Harris Teeter announced it had cut prices on thousands of items across its stores in Charlotte, Asheville and Hendersonville. The grocer is running frequent advertisements touting that message on radio and television.

Schlotman noted that price is not always the first consideration for Harris Teeter’s customer base, which tends toward college-educated, affluent shoppers.

But the competition in Charlotte’s grocery market continues to expand.

Lakeland, Florida, based Publix Super Markets Inc. has opened five stores in the Charlotte market since January. It plans nine additional locations here.

Salisbury-based Food Lion adopted a new logo and announced a multi-year initiative focused on making shopping easier for its customers while keeping prices low.

Wal-Mart Stores Inc. (NYSE:WMT) continues to grow its neighborhood market concept, while Whole Foods has announced two locations.

Kroger knew when it acquired Harris Teeter that pricing would needed to be addressed, Schlotman said Tuesday at the London conference. “We had anticipated all along the need to invest in some price attributes for them.”

At the time of the merger, Kroger said it expected to achieve cost savings of $40 million to $50 million from the deal, largely from enhanced scale and other efficiencies, within the next four years.

Those synergies will allow it to reinvest in Harris Teeter, including pricing, Schlotman said. For example, Kroger self-distributes its pharmaceuticals, while Harris Teeter used a third party. “Those kinds of savings give you dollars to reinvest back in the price without necessarily affecting margins,” Schlotman said.

He also sees opportunities to grow Harris Teeter’s footprint in the District of Columbia and Baltimore markets. Harris Teeter operates more than 230 stores in eight states and the D.C. area. The bulk of its stores are in North Carolina. Kroger operates more than 2,600 stores under more than two dozen banners nationwide.

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With 3,000 More Locations, Subway Widens Its Lead Over McDonald’s May 19, 2014 | Bloomberg Businessweek http://www.businessweek.com/articles/2014-05-19/with-3-000-more-locations-subway-widensits-lead-over-mcdonalds While burgers have long been the main staple of American fast food, $5 Footlongs are becoming more ubiquitous by the day. Subway, long the largest restaurant chain in number of outposts, will now have an even wider lead against rivals: On Monday, the company announced its intention to add 3,000 locations worldwide this year, expanding its footprint by 7 percent. It has already achieved about one-third of this goal, opening 973 new stores around the globe so far this year.

In 2013, Subway’s more than 40,000 locations outstripped McDonald’s (MCD) 35,400 and Starbucks’ (SBUX) 20,000. Yum’s (YUM) three brands combined—KFC, Pizza Hut, and Taco Bell—had about 40,300 locations. This year McDonald’s plans to open 1,500 to 1,600 shops, and Starbucks’ target is 1,500, mainly in the Americas and the China-Asia Pacific region.

Subway has been pursuing rapid growth for the past decade (see this map of its expansion over the years). According to figures from Chief Development Officer Don Fertman, the chain has averaged more than 2,000 new spots per year for the past 10 years, but international expansion has bumped up the rate to more than 2,500 in 2012 and more than 2,700 in 2013.

Subway’s strategy is to open not only in shopping centers and as free standing locations, but also in what it calls “nontraditional venues,” such as hospitals, colleges, sports arenas, and airports, where its sites can be as small as 300 square feet. Fertman says that in North America, it’s looking at such Northeast markets as Philadelphia, Boston, and New Jersey, and overseas it’s expanding quickly in Brazil, Mexico, Colombia, and Argentina. Brazil is now its fourth-largest market after the U.S., Canada, and the U.K. Moreover, the chain shows no sign of slowing down: Its leaders predict the market can handle 100,000 locations by 2030.

Metro Group builds out cross-channel B2B sales in China May 19, 2014 | Internet Retailer http://www.internetretailer.com/2014/05/19/metro-group-builds-out-cross-channel-b2b-saleschina The Germany-based company is upgrading its wholesale site, MetroMall.com, to let customers order online in either English or Chinese for in-store pickup at stores in the Metro Cash & Carry wholesale chain.

Metro Group’s Metro Cash & Carry wholesale store chain is going more “omnichannel” in China, where business shoppers on its complementary e-commerce site, MetroMall.com, will soon be able to order products online and arrange to pick them up in a store, a spokesman says.

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MetroMall.com, which was launched two years ago, is ready for several upgrades after the company learned more about how wholesale customers, mostly small, independent businesses, like to shop, he adds. “After two years of testing MetroMall, we are upgrading it to provide better services,” he says. In addition to in-store pickup of online orders across the 77-store Metro Cash & Carry chain, the upgraded e-commerce site will become accessible via mobile devices and social media, and in both English and Chinese languages, the spokesman says. He declines to provide more specifics on the timing of the upgrade or the technology behind it.

“Aiming to be ‘the champion for independent business’ and a focused multichannel specialist, we’re dedicated to support our local customers to be even more successful by providing them with highquality products, unique solutions at competitive wholesale prices,” says Jeroen de Groot, president of Metro China.

For now, MetroMall.com is serving customers only in Shanghai, but after the upgrade it will serve all registered customers of Metro China, the company says. Metro China recently opened a third Metro Cash & Carry wholesale store in Ningbo, a deep water port south of Shanghai and along the cost of the East China Sea in the Zhejiang province, bringing the chain up to a total of 77 stores across 53 cities. The wholesaler counts in China more than 5 million customers and more than 10,000 employees.

PUBLIX moves north May 16, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/88790 Publix is ready to make a move into North Carolina, reports Triangle Business Journal. The Floridabased grocery retailer has launched a micro-site for the Raleigh, NC market highlighting some of its new store plans and is promoting the site with advertisements in local media.

Publix will be opening its first store in the Triangle region in late 2014 at the new Bradford shopping center in Cary. However, the company hasn’t yet announced deals for any other locations in the region.

Costco Opens Spanish Store to Get Foothold in Continental Europe May 16, 2014 | Bloomberg Businessweek http://www.businessweek.com/news/2014-05-16/costco-opens-spanish-store-to-get-foothold-incontinental-europe Costco Wholesale Corp. opened its first store in continental Europe, extending the reach of the largest U.S. warehouse-club chain into a new market after global sales exceeded $100 billion last year.

The outlet in Seville, Spain, celebrated taking its first customers yesterday, according to a company official in Madrid, where the Issaquah, Washington-based company plans its next opening.

The 140,000-square-feet (13,006 square meters) warehouse store will kick off a “revolution” in retailing planned by Costco in Spain, newswire Efe said, citing Diane Tucci, the company’s general manager for Spain.

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Finance Acquisition brings new categories, channels for Cott May 30, 2014 | Food Business News http://www.foodbusinessnews.net/articles/news_home/Business_News/2014/05/Acquisition_br ings_new_categor.aspx?ID={A4C54387-7B20-434A-977F-36B980484F80} Cott Corp. has acquired Aimia Foods Ltd., a privately-owned business based in Merseyside, United Kingdom, for a total value of $133 million, including earnout considerations.

The deal accelerates Cott’s diversification strategy as the beverage maker strives to expand its portfolio beyond the declining categories of carbonated soft drinks and shelf-stable juices. Aimia Foods brings a hot and cold beverage platform and multiple food service relationships to Cott’s United Kindgom and Europe business unit. In the year ended March 31, Aimia Foods had revenues of approximately $110 million.

“Aimia has extensive expertise in new product categories, packaging formats and trade channels, such as the packaging of powdered beverages, which we believe enhances the diversification opportunities available to the combined businesses,” said Jerry Fowden, chief executive officer of Cott. “Aimia’s core strengths lie in the manufacturing, sale and marketing of Aimia-owned and thirdparty licensed beverage brands across all sectors of the U.K. market, including food service, vending, cash and carry and retail. Aimia has been highly successful in maintaining strong relationships with leading brand-owners and outsourcing partners, and we look forward to continuing to build these relationships under Aimia’s current leadership team.”

The acquisition enters Cott in new categories of hot chocolate, coffee, malt drinks, creamers and cereals, and expands the company’s packaging capabilities with new formats that include pouches, jars, sticks, in-cup products, sachets and block-bottom bags. Cott said it also will benefit from Aimia’s presence outside the large-format retail and supermarket channel, with approximately 40% of revenues in wholesale, vending and food service channels and 35% of revenues from contract manufacturing. The companies share a low-cost operational approach and scalable infrastructure, creating a stable platform for future expansion.

“We firmly believe that bringing Aimia Foods into the Cott family will provide additional opportunities for the benefit of our employees and customers alike,” said Rob Unsworth, managing director of Aimia Foods. “Our leadership team is excited to work with Cott to keep building on the strong foundation already established.”

Cott expects the combination to be accretive in the first year with incremental revenue growth opportunities based on its expanded product portfolio and broader channel diversification.

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Tyson raises stakes with $6.8 billion bid for Hillshire May 29, 2014 | Food Business News http://www.foodbusinessnews.net/articles/news_home/Business_News/2014/05/Tyson_raises_ stakes_with_68_bi.aspx?ID={5D70321D-D4C0-43FE-B032-1E8C67A3204A} Two days after Pilgrim’s Pride Corp. offered to acquire Chicago-based Hillshire Brands Co., a new bidder stepped up to the plate. Tyson Foods, Inc. has proposed to buy Hillshire for $50 per share in cash in a transaction that would be valued at $6.8 billion. The deal is subject to the termination of Hillshire’s merger agreement with Pinnacle Foods Group, Parsippany, N.J., which was announced May 12.

Pilgrim’s Pride, which is majority owned by JBS S.A., Sao Paulo, Brazil, on May 27 submitted an allcash offer of $45 per share in a transaction valued at approximately $6.4 billion, contingent on the termination of the Pinnacle deal. Following the bid, Hillshire’s board of directors said it would thoroughly review the proposal but added it strongly believed in the strategic benefits of the proposed transaction with Pinnacle.

For Tyson, the combination with Hillshire would reposition the company as a leader in retail prepared foods with a complementary portfolio of such well-known brands as Tyson, Wright Brand, Jimmy Dean, Ball Park, State Fair and Hillshire Farm. Hillshire’s strength in the breakfast category would fortify Tyson’s presence in the fast-growing day part. The deal also would provide significant synergies in sales and marketing and distribution and supply chain resources, Tyson said.

Tyson said it expects the proposed transaction would be accretive to earnings per share in the first full year following completion.

The offer represents a 35% premium to the unaffected closing price per share of Hillshire’s common stock on the day prior to announcement of the Pinnacle transaction, and is valued at 13.4x Hillshire’s trading EBITDA, according to Tyson.

“We believe that there is a strong strategic, financial and operational rationale for the combination of Tyson and Hillshire,” said Donnie Smith, president and chief executive officer of Tyson Foods. “Our proposal provides Hillshire shareholders with an immediate cash premium for their shares that we believe is both greater and more certain than what can be attained in the near term by the company either on a standalone basis or in combination with any other food processing company.”

For its most recent fiscal year, Hillshire Brands had sales of $3.9 billion.

BEST BUY back in black May 22, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/88883 Best Buy has announced results for the first quarter ended 3 May 2014 which saw the retailer back in the black. Net earnings rose to USD461 million, from a loss of USD81 million in the prior year’s Q1.

Revenue slipped 1.9% to USD9.04 billion. At home, comparable store sales fell 1.3%. Softening the blow, online comp sales in the US jumped 29.2%. Overall, US sales declined 2.1% to USD7.78 billion.

This was blamed on the declining CE industry.

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Abroad, Best Buy’s International Division posted a disappointing revenue total of USD1.25 billion, a decline of 10.5% versus last year. This fall was primarily due to a comparable sales decline of 5.8% driven by Canada, China and Mexico; the negative impact of foreign currency exchange rate fluctuations, and the loss of revenue from large-format store closures in China, partially offset by revenue from new store openings in Mexico.

Hubert Joly, Best Buy President & CEO, commented: “Beyond our financial results, we made progress against our three business imperatives, which are to improve our operational performance; build our foundational capabilities to unlock future growth strategies; and leverage our unique assets to create a differentiated value proposition that is meaningful to our customers and our vendors.”

He continued: “This progress included (1) leveraging our new ship-from-store and digital marketing capabilities to help drive a 29% increase in Domestic comparable online sales; (2) announcing new home theater stores-within-a-store vendor partnerships with Samsung and Sony; (3) launching new mobile installment billing programs; and (4) increasing our annualized Renew Blue cost reductions

by USD95 million.”

THE HOME DEPOT starts spring strongly May 21, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/88848 Despite a slow start to the spring selling season, sales and net income for The Home Depot’s first quarter ending 4 May saw an upward trend. Sales for the DIY giant rose 2.9% to USD19.69 billion, with US same-store sales up 3.3%. Net earnings were up 12.5% to USD1.38 billion.

Spring is, of course, an important time for The Home Depot as householders attend to their gardens and prepare for the barbecue season. In addition, sales to building contractors, who are very much hostage to the vagaries of weather conditions, contribute considerably to the Home Depot’s sales.

However, the Home Depot said sales of landscape items and materials such as concrete were on the rise due to repairs needed after the harsh winter in much of the US. While there are some indicators that the US housing market recovery is losing momentum, The Home Depot insists that sales for the year are set to grow in line with the guidance it previously provided.

DIXONS RETAIL sells Central Europe operation May 19, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/88811 Dixons Retail has entered into an agreement to sell its ElectroWorld operations in Central Europe to NAY, a leading CE specialist retailer in the region. ElectroWorld operates 26 specialist electrical retail stores across the Czech Republic and Slovakia.

Following completion, which is expected to take place during the summer, and remains subject to certain normal conditions including competition authority clearance, Dixons Retail expects to receive a small deferred cash consideration spread over three years.

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For the year to April 2014, the assets being disposed of generated losses before tax of GBP5.6 million (USD9.3 million) on revenue of GBP129 million (USD214.6 million). The sale is in line with Dixons’ recent strategy of disposing of non-core operations in order to focus on more profitable operations.

In mid-2013 Dixons sold its loss-making pan-European Pixmania chain. At the same time the retailer revealed it had also sold its Turkish arm. Indeed, later in the year, Dixons also disposed of its Unieuro chain in Italy.

WALGREENS eager to absorb ALLIANCE BOOTS May 19, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/88816 US drugstore giant Walgreens is reportedly keen on making an early move for the remaining 55% share of Alliance Boots, in which it currently has a 45% stake. Officially, Walgreens has an option to buy the remaining 55% between February and August 2015. But, according to the Sunday Telegraph, Walgreens hopes to acquire the chain before then, in a takeover valuing Boots at around GBP10.5 billion (USD17.5 billion).

Both Alliance Boots and Walgreens declined to comment on speculation that the second stage of the takeover is being brought forward. Interestingly though, a link could be made between Walgreens’ eagerness to 100%-own the Switzerland-based entity and the fact that moving its current headquarters in Chicago, IL to Bern, Switzerland where Alliance Boots is currently headquartered, would allow the retailer to switch from paying the 37.5% US corporate tax rate to the 20% paid by Alliance Boots.

NORDSTROM growth plan on track May 16, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/88789 US-based department store operator Nordstrom has reported Q1 2014 net earnings of USD140 million. This represents a fall from USD145 million for the same period last year. The decline was attributed to IT investments to improve service channels and infrastructural costs related to the entry into Canada.

Net sales increased 6.8% to USD2.8 billion. Comparable sales increased 3.3% with accessories, women’s shoes, and cosmetics the top performers. Direct net sales increased 33%, driven primarily by an expanded merchandise selection and ongoing online improvements.

Gross profit as percentage of net sales declined 124 basis points partly due to increased markdowns resulting from an increased promotional environment, Nordstrom Rack’s hastened store expansion and growth of Nordstrom Rewards loyalty program.

Nordstrom plans to open three full-line stores and 17 Nordstrom Rack stores during the fiscal year 2014. It has also announced its plans for a financial partnership for its Nordstrom credit card receivables approximating USD2 billion.

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KOHL’S seeks new focus on Q1 slip May 16, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/88793 In Q1 2014, Kohl’s profit declined 15% to USD125 million as sales slipped 3.1% to USD4.1 billion for the quarter through April 2014, missing the department store chain’s own forecasts. Sales excluding new or closed stores fell 3.4% compared with the same period a year earlier.

During the latest quarter, gross margin improved slightly to 36.8% from 36.4%. Like other middlemarket department stores, Kohl’s has been squeezed on the high end by Macy’s and on the lower end by Walmart and Target, a trend exacerbated by the recession. Kohl’s reacted in part by increasing its offerings of private brands which carry higher margins, including a clothing line by Jennifer Lopez and house labels like Croft & Barrow and Apt. 9.

Kevin Mansell, Kohl’s CEO, outlined a plan on Thursday for the chain to resume growth after the falls in sales and profit. The multi-year plan includes stocking better products, offering more compelling savings, tailoring offerings to local tastes and attracting top talent.

Kohl’s is looking for a new Chief Merchandising Officer and hopes to have the position filled by late October, in time for the company’s next investor meeting. As part of plan to boost performance, Mansell said new beauty departments and more national brands were helping to drive store traffic.

Kohl’s had also pushed too heavily into private labels, he said, a move that had turned off some shoppers. The company also plans to roll out an improved loyalty program that will better target savings to each customer.

JCPENNEY extends credit as margins improve May 16, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/88792 JCPenney has posted its Q1 results. Gross margin continued to improve, to 33.1% from 30.8% in the same quarter of 2013. The company’s net loss was USD352 million, compared with a loss of USD348 million a year earlier. Total sales rose to USD2.80 billion from USD2.64 billion, beating the average estimate of USD2.71 billion.

Sales in the company’s online business, which is also being revamped, increased 25.7%. Comparable store sales rose 6.2% in the first quarter ended 3 May, helped by demand for household goods, men’s and women’s clothing, and jewelry. It was the second consecutive quarter of same-store sales growth, after nine straight quarters of declines.

JCPenney said it had increased its credit facility to USD2.35 billion from USD1.85 billion and extended the maturity. Due to favorable market conditions, the company decided to pursue this new facility proactively to extend the maturity several years and enhance its liquidity position.

This financing is expected to provide better pricing terms and is expected to add USD500 million of incremental liquidity during peak seasonal needs. The company expects to close the facility during the second quarter.

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Stater Bros. goes completely private May 16, 2014 | Supermarket News http://supermarketnews.com/retail-financial/stater-bros-goes-completely-private Stater Bros. Markets, San Bernardino, Calif., has become a totally private company with no public debt following a debt restructuring earlier this month.

As a result, the company said it no longer has a legal requirement to file financial results with the public or the Securities and Exchange Commission, though it is still evaluating what kind of information it will disseminate in the future, Dave Harris, EVP, finance, told SN. The new $725 million facility consists of a revolver of $150 million, plus $325 million in term loan A and $250 million in term loan B, he said, which enabled Stater to issue an irrevocable call to bondholders to pay off its senior unsecured notes of $285 million, which was due in 2015, and $255 million, which was due in 2018.

Harris made the announcement during a conference call with analysts Wednesday discussing its most recent qurterly results.

Also during the call Jack Brown, chairman, president and CEO, said Stater is “prepared to move quickly” if any Vons or Albertsons stores become available as the merger between the two companies progresses.

“We’ve already plotted every Vons and Albertsons location, and there are some duplicate stores that may become available.” he said. “We’ve put together a wish list, and we’re well positioned financially to move ahead if and when any locations become available that improve our market share.”

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Technology Amazon adding 10,000 robots to warehouses May 28, 2014 | FierceRetailIT http://www.fierceretail.com/retailit/story/amazon-adding-10000-robots-warehouses/2014-05-28 Amazon (NASDAQ:AMZN) has long been a fulfillment story rather than a retail one, but it’s the consumer-facing side of its business that gets the bulk of attention. Not so much lately, as the spotlight turns to expanded delivery and automated fulfillment, now with robots.

The world’s largest online retailer made a big splash last fall when CBS News aired what amounted to an Amazon infomercial on “60 Minutes” detailing tests of deliveries by drone. This pie in the sky piece, broadcast the evening before Cyber Monday, presented the notion that home deliveries could be dropped from the sky sometime in the future.

While the segment earned Amazon a ton of media and consumer attention at a critical time of year, it also showcased the retailer’s inventory and supply chain investments. Most of what Amazon does is aimed at quicker, more accurate fulfillment.

And now there will be 10,000 robots operating in warehouses by the end of the year helping to process online orders more efficiently. CEO Jeff Bezos revealed the scheme during a shareholder meeting.

Robots aren’t entirely new for Amazon, there are already some 1,300 in operation in Amazon distribution centers. The technology was created by Kiva Systems, a company Amazon purchased for $775 million in 2012.

Robotic fulfillment is a far more realistic initiative than drone delivery, and a more important one to Amazon as the retailer continues to best the competition with delivery prowess.

E-receipts are Walmart’s newest source of shopper data May 21, 2014 | FierceRetailIT http://www.fierceretail.com/retailit/story/e-receipts-are-walmarts-newest-source-shopperdata/2014-05-21 Walmart (NYSE: WMT) is rolling out a program to send shoppers e-receipts via its mobile app, and while they’re surely thrilled to save a few trees the real impetus is the wealth of customer data it can provide.

The retailer hopes to use the feature to collect information on what shoppers are buying, that way it can provide suggested items for their shopping list and offers personalized to their shopping history.

“We view this as a platform,” Gibu Thomas, Walmart’s senior VP of mobile and digital media said at the Source14 conference in San Francisco. “It will produce a fire hose of transactional data.”

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When a customer checks out at one of Walmart’s stores, they will be prompted to enter their mobile phone number on the debit card reader. If they choose the e-receipt option a receipt will be sent to their phone. If they have an account with Walmart, those purchases will be synced with the mobile app. They can also scan a QR code on print receipts to add them to the app.

The shopper opt-ins are a couple of sizable ifs for the program, but the retailer is hoping to provide more incentive for customers to participate than the typical e-receipt program. For one, storing all the receipts in the app will streamline the process for users, but they will also be able to easily add items to their shopping list while looking through past purchases.

Shoppers will also be able to make a return using their digital receipt, rather than having to hang on to a print copy. Wendy Bergh, VP of mobile and digital strategy at Walmart Global eCommerce, even hopes the retailer will be able to use the data acquired to make the shopping list portion of its app a more predictive experience.

“Imagine that you are shopping and the app reminds you to buy your milk or reminds you to buy your diapers when you are running out,” she told Mobile Commerce Daily. “…The best shopping list is one you don’t even have to create and that is what we want to deliver for them so that’s where we are headed.”

Walmart continues to build on its digital experience, whether in-store or purely online. Thomas compared the e-receipt program to the Savings Catcher the retailer debuted in March, in that it further develops the shopping experience while providing Walmart with prized information.

The chain continues to demonstrate its commitment to new technology. The Global eCommerce unit announced it will add 550 new hires and lease more than 100,000 square feet at a new property in Sunnyvale, California. Additionally, Walmart Labs recently acquired Adchemy for its search technology and the glut of purchase data provided by e-receipts could prove extremely valuable in its own right.

SAINSBURY’S optimises with Quantum May 19, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/88813 Sainsbury’s will use Quantum Retail’s software and services to optimise its fashion and general merchandise inventory through improved allocation and replenishment functionality. The technology will help the UK retailer to obtain comprehensive and granular predictions of product demand based on consumer behaviour.

The solution forecasts demand at individual item level for every store rather than using averages across a range of similar stores. Buying decisions are made based on current stock levels, as well as considerations such as daily selling patterns, product life-cycle, seasonality, target service levels and inventory availability.

Marks & Spencer in the UK also uses Quantum Retail’s technology. In 2010, the retailer selected the software to manage its inventory forecasting, replenishment and order planning needs for its food division.

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MACY’S gains InfiniteInsights with SAP May 19, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/88815 Macy’s has deployed SAP InfiniteInsight for its online business. The predictive analytics technology will help Macy’s to better understand customer buying behaviour and optimise e-mail and website marketing campaigns.

The new solution replaces a manual model creation process and has enabled Macy’s to build 20 predictive models in a few weeks. The technology has been in operation for the past three months, during which Macy’s has seen an eight to 12% increase in online sales.

With the new technology, the US department store specialist will be able to further its multi-channel initiatives. Over the last years, the retailer has made significant investments in its bricks and mortar stores and distribution centres to accommodate a growing online business.

By autumn 2013, Macy’s had expanded the backrooms of 500 of its stores, converting them into distribution centres for its online business. In January, the company revealed plans for a new fulfilment centre near Owasso in Tulsa County, Oklahoma, to cope with the rapid growth of its direct-to-customer shipments.

Mall operators Simon, Taubman introduce digital upgrades May 19, 2014 | FierceRetail http://www.fierceretail.com/story/mall-operators-simon-taubman-introduce-digitalupgrades/2014-05-19 Mall operators Simon and Taubman are introducing new digital initiatives designed to aid retail tenants as consumers become increasingly connected to technology for their shopping needs.

Simon is investing $1 billion over the next three years to renovate and upgrade numerous malls across the country. The malls will see upgrades to omnichannel strategies including technologies that enable shopping and gifting activities and provide same-day delivery solutions.

Part of Simon’s investments will go toward rebranding the malls in digital, social, TV and print media in select markets. The move will help the mall connect with the more than two billion consumers who generate $70 billion in sales in Simon malls each year, according to the company.

Taubman, which operates 20 regional, super-regional and outlet shopping centers in the United States, is upgrading services to include free basic Internet access to all its brick-and-mortar tenants beginning this summer. The company noted that the complimentary Internet service will help stores and kiosks pursue their digital initiatives.

“We know that the best retailers are pursuing omnichannel customer engagement strategies and that requires fast, secure Internet access to execute both customer-facing programs and back-ofthe-store operations,” said Taubman CTO Michael Osment.

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As more shoppers turn to e-commerce, mall operators are finding creative ways to capture shoppers’ attention. Earlier this year, Westfield Labs, a division of the Westfield shopping mall development company, unveiled 7-ft.-tall “digital storefront” tablets inside of Garden State Plaza mall in Paramus, New Jersey. The life-sized touch-screen monitors allow shoppers to shop and scroll through products from retailers located inside the mall, including Macy’s (NYSE: M), Nordstrom, Ann Taylor (NYSE: ANN) and more.

The tablet screens also allow customers to see special shopping events in the mall and shop from the screens via mobile devices. Shoppers can view an interactive map of where to find selected products in the mall, which makes the tool serve as a traffic-driver to brick-and-mortar stores.

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Strategy Abercrombie lands deal to sell on Asos May 30, 2014 | FierceRetail http://www.fierceretail.com/story/abercrombie-lands-deal-sell-asos/2014-05-30 Abercrombie & Fitch has signed a deal with U.K.-based online retailer Asos to begin selling Abercrombie apparel on Asos.com this holiday season.

It’s the first time Abercrombie has entered into a wholesale agreement with another e-commerce retailer.

“Given Asos’ strong and growing traffic, this partnership will enable us to increase brand consideration and engagement with an attractive margin structure,” CEO Mike Jeffries said during an earnings call with investors.

Asos will only sell Abercrombie & Fitch-branded clothes. The company said that it is continuing to discuss if Hollister items will later be added to the Asos partnership.

The new deal with Asos is part of a larger turnaround effort for Abercrombie as the company seeks to stem declining sales and regain its cool among its teen and college-age shoppers, many of whom have defected to the likes of H&M and Forever 21.

“We are fully cognizant of those challenges and know that we need to be focused, disciplined and at the top of our game to navigate through this environment,” Jeffries said during the call.

Asos is another leader in the teen retail space, so the partnership could bode well for the struggling Abercrombie. At the end of its fiscal year last August, Asos shipped to 7.1 million active customers in 237 countries and territories around the world. Annual revenues at the e-commerce company rose 39 percent to roughly $1.2 billion.

Abercrombie & Fitch yesterday reported $822 million in first quarter revenue, a 2 percent decline over the prior-year period but beating expectations of $804 million. Overall company same-store sales fell 4 percent during the quarter, with U.S. same-store sales also falling 4 percent. By brand, same-store sales fell 1 percent for Abercrombie & Fitch, 6 percent for Abercrombie Kids and 7 percent for Hollister.

TESCO clears next Indian hurdle May 29, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/88949 Tesco’s deal to acquire a 50% stake in Trent Hypermarket, part of the Tata Group in India has received approval from the Competition Commission of India, the Indian Economic Times reports. In its order, the competition body said it did not expect the proposed alliance “to have appreciable adverse effect on competition in India”. Trent Hypermarket currently operates just 16 retail stores in the country.

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This is a positive step which brings Tesco’s expansion in India a step closer. After years of slow progress in the country with Tesco first looking into developing a cash & carry business in 2008 Tesco is finally close to making an entry onto the Indian retail scene.

However, the watchdog’s green light coincides with a government led by the BJP, which has a stated policy of opposing FDI in retail stores selling multiple brands, has recently assumed power, leading to further confusion over the status of foreign retail investment. Carrefour has recently been rumoured to be considering making an exit from its Indian involvements.

TESCO, CRE joint venture is approved May 29, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/88940 The Chinese regulatory authorities have granted approval for the joint venture between China Resources Enterprise and Tesco China. CRE will hold 80% of the new entity with Tesco holding the remainder. The company will re-banner Tesco’s Chinese stores to Vanguard.

At long last, but to no one’s great surprise, the merger has been approved. China Resources Enterprise will take over 135 hypermarkets in all together along with, perhaps just as importantly, Tesco’s expertise in private labels and customer loyalty schemes.

The UK retail giant will remain in the Chinese retail market as an investor, but it unlikely Tesco could ever assume control of the new JV. However, CRE can expect considerable challenges in assimilating Tesco China, with its different corporate culture and complicated personnel structures.

Nonetheless, CRE will secure a strong presence to Shanghai through capturing the Tesco locations and will further consolidate its leadership in the region. And, as e-commerce penetrates the Chinese grocery market, it will be exciting to see whether or when the new JV will leverage Tesco’s online success in the UK and introduce its similar operation in China.

The Honest Company And Target Announce Ongoing Partnership May 29, 2014 | Bloomberg http://www.bloomberg.com/article/2014-05-29/amlZH2n1Tn.U.html The Honest Company And Target Announce Ongoing Partnership Beginning this summer, Target stores nationwide and Target.com to offer the eco-friendly product line The Honest Company, a family brand providing natural, non-toxic essentials, announced today a new partnership with Target Corporation (NYSE:TGT) in which the retailer will offer a selection of The Honest Company products in all Target stores and an expanded assortment on Target.com starting June 15.

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The Honest Company.

“As a busy working mom, I know you can’t always anticipate when you’re going to need something.

It’s great to have a partner like Target that offers convenience and great values at any given moment. We’re excited to launch The Honest Company products in Target stores and on Target.com to provide easy access to our safe, stylish and accessibly-priced products,” said Jessica Alba, president and co-founder, The Honest Company.

Through the ongoing partnership, Target stores will carry stylish diapers, wipes and personal care items including face and body lotion, conditioner and shampoo and body wash, as well as household products ranging from the award-winning multi-surface cleaner to sweet-smelling dish soap and durable laundry detergent. Target.com will feature 150 product options including items found in Target stores, as well as online exclusives, such as the natural and effective bug spray, diaper cakes, fruit and veggie wash, dish towels and more. Products range in price from $4.95 to $124.95.

“Target’s guests are looking for products they can feel good bringing into their homes, all at a great value,” said Rick Gomez, senior vice president of marketing, Target. “By teaming up with The Honest Company, we’re able to offer an affordable collection that’s beautifully designed, practical and ecofriendly, which responds to our guests’ desire to shop more natural options at Target and Target.com.”

Continuing their commitment to giving back to the community, The Honest Company will give a portion of proceeds to families in need from all product sales at Target.

“A core mission of The Honest Company has always been to make our products easily accessible and we are thrilled to offer our customers the option to purchase Honest products while shopping for other everyday needs at Target,” said Brian Lee, chief executive officer and co-founder, The Honest Company. “We look forward to working with Target to create a safer and healthier environment for families.”

The Honest Company was founded in 2012 as an e-commerce site and offers a line of over 65 products. In addition to categories offered at Target, Honest offers health & wellness products and The Collective, a collection of designer collaborations, available at Honest.com.

Flipkart, Myntra merge in Rs 2,000 crore deal May 23, 2014 | The Times of India http://timesofindia.indiatimes.com/tech/tech-news/Flipkart-Myntra-merge-in-Rs-2000-croredeal/articleshow/35493912.cms Two of India’s biggest e-commerce companies, Flipkart and Myntra, have merged to create an entity with annualized sales of $1.5 billion, bringing them closer and in some cases rivalling the much older offline retailers of those like Future Group, Aditya Birla, and Reliance.

Their combined might also places them in a better position to take on the likes of Amazon, which has become increasingly aggressive in India’s booming e-tailing market.

The deal was influenced by two large common shareholders, Tiger Global and Accel Partners.

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Flipkart and Myntra did not disclose the details of the deal, but analysts estimate that Myntra has been valued at about Rs 2,000 crore ($330 million). The impending deal was first reported by TOI in January this year. This is the biggest M&A deal in India’s e-commerce story to date, surpassing the $100 million that the Ibibo Group spent to buy RedBus, again a story which first broke on this newspaper in June last year.

“We want to be a leader in every category that we are present in. Fashion is definitely the category of the future and we want to be the biggest players in this space,” said Sachin Bansal, who cofounded Flipkart with Binny Bansal. This acquisition of Myntra, involving a complicated share-swap process, also values Flipkart at over $2 billion, possibly the first venture-funded Indian startup to cross that figure.

Two other Bangalore-born peers, Mu Sigma and InMobi, have been eyeing similar valuations as they explore fresh fund raising or listing plans in the near future.

While Flipkart is into a number of categories, Myntra is focused on fashion e-tailing. With Myntra’s share of 30% of online fashion sales, Flipkart now has a 50% share in a segment that’s clocking nearly 100% annualized growth. With this deal, Flipkart effectively has stolen the thunder from Gurgaonbased Snapdeal, which was looking to be the first e-tailer in India to cross Rs 1,000 crore in fashion sales by the end of this year.

As part of the acquisition, Myntra co-founder Mukesh Bansal will join Flipkart’s board and will also oversee Flipkart’s fashion business. Flipkart and Myntra will remain as two separate entities, but people holding stock options in Myntra will now hold the same in Flipkart.

“We will retain the same management team at Myntra. Neither employee roles nor the company’s road map will change. The idea is to maintain distance between the two businesses and preserve a unique culture,” said Mukesh Bansal. “Both companies are running at a very fast speed and winning on the competitive landscape. So we don’t want to change that at all,” he added.

Flipkart’s acquisition of Myntra is also a great story of two IITians, both Bansals, in their early thirties buying a cross-town rival founded and run by another IITian and another Bansal in his thirties, to create a single entity that accounts for 50% of sales of the e-tailing industry.

However, the deal making wasn’t a smooth road as legal due diligence involving a plethora of foreign investors with different domiciles threatened it at various stages. In fact, Myntra went to on raise a $50 million round from PremjiInvest and others even as it had the Flipkart offer on the table. Myntra continued to engage with newer investors for additional funds until the transaction details fell in place in early April. Its CEO Mukesh Bansal first hinted at the possibility of deal with Flipkart in an interview to TOI on April 7.

Sandeep Ladda, India technology leader at consultancy firm PwC India, said the merger represented a process of consolidation in the sector. “Only the niche players or those with good financial muscle would be able to survive, while the rest would look for acquisitions or being taken over,” he said.

Sachin Bansal on Mukesh: We have had a lot of respect for each other for a long time and we are excited about working with each other now. We (Flipkart) learnt our first supply chain scaling lessons from Myntra back in 2008. Myntra is a leader in fashion today and we would love to learn more from Myntra and Mukesh.

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Binny Bansal: This acquisition is all about scaling up fast and we really think that the future of ecommerce is fashion and we can jointly build it faster. We saw this as an opportunity to accelerate our roadmap; things that would have taken us five years to achieve, we will now achieve in two to three years.

Mukesh Bansal: Last few months I have spent a lot of time with Sachin and Binny and grown to respect what Flipkart has done. And I got convinced that if we come together and work as one entity, it will be a game changing equation in the Indian e-commerce space.

TARGET tests rush delivery May 22, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/88866 Following on the chain-wide launch of instore pick-up capabilities in November 2013, Target will continue to explore ‘flexible fulfilment’ initiatives to meet shopper expectations. During its Q1 conference call, Target announced plans to test same-day delivery using its stores as fulfilment depots.

Launching in June, shoppers in select areas of Boston, MA; Miami, FL; and Minneapolis, MN will be able to receive same-day Rush Delivery service on orders placed before 1:30pm. A fee of USD10 per order will apply.

Jason Goldberger, SVP of Target.com & Mobile, said: “With these new services and tests like Rush Delivery, we’re gauging guest appetite and building internal capabilities and technologies that will make Target a leading omni-channel retailer.”

Target currently is behind the multi-channel curve with retailers such as Amazon and Walmart far more advanced in the online space. So the move by Target is an interesting one. It remains to be seen, however, whether shoppers will bite at the hefty delivery fee.

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