RETAIL NEWS FLASH March 17, 2014
Table of Contents Sales & Marketing ................................................................................................................. 3 Finance ................................................................................................................................. 6 Technology .......................................................................................................................... 10 Strategy .............................................................................................................................. 14
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Sales & Marketing Amazon raises price of Prime membership to $99 March 13, 2014 | Fierce Retail http://www.fierceretail.com/story/amazon-raises-price-prime-membership-99/2014-03-13 Amazon (NASDAQ: AMZN) announced today that it will raise the price of its Prime subscription service from $79 to $99 per year. Amazon Student Prime will rise $10 to $49 a year. It's the first time that Amazon has hiked the price of the service since its inception nine years ago. Current Amazon Prime members will pay the increased fee when they renew, starting on April 17. Any new customer who signs up starting March 20 will also pay $99. The price increase doesn't come as a surprise. Amazon said in January that it may raise the Prime subscription as much as $40. "The increased cost of fuel, transportation, as well as the increased usage among Prime members" have prompted Amazon to consider a price bump, Amazon CFO Tom Szkutak said during an earnings call in January. In fact, Amazon's net shipping costs have increased 19 percent to 1.21 billion, up 4.5 percent from a year earlier. Amazon Prime launched to initially provide customers free two-day shipping on over 1 million items. It has since grown to include 19 million items, and the membership now includes access to Amazon Prime Instant Video and a digital library for Kindle owners for no extra charge. There have also been reports that Prime members will soon get access to a Spotify-like music streaming service. Though Amazon has refused to divulge the exact number of people enrolled in Prime, in December the company said it was in the "tens of millions." A $20 price bump will give Amazon a nice bump in revenue.
AMAZONFRESH reportedly ready to roll March 12, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/88103 In a move with potentially massive implications for the US grocery market, it has been claimed that Amazon intends to roll out its AmazonFresh grocery business to 30-40 US markets this year. It is also stated that a huge reorganisation of the company’s fulfilment model will accompany this launch. Amazon is preparing to introduce a new combination of shipping modes in the US, a supply chain consultant with close connections to the retailer has told DCVelocity. According to James Tompkins, the e-commerce giant plans to divide the country into three segments based on population size. The top 40 markets, containing around half of the US population will be covered by Amazon’s private fleet, partly to service the AmazonFresh concept. The next 60 largest areas, accounting for about 17% of population, will be served by regional carriers while the remaining areas, containing approximately one-third of the US population, will be served by the US Postal Service.
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If realised, this means that UPS and FedEx. who currently handle a large percentage of Amazon deliveries will no longer be a major part of the retailer’s future plans. Tompkins further claims AmazonFresh will be launched in 30-40 US markets in 2014 and that deliveries of groceries and nonfood products will be coupled in the same trucks to optimise costs. With such a move Amazon would secure more control over its distribution network and benefit from considerably reduced shipping costs. Such a level of control could, for example, mean being able to guarantee more consistent delivery times and the avoidance of fulfilment failures such as happened during Christmas last year.
Amazon launches pilot to test 3D-printed products March 10, 2014 | Fierce Retail http://www.fierceretail.com/story/amazon-launches-pilot-test-3d-printed-products/2014-03-10 Amazon (NASDAQ: AMZN) has partnered with 3DLT, an online retailer that specializes in 3D printing, to offer 3D-printed objects through a new pilot program -- one that stands to capitalize on a new trend that promises to change retail forever. Amazon hand-picked 3DLT after learning about the company through the startup accelerator UpTech. The company is one of the first to offer a market for 3D-printed products and 3D printing designs. Its products range from jewelry to smartphone cases with more items to be added in the coming weeks. 3D printing is a process of making three dimensional solid objects from a digital model. Amazon's pilot program is the first for the retailer, but not the first of its kind. Makerbot has a head start on Amazon with three stores and an entire product line -- the Makerbot Replicator Mini will ship this spring and pre-orders are currently being placed for the $1,375 system. Last year, Amazon began selling 3D printers and currently offers a limited selection of 3D-printed items. If the pilot is successful, the product range could increase. "When it was announced that Amazon would begin selling 3D printers and supplies last summer, the industry heralded it as a defining moment, a clear indication that 3D printing was going mainstream," said John Hauer, CEO of 3DLT.
PEAPOD expands regional reach March 05, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/88002 To better serve the needs of customers in Hampshire and Hampden counties, Ahold US-owned Peapod has opened a new distribution centre in Agawam, Massachusetts. According to the Progressive Grocer, In addition to providing home and workplace delivery, the new facility will also serve extra pick-up locations scheduled to open in the next few months. This service will give consumers the option to shop online and pick up their groceries at a nearby Stop & Shop store.
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Peapod is continuing to quietly go about its business, steadily expanding its reach in the relatively affluent New England and north-eastern regions. As a genuine pioneer in online grocery in the US, the operator’s order-fulfillment technology and proprietary transportation routing system will attract greater scrutiny from peers as the US market realizes the necessity of taking online seriously.
OLD NAVY sets sail for China March 03, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/87966 Gap has opened a first store for its value-oriented family apparel chain Old Navy in China. The company-operated store is located in the prime shopping district on Nanjing West Road in Shanghai. Gap has simultaneously launched a dedicated Chinese Old Navy e-commerce site, which should help build brand awareness before expansion into other mainland cities. The 22,000 square foot (2,000 square metres), three-level Shanghai store incorporates many elements from Old Navy’s US flagship stores such as the Super Modelquins and Magic the Dog. It also boasts interactive features, such as touchscreen video games and game tables, designed to make shopping engaging and fun for the entire family. Gap, which has been present in China for three years under its namesake brand, plans to open a total of five Old Navy stores in China in fiscal 2014. Other international expansion plans on tap in 2014 for Old Navy includes a franchise business in the Philippines plus an additional 25 stores in Japan, where the brand debuted in 2012 and opened its first store in 2013. (Old Navy also has stores in Canada). Although clearly a strong avenue for future growth, the ongoing focus on international expansion cannot completely compensate for continued challenges domestically and should not overshadow the need for continued improvement in the home market with its core brands and stronger performance from recent acquisitions.
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Finance MORRISONS in shock profit plunge March 13, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/88114 Few observers expected good news, but only the most pessimistic predicted this. Morrisons has unveiled a substantial full-year pre-tax loss of GBP176 million (USD288.4 million) ahead of unveiling a major restructuring plan following a comprehensive strategic review. For the year ended 2 February, turnover dropped 2% to GBP17.7 billion (USD29 billion) from GBP18.1 billion (USD29.7 billion) in 2012. Like-for-like sales, excluding VAT and fuel, fell 2.8%. The outcome of the strategic review includes enhanced focus on the core supermarket business with a proposed investment of GBP300 million (USD491.6 million) in 2014/15. The chain will also invest GBP1 billion (USD1.6 billion) in self-help initiatives over three years – implementation is already underway. As anticipated by Planet Retail, it will also accelerate new channel development – particularly online and convenience. More significantly, the company has announced it will exit some non-core activities including Kiddicare and Fresh Direct – which should hopefully raise some much-needed funds. In terms of new space, for 2014/15 Morrisons expect to add a total of 540,000 square feet (50,000 square metres), of which 330,000 square feet (30,000 square metres) will be core grocery. Morrisons will open a further 300,000 square feet (28,000 square metres) of core space in 2015/16 as it completes development of the remaining pipeline. Thereafter Morrisons will only acquire new supermarket sites in exceptional circumstances. The chain expects to open around 250,000 square feet (23,000 square metres) of convenience space annually.
COSTCO Q2 net income slides March 06, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/88033 Costco has announced that net sales for the second quarter ended 16 February increased 6% to USD25.76 billion. However, the headline number to emerge from these figures is that net income slid 15% to USD463 million against USD547 million in the same period last year. Excluding the effects of gasoline price inflation and strengthening foreign currencies, comparable store sales for the US-based warehouse club operator were up 5%. US comparable store sales also rose 5% while the international division reported comp store sales growth of 7%. For the first halfyear the company reported a net sales rise of 6% to USD50.22 billion, from USD47.55 billion last year. Net income was USD888 million compared to USD963 million in the prior-year period.
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At present Costco operates 649 warehouse clubs, comprising 462 in the US and Puerto Rico, 87 in Canada, 33 in Mexico, 25 in the UK, 18 in Japan, 10 in Taiwan, nine in Korea and five in Australia. The retailer plans to open additional 14 new clubs before the close of its fiscal year on 31 August.
STAPLES shuts stores after poor FY March 06, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/88050 For its fiscal year 2013, total company sales at Staples were USD23.1 billion. Excluding the extra week in 2012, the figure represents a 3.4% slide in sales year-on-year. The office supplies company reported full-year 2013 income from continuing operations of USD707 million, compared to a 2012 loss of USD161 million. Thanks to the implementation of a plan to aggressively reduce costs, Staples achieved full-year profitability in Europe. Total company sales for the fourth quarter of 2013 were USD5.9 billion, a slide of 3.8% excluding the 53rd week. Q4 total company sales growth was negatively impacted by 109 store closures in North America and Europe during the 12 months preceding the fourth quarter as well as unfavourable foreign currency fluctuations. Accelerated growth was experienced from staples.com with sales up 10% in the fourth quarter. SKUs available via the online operation increased five-fold from 100,000 items at the beginning of the year to over 500,000 at the end of 2013. Staples has initiated a plan to close up to 225 stores in North America by the end of 2015 – a wise move considering how the office industry is moving into a digital, paperless world. The company also initiated a multi-year cost savings plan expected to generate annualised pre-tax savings of approximately USD500 million by the end of 2015. The savings are expected to come from supply chain, retail store closures and labor optimisation, non-product-related costs, IT hardware and services, marketing, sales force, and customer service.
Wretched results rock RADIOSHACK March 05, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/87999 Poor Q4 and FY results have triggered a drastic store cull by US consumer electronics operator RadioShack. Comparable store sales fell 8.8%, dragged down by a poor Q4 in particular. During its last quarter, comparable store sales dropped 19% driven by traffic declines and soft performance in the mobility business. Joseph C Magnacca, CEO, said: "Our fourth-quarter financial results were driven by a holiday season characterised by lower store traffic, intense promotional activity, particularly in consumer electronics, a very soft mobility marketplace and a few operational issues.�
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Full-year net sales were USD3.43 billion against USD3.83 billion last year. FY consolidated gross profit was USD1.17 billion, or 34.1% of net sales, compared with USD1.47 billion, or 38.4% of net sales last year. The company posted a net loss of USD400.2 million, compared to net loss of USD139.4 million last year. After such a dismal set of results, the company confirmed it expects to close up to 1,100 stores. These have been selected based on location, area demographics, lease life and financial performance. This move is necessary given changes in shopper behaviour and CE consumers moving online.
Kroger Said to Contact Safeway About Buying Some Assets March 04, 2014 | Bloomberg http://www.bloomberg.com/news/2014-03-03/kroger-said-to-contact-safeway-about-buyingsome-grocery-assets.html Kroger Co. (KR), the largest U.S. supermarket chain, recently approached Safeway (SWY) Inc. about buying part of its operations, people with knowledge of the matter said. The shares of both companies rose. Kroger also has contacted Cerberus Capital Management LP, the private-equity firm that is the lead bidder for Safeway, about buying some stores that Cerberus may not want, said one of the people, who asked not to be identified because the talks are private. Safeway, the nation’s second-largest grocery chain, would prefer to be sold as a whole, people familiar have said. A sale to either Cerberus, which owns the Albertsons chain, or Kroger may raise objections from antitrust regulators in select markets, and splitting off some of Safeway’s assets could help address those concerns. Kroger and Cerberus may be able to reach agreement on any of Safeway’s assets that would have to be sold in that case, said one of the people. A spokesman for Kroger declined to comment. Brian Dowling, a spokesman for Safeway, and Peter Duda, a spokesman for Cerberus, didn’t immediately respond to phone and e-mail messages seeking comment. Safeway, based in Pleasanton, California, climbed 1.5 percent to $38.02 at the close in in New York, giving the company a market value of $8.8 billion. Kroger, based in Cincinnati, increased less than 1 percent to $41.99, for a market value of $21.7 billion. Supermarket Portfolio Cerberus led an investor group last year that acquired Supervalu Inc.’s Albertsons, Acme, JewelOsco, Shaw’s and Star Market grocery stores in a transaction valued at about $3.3 billion. The New York-based buyout firm wants to add Safeway to its portfolio to gain economies of scale and market presence, people familiar with the situation have said. Private-equity firms CVC Capital Partners Ltd. and Leonard Green & Partners LP also have expressed interest in buying parts of Safeway, people familiar with the matter said last month. Leonard Green and CVC, which jointly own big-box wholesale chain BJ’s Wholesale Club Inc., could team up to do a deal, one of the people said then.
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KKR & Co. bought Safeway in 1986 for about $4.3 billion, according to data compiled by Bloomberg. The retailer went public in 1990. Safeway has been simplifying its operations and recently sold its 72 Dominick’s stores in the Chicago area after divesting its Canadian business and conducting an initial public offering of gift-card unit Blackhawk Network Holdings Inc.
Buyout costs weigh on NEIMAN MARCUS March 03, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/87969 Neiman Marcus Group has reported that sales for its fiscal 2014 second quarter ended 1 February increased 5.1% from USD1.36 billion to USD1.43 billion. On a comparable basis, sales increased a healthy 5.5%, encompassing a 4.5% gain for the specialty retail segment (i.e. Bergdorf Goodman, Cusp, Last Call and Neiman Marcus stores) and 10.4% for online. The business reported a net loss of USD68.0 million for the second quarter, down from net income of UD40.4 million in the same prior-year period. The loss was partially attributable to transaction costs from the Ares Management and Canada Pension Plan Investment Board-led buyout last fall. Other expenses listed included USD2.1 million in equity from its online venture in China and USD2.5 million related to the data breach that was revealed earlier this year.
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Technology Online tool helps WALMART, M&S benchmark shrink March 12, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/88102 Walmart and Marks & Spencer are among the first retailers to test performance of their anti-shrink programmes with the newly launched online Loss Prevention Benchmarking Tool. The platform has been developed by collaborative ECR Shrinkage Group along with solution provider Checkpoint. Based on global research, the system provides benchmarks on strategic, organisational and operational standards for an effective shrink management strategy. To access and use the free tool, retailers simply complete an online questionnaire. Once responses are entered, the tool generates a colour-coded model highlighting areas of the shrinkage framework where a retailer has strengths and, also, areas requiring prioritizing. It also emphasises the importance of empowering store staff to take responsibility for dealing with shrink and recognising how operational failures are the root causes of many forms of retail loss. As many retailers’ bottom lines are challenged by shrink, the Loss Prevention Benchmarking Tool can help identify weaknesses within organisations and suggest effective action to reduce losses significantly. The fact the platform can be used free of charge will definitely heighten acceptance of the tool and make it even more effective. Mastercard and Visa form alliance to accelerate payment security
March 12, 2014 | Fierce Retail IT http://www.fierceretail.com/retailit/story/mastercard-and-visa-form-alliance-acceleratepayment-security/2014-03-12 MasterCard (NYSE: MA) and Visa (NYSE: V) announced the formation of a new cross-industry group focused on enhancing payment system security in the wake of multiple security breaches. The group will focus on a broad range of security-related topics, including advancing the migration to EMV in the United States, promoting additional security solutions like tokenization and point to point encryption to protect mobile and online transactions, and developing an actionable roadmap for securing the future across all segments of the payments industry. "One of the critical roles we play is to protect consumers and businesses against criminals and fraudsters," said Chris McWilton, president of North American Markets, MasterCard. "Only through industry collaboration and cooperation will we address the real and immediate issue of security and maintain consumer confidence and trust. EMV will be the next step in these efforts, alongside enhanced security solutions for online and mobile channels."
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This new group will include a diverse assembly of participants in the payments systems including banks of all sizes, credit unions, acquirers, retailers, point-of-sale device manufacturers and industry trade groups. The formation of the group is a public recognition of the importance for all parties to work together and will ensure all voices can contribute to the strategic direction of payment security. "The recent high-profile breaches have served as a catalyst for much needed collaboration between the retail and financial services industries on the issue of payment security," said Ryan McInerney, president, Visa. "As we have long said, no one industry or technology can solve the issue of payment system fraud on its own. These conversations will serve as a useful forum to share ideas, break down barriers and spur the adoption of next generation security solutions for the benefit of all." MasterCard and Visa expect the group will complement and engage with other efforts across the industry, including proprietary risk councils, EMV task forces and the standard management bodies. It's just one of the many industry efforts stemming from Target's (NYSE: TGT) data breach in which more than 70 million accounts were compromised between November and December last year.
Lord & Taylor Gets Bitcoin Payments Through Mobile-Shopping App March 11, 2014 | Bloomberg http://www.bloomberg.com/news/2014-03-11/lord-taylor-gets-bitcoin-payments-throughmobile-shopping-app.html Bitcoin users can now buy merchandise from Lord & Taylor department stores using a mobile software application, the latest step by startups to make the virtual currency useful in the physical world. The mobile app, Pounce, lets shoppers make purchases by using their phones to scan images in print advertisements. The software, made by an Israeli startup, now works with Coinbase Inc.’s digital Bitcoin wallet, the companies said today. Pounce has had a partnership for print-ad shopping with Hudson’s Bay Co. (HBC), Lord & Taylor’s parent company, since January. Coinbase and others are seeking to connect Bitcoin with real-world commerce to help establish the virtual currency as a viable way to pay for goods. Revel Systems Inc., a San Francisco maker of payment terminals, said last month it’s adding a Bitcoin button to its system, potentially letting shoppers at supermarkets, pizza places and thrift stores use the currency. Coinbase announced a payment deal with online retailer Overstock.com Inc. (OSTK) earlier this year. Getting a way to shop at Lord & Taylor with Bitcoins “has the potential to bring more legitimacy to the currency,” said Ugo Egbunike, director of business development at ETF.com, an analysis firm for exchange-traded funds. “This definitely helps boost the Bitcoin economy,” he said. Bitcoin is the most popular of a group of digital currencies that have no central issuing authority, use a public ledger to log every transactions and employ a network of volunteer computers to process transactions. The underlying software was created in 2009 by an anonymous person or group, Satoshi Nakamoto, and it has traction with merchants for its lower costs. It also has been used to facilitate illegal transactions, which has drawn the attention of law enforcement worldwide.
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PayPal puts 'mobile first' in redesign March 11, 2014 | Fierce Mobile Retail http://www.fierceretail.com/mobileretail/story/paypal-puts-mobile-first-redesign/2014-03-11 PayPal (NASDAQ: EBAY), the online payments platform owned by eBay, has launched a new mobileoptimized site intended to drive use of its mobile payments feature. PayPal is putting "mobile first," according to Cristina Smedley, PayPal's VP, global brand. PayPal had three goals in mind for the redesign, according to Smedley: To make PayPal.com modern and designed for mobile first with a richer palette of content, including video, photography and illustrations. To simplify the site and to use easy to understand language and with simpler navigation. There's a more simplified landing page, or front door, and a more contemporary look when viewed on a mobile device. There is also a new interface for managing notifications, balances and recent transactions. Unfortunately, the updates don't extend to PayPal's third party partners, notes TechCrunch's Ingrid Lunden. Shoppers trying to pay with PayPal on third party sites are still forced to a new window to complete the transaction.
eTail West: Rue La La makes sense of mobile March 04, 2014 | Fierce Mobile Retail http://www.fierceretail.com/mobileretail/story/etail-west-rue-la-la-makes-sense-mobile/201403-04 For flash sale site Rue La La, mobile solved a problem and today it comprises roughly half of the traffic to the online retailer. "Rue La La was started selling limited time inventory, bringing mobile into the picture filled a need," said Gabriella Buerman, mobile product marketing manager, Rue La La. Buerman spoke as part of a panel discussion during eTail West in San Antonio, Texas on Tuesday. Retailers, the panelists agreed, need to approach mobile from a solution standpoint. For Pinny Gniwisch, founder of online jeweler Ice, the platform provided ways for shoppers to try products that weren't available through a desktop, thanks to mobile's built-in cameras. "When shopping for jewelry, people take their time," said Gniwisch. Ice created an app that let shoppers take a photo of their fingers and see how the jewelry looked on them. "People were using it as a research utility," he said. Very quickly, 30 percent of the retailer's traffic was coming from mobile. For Edmunds.com, a Web site known more for its automotive information than as a retailer, mobile gave new life to tools that languished online. A lease payment calculator didn't get much use when accessed by a desktop, but became a valuable tool in a shopper's pocket in the showroom negotiating a sale.
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Use caution when trying to measure ROI when it comes to mobile, the value of which is often found in its influence on a later purchase, advised the panel. And while the adage, don't innovate for innovation's sake held true for most retailers, Travelocity's VP of Strategic Initiatives, David Young, said the practice had some purpose. "There's merit in it," he said, thanks to Apple's review and promotion process. "You will get visibility based on making a revision to your app or mobile site. You get that feature placement in the app store and you can increase downloads tenfold. There's ROI there." Of course, retailers have only scratched the surface of what mobile can do. "I'm addicted to my Fitbit, I would love it to tell me that sales have just started," said Buerman. "At some point, everyone will need to do mobile, and do mobile well."
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Strategy Kroger to add an additional market, focus on urban-format stores March 13, 2014 | Fierce Retail http://www.fierceretail.com/story/kroger-add-additional-market-focus-urban-formatstores/2014-03-13 Kroger (NYSE:KR) is planning to expand into one new market by the end of the year and will continue to open new stores to fill in existing markets. J. Michael Schlotman, Kroger CFO, shared the news at an investor conference Wednesday in New York, reports Supermarket News. "We are going down the path of picking one new market to enter organically," Schlotman told the UBS Global Consumer Conference. "We've been engaged in that process since October, and we've essentially [decided] where we're going to go, though it will be awhile before we go public." Kroger also may be looking at purchasing stores that may be divested in the coming months. Schlotman did not directly pinpoint which stores, but it could be an indication that Kroger is interested in making a bid for stores as a result of the recent acquisition of Safeway (NYSE: SWY) by Albertson's. "We've been happy picking up assets [when stores] become available in markets where we currently operate, and those have been very beneficial for us," Schlotman said. Kroger is currently focused on managing its newly-acquired Harris Teeter unit, which it purchased for roughly $2.5 billion in July. Kroger operates more than 2,400 grocery stores in 31 states, while Harris Teeter has 216 stores in eight states. The Harris Teeter stores are typically much smaller than Kroger locations and are located in more densely populated areas than a typical Kroger. Scholtman remarked that operating the Harris Teeter unit has helped the company "learn a lot" about urban-format stores.
Whole Foods moves to centralize some operations March 12, 2014 | Supermarket News http://supermarketnews.com/retail-amp-financial/whole-foods-moves-centralize-someoperations While Whole Foods Market intends to retain marketing flexibility at the operating level, it contemplates moving more backstage decisions to its home base in Austin, Texas, co-CEO Walter E. Robb told the UBS Global Consumer Conference Wednesday in New York. “You need to be global in your brand, your standards, your values and your financial disciplines, and you have to hold that sort of framework while putting the operating flexibility where the action is — where the customer is — and I think we’ll continue to do that,” he explained.
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“But we’re gradually looking at moving more of the back side of things that support the business to Austin because it doesn’t make sense doing *the same things+ 12 times. It just makes sense *to centralize some functions+, and that’s where we expect to pick up some efficiencies. “And frankly the operators are happy to let some of those things go.” Robb also said the natural products industry “is becoming the food industry. It’s an incredibly vital, growing industry, and I think you are seeing a tremendous period of transition — with more players in the marketplace and more products becoming available in more places — and you’re going to see some business models that are checked and stressed and tested during this period. But I can promise you Whole Foods will be there at the end of the race.” He said he does not believe conventional retailers who are adding more space for natural products are taking share away from Whole Foods. “I think they are taking share from each other,” he noted. “But we are not them, and they are not us. We are different from them, and over time that will continue to become clear. As customers say they want more of these sorts of choices, we’re going to be there to serve them.” Robb mentioned two initiatives that will help distinguish Whole Foods from its competition: “Customers have never had any view into the use of pesticides on conventional produce, and we’re going to provide that for them for the first time ever. And we also plan an effort around transparency on GMO labeling.” Among other comments: •
With a goal of 1,200 U.S. stores, Robb said Whole Foods expects to reach its first threshold — more than 500 stores — by 2017, “and then we’ll go from there.” With more than 370 stores in operation, Whole Foods has 107 additional leases already signed, he noted.
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Robb said the disruption in the industry created by the Albertsons-Safeway merger “is going to provide opportunities for any retailer with a strong balance sheet and an appetite for picking up real estate, and I think we’ll be a potential beneficiary if there is some divestiture.”
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Private-label brands account for 20% of grocery penetration at Whole Foods, “and while I can see that moving up a little bit, I don’t ever see us moving, like some European retailers, to 60% to 70% penetration,” Robb said.
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Locally grown food is the biggest trend in food today, Robb said — even greater than organic, he noted, indicating that Whole Foods has a local loan program totaling $25 million that it makes available to producers — “and no other supermarket does that,” he noted — “and that part of our business is robust and growing.”
eBay changes the way it rates sellers March 11, 2014 | Internet Retailer http://www.internetretailer.com/2014/03/11/ebay-changes-way-it-rates-sellers A single “transaction defect rate” replaces four separate measures, the online marketplace says. Sellers with better ratings will appear higher in eBay search results. The changes take full effect in late August, though merchants will start to see some of them over the coming weeks, eBay says.
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EBay Inc. will change the way it measures seller performance on its online marketplace, a move that promises to influence which online merchants achieve “Top Seller” status, and how high those retailers appear in eBay search results. The online marketplace and e-commerce services provider said today that it has begun telling sellers about the new ratings criteria and related revisions, which cover such areas as shipping costs and holiday returns. Sellers will start to see evidence of the changes within the next few weeks, though the changes won’t be reflected in monthly seller evaluations until late August, eBay says. “Our world is changing at an incredible pace driven by technology and fast-rising consumer expectations,” says Michael Jones, vice president, eBay North America. “Customers expect to shop and buy wherever they are, and at eBay, we’re fully committed to helping sellers meet these rising expectations and reap those rewards.” Among the main changes is that eBay will measure seller performance via a new measure called “the transaction defect rate.” The single measure replaces four separate ones that covered the following areas: shipping charges, speed of delivery, seller communication and the accuracy of the product description. The new transaction defect rate is the percentage of a seller’s successful transactions that have exhibited one or more “defects,” such as poor shipping times, negative or neutral customer feedback, or a product returned because it was not as described by the seller. EBay says sellers can have up to 5% of transactions “with one or more transaction defects over the most recent evaluation period.” An eBay spokeswoman explains: "When a seller goes above 5%, they’ll be notified and have time to adjust their selling practices. If they are unable to fall back below 5%, then longer term impact would include restrictions or suspensions." But to qualify as a top-rated seller, the merchant can amass no more than 2% defective transactions over such a period. (Only transactions with U.S. buyers count toward the rating, eBay says.) By contrast, under the previous regime with four seller rating requirements, top-rated sellers could have only 0.5% of transactions with low ratings. "If a seller breached any one of the four thresholds they would be impacted," an eBay spokeswoman says. The new seller rating criteria will first apply to Aug. 20 seller evaluations, eBay says, though on April 16 sellers will “have a preview of how they’re trending toward the new defect rate requirement in the seller dashboard.” The online marketplace says that sellers with low transaction defect rates will end up with better positions in eBay search results. “The new measurement allows eBay to recognize and reward sellers who consistently deliver the great service buyers expect, and to identify and respond to the experiences that erode confidence and drive buyers away,” the online marketplace says in a sheet explaining the changes. At least one eBay seller today welcomes the change. Rick Green, CEO of auto parts seller 1A Auto— which, he says, started selling on eBay in 1999—says the new, single-rating system is more likely to reward long-term, incremental improvements by retailers, and enable less “gaming” of the system— for instance, by offering shoppers discounts to make their complaints go away.
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That’s possible because eBay says it will be less likely for a single transaction defect to mar a seller’s rating. The online marketplace says a seller will not suffer under the new measure unless defects are reported from at least eight different buyers—or five different buyers for top-rated sellers—over the most recent evaluation period. Each transaction is counted only once toward the seller’s defect rate, meaning a disgruntled shopper who leaves negative feedback on several parts of a transaction will lead to just one defect count for that seller. “This is the closest eBay has gotten to receiving actual marketing signals from consumers as a whole,” Green says. Other changes eBay announced today include: •
Shipping costs no longer count toward performance ratings. “This will protect *sellers+ from low ratings for ship cost even through the shipping charges are shown to buyers up front when they purchase an item,” eBay says.
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Sellers must accept holiday returns through Jan. 31 to qualify for the “Top Rated Plus” seal and a 20% final value fee discount for sales made between Nov. 1 and Dec. 31. If the item sells, a seller is charged a final value fee. Final value fees are calculated based on the total amount of the sale and are charged per item. This does not apply to gold bullion, gift cards, tickets and business and industrial product categories.
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EBay will provide standard rules for returns as part of its item condition policy. That means there is “no more need to spend time detailing *return+ policies” to shoppers, eBay says.
The recent moves from eBay follow other changes within the past year, including a new pricing structure announced last month, designed to make selling on eBay more attractive than selling on Amazon.com Inc.’s marketplace. Today’s changes from eBay show its ongoing effort to keep up with the expectations set by the Amazon marketplace, says Scot Wingo, CEO of ChannelAdvisor Corp., a marketing company that helps retailers sell on Amazon and eBay. “It’s a very competitive world out there, and eBay is trying to keep up,” he says. Some sellers likely will face a period of confusion, he says, because “the new defect rate is quite a change.”
Dollar stores targeted by WALMART Express March 05, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/88003 Walmart has provided more information on its US small format expansion plans. As previously announced, the retailer is accelerating the roll-out of small formats, opening between 270-300 small-box stores in 2014. Speaking at Raymond James Institutional Investors Conference on 4 March, Walmart US President & CEO Bill Simon now indicates the unit breakdown will be approximately 200 Neighborhood Markets and 100 Walmart Express stores.
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Walmart was also forthcoming with some specific financial metrics associated with its small formats. In 2013, sales from the 346 Neighborhood Market units in operation increased 40% from the previous year. Comparable store sales were up 4% for the year. The company forecasts Neighborhood Market store sales to reach USD8 billion in 2014, a 35% annual increase fueled largely by new store expansion. By year-end, there will be a total of 500-525 Neighborhood Markets in operation. Regarding Walmart Express, Simon said the company was "pleased" with the banner's profitability. The initial Walmart Express stores, which opened in 2011, performed nicely with second-year comps up about 9%. The addition of 100 units this year will bring total stores to 120 by the end of fiscal 2014. Interestingly - and contrary to conventional thinking of using Express to penetrate dense urban areas - the company intends to locate Express stores primarily in rural areas where it says other formats like dollar stores, drugstores and hard discounters have been intercepting fill-in trips. Planet Retail foresees the coming years will indeed be a battle of the small boxes.
CARREFOUR turns acquisition into franchise March 03, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/87975 Carrefour has presented its vision for the next few years to the employees of the recently acquired Coop Alsace chain. This acquisition has significantly strengthened the retailer's position in eastern France. The first wave of rebranding appears to have borne fruit, with sales up 40-50% at some outlets, local press reports. This spring, Carrefour will fully integrate some 48 of the 129 outlets under its various small format fascias, such as Carrefour Contact, Carrefour City, Carrefour Express and 8 à Huit. The remaining 81 will be integrated later and will continue to operate under the Coop Alsace brand for now. Carrefour’s plans envision all store directors becoming owners with the ownership of the operations transferred to franchise within 3-4 years. This way, Carrefour should manage to recoup its acquisition costs within a handful of years.
ABERCROMBIE & FITCH embraces change March 03, 2014 | Planet Retail http://www.planetretail.net/NewsAndInsight/Article/87967 After years of steadfastly adhering to the same strategy, Abercrombie & Fitch continues to announce a bevy of new initiatives designed to help the teen apparel specialist regain favor with both consumers and Wall Street. During a quarterly call with analysts last week, the company revealed it is considering expanding the number of third party brands in its own stores and online. The company already has tested such an arrangement with its Hollister brand and Keds sneakers.
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The addition of third party brands, particularly narrowly distributed ones, not only would help Abercrombie & Fitch drive traffic, but also could have a halo effect on its retail concepts. Indeed, retailers such as J. Crew and Urban Outfitters have successfully used third party brands in their assortments. Conversely, Abercrombie & Fitch also is exploring whether to sell its branded merchandise to other retailers. This deviation from the vertically integrated retail model is still a topic of discussion rather than a planned initiative, though again retailers like J. Crew have used this distribution model to gain traction in new markets. Separately, the company is testing made-for-outlet test sites, one each in Seattle and Kent, England. Historically, Abercrombie & Fitch has used outlets as a clearance vehicle. According to CEO Mike Jeffries, “We are opening more test stores over the next couple of months. We’re looking at this as a real potential in terms of the business, but we have to be very sure about the results” before rolling out the format. Although Abercrombie & Fitch clearly has a lot of work ahead to reignite sales growth, Planet Retail is growing increasingly encouraged by management’s willingness to embrace change. Already this year, the company has engaged an analytics provider to help with assortment planning, brought in new board members and reduced Jeffries’ span of control. These additional initiatives suggest that Abercrombie & Fitch is now ready to enact some real change.
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