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Lidl flops in the US

Forbes reported on Lidl's poor performance after entering the US market in 2017. At the time, Lidl's promise was to convince US consumers to "Rethink Grocery" and to open 100 stores by the summer of 2018. The grocer was viewed as a threat to the incumbents - Kroger, Albertsons, Walmart and regional grocery retailers. However, 12 months down the road and Lidl has only opened 53 stores and has failed to achieve anything close to a viable, long-term business strategy capable of gaining enough market share to destabilise its competition. The article asks the obvious question - how is it possible that a retailer operating 10,500 stores in 28 countries, with a reputation for being one of the best grocery retailers in the world, could fall so short in the US market? Lidl's business model just doesn't work in the States and the business is yet to adjust. Lidl's results confirm that entering the retail space in the US remains a big challenge, even for excellent operators.

The alternate universe of offices

The Hustle reports that a recent study out of Harvard Business School has found that open plan offices are actually bad for business, decreasing face-to-face colleague interaction by 72%. According to the article, the HBS study is one of many that delivered similar findings. For example, open office plans result in an average 15% decline in productivity, a 50% increase in the likelihood of getting sick and an increase in the number of distractions per hour. Open plan workspaces may be trendy and inexpensive to set up, but it looks like these "benefits" don't come cheap for businesses in the long run.

2018 iPhone models to come in five colours

27 reported that Apple analyst Ming-Chi Kuo's latest intel says the new 2018 iPhones will come in a plethora of colors. The 6.5-inch phone will be offered in black, white and gold. The entry-level 6.1-inch LCD iPhone will apparently debut in “grey, white, blue, red and orange”. According to the report, the 6.5-inch OLED iPhone model will be priced around US$1000, like the current iPhoneX, and will feature dual-SIM capabilities. The 6.1-inch LCD iPhone X style device will retail for around US$700. Like always, it will be interesting to see what Apple unveils later this year.

Aldi now Australia's most trusted brand

Inside Retail reports that a survey by research firm Roy Morgan has revealed that German supermarket giant Aldi has claimed the mantle of Australia’s most trusted brand. Aldi outperformed local rivals Coles and Woolworths, neither of which placed in the top 10 due to low trust ratings. Aldi also outperformed the likes of Qantas, Bendigo Bank, Bunnings Australia and Kmart. Roy Morgan's CEO echoed the sentiments we have long held about the grocery sector stating, “Aldi’s ability to excel at its core competencies has built a level of trust in the Australian market without at the same time attracting the degree of distrust seen by its rivals.”

Reports of retail death have been premature

The Washington Post published comments about a Bloomberg report, reflecting on specialty apparel and department store stocks being battered in recent years, as a steady stream of store closings and online competition put their future in doubt.  Recently, this trend has been shifting and analyst now started to rank some of the retail stocks as 'buy'.  According to Bloomberg, many big names in the clothing business have better days ahead because they’ve made some "underappreciated progress in solving some important problems", such as ... getting better at inventory control and shortening merchandise buying cycles.  Such measures make sense, but what we don't understand is why did this qualify as news?  Effective buying and accurate inventory control are retail 101.  Anyway, it is good to hear that not everything within the retail industry is doom and gloom.

Japanese retailers around the world

Nikkei Asian Review commented on the international expansion of Japanese retailers - around 14% have operations outside  Japan.  They target mainly Chinese and the US markets; only about 20% of the expanding companies look at SE Asia.  Around 70% of the Japanese retailers who operate internationally are pleased, or at least comfortable with their results.  The biggest challenges encountered relate to finding regional partners and adopting local management styles.  We can imagine how hard the latter must be for Japanese corporations.

99-year-old Godfreys owner taking the fight to social media

The AFR reports that 99-year-old Godfreys owner John Johnston has instructed CEO John Hardy to take the fight for the business's resurgence to social media and beyond. The retailer will stop trading on the ASX at the close of today, as it ends an awkward chapter after nearly four years as a listed company. The newly restructured company will take a more aggressive and progressive position in the market, already launching an advertising blitz, which generated some positive momentum. It will be intriguing to see if the limping business can be turned around.

US shopping malls are emptying out

The Wall Street Journal reports that shopping malls in the US are the emptiest they have been in six years, with a vacancy rate of 8.6% in the second quarter. According to research from Reis Inc, the high vacancy rate is due to more consumers shifting to online shopping. Retailers such as Bon Ton, Sears, J.C. Penney and Toys “R” Us have all announced store closures this year. But, the main reason is not that Americans have abandoned brick-and-mortar for online merchants. The US simply has far too much retail space per capita - one of the highest globally. Stores still play a major role, with many pureplay retailers now recognising that having a brick-and-mortar presence reinforces their online efforts, including

Retail sales lukewarm

An article in the AFR details the latest retail sales figures in Australia. Amid all the metrics mentioned, we were again disappointed with the way the data is represented. Retail sales statistics compared to the month before makes no sense and distort the real story. In retail, the only material measure is year-on-year corresponding period comparison.  In this light, the only meaningful figure noted in the report was the sales data for May, which shows a lukewarm rise of 2.4% from the same period in 2017.

Bapcor a front runner in Kmart Tyre & Auto acquisition

The $1.8 billion automotive parts group, Bapcor is a front-runner to acquire Kmart Tyre & Auto from Westfarmers according to an article in today's AFR. Kmart Tyre & Auto, which operates 250 outlets, is expected to fetch approximately $300 million. According to Bapcor CEO Darryl Abotomey, the business is approaching the opportunity from a clinical viewpoint. Another potential buyer for Kmart Tyre & Auto is GPC Asia Pacific, the parent company of Repco. The AFR reported on 3 July that 3 bids were due for the retailer by end-July.

Outlook for Metcash is grim

Times are seriously tough for grocery wholesaler Metcash, according to an AFR report. The article outlines the details of a $125 million off-market buyback, which will reduce the business's issue capital by about 5.3%. The move comes after supermarket chain Drakes' announcement in May that it will leave the Metcash supply chain, the growing strength of Aldi in key markets, and continued fierce competition from Woolworths and Coles. Fund managers warn that Metcash faces serious strife over the next 5 years. Across grocery and pharmacy, there is an interesting wholesaling shake up down under.

Afterpay shines on the sharemarket

The AFR reports that Afterpay founder Nicholas Molnar has become one of Australia's ten wealthiest self-made individuals, with a $200 million fortune fuelled by the rapid growth of the buy now pay later service. Afterpay boasts more than 1.8 million customers and is growing at around 3,300 new customers per day. The business has 14,000 retailers on its books, flights on Jetstar are next, and it has now cracked the US market after cutting a deal with Urban Outfitters. AfterPay shares have enjoyed a bullish rally of 220% over the past year. Despite a few regulatory headwinds, the growth trend looks set to continue with Goldman Sachs analysts believing that the risks for a material change to its business model are minimal.