FROM THE DESK OF DEBORAH WEINSWIG

This week in New York City, we attended Place 2015: The Business of Location, a unique occasion for retailers to learn about how location analytics and indoor positioning can optimize merchandising and improve mobile strategy and the customer experience. Our colleague, Janie Yu, from Fung Capital USA, spoke on a panel about investment in this space. This one-day event was filled with the latest updates on ibeacons, data privacy issues and the future of mobile consumer engagement. Beacons are coming. More than half of the top 100 US retailers tested beacons in their stores in 2014. Between 2015 and 2016, beacon-triggered retail sales in the US are expected to increase by morethan 1,000%, from $4.1 billion to $44.4 billion. A panelist from a Canada-based department store confirmed that his company has seen its best mobile conversion rate with beacons. The Bluetooth low energy–powered technology allows mobile apps to listen for and interact with signals from physical spaces. Imagine a world where retailers push personalized coupons to customers as they walk into stores, where retail apps can find and reserve parking spaces for shoppers, and where billboards in stores can detect information about customers and show them only items that are relevant to them. It’s all already happening! The use of data transmitted by beacons is limited only by our imagination. Retailers can use beacon-powered analytics to improve their customer service via existing marketing channels. For example, stores can use information about customers to personalize newsletters and help sales associates better interact with them. With beacons and associated indoor-positioning technology, shopping malls can help shoppers design personalized shopping trips that optimize their time. Time is money for retailers: the time shoppers may waste wandering around looking for stores can be minimized and converted into potential sales. As one of the panelists said, “It is all about creating a better experience—the technology is in the background.” Interestingly, panelists and speakers at the conference believe that data privacy is not a major concern for customers as long as the exchange of data is for a better customer experience, whether that means the right coupon at the right time or a personalized greeting from an in-store display. Who’s going to be the next big player? And who’s going to pay for it? With Facebook announcing that it’s going to hand out free beacons to small and medium-sized companies and roll out its own location-based communications platform, it’s going to be interesting to see who will be the final disruptor in the space. Given their large numbers of active users, Facebook, Google, PayPal, Twitter and Amazon are all qualified candidates to push for mass adoption of beacon technology. Can indoor positioning technology even be adopted without beacons? Yes…also possible. The largest mall developer in China, Dalian Wanda, is working with a company that uses magnetic-positioning technology without any external infrastructure. Will 2015 be the year of beacons? We’ll see. But the effort to create a better shopping journey needs to be a concerted one among retailers, brands, data analytics providers and even social media platforms.  

US RETAIL TRAFFIC

Through June 6, 2015 Source: ShopperTrak

• Overall store traffic for the week ended June 6 plummeted by 8.3%. Last year in the same week, traffic declined by 4.3%. Unusually cool weather in some parts of the US undermined shopper traffic.
• Apparel and electronics store traffic declined by 3.7% and 2.3%, respectively.
• Traffic should accelerate with Father’s Day coming up and with warmer weather.

US REGULAR GASOLINE PRICES

Source: US Energy Information Administration

US RETAIL EARNINGS

Source: Company reports * Hudson's Bay reported in CAD

US RETAIL HEADLINES

Facebook Offers Free Beacons to Businesses and Tests New “Place Tips” System (June 9) BBC

• Facebook started to roll out Place Tips, a system that allows businesses to interact with people through smartphones, based on their location.
• Facebook has been experimenting with the system with over 100 businesses in New York City. It announced that it’s rolling out the system across the US.

Global Brands Group Names New President of Seven Global, a Joint Venture with David Beckham (June 10) Women’s Wear Daily

• Global Brands Group has named Jason Weisenfeld as President of Seven Global, a new brand collaboration with David Beckham and Simon Fuller. Weisenfeld has worked in various capacities with Coach, Net-A-Porter and Versace.
• Weisenfeld was part of the team that helped launch Victoria Beckham’s brand. The joint venture will build a series of celebrity-driven brands in fashion, food and electronics.

Online “US Made” Manufacturing Marketplace Maker’s Row to Open E-Commerce Store (June 8) Women’s Wear Daily

• Brooklyn-based Maker’s Row connects American apparel manufacturers with small-to-medium-sized and product-based businesses. Its CMO and Cofounder, Tanya Menendez, said the company is launching an e-commerce store this summer to showcase all kinds of products that can be made in the US.
• More than 20 states will be represented. The company recently received $2million in funding and now employs 16 people. It’s currently working with brands such as Under Armour and Ralph Lauren to help them expand their manufacturing domestically.

Lands’ End Hires Top Talent from High-Profile Retailers (June 9) Women’s Wear Daily

• Lands’ End, a brand spun off from Sears Holdings last year, has hired several executives from upscale brands.
• The company just named Joseph Boitano, a former top merchant at Saks Fifth Avenue, as its Chief Merchandising and Design Officer. Scott Hyatt, former sourcing officer for J.Crew, will join Lands’ End as Chief Supply Chain Officer on June 29.
• Ian Velardi, who was recently with Bonobos, will lead the company’s design division.

ASIA HEADLINES

Voonik Turns Shoppers into Fashionistas, and It Just Raised Funding (June 10) TechinAsia

• India’s Voonik, a fashion e-store, announced that it raised US$5 million in series A funding from Sequoia Capital and existing investor Seedfund. The company had raised US$400,000 in seed funding earlier.
• Voonik also serves as a personal shopping assistant, suggesting clothes, accessories and footwear based on a user’s body shape, skin tone, lifestyle, budget and preferences. People can shop and mix and match from styles and products across other e-commerce sites such as Jabong, Fashionara and Zovi.

Chinese Parents to Edutech Startups: Don’t Waste Our Kids’ Time with Unproven Methods (June 10) TechinAsia

• Chinese tech blog Techweb visited six gaokao test sites in Beijing and surveyed 145 parents. Only eight of them, 5.5%, said their kids used online learning to prepare for tests, while 27.6% sent their kids to extra remedial classes.
• Parents told Techweb that while online education is cheaper than remedial classes, they aren’t confident it’s effective. Online courses don’t have the legacy and data to prove that their systems work, and parents don’t want to risk their children’s precious free time on experimental methods.

With a Simple Touch, This Gadget Analyzes Your Skin and Tells You How to Improve It (June 10) TechinAsia

• WAY, a startup from South Korea, has developed a portable gadget that can monitor a user’s skin condition and surroundings to provide an instant snapshot of the user’s skin health and tips for how to improve it.
• WAY comes with three sensors: one to check the current UV index, one to gauge humidity and one that performs a bioelectrical impedance analysis to read moisture content and estimate oil levels within skin tissue.

China’s Big Biotech Bet Starting to Pay Off (June 10) Channel NewsAsia

• In April, scientists at Sun Yat-Sen University in Guangzhou published results of a groundbreaking experiment to alter the DNA of human embryos using new CRISPR-Cas9 gene-editing technology.
• More than 50 Chinese institutions are patenting in the field, led by the Chinese Academy of Sciences, universities, the Anhui Academy of Agricultural Sciences and Beijing Jifulin Biotech. Nearly a fifth of the 518 families of gene-editing patents analyzed since 2004 were associated with Chinese entities.

Sony Aims for More Clients, 20% Sales Growth in Image Sensors (June 9) Channel NewsAsia

• Sensors have emerged as one of Sony’s strongest products in recent years even as its TV and mobile operations have struggled. While the company has fallen behind Apple and Samsung in smartphones, its sensors are used in those rivals’ handsets.
• Tomoyuki Suzuki, head of Sony’s device solutions business, which includes image sensors (chips that convert optical images to electronic signals), said he expected sensor sales to grow by about ¥100 billion (US$804 million), to ¥550 billion, in the year ending March.

Hong Kong Startup Equips Self-Storage Companies for the On-Demand Economy (June 9) TechinAsia

• Valet storage lets customers request that a van come directly to their home or office to pick up items and take them to storage, and then return them to their doorstep when needed. In contrast, traditional self-storage companies require customers to bring items to the storage unit themselves.
• “The on-demand model gives traditional companies an opportunity to reach a new customer base, potentially customers who don’t necessarily want a whole unit or don’t have the transportation ability,” Miles Davison, cofounder of StuffGenie says.

EUROPEAN RETAIL EARNINGS

Source: Company reports *  reported in EUR ** reported in GBP

EUROPEAN RETAIL HEADLINES

Apple Pay to Launch in UK  (June 8) Retail-Week.com

• Apple’s new payment system will launch in the UK in July 2015. Major retailers such as New Look, Marks & Spencer and Waitrose have already signed up for Apple Pay. Numerous UK companies are said to be working closely with Apple to develop apps for the Apple Watch, too.
• Transport for London will also accept Apple Pay.

Luxury Fashion Brands to Join Forces and Challenge Amazon (June 8) BusinessofFashion.com

• Richemont, the parent company of brands such as Chloé and Net-A-Porter, is in talks with luxury groups LVMH and Kering about building a luxury retail website large enough to challenge Amazon.
• This comes after Net-A-Porter merged with Italian e-tailer YOOX in March this year; the combined annual sales of the two companies total more than€1.3 billion (US$1.5 billion).

IKEA Takes Decisive Measures over Climate Change (June 4) Company Press Release

• Swedish furniture manufacturer IKEA announced it will invest €1 billion in projects that will help create a better climate.
• Many of these projects will focus on developing ways to generate sustainable energy. Since 2009, IKEA has invested €1.5 billion in sustainable energy; it currently owns 313 windmills and 700,000 solar panels. Within the next five years, IKEA aims to become a completely energy-neutral company.

Online Fashion Retailer Opens First UK Store After US Debut (June 8) RetailBulletin.com

• UK fashion retailer Missguided will open its first physical store in the UK. The concession will occupy a 39-square-meter space within the Selfridges department store in Manchester and offer a range of Missguided clothing, footwear, and accessories.
• The fast-fashion retailer also recently announced plans to open a concession in US department store Nordstrom.

Boohoo.com Performs Better than Expected After January Profit Warning (June 10) Company Press Release

• After a profit warning in January, online fashion retailer Boohoo.com has reported a 37% rise in group sales, to £41.3million, in the three months ended May 31. Overseas sales grew by 66%, to £10.1million, while UK sales were up 27%, helped by investment in marketing and promotional activities.
• Customer numbers rose by a third, to 3.3 million.

Boots Pharmacy to Cut 700 Jobs at UK Head Office (June 8) Company Press Release

• High street pharmacy Boots will cut about 700 jobs from its head office in the UK. The move is part of an extensive restructuring strategy to simplify the retailer’s operations. Boots currently employs a total of 60,000 people in the UK, around 8,000 of which are based in its UK head office.
• Boots President Simon Roberts said there are no planned store closures and that retail staff will not be affected by the cuts.

H&M to Begins Its Global Expansion with New Delhi Flagship Store (June 6) wgsn.com

• Swedish fast-fashion retailer H&M will open a flagship store in India this autumn. It will be the first of 50 planned store openings across the country over the next few years.
• The flagship will become part of Select Citywalk, New Delhi’s premium shopping center, and is the first step in H&M’s global expansion plan. The retailer also plans to open stores in South Africa, Taiwan and Macau.

Tesco Invites Selected Companies to Bid for Homeplus Business (June 9) RetailBulletin.com

• UK grocery retailer Tesco is looking to sell its South Korean business unit, Homeplus, as it focuses on its core UK grocery business.
• Homeplus has been valued at £4 billion and Tesco has reportedly invited about six companies to bid for the retail business.KKR, The Carlyle Group and CVC Capital Partners have been invited to bid for Homeplus, as have Hyundai Department Store, Affinity Equity Partners and MBK Partners.

Inditex Starts the Year in Style with 1Q Results (June 10) Company Press Release

• Inditex, the Spanish retail group that owns Zara, has reported a 28% jump in net profits, with core profit up 22%, to €895million. Net sales leapt 17% (13.5% in currency-neutral terms), to €4.37billion, compared with a growth rate of 11% in 2014.
• The fashion retailer opened 63 stores in 27 markets during the quarter, taking its count to 6,746 in 88 markets.It revealed plans to launch more online platforms for Zara in Hong Kong, Taiwan and Macau by the end of this year.

Sainsbury’s Like-for-Like Sales Down, but Online Sales Look Promising (June 10) Company Press Release

• UK grocery retailer Sainsbury’s reported a sixth consecutive quarter of like-for-like sales decline, as sales fell 2.1% in its first quarter. Food price deflation and intense competition in the grocery sector were highlighted as contributing factors.
• Total retail sales for the 12 weeks ending June 6 were down 0.6% excluding fuel and down 2.3% including fuel, although the retailer’s online store has continued to grow after experiencing a record week of 256,000 orders.

LATAM HEADLINES

Brazil’s Inflation Rate Increases to 8.47% (June 10) Latin American Herald Tribune

• Brazilian consumer prices increased 0.74% MoM in May, up 5.34% YTD and 8.47% YoY
• The January-May and YoY increases represent the highest inflation rates since 2003
• The major inflation drivers in May were food and beverage; the price of tomatoes increased 21.38%

Private Equity Bullish on Growth in Mexico (June 10) Financial Times

• Private-equity funds General Atlantic (GA) and Actis (which is focused on energy) are both opening offices in Mexico City
• GA invests 10–15% of its $1.5–2 billion annual investment capital, or $150–300 million, in Latin America, with $1.2 billion invested to-date invested in the region
• The firm sees opportunities in healthcare, financial services, retail and technology, due to Mexico’s growing middle class

Colombia Is Viewed as Top Retail Opportunity in Latin America (June 2015) BMI Research

• BMI sees attractive growth opportunities in the mass grocery retail (MGR)
• MGR represents 45% of total grocery retail sales in Colombia, however, BMI sees additional room to expand, as the non-organized sector represents more than 50% of the market
• BMI forecasts a 9.0% CAGR of MGR sales during 2014–2019, with the rate exceeding those of Brazil, Chile and Mexico

FEMSA: Cautiously Optimistic on 2005 (May 28) The Yucatan Times

• FEMSA’s CEO Carlos Salazar is “cautiously optimistic” for 2015, especially in Mexico, despite unfavorable exchange rates
• The company is pursuing an aggressive growth strategy by acquiring gas stations, where the state-owned monopoly has been liberalized
• FEMSA is also struggling amid a tax enacted in Mexico on sugary drinks last year