To follow is a brief review of retail news from around the world:
February 1 – Temasek, Others Plan to Sell Stake in Indonesian Retailer Matahari
Major shareholders, including Singapore state investment firm Temasek Holdings Pte Ltd., are planning to sell their stake in the Indonesian retailer Matahari in a deal that could value the company at as much as $1 billion, people familiar with the process said. PT Matahari Putra Prima Tbk.—one of Indonesia’s largest listed supermarket retailers, with nearly 300 stores—is 50.2% owned by Indonesian tycoon Mochtar Riady and his family through their company PT Multipolar Tbk. Temasek owns a 26.1% stake, acquired in 2013 for $300 million. A spokesman for Multipolar said the company had received strong interest from a number of parties in its stake in Matahari and is evaluating the proposals with the help of a financial adviser. For additional reading, visit WSJ.
February 6 – Alibaba opens Australian HQ
The online retail giant has opened a new office in Melbourne, with a remit to oversee sourcing and operations in both Australia and New Zealand. The new office is Alibaba’s first expansion into the region, with personnel positioned to source and promote products, which are becoming increasing popular with consumers in China and South East Asia, from both countries. Alibaba will also use the new office to better facilitate the supply of goods to markets in Asia in which it operates, having also signed a memorandum of understanding with Australia Post to improve logistics between Australia and China. It is also understood that the relationship will be used to develop an Australian shop on the Lazada marketplace in South East Asia, of which Alibaba are the majority shareholder. For more, see Retail Analysis.
February 7 – Warning Signs Mount on Sears
The clock is running out on Sears Holdings Corp.’s turnaround. The struggling retailer bought some breathing room through moves to raise more than $1.5 billion in recent weeks, but investors are growing increasingly doubtful that Sears will ever get back on track. The cost of insuring the retailer’s bonds hit new highs and its stock price continues to tumble falling 5% Monday to close at $6.52, an all-time low, signaling fresh concerns about the retailer’s future. For additional information, go to WSJ.
February 7 – Metro Group Reports Slight Increase in Q1 Like-For-Like Sales
The Cash & Carry business saw sales decline by 0.3% to €8.02bn, which was influenced by currency fluctuations. On a constant currency basis, sales were up 0.7% like-for-like. Positive sales growth was driven by Spain, Turkey and China. Delivery sales rose by 16.5% and now account for 12.7% of total sales. The acquisition of France-based distribution company Pro ȃ Pro, from Belgium-based Colruyt, was completed during the quarter, strengthening Metro’s French wholesale business. For the full year, Metro remains confident it will achieve its forecast, expecting to see sales and like-for-like sales increase slightly. For additional reading, go to Retail Analysis.
February 7 – UK Retail Sales Get Slow Start to 2017
The latest release from the British Retail Consortium Retail Sales Monitor (BRC-RSM) shows that UK retail sales grew by just 0.1% in January 2017, with like-for-like sales negative on -0.6%. The slowdown from the more buoyant trend seen at the end of 2016, above all affected non-food categories, with declines seen across many. Online sales in the non-food sector of retailing still saw significant growth in January 2017 at +8.0%, but this is notably below the longer term average, which over 12-months now stands at 9.5%. Moreover while store sales have progressively fallen, online sales are now providing the critical channel of growth across the non-food sector as a whole. The online share of sales is now well established at over 20%, and the three-month average for participation in the November to January period was 24.9%. Further details at Retail Analysis.
February 8 – Walmart increases China Ecommerce Investment
Walmart has increased its stake in JD.com from 10.8% to 12.1%. This further increase in Walmart’s stake in the business comes following a doubling of its stake last October. Walmart formed a strategic partnership with JD.com last June, which saw it take a 5% stake in China’s second largest ecommerce operator as part of a wide range of business activities, covering online and offline retail. For Walmart, this alliance expanded its opportunity in China’s ecommerce market. For further reading, visit Retail Analysis.
February 9 – Waitrose to Close Stores & Restructure Roles
Waitrose has announced that it plans to close up to six stores and will streamline its store management structure as it responds to market challenges. The move follows the decision last September not to develop seven new sites. Simultaneous to the store closures, Waitrose has announced that management jobs are at risk as it works to reduce its number of department managers in its stores. Under the proposals these department manager roles will be replaced by a new deputy store manager in its 350 UK stores. This will mean around 180 jobs are lost. The news follows a warning last month from parent John Lewis Partnership that this year’s annual staff bonus will be significantly lower following a 58% fall in half year profits in the six months to July 2016. For additional reading, see Retail Analysis.
February 9 – Target to Double Neighborhood Store Network by 2019
Target, who currently operates 32 neighborhood stores in the US, plans to open 33 further neighborhood stores by 2019. The move is part of Target’s strategy to grow with small-box in dense urban markets or on college campuses. Target is also bulking up on neighborhood stores in the Chicago market. The recent Chicago neighborhood openings are part of a new high-priority game plan at Target to grow in dense urban markets with stores featuring a carefully curated array of merchandise designed to meet the needs of customers making quick runs to the store. For more, go to Business Journal.
February 10 – Walmart continues to Downsize in Brazil
US retailer Wal-Mart closed five stores in Brazil in recent weeks, three of which were located in the state of Rio Grande do Sul, according to publication O Estado de Sao Paulo. Among the banners affected are Nacional (a local network of supermarkets that was acquired by Wal-Mart in 2005) and Todo Dia (neighborhood stores). The company also dismissed employees in the commercial and administrative areas, with the total number of dismissals in retail and HQ expected to reach 300, sources told the local daily. The latest cuts came despite the fact that the US retailer reported positive data for Brazil in its latest balance sheet for the third quarter of 2016. Although operating profit decreased, sales grew 8.1% between July and September, while customer store flow grew 0.5%. For more, go to European Supermarket Magazine.
February 10 – Dollar General Plans to Open 1000 New Stores
US discount retailer Dollar General plans to open 1000 stores and two new distribution centers in 2017. The company is focusing on a new smaller-store format which will trade under a different brand, DGX. The first of these stores has opened in Nashville, Tennessee. With a 3400 sqft footprint, it targets urban shoppers with what the company describes as “a convenient, easy-to-shop format”. The merchandise mix is geared toward instant consumption and includes a soda fountain, coffee station and grab-and-go sandwiches. Additional info at Inside Retail.
February 13 – Tramontina has arrived in Colombia with its own flagship store
With 106 years of experience, Tramontina has arrived in Colombia. The Brazilian company, specialized in tools for the kitchen, owns 10 factories in Brazil and produces more than 18,000 differentiated products in different categories. Tramontina is a brand originally from Brazil, specialized in cooking utensils and perfect for lovers of gastronomy. The company arrived in Colombia, with the mission of “delivering quality products that make life easier for people”. The first of its stores is located the new shopping center Parque la Colina and has domestic utilities, kitchen equipment, tools for agriculture, garden, industrial maintenance, civil construction, electrical materials, also wood and plastic furniture. “We bring a format that arrives for the first time to Colombia, the products are divided into nine ‘worlds’: Prepare, Celebrate, Serve, Ambient, Thematic, Cut, Equip, Kids and Design Collection, where the client can find from the cover Your table as the dishwasher for your kitchen, “explained Clovis Tramontina. For further reading (in Spanish), see Diario del Cauca.
February 15 – Walmart Mexico Profit Rises 23% in 4th Quarter
Net profit at Walmart de Mexico SAB rose 23% in the fourth quarter on higher sales and cost control efforts. Mexico’s biggest retailer, which also runs stores in Central America, on Wednesday reported net profit for the October-December quarter of 10.4 billion Mexican pesos ($514 million), compared with 8.5 billion pesos a year earlier. The quarter closed a solid year for Walmex, as the unit of Bentonville, Arkansas-based Wal-Mart Stores Inc. is known. Full-year sales grew 12% from 2015, thanks to strong household consumption in Mexico, where employment and wage growth were coupled with low inflation, and to gains in Central American currencies against the Mexican peso. Additional reading at WSJ Online.
February 17 – Alibaba Tipped to Buy RT-Mart China
Chinese eCommerce giant Alibaba Group has declined to comment on Chinese media reports that it plans to acquire the mainland division of Taiwan supermarket chain RT-Mart. Stocks for the Sun Art Retail Group, the parent company of China’s RT-Mart backed by Taiwan textile business Ruentex, rose to their highest value in two years following the reports. If the reports prove to be true, it would be wedding the largest eCommerce enterprise in the world with China’s top retailer, says The China Post. A December survey by research group Kantar Worldpanel shows the Sun Art group has about 7.8 per cent of the Chinese retail market share, followed by Vanguard at 6.3 per cent and Walmart at 5 per cent. As well as RT-Mart, Sun Art owns retail chain Auchan. The group has more than 420 supermarkets, 68 per cent of which are rented locations. It plans to expand to 98 more outlets in the next three years, of which 88 are already under construction. Sourced from Inside Retail HK.
February 21 – Walmart’s 2016 in Latin America
Walmart continues to impress in Mexico. Walmart majority owned Walmex continues to lead in the Mexican market, with a variety of formats delivering sales growth ahead of the market. In 2016 overall, total Mexico same store sales growth came in at 8.0%, with Q4 up a creditable 7.9%. Following strong recent trading, again it was Sam’s Club which led the way, followed by supercentres, Bodega Aurera and finally – though still ahead of the broader ANTAD market growth – its more premium Superama format. By region, it was the North of Mexico that performed best, though all regions showed a good level of growth. Online was a highlight, with total growth of 27% across the Walmex business in Mexico and Central America combined. Central America on a positive track. Walmex also operates in several Central American markets, and while growth of the Bodega format may be now slowing slightly in Mexico, where it’s now a relatively mature format, it remains very much the key driver of growth across Walmex’s Central American operations. Across broader Central American operations, same store sales growth came in at 4.9%. While Nicaragua was the standout market, even more mature markets such as Costa Rica continued to deliver solid growth. Brazil remains difficult. Q4 brought a more sluggish performance than earlier quarters: same store sales did nudge upwards, but only marginally, marking a different kind of performance to the more positive returns of the previous two quarters. Walmart called out Sam’s Club and its Maxxi atacarejo (cash & carry) business as the strongest performers – the challenge in Brazil is that its atacarejo presence remains much smaller than those of key rivals such as Carrefour and GPA, both of whom are using the format to drive substantial wider growth in their Brazilian operations. Taken from Retail Analysis.
February 23 – Wayfair Shares Fall as Retailer Gives Downbeat Revenue Guidance
Online home-goods retailer Wayfair Inc. gave a downbeat view for revenue in the first three months of 2017, even as the company said the top line jumped 33% in the fourth quarter amid more active customers using its website. Wayfair said it expects direct retail revenue of $890 million to $910 million in the first quarter, up between 25% to 28% from the prior-year quarter. That’s much slower growth than the 40% year-over-year growth the company posted in the fourth quarter. Michael Fleisher, the company’s chief financial officer, seemed to hint that the guidance was conservative, saying on a conference call Thursday that “we aim to set guidance in a prudent fashion that takes new account that we are in a mass market consumer business, where customers need to show up every day.” Direct retail revenue, which consists of sales generated mainly through the sites of Wayfair’s five brands, increased 40% to $959 million. Wayfair said 43.3% of total orders delivered for its direct retail business were placed via mobile devices, up from 36.4% in last year’s fourth quarter. From WSJ Online.
February 24 – Philippines Leads Rise in SE Asia Consumer Confidence
While consumer confidence in the Philippines, Thailand and Vietnam is strong, this is not so much the case in Singapore and Malaysia, according to a new Nielsen survey. Its Global Survey of Consumer Confidence and Spending Intentions shows the Philippines confidence index rose from 119 to 132 last year, the highest increase in the Southeast Asian markets studied. Thailand came in second with a five-point increase to 110, followed by Vietnam with a three-point increment. Consumer confidence levels above and below a baseline of 100 respectively indicate degrees of optimism and pessimism. Malaysia and Singapore were exceptions in Southeast Asia, with confidence levels below the baseline. Vietnam and the Philippines had robust GDP growth of 6.7 and 6.6 per cent respectively in the last quarter of last year. In terms of specific confidence indicators, the Philippines had the highest increase in spending intention across the region (up eight points to 60 per cent) and job optimism (15 points up to 87 per cent). It had a five-point increase in optimism about personal finance, to 86 per cent. For further reading, go to Inside Retail.
February 27 – Two Retailers, One Big Worry – Border Tax
Two retailers moving in different directions have at least one thing in common: They are terrified of a border-adjusted tax. Target Corp. and Best Buy Co., both set to report earnings this week, are among a group of retailers that sent executives to meet with President Donald Trump earlier this month, lobbying against higher taxes on imports. They are likely to speak out against Mr. Trump’s plans in their respective analyst calls. Retailers have plenty to lose should the Trump administration act on its plans, mainly because many rely substantially on imported wares. Mr. Trump, who is scheduled to speak before a joint session of Congress on Tuesday, has said the plan would operate like a tax on the trade deficit. It also could act as one on retailers, though, forcing them to raise prices and lose some customers. For further reading, see WSJ Online.
February 28 – JD.com Opens Brick & Mortar Stores
JD.com, China’s second largest ecommerce platform, has opened three offline stores, following Alibaba and Amazon. JD.com currently has three bricks-and-mortar stores, all of which are located inside the stores of Yonghui, its strategic partner. Two of the stores are located in Beijing, and the other one in Chongqing. These stores are about 20 sq.m with three to four staff providing assistance to customers. It carries a variety of items sold on its website, including consumer electronics, cosmetics, healthcare products and JD.com gift cards. It also offers QR codes for consumers to scan and purchase the items online. See Retail Analysis for more info.
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