FROM THE DESK OF DEBORAH WEINSWIG

Although Starbucks has its detractors, its popularity has not been diminished one bit in the two locations near our Midtown New York City office. Starbucks seems more popular than ever among New Yorkers and tourists alike, with a line often trailing out the door during the morning rush, even as late as 10:00 a.m.

Mobile Order & Pay allows customers to locate the nearest store, select and customize their food and drink items, receive an estimate of when the order will be ready, and prepay. The menu also highlights products available in certain geographic regions and stores. Naturally, purchases are also recorded in the My Starbucks Rewards program database.

• US home prices continue to rise. S&P/Case-Shiller’s 20-City Index rose 5% in July, in line with economists’ expectations.
• San Francisco, Denver, Dallas reported the largest price gains among the 20 cities, with price increases of 10.4%, 10.3%, and 8.7% respectively.
• Fourteen out of 20 cities reported price increases.

US RETAIL EARNINGS

US RETAIL HEADLINES

• Ralph Lauren will step down from the CEO role at the company he founded nearly 50 years ago, handing the title to Old Navy President and former H&M executive Stefan Larsson. Lauren will stay active as Executive Chairman and Chief Creative Officer.
• Earnings at the apparel company have been pressured by a strong dollar and intense competition in the luxury space. The latest quarterly earnings of $1.09 per share beat analysts’ expectations, but revenue dropped 5.3% on a year-over-year basis. The company hopes Larsson, who is credited with reviving Old Navy, can help incorporate elements of fast fashion and strengthen its international presence.

• Costco will convert its store in Hackensack, NJ, into a business center concept, making the location the first Costco Business Center store in the Northeast. The company’s business centers do not sell apparel, books, seasonal items and many other categories offered in the warehouse stores.
• The retailer now has 10 business centers that cater to convenience stores, caterers, restaurants, hotels, hospitals and offices. About half of sales are delivered directly to small-business customers, rather than being purchased in-store. Costco plans to open 12 more centers before year-end. Aided by membership growth, net income during the quarter increased by 10%, to $767 million

• Walmart said it is expanding its free grocery pickup service for online orders in eight new markets, and will add additional markets soon. Shoppers can choose from about 30,000 items, roughly the same number as offered in stores. After ordering and paying online, the customer drives to the store at a selected time and workers load the items into the customer’s car.
• The retailer is leveraging its physical presence as competitors such as Target and Amazon improve pickup and delivery options. “Right now the focus for us is pickup, driven largely by what our customers are telling us,” said Michael Bender, Walmart’s COO of Global E-Commerce. This month, Target partnered with Instacart to test grocery delivery for $3.99 per order. Amazon is testing delivery service for a $299 annual fee in Seattle, New York, Philadelphia and California.

• Beginning October 1, Target will expand its price-matching program from in-store to online. The retailer promises to match the prices of 29 online rivals, including Amazon, Walmart, Costco and Sam’s Club.
• The retailer also expanded the time frame in which customers can take advantage of the price match to 14 days for both in-store and online purchases. This marks the first time Target has been willing to match prices of membership club competitors such as Sam’s Club.

ASIA HEADLINES

• Yahoo said it would proceed with the planned spin-off of its stake in Alibaba Group, even though the IRS has declined to rule on whether the transaction would be tax-free.
• The spin-off will remain subject to certain other conditions, including the receipt of a legal opinion on the tax-free treatment of the deal under US federal tax laws, Yahoo said in a regulatory filing.

• Slurp has developed customizable iPad point-of-sale software for the restaurant industry in Malaysia. The software allows retailers to manage their menu, inventory and pricing. It also allows employees to clock in and out, and businesses to implement loyalty programs, promos and vouchers for customers.
• The food and beverage sector in Malaysia was valued at just under US$10 billion in 2012. By 2017, it is projected to grow at a rate of 5.3%.

• Europe and China have signed an agreement that will provide EU telecoms more access to the Chinese market and equal access to China’s government-funded 5G research. This will give European companies the same level of access that Chinese companies participating in the EU’s 5G initiatives have.
• The agreement covers joint research and efforts to encourage enterprise participation in 5G research. It also addresses efforts to jointly promote global standardization for 5G.

• Cisco and Chinese cloud-computing company Inspur will set up a joint venture in China. The companies will each invest an initial $100 million to sell networking technologies and products to customers in the cloud, data-center and smart city industries.
• The move counters February reports that the Chinese government dropped Cisco and other US-based tech giants (including Apple, Intel and McAfee) from its list of authorized brands over fears of surveillance and hacking by the US National Security Agency.

• China’s Didi Kuaidi has invested in India-based Ola, another Uber rival. Ola seeks to raise US$500 million at a valuation of US$5 billion in order to expand in India.
• Ola is Didi Kuaidi’s third investment of this kind. It invested US$100 million in Uber’s biggest US competitor, Lyft, and participated in a US$350 million round of funding for GrabTaxi, a rival in Southeast Asia.

• E-commerce sites such as JD.com and Tmall account for 21% of smartphone sales in China, and their share will continue to grow as they offer more differentiated services on their platforms.
• Market research firm IDC stated that some e-commerce operators are already providing services that include insurance for mobile screens and alternative payment options, such as allowing consumers to trade in their old phones or pay for phones in monthly installments.

• A former private banker from Nomura Securities founded ZUU online, one of Japan’s largest and fastest-growing finance-related websites. It offers original content in the form of news and columns related to banking, securities, equity, real estate, insurance and taxes.
• ZUU currently has 2.5 million monthly unique visitors and more than 10 million monthly page views. Its user base has grown by a factor of 17 since last year. The site now also matches users with financial planners and accountants, provides an online portfolio management platform, and runs a premium real estate portal.

• Creators Market, launched in May 2014, allows users to turn their drawings into Line stickers. There are now 170,000 sticker sets available for purchase, up from 30,000 in late 2014.
• Line will offer original merchandise featuring characters from 19 popular Creators Market sticker sets to 93 brick-and-mortar stores across Japan. The Creators Market pop-up shows will feature 17 kinds of products, including iPhone cases, pens, T-shirts and real stickers.

EUROPEAN RETAIL EARNINGS

Source: Company reports

EUROPEAN RETAIL HEADLINES

• Auchan announced that it will launch a new online marketplace to increase its product lines and range. The French supermarket chain, known for its strength in food retail, said that its new online shop will focus mainly on two categories, food and garden articles. The categories on offer are expected to expand to technology, baby care, furniture and toys by the end of this year.
• Auchan is launching the online marketplace in partnership with Mirakl, a French company that specializes in providing software-as-a-service technology. Mirakl has previously worked with other retailers such as Rue du Commerce, Pixmania and Darty. A spokesperson for Mirakl said that the platform will enable Auchan to manage third-party vendors more efficiently.

• The Toy Store has opened its UK flagship store in London. The Middle Eastern toy retail chain has reportedly been scouting for venues for two years; it finally settled on a space formerly occupied by Topshop at the West One Shopping Centre. Spread over two floors, the store is said to be the largest independent toy store to open in London in 250 years.
• A key focus of the store is interactivity with customers, supported by games and panels around the store placed at the average height of children. Staff dressed as popular children’s characters will circulate to demonstrate some toys and games.

• Aldi announced record sales of £6.9 billion (US$10.6 billion) in the UK and Ireland for fiscal year 2014, up 31% from the previous year. Operating profit fell 4.1% year over year, to £260.3 million (US$400.5 million), due to “increased investment in prices and people,” yielding an operating margin of 3.8% versus 5.1% in 2013. Aldi opened its first UK store in 1990 and has become the sixth-largest grocer in the country. It has invested a total of £878 million (US$1.4 billion) in expanding its UK business and its UK and Ireland sales have more than doubled in the past three years.
• The company also announced plans to launch an e-commerce site early next year, so that it can reach more customers. The site will initially sell Aldi’s wines by the case before expanding to its nonfood Specialbuys range later in 2016.

• UK fashion pure play Boohoo.com released strong financial results for the six months ending August 31, 2015. The retailer’s revenue climbed 35%, to £90.8 million (US$139.7 million). UK revenue was up 30%, revenue for the rest Europe was up 19% and revenue for the rest of the world was up 65%. Gross profit rose by 30%, but the gross margin fell to 60.1%, from 62.3% in the first half of fiscal year 2015. Operating profit jumped 38%, generating an operating margin of 6.6%, up from 6.4% for the year-ago period.
• Mahmud Kamani and Carol Kane, the joint CEOs of the online retailer, stated that they were very pleased with the strong performance in the first half of the year. They said the company will continue to focus on key markets that show the strongest growth potential while expanding internationally. Boohoo.com had 3.5 million active customers at the end of the reporting period.

• Amazon has begun selling chilled food products through its website in the UK. Currently, the service is available only to customers in Birmingham, via one-hour delivery on about 50 products. The online retailer is expected to launch a trial in London next month. This move is believed to be Amazon’s effort to test the service before it fully launches AmazonFresh, its full e-grocery delivery service, early next year.
• An Amazon spokesperson stated that Prime Now already offers customers quick delivery on ambient products such as coffee and bottled water, and that the company is excited to add chilled and frozen foods to its selection. Amazon’s warehouse in Bardon, Leicestershire, spanning 257,855 square feet, is on lease from Logicor and is located conveniently for distribution in Birmingham. Sources familiar with the business speculate that the retailer will lease another warehouse in the UK to support the launch of AmazonFresh.

• Miss Sixty, an Italian fashion brand, plans to open a new store in Knightsbridge. The company has signed a deal for a 10-year lease on a store comprising 3,791 square feet. This will be Miss Sixty’s sixth shop in London.
• The store is set to open in early 2016 and will span three floors, two of which will be dedicated to retail. The store will also adopt a new image inspired by art from the 1960s.

• Fnac, a French entertainment and electrical goods retailer, has approached Darty, an electrical goods specialist, with an all-share acquisition bid. Fnac believes that consolidation of the businesses will create a “compelling strategic and financial opportunity” and strengthen its position in the French electronics and home appliances market.
• The deal is for a 100% acquisition of Darty’s issued share capital, valuing each share at £10.11 (US$15.56) and the existing issued share capital at £533 million (US$820 million). Fnac has proposed to pay shareholders one of its shares for every 39 shares held in Darty. The latter said that its talks with Fnac will concentrate on reviewing the potential risks and benefits of the transaction for its shareholders.

• Sainsbury’s comps (excluding fuel) fell by 1.1% in its second quarter, but the grocer remains confident about full-year pretax profits, which it forecasts will be “moderately ahead” of consensus estimates. The retailer reported an increase in sales volume and the number of transactions in the 16 weeks ending September 26. Total revenue increased by 0.3%, excluding fuel, but fell by 1.8% including fuel.
• CEO Mike Coupe stated that Sainsbury’s has shifted its focus from promotional activity to invest in product pricing. Coupe mentioned the strategy in the context of what he termed the “perfect storm”—a volatile atmosphere caused by a fierce price war, shifting consumer habits and food price deflation. He added that Sainsbury’s is making good progress on delivering its strategy and that the lower-price model helped improve demand forecasting, driving lower levels of waste and better product availability.

LATAM HEADLINES

• Buenos Aires will increase its investment in new designers by 10%, to US$2.1 million, in order to develop its fashion industry. This represents an acceleration of the 3%–5% rate of increase during the past few years.
• The city seeks to enhance its image as a fashion hub amid competition from São Paulo and Rio de Janeiro in Brazil and Medellín in Colombia.

• The average Peruvian shopper makes about 300 purchases annually, primarily at traditional chains.
• In a survey, more than 87% of shoppers said they visit more than seven chains a year, predominantly paying with cash. Peruvians are daily shoppers who look for proximity, convenience and relationships with vendors.

• A deal to sell Cencosud’s 40 gas stations and 40 pharmacies in Colombia to Cruz Verde is reportedly in its final stages and set to close in October.
• Cruz Verde operates 150 pharmacies in Colombia and 640 in Chile, in addition to 150 beauty shops in Chile.

• Brazil’s currency hit a new low last week, 4.24 reais to the US dollar. The real is down about 35% this year, and Brazil’s central bank has revised its 2015 GDP forecast downward, to (2.7)%.
• The unemployment rate in Brazil increased to 7.6% in August, and the inflation rate is approaching 10%. Moreover, the current budget deficit stands at 8% of GDP, and the central bank has raised interest rates to 14.25%.

• Retail store openings are set to increase by 3,900 in Peru over the next five years, and retail sales are expected to grow by 4% annually, despite Peruvians’ preference for traditional shopping channels.
• Bolivia also has strong traditional shopping channels, but Euromonitor analyst Tomas Leal says the country is developing smaller channels, particularly in residential neighborhoods.