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31
Jul-18
Tuesday

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

22
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.
30
Jul-18
Monday

Court approves Oroton DOCA

10
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?"

Online retailers grapple with low trust rating

22
The Herald Sun reported on the findings from the first annual Australian Consumer Trust Index, which assessed how consumers rate businesses to do right by them. The project leader noted that "public trust in institutions, including businesses, is at an all-time low." In retail, the study showed that supermarkets and pharmacies are the most trusted verticals, while online-only stores are deemed untrustworthy due to perceived product inferiority and information security vulnerability. This data reinforces the relevancy stores still have in retail, and many pureplay retailers, including Amazon, have recognised that having a brick-and-mortar presence reinforces their online efforts.
27
Jul-18
Friday

Australia’s best performing e-commerce websites

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Inside Retail reports that JB Hi-Fi is Australia’s most visited e-commerce website, according to a new study. The retailer drew in 74.02 million visitors to its site between January and June. Bunnings.com.au was second with 68.87 million visitors and Woolworths.com.au third with 53.65 million visits. However, when you add international players to the mix the results look very different. Ebay.com.au attracted 404.67 million visitors for the same period, Amazon.com pulled 111.82 million, more than double the 52.44 million visitors to Amazon.com.au marketplace.

FANG takes Wall St on a bumpy ride

13
Reuters reported on Wall St's wild day yesterday with Facebook shares suffering the biggest one-day wipeout in US stock market history following executives forecasting years of lower profit margins. Facebook shares closed almost 19% down at $176.26, wiping more than $120 billion off the company's value. However, Wall St found relief after Amazon.com's quarterly results beat estimates, sending the online retailer’s stock to a record high and alleviating fears of deepening troubles across the FANG group (Facebook, Amazon, Netflix, and Google). Amazon said it expects an operating profit between $1.4 billion and $2.4 billion, up from $347 million a year earlier. Analysts were expecting around $843 million.
26
Jul-18
Thursday

Gimmicks Max

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We just learned that Coles will be introducing a premium subscription to its Flybuys loyalty program, which will offer discounted groceries, free home delivery, and access to online video streaming. Known as ‘Flybuys Max’, the program is currently being tested with a small group of members before the subscription is rolled out nationally. Apparently, the membership will cost $10 a month or $99 a year and will entitle members to a 5% discount on all fresh produce at Coles supermarkets. We struggle to see how further increasing the cost base can help a business, which is already too expensive to run.

Confusing Aldi with Coles

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Inside Retail reported that Dick Smith Foods will be closed due to increased competition from German-based discount supermarket Aldi. Dick Smith said that problems have arisen because Aldi’s “method of business is ‘not sharing the wealth’ - they do this by having less and less staff, and Coles and Woolworths will have to match that; They’ll have to put off a tremendous amount of staff so they can get their overheads down to compete with Aldi.” Dick Smith has missed the key point: the problem is not with Aldi but with Coles and Woolworths. Aldi didn’t cut any staff – they just don’t need so many people because their business model is based on Operational Excellence.

Cotton On's e-commerce journey

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During the 2018 Online Retailer conference in Sydney, Cotton On Group's GM of E-commerce (Brendan Sweeney) shared key data about the recently launched and highly successful Perks loyalty program, now rolled out worldwide. By linking the underlying technology from Retail Directions with their website, Cotton On was able to set up the program "within a couple of months". Over 3 million customers have joined the scheme in 2018. The Perks program is another powerful tool in Cotton On's multi-channel journey, following the previously deployed 'Store to Door' service, also supported by the Retail Directions platform. Brendan pointed out that 50% of in-store customers who use the service convert into multi-channel customers.  

Grocery wars in the UK

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The Daily Mail reported that Tesco has decided to launch a chain of discount shops to take on cut-price retailers Aldi and Lidl at their own game. Apparently, 60 locations have been earmarked to be rebranded. On the surface, the move is understandable, as Aldi and Lidl have doubled their share of the UK grocery market to almost 13% in five years. However, in our experience, running an operationally excellent, discount retail chain requires a totally different culture. We can't see how a business, which doesn't have such a culture at present, could suddenly acquire it overnight.
25
Jul-18
Wednesday

The mystery of AI resolved

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We have been attending Online Retailer conference in Sydney and one of the recurring topics is AI and its likely impact on retail and the society in general. We have sensed considerable confusion regarding the meaning of the term and the perceived capabilities of this fascinating technology. Retail Directions' delivered a keynote address to clarify the essence of AI, what are the pre-requisites to deploy it in a retail enterprise, and what it can do for retailers. Monitor www.retaildrections.com Insights section for a full briefing - coming soon!