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3
Aug-18
Friday

Explosive mixture

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The AFR released interesting information about Coles’ plastic bags debacle. Apparently, the ban (introduced on 1 July) has impacted sales and EBIT. Now that Coles has decided to provide free reusable bags to repair the damage, the media went into a hysterical spin, levying heavy criticism on Coles for backing out. Yet, the AFR revealed that a mere 5,000 people signed a petition demanding the re-introduction of the ban and Coles boycott. Arguably an immaterial group, but highly vocal. A lesson here for retailers: it rarely pays to mix politics and contentious issues with business. After all, Coles’ number one objective should be to supply groceries.
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Aug-18
Thursday

Instagram building direct shopping through app

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The AFR reported that social media network Instagram is considering introducing a way for consumers to shop directly through the app. With more and more consumers, businesses and advertisers flocking to the platform, the introduction of direct shopping would be a boost for retailers. Instagram topped 1 billion users in June and analysts predict it to be generating US$22 billion in revenue by 2020.

News from the US

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The Dallas Morning News reported that Rodd & Gunn will be opening its first store in Texas, continuing its retail expansion in the US.  founded in 1946, the business operates in 100+ locations around Australian/New Zealand, and it also sells through 66 Nordstrom locations.  Retail Directions are proud to be a part of Rodd & Gunn’s journey, providing core systems for the business around the world.

Zara to start shipping online orders from stores

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The Wall Street Journal reported that Zara will roll out its ship-from-store system to around 2,000 stores in 48 countries, including the US, making it one of the largest-scale attempts by an apparel company to repurpose downtown shops to help fulfil online orders. Zara expects better stock availability and faster deliveries as a result. However, such fulfilment models come at a price: they impact store stock holdings (usually carefully crafted to meet the demand of walk-in customers), they require packing facilities within the stores, and they create additional workload in the stores. It goes without saying, that in order to be able to route customer orders to the right fulfilment store, the business must have precise information about stores' stock on hand - in real time. Not many retailers can boast this.
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Aug-18
Wednesday

The writing was on the wall

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Inside Retail reported that Coles has decided to reverse a decision to stop providing free plastic bags to shoppers. The grocer said some consumers need more time to adjust to the switch to buying reusable bags. Coles was meant to stop providing its reusable Better Bags for free on August 1 and start charging customers 15 cents per bag, but has now backflipped on that decision and appears set to provide them indefinitely. The plastic bag saga has several facets to it: calculations by the Queensland University of Technology estimate that an extra $71 million in gross profit is on the table for Coles and Woolworths from the sale of 15c bags, money Coles is now walking away from (for the time being), while experience from other countries clearly shows that switching to multi-use bags does not help the environment.

Fast moves to make out-of-state retailers collect tax

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Less than six weeks after the US Supreme Court's landmark decision in South Dakota v. Wayfair, more than half of US states with a sales tax have taken steps toward compelling out-of-state retailers to collect and remit sales and use tax.  It's good to see the playing field being levelled for all retailers.

Not everything on the web comes for free

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Law360.com reported that a Delaware federal jury on Friday awarded IBM Corp. more than US$82.5 million after finding Groupon Inc. infringed four e-commerce patents that date back to the early days of personal computing. Jurors returned the verdict following approximately six hours of deliberations in a Wilmington courthouse and found that Groupon willfully infringed the patents. The US$82.5 million that IBM was awarded is about half of what it had sought in the case. Two of the patents came out of the Prodigy online service, which started in the late 1980s and predated the Web. Another is related to preserving information in a continuing conversation between clients and servers. The fourth is related to authentication.
 
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Jul-18
Tuesday

Appearance of Intelligence

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The AFR published a few articles today, covering the topic of 'Artificial Intelligence'. They included comments such as "the local business sector is well behind foreign competitors", "totally unprepared" and "we have to catch up". CSIRO's CEO was quoted urging businesses to think carefully about how to "invest savings from new technology". There was also an article about 'ethical' AI development. Unsurprisingly, none of the articles explained what AI stands for. It is disconcerting to see so much debate about a topic that is so poorly understood. To correct this, during last week's Online Retailer conference Retail Directions clearly defined the concept and debunked the myths that surround AI and its use in business, particularly in retail. We will soon be publishing the proceedings of our AI session - watch this space!  

Rideshares make traffic worse

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According to a report in The Hustle, a recent urban transportation study has found that Uber, Lyft, and other ridesharing platforms actually make traffic worse in urban areas, not better. Contrary to claims that rideshares reduce traffic by encouraging passengers to leave personal rides at home, the study found that sharing a ride adds an extra 4.1km driven for every 1.6km of personal driving reduced. Overall, 60% of rideshare users would have walked, biked, used public transport or skipped the trip if they hadn't gotten an Uber or Lyft. In recent times, both Uber and Lyft have started buying bike and scooter companies aplenty - maybe they see the writing on the wall?

Not everything at Lidl runs smoothly

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CIO.de reported that for the past seven years, Lidl has been working to replace its old merchandise management system with an SAP system based on HANA technology, but the initiative has now been cancelled.  Lidl stated that the project goals were “not achievable with justifiable effort”. So far, according to expert opinion, the project has consumed more than half a billion euros (nearly A$800 million).  Now Lidl apparently wants to revive its old system. We have always warned that three fundamental mistakes handicap retailers when it comes to systems: choosing the wrong architecture, opting for a non-retail-specific application, and spending too much money. We have heard about more expensive IT projects, but at A$800 million this must be a record in retail.
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Jul-18
Monday

Court approves Oroton DOCA

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Inside Retail reports that accessories retailer Oroton has been given leave by the Supreme Court of New South Wales to transfer all of the company’s issued shares to Manderrah Pty Ltd at the previously agreed value of nil, fulfilling part of the Deed of Company Arrangement (DOCA). The accessories retailer entered into the DOCA with Manderrah in April in order to secure the future of the business, which fell into administration last November due to declining sales and high rental costs. Privatisation now frees the struggling retailer from the demands of the sharemarket, allowing it to focus on its long road to recovery.

Anti-trust pressure mounts for tech giants

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The AFR reported that the size of the tech giants, such as Google and Amazon, is becoming a problem in terms of fair competition. On Thursday, Amazon reported a revenue jump of 39% to US$52.9 billion (almost double analyst predictions) for the quarter ending June 30. A few days earlier, Google's parent company Alphabet posted quarterly revenue of US$32.7 billion. For perspective, BHP has annual revenue of around US$50 billion. Now it seems like the regulators are closing in. This week, a prominent Amazon critic named Lina Khan joined the office of the US Federal Trade Commissioner as part of the office's increasing scrutiny of tech companies from a competition point of view. Khan's central question will be: how do competition laws need to change to reflect the "realities of how dominant firms acquire and exercise power in the internet economy?"