FROM THE DESK OF DEBORAH WEINSWIG

Summer Is Over, and the Holiday Shopping Season Has Already Begun

In the US, the Labor Day holiday falls next Monday, which marks the traditional end of summer. Now, with the Olympics finished, summer holidays taken and the kids going back to school, adults adopt a more serious attitude toward work again. First up is the back-to-school flurry. Fung Global Retail & Technology is maintaining its initial estimate of 2%–3% growth in this year’s back-to-school retail sales, amid a dynamic US economic environment. Retailers are optimistic about the fall quarter, and solid consumer spending in the second quarter should relieve some anxiety for retailers. The low saving rate, robust labor market and falling gas prices also favor strong consumption trends—yet consumer confidence could suffer due to slow wage growth, the potential of an interest rate hike and the pending US presidential election. We normally think of the holiday shopping season as taking place during the calendar fourth quarter (October–December), but that is changing. The second annual Amazon Prime Day in July was much bigger than the first, with orders up 60% worldwide and up 50% in the US. The number of Prime members is growing at about 50% per year, based on estimates from Consumer Intelligence Research Partners, creating a virtuous circle for Amazon; more members bring better economies of scale and better benefits—which attract even more members—and so on. Prime Day enables Amazon to enliven the slow midsummer shopping season, and savvy shoppers can use Prime Day to get a head start on their back-to-school and holiday shopping. Other retailers jumped on the Prime Day bandwagon to offer deals of their own in July. Walmart offered free shipping and price rollbacks; Target ran a “Summer Sale”; Best Buy offered discounts on several big-ticket electronics categories, including HDTVs, gaming consoles and large home appliances, while highlighting the fact that “no membership [was] needed”; and Toys “R” Us ran a promotion offering a discount and free shipping. As this letter’s title says, the holiday shopping season has already begun. Today, Walmart issued a press release saying that 20% of the top toys for this holiday season are exclusive to the retailer, and its toy recommendations are tied to the personality of the child recipient: boss, humanitarian, dreamer, thrill-seeker or independent. The company’s holiday layaway plan will start September 2, allowing customers to put down 10% of the basket’s value (or $10, whichever is greater) on a $50 minimum basket. Customers will have until have until December 12 to pay off the balance. Walmart offered a similar promotion last year as well. The general trend has been for retailers to move up the timing of shopping events in order to get a jump on their competitors (and also, probably, to alleviate some of their own uncertainty about holiday sales). In recent years, we have seen a smearing of the timing of holiday sales, as purchases normally completed in December are increasingly being completed in November or even earlier, depending on the promotions offered. And the advent of e-commerce and mobile commerce has made it less and less necessary for shoppers to visit a crowded store during the holidays. Even Black Friday is losing its dominance as the largest shopping day of the year. Many shopping events are now being held on Thanksgiving Day or falling to Cyber Monday, and some retailers are offering promotions the week before Thanksgiving or throughout the whole month of November. Online and mobile commerce makes it easier for retailers to offer online promotions at virtually any time, and consumers are increasingly taking advantage of these shopping events, rather than saving up their shopping for the traditional big shopping days. Although the dog days of summer are not yet behind us, it is time for consumers to take out their credit cards and start thinking about their holiday shopping.

US RETAIL EARNINGS

Source: Company reports

US RETAIL & TECH HEADLINES

At Ports, a Sign of Altered Supply Chains (August 29) The Wall Street Journal

• Activity and traffic in US ports is flat, during a time when retailers are usually loading up on imported toys, clothing and other merchandise for holiday shoppers. The same trend was seen last year, and economists say it is due to retailers having less inventory in stores as consumers shift to shopping online.
• The pattern change was unexpected by ports, which have spent billions to upgrade equipment and deepen harbors in anticipation of the usual surge of imports during this time of year. Ports are expected to handle 2.2% more imports this year, which represents the slowest growth rate since 2011.

Get Ready to Share the Road with Cars that Have No One Behind the Wheel (August 31) TechCrunch

• California and Michigan are both looking at legislation that would allow the testing of driverless cars on actual roads. While the bills do limit the situations in which driverless cars can be tested, the proposed laws represent a big step in the development and acceptance of the technology.
• The bills could represent a significant economic advantage, too, serving as a way to keep car tech research and development within the two states. Plus, the legislation will likely speed up adoption of similar legislation in other states.

How Social Media Capsized the Fashion Show (August 29) Glossy

• Tommy Hilfiger is taking a unique approach to New York Fashion Week. In addition to its privately held, press-and-buyers-only women’s ready-to-wear show, the classic American brand will hold “a carnival-themed party and fashion show” called Tommy Pier to launch the Tommy x Gigi brand. Half of the 2,000 tickets for the event will go to the public.
• This new take on Fashion Week is in response to the power and immediacy of social media, which brands must adapt to. Fashion shows now have to satisfy two audiences: the industry and the consumer.

Think Tank: Millennials Are More Brand Loyal than You Think (August 30) Women’s Wear Daily

• Despite being bombarded with branded content through social media and targeted ads, 64% of millennials say they are as brand loyal as their parents, or even more so. According to a survey, only 1% of millennials are influenced by advertising, says Thomas Marks, VP of Marketing at Stitch Labs.
• So, retailers should focus their marketing efforts on creating experiences, supporting good causes and engaging with customers on social media. Of the millennials surveyed, 78% said they would rather spend on an experience, 87% said they had donated to a nonprofit in 2013 and 62% said they are more likely to become brand loyal if a brand engages with them on social media.

EUROPE RETAIL HEADLINES

Apple Ordered to Pay €13 Billion in Tax to Ireland (August 30) Reuters

• On Tuesday, August 30, European Union antitrust regulators ordered Apple to pay €13 billion (US$15 billion) in taxes to the Irish government.
• In 2014, the European Commission accused Ireland of dodging international tax rules by allowing Apple to safeguard profits worth tens of billions of dollars from tax collectors in return for preserving jobs.

Not On The High Street to Expand in the UK and Overseas (August 30) Retail Gazette

• British online retailer Not On The High Street has landed £21 million (US$27 million) in investment funding as it expands in the UK and abroad. The funds are expected to be used to further invest in technology, marketing and website operation.
• Not On The High Street has a partner community of 5,000 sellers that use the platform to connect with customers.

Galeries Lafayette to Further Invest in Its Omni-Channel Strategy (August 29) Luxury Daily

• French department-store chain Galeries Lafayette has hired Constance de Polignac as Marketing and Digital Director. Polignac joins from apparel retailer Camaieu and will develop Galeries Lafayette’s omni-channel strategy.
• Earlier this year, Galeries Lafayette acquired French e-commerce site Instant Luxe, which specializes in preowned luxury goods. With growing interest in luxury consignment among affluent consumers, the purchase of Instant Luxe gives Galeries Lafayette a foothold in the secondhand retail sector.

Dutch Companies Test Drone Package Delivery to Smart Mailbox (August 29) Ecommerce News Europe

• Two Dutch companies, delivery specialist B2C Europe and mailbox manufacturer Parcer, are developing a new delivery service for online orders. With the service, drones could deliver packages to smart, Internet-connected mailboxes.
• The service aims to remove the need for a human to place parcels, and deliveries could be scheduled for any time of the day. Smart mailboxes could be located anywhere that is accessible by air.

Last Remaining BHS Stores Closed (August 28) BBC News

• On Sunday, August 28, the last 22 remaining BHS stores closed, following the 88-year-old British department store chain’s failure to find a buyer. The retailer was placed into administration in March.
• In the weeks prior to August 28, administrators made 141 BHS store closures. Negotiations over pensions continue for the 11,000 BHS staff who have lost their jobs.

ASIA TECH HEADLINES

Malaysia’s Macrokiosk Secures Investment from Japan’s GMO Payment Gateway (August 30) e27.co

• Malaysian mobile technology company Macrokiosk has secured an undisclosed amount of investment from Japan’s GMO Payment Gateway in return for a substantial stake in the company.
• Macrokiosk believes the partnership will help it adopt new technologies and innovate solutions to meet the dynamic needs of its various clients.

Mitsubishi Heavy Industries to Deliver Japan’s First Jet in 2018 (August 30) Bloomberg

• Mitsubishi Heavy Industries revealed that it still plans to deliver its first plane, the Mitsubishi Regional Jet, in 2018, despite issues with the jet’s air-conditioning ventilator having grounded the plane from further test flights.
• Mitsubishi Regional Jet will be the first locally built passenger jet. It already has 407 orders, and its two biggest customers are based in the US.

Venture Capital Group Founded to Boost Southeast Asia’s Startup Industry (August 30) TechinAsia

• A new group, called the ASEAN Venture Council, has been formed by venture capital firms that include Gobi Partners, East Ventures and Convergence Ventures. The goal of the group is to promote and develop the venture capital industry in Southeast Asia.
• The startup industry in Southeast Asia is booming right now; in the first half of 2016, US$799 million was pumped into young tech firms across the region.

Japan’s SmartHR Secures US$4.89 Million in Funding (August 30) TechinAsia

• Japan’s SmartHR, which provides automated human resources services, has secured funding totaling US$4.89 million. The funds will be used to better automate personnel and labor management tasks.
• SmartHR helps automate employee benefit and insurance programs. The company’s service enables clients to shorten the procedure for filing insurance claims by connecting directly with local city offices.

LATAM RETAIL HEADLINES

Dilma Rousseff Ousted in Historic Brazil Impeachment Vote (August 31) The Wall Street Journal

• At the impeachment trial of Dilma Rousseff on August 31, Brazil’s senate voted to convict the former president on charges that she used illegal bookkeeping maneuvers to hide a growing budget deficit.
• The impeachment of Rousseff was widely expected due to the amount of legal evidence that had been compiled. Interim President Michel Temer, who had served as Rousseff’s vice president, will serve the remainder of the term as president.

Retail Development Is Surging at the US-Mexico Border (August 30) Shopping Centers Today

• The Mexican peso is weak versus the US dollar right now, but Mexican nationals are still crossing the border to shop in the growing number of American shopping centers in Texas and Arizona.
• Mexican residents account for nearly US$4.5 billion in annual retail sales in Texas, particularly in counties along the border. Existing malls in the area are working to expand in order to accommodate Mexican shoppers coming from across the border.

The Body Shop Expands to Chile (August 25) Retail Gazette

• The Body Shop is continuing its expansion in Latin America, and plans to open a new store in Chile. The retailer is already present in both Mexico and Brazil; Chile will be the third Latin American country that the retailer enters.
• The Body Shop has stores in 65 countries to date. The company has not announced plans to open any additional stores in Chile apart from its first one.

Brazilian Pet-Sitting Marketplace DogHero Raises US$3.1 Million (August 29) TechCrunch

• Known as the Brazilian Airbnb for pet sitting, DogHero raised US$3.1 million in financing as petcare spending in Brazil continues to rise. Currently, Brazil accounts for US$8.16 billion in spending on pets.
• DogHero launched in 2014 in order to capitalize on consumers’ willingness to open their wallets for more third-party pet services, such as veterinary care, grooming and pet sitting. Brazil is the second-largest market for dog ownership in the world, behind only the US.

Soriana to Compete with Walmart in E-Commerce (August 30) América Retail

• Mexican retailer Soriana is set to sell its products online through Soriana.com. There will be no minimum purchase necessary and express shipping will be an option, with an estimated delivery time of two to five days.
• Items sold on the site will include electronics, computers, domestics, furniture, health and beauty, sporting goods, toys, and car parts, and there will also be an outlet section. Soriana.com will feature a live chat option that provides customers with immediate answers to questions and concerns.