FROM THE DESK OF DEBORAH WEINSWIG

This week, we had the opportunity to meet some amazing startups at the AIA Accelerator (Powered by Nest) Day, which was held at Hong Kong’s cool PMQ complex, a former police dormitory that has been turned into a creative hub full of small, hip clothing boutiques.  The event was a combination mini-trade show and pitch session featuring eight promising startups, all focusing on the general topic of health. What is AIA and why healthcare? AIA is the largest insurance company in Asia, having spun off from US parent AIG following the global financial crisis. AIA was a sponsor of the event and a supporter of the companies, which just graduated from the Nest accelerator program in Hong Kong. Although insurance companies are typically very conservative and do not invest in risky startups, AIA developed a good relationship with Nest and also has an interest in promoting health and healthcare. Many of these companies were launched based on experiences from the founders’ lives, and this passion was reflected in their pitches. The startups we met were: Advanpro has developed a high-tech fabric whose electrical characteristics change when stretched, and its first application is a strap that monitors breathing. The device can be used to monitor breathing activity when sleeping, including diagnosing sleep apnea. Future applications include the fabric’s integration into belts, shirts, bras and footwear. Auomeo uses a hardware-software combination to compensate for hearing loss and deficiencies in hearing sounds of certain frequencies. Its product consists of a hardware module about the size of a matchbook and a smartphone app. You create a personalized hearing profile for both right and left ears by listing to a series of tones (like a hearing test), and then the system adjusts the audio from music, TV, cellphones to fit your profile. In our test in a noisy room, music sounded much clearer and cleaner than without. The product will be available via crowdsourcing on June 9 for $99. Heartisans uses the combination of a heart monitor and data analytics to predict a heart attack before it happens. Patients’ survival rates increase dramatically if they receive CPR or defibrillation soon after suffering cardiac arrest, and the device can suggest measures to take immediately to help fend off an imminent heart attack. Moreover, the company maintains a cardiologist on call to advise patients. The monitor can also detect heart problems such as congestive heart failure. Prenetics uses pharmacogenomics to analyze our DNA to determine the proper dose of drugs, including those that are ineffective or cause unacceptable side effects, and many adverse effects are caused by improper dosing. The US Food and Drug Administration (FDA) has outlined 130 drugs whose dosage should be modified by pharmacogenetics. Sanwa Biotech makes a small-sized lab-on-a-chip reader that can sit on a desk in a doctor’s office. It enables rapid diagnoses in the doctor’s office or clinic, eliminating the need to send samples to the lab and wait for them to be processed. Tests can be run in 15 minutes and the company claims they are more than 90% accurate. Sensible Dynamics makes a sport sleeve that is worn on the ankle to reduce sports injuries. The device leverages Big Data, the Internet of Things, and digital health. We saw demos that used the sleeve, which contains gyroscopes and accelerometers, to monitor an athlete’s form while training or exercising. Shape is a device the size of a bathroom scale that optically scans your body shape in 3D and stores this data in order to track weight loss and muscle gain, as compared to weighing oneself with a scale or other methods to track body composition. The target market is the USA, specifically California, where weight loss and improving one’s physique are large market opportunities. Simple Wearables makes a band worn by grandma that senses where and how hard if she has a fall and determines the severity of her injuries. The product is based on the founder’s own experience, where his grandmother fell and refused medical attention, only to die soon after. The product is currently being tested in the Philippines and will be priced at $150 initially plus $24 a year. These startups all share one quality—the passion of their founders—many of whom created them so that others will not have to go through some of the negative experiences that happened in their own lives. It shows that one can do good while doing well, and the support of AIA is a strong validation of the likelihood of startups’ bright futures.

• Year over year EU retail sales growth remained steady at 2.0% in April, according to new data from Eurostat.
• The EU total was boosted by 4.2% year over year growth in German retail sales as well as 3.1% growth in Spain and 3.6% growth in the UK.
• French retail sales fell 0.1% year over year.

US RETAIL TRAFFIC

Through May 23, 2015 Source: ShopperTrak

• Overall store traffic in May was 2.8% weaker than last year’s. Weekly traffic in the week ended May 30 declined by 2.1% year over year, representing the fourth consecutive decline.
• Apparel and electronics store traffic declined by 1.8 % and 1.5%, respectively.
• Last year, traffic in April declined by 6.7%.

US REGULAR GASOLINE PRICES

Source: US Energy Information Administration

US RETAIL EARNINGS

Source: Company reports

US RETAIL HEADLINES

Amazon to Add Food Private Label (May 28) Wall Street Journal

• Amazon sought trademark protection for categories under its Elements brand, including coffee, soup, pasta, water, vitamins, dog food and household products.
• Private-label packaged goods were worth $120 billion in the US in 2014, or 18% of total package goods market share. Amazon is increasing its presence in online grocery, including fresh grocery delivery.

Online Beauty Subscription Company Ipsy Opens Studios (May 29) Women’s Wear Daily

• The owner of Ipsy, YouTube beauty blogger Michelle Phan, has opened a new studio for beauty content creators.
• Ipsy Open Studios is the next phase of the previous Ipsy online beauty community founded in 2011. Ipsy currently has over 1 million subscribers in the US and Canada.

Walmart to Raise Department Managers’ Wages (June 2) Associated Press

• The big-box retailer is raising wages for over 100,000 department managers in its deli and other specialized departments in the US. These managers are currently paid $13 to $24.7 per hour.
• The largest private employer has been under fire from labor-backed groups. This raise follows the announcement in February that the company will increase minimum wages for entry-level and long-term hourly employees to at least $10 an hour.

Amazon Introduces Free Shipping with Any Order (June 2) Bloomberg News

• This new initiative applies to thousands of items like makeup, mobile phone accessories and earplugs, and is available to Prime and non-Prime customers.
• The free delivery will take four to eight days from a new shipping hub in Florence, Kentucky.

ASIA HEADLINES

JD.com Launches New Imported Goods Platform Japanese Mall (Jun 2) Enterprise Innovation

• com recently launched the Japanese Mall, a new channel on its cross-border platform dedicated exclusively to sales of authentic imported Japanese products.
• JD Worldwide also hosts French Mall and Korean Mall, both of which launched earlier this year, and the company said it would continue seeking opportunities to offer channels dedicated to other countries’ products in response to customer demand.

Chinese Travel Site Qunar Nabs $500M Investment, Refuses Ctrip’s Acquisition Offer (Jun 2) TechinAsia

• Qunar, one of China’s biggest travel booking sites, announced that it has secured a strategic round of funding worth US$500 million led by Silver Lake, a global tech investment firm.
• After declining Ctrip’s offer on June 1, the company clarified that it remains open to engaging in further discussions with Ctrip as well as other strategic players in the sector that may benefit Qunar and its shareholders.

Wearables, 3D Advances in Spotlight at Asia’s Biggest Tech Fair (Jun 1) The Australian

• The distinct markets around 3D scanning, 3D cameras, 3D printing and their representations using augmented reality are converging. Scanning an object in front of a computer display and creating a file that can be sent straight to a 3D printer will be possible.
• Research firm IDC estimates the number of wearable devices shipped globally will grow from 19.6 million units in 2014 to 45.7 million units this year. By 2019, shipments will reach 126 million units.

China’s Smartphone Market is Almost Saturated—So What Happens Next? (Jun 1) LA Times

• Cellphones represent more than 90% of cellphone sales in China. In the first quarter of 2015, according to IDC, China’s smartphone shipments fell to 98.8 million units, a 4.3% drop from a year earlier, the first quarterly decline in six years.
• In China’s saturated smartphone market, brands other than Apple will realize that they not only need to make more premium models, they need to make those models more attractive to consumers than they have in the last few years.

CyberAgent Ventures Raises New $50M Fund For Startups in Southeast Asia, Opens Co-Working Space in Jakarta (Jun 1) TechinAsia

• Japan-based venture capital firm CyberAgent Ventures announced a new US$50 million fund for Southeast Asian startups, with a strong focus on the Indonesian market. In the past, the firm has invested only in series A Indonesian startups.
• Steven Vanada, VP of CyberAgent Ventures in Indonesia, said the company will be looking into several different new verticals, including edtech, real estate, car listings and fintech, as well as startups that can be classified as “mobile first” or “mobile only.”

Lvmama Scores $80M Funding to Get aLeg Up in China’s Crowded Tourism Market (Jun 1) TechinAsia

• Lvmama, a Chinese tourism booking site, has received RMB 500 million (US$80 million) in series E funding from Jinjiang International Group, according to an internal email leaked to Chinese startup blog 36kr.
• Lvmama is embroiled in an ongoing race-to-the-bottom price war with its competitors. Last month, rival tourism booking site Tuniu received a US$500 million injection from JD, Hony Capital, DCM Ventures, Ctrip, Temasek Holdings and Sequoia Capital.

Klook Looks to Tap Into Asia’s Travel Boom With New Funding (Jun 1) TechinAsia

• Travel activities startup Klook announced that it has secured a US$1.5 million seed investment round. The funding comes from angel investor Wu Xiaoguang, who is Tencent’s senior executive vice president and CEO of its ecommerce wing.
• Klook, which is based in Hong Kong, focuses on selling travel experiences and packages in Southeast Asian tourist hotspots. Besides ticketing for some main attractions in each city, it covers some more unusual and bespoke offerings, like a supercar driving experience on Singapore’s F1 track.

SoftBank Ups Its Stake in Supercell to 73% as Accel Cashes Out of the Mobile Gaming Giant (Jun 1) TechCrunch

• Japan’s SoftBank has upped its stake in the startup Supercell, the mobile gaming giant out of Finland behind blockbuster titles like “Clash of Clans” and “Hay Day,” to 73.2 percent, after buying an additional 22.7 percent of shares from existing external investors.
• For fiscal year 2014, the company reported that it tripled revenues to €1.55 billion ($1.7 billion) versus €515 million in 2013, posting earnings (Ebitda) that more than doubled to $565 million.

China Developing ATM With Face Recognition (Jun 1) ZDNet

• Beijing’s Tsinghua University and Hangzhou-based security company Tzekwan Technology have developed a prototype of facial recognition technology in an aim to help reduce crimes committed using ATMs.
• The Chongqing-based research institute said it had set up the world’s biggest Asian face database with more than 50 million records, and that it believes its app is 99.8 percent accurate. The technology has already been used at border controls and as to monitor employee access.

EUROPEAN RETAIL EARNINGS

Source: Company reports

EUROPEAN RETAIL HEADLINES

Woolworths’ Brand Name Could Soon Be Up for Sale  (June 1) retail-week.com

• Retail group Shop Direct is closing its Woolworths website and will direct existing customer accounts to Very.co.uk, another Shop Direct online retailer. The group purchased the Woolworths brand in 2009 as an online-only business after administrators were unable to find a buyer for the whole of the collapsed chain.
• This move has sparked speculation that the Woolworths brand name could be for sale.

AO World PLC Reports Rise in Total Revenue in End of Year Report (June 1) AOWworld plc Press Release

• Online domestic appliance retailer AO World reported a 23.8% rise in total revenue to £476.7m from £384.9m in 2014. Pretax losses of £2,881m were an improvement on last year’s figure of £7,551m, as were net losses, which fell from £9,573m in 2014 to £2,517m.
• AO World also reported a group operating loss of £2.2m, down from £7.2m in 2014. This was attributed to investments of £4.2m in European start-up operations and Long Term Incentive Plan costs of £2.5m.

Change of Plan and Change of Owner For German Retailer (June 2) wgsn.com

• Within a week after German perfumery chain Douglas announced plans to join the stock exchange, its owner Advent International sold the chain to British investment fund CVC Capital Partners.
• Despite the €2.8 billion deal, there will be no changes in top-level management.

Fitzwilliam Takes Full Control of Iconic Irish Department Store (June 1) wgsn.com

• Fitzwilliam Finance Partners has taken full ownership of Dublin department store Arnotts after acquiring the half it didn’t already own from Apollo Global Management.
• The deal is worth over €100m, with Apollo reportedly making around €55m from the investment.

Carrefour Pioneering After-Work Pickup Locations (June 2) retail-week.com

• French grocery retailer Carrefour announced plans to develop a pickup point in the shared car park of two Belgian companies. The service would enable customers to collect their online shopping after work and avoid the congested areas where the stores are located.
• 7,500 product lines will be on offer as part of the service, and customers can place orders until 11 am.

New Look Mobile Orders Jump 115% (June 2) retailbulletin.com

• Fashion retailer New Look said that m-commerce now accounts for 45% of its online visits. This is just one part of what seems to have been a successful period for the retailer.
• The company saw its revenue increase by 3.4% to £1.41 billion in the 52 weeks to 28 March, while pre-tax profit rose to £50.6 million from £20.7 million a year earlier.

Harvey Nichols Develops New Loyalty Program (June 1) retailbulletin.com

• Luxury UK department store Harvey Nichols developed a new loyalty app after 80% of its customers said they would prefer it to a traditional loyalty card.
• The app will be available to all customers. Members will receive 1 point for every £1 spent in-store and online. The company will treat app users to Champagne, smoothies and even Botox.

Style.com Moving Into British and European Markets (June 2) retaildetail.eu

• CondéNast’s online store, Style.com, will deliver goods to Europe from 2016.
• The company’s webstore, which will launch in Britain in September, will manage the new service. The products on offer will appear in online versions of Condé Nast publications, including Vogue, GQ and Customers will be able to make purchases using the Style.com “buy” button featured in articles.

LATAM HEADLINES

Brazil’s Retail Sales Decline in April (June 3) Latin American Herald Tribune

• Brazilian retail sales declined by 0.9% MoM and by 0.4% YoY in April.
• The figure for the broader market, which includes the automotive and construction sectors, declined by 1.6% MoM and by 0.7% YoY.
• March’s weakness spilled over into April, when seven of ten sectors showed a MoM decline.

LatinAmerican Countries Occupy Six Spots in Top-20 Global Retail Development Index (June 1) Latin American Herald Tribune

• Six Latin American countries—Uruguay, Chile, Brazil, Peru, Panama and Colombia—occupied spots on A.T. Kearney’s 2015 Global Retail Development Index.
• Kearney cited socioeconomic volatility as a factor in Latin America. Retailers took a more cautious approach to international expansion, yet there were few market exits.
• Brazil is an “established market” with 11 to 15 luxury brands; Colombia, Mexico and Panama count as “middle of the pack,” with six to 10 luxury brands each; and “emerging luxury markets,” with up to five brands, include Chile, Peru and Uruguay.

Brazil’s Output Contracts During December-to-February Period (June 1) Bloomberg

• According to IBCR-Br, Brazil’s regional economic activity index, output contracted by 0.6% as compared to the September-to-November period, in which activity expanded by 0.7%.
• Regional growth contracted by 1.4% in the south, where manufacturing was the weakest and where a difficult job market reduced demand across the board.
• In the country as a whole, consumer confidence continues to weaken, the inflation rate is above 8%, and credit is tightening.

Linio Has Approved 20 Companies to Sell on Its Marketplaces in China (May 27) Internet Retailer

• Following Linio’s opening of its first China office last year, 100 Chinese companies have applied to sell on its online marketplaces, and 20 have been approved.
• The company is seeking Chinese companies experienced in selling overseas, with average online purchases of at least $40, due to the $20 cost to ship from China to Latin America.
• Linio, a subsidiary of German e-commerce company Rocket Internet, runs web marketplaces in Mexico, Colombia, Peru, Venezuela, Chile, Argentina, Panama and Ecuador, and its website receives 30 million visits monthly.

Brazil’s Largest Online Retailer Launching Online Stores (May 22) Internet Retailer

• Brazil’s B2W Digital was the top-ranked retailer in Internet Retailer’s Latin America 500, with 23.6% YoY online sales growth in 1Q2015.
• The company announced the launch of three new online stores: BR Foods, Drinkinity (which sells a container and pods that are mixed with water to create beverages) and the official website of the 2016 Rio Olympic and Paralympic Games.
• B2W Digital also announced plans to expand a pilot program featuring online ordering and pickup at Lojas Americas stores to 200 more stores.