FROM THE DESK OF DEBORAH WEINSWIG

Holiday 2020: Let the Shopping Begin! (Actually, It Already Has) This letter goes to press the weekend before one of the biggest US shopping day of the year, Black Friday (with Cyber Monday having been the largest for several years now). Typically, holiday shopping begins in earnest the day after Thanksgiving—which most people take off work—with doorbuster deals leading the march to Super Saturday and other big shopping days. As we all know, many things are different this year. First of all, holiday shopping started in October, with shopping festivals adding some sparkle to the month. Coresight Research, in collaboration with retail, technology, charity and other partners, launched the inaugural 10.10 Shopping Festival on October 9–12. Amazon also moved its annual Prime Day to October 13–14 (from its usual timing in July) and announced that sales by small and medium-sized businesses hit $3.5 billion during the event, up by 60% compared to last year. These holidays paved the way for Singles’ Day: Chinese e-commerce giant Alibaba reported total GMV of $74.1 billion during the 11-day festival this year, from November 1 to 11—nearly double the GMV of the 24-hour sales period in 2019. Secondly, consumer and shopping behavior in November will have different patterns this year. Local governments have discouraged people from traveling to visit friends and family on Thanksgiving: 72% of respondents are planning not to travel this Thanksgiving and 69% are planning to stay home at Christmas, according to a recent survey by the American Hotel and Lodging Association. This shift to staying at home has spurred demand for smaller turkeys—since families are not gathering to eat together—leading to a potential “big bird” problem of a surplus of unsold large birds. Many large retailers, including Best Buy, Target and Walmart, have announced that they will be closed on Thanksgiving Day this year. At the same time, consumer interest in shopping in stores over Thanksgiving also appears low, with only 19% of respondents reporting that they are willing to shop in stores on Thanksgiving Day and 16% on Black Friday, respectively, according to our recent US consumer survey. Our US Holiday Retail 2020 Databank includes updated data on retailers’ Thanksgiving and Black Friday plans, holiday hiring plans and finding from our latest proprietary consumer surveys. Rather than go out and brave potentially cold weather, coronavirus risks and closed stores, a large percentage of consumers are electing to shop from the comfort of their own sofas. Our survey shows that 44% of respondents plan to shop online on Thanksgiving Day and 56% on Black Friday, possibly indicating a new holiday shopping trend. However, consumers do not have to wait until November 27 to start their holiday shopping, since many large retailers have already launched Black Friday sales events and staged deals to add interest and drive consumers to make purchases by prompting a fear of missing out. Still, retailers and consumers have shown inventiveness and creativity this holiday season. Many came up with contactless ways to celebrate Halloween, such as dropping off wrapped candy bags and curbside trick-or-treating events. The same ingenuity applies to other holiday traditions. Although people will celebrate Thanksgiving and Black Friday differently this year, they won’t miss out on their holiday traditions. The same inventiveness applies to visiting Santa at the mall and passing on holiday requests. In these times of social distancing, sitting on Santa’s lap is a no-no. As such, creative malls have constructed Santa huts outside in their parking lots, put Santa safely behind plastic barriers or are even allowing kids to communicate their wishes to the North Pole via videoconferencing. Although the ways in which consumers shop and celebrate will be different this year, and the shopping calendar has been altered, consumers have not given up on the holidays by any means. Instead, they are finding new ways to get their shopping done and continue with holiday traditions in a safe and socially distanced manner.

US RETAIL AND TECH HEADLINES

Walmart Grows Comparable Sales by 6.4% in US Segment in Its Third Quarter (November 17) Company press release

• Walmart reported comparable sales growth of 6.4% in its Walmart US segment in its third quarter, ended October 30, 2020, driven by strength across the food, general merchandise, and health and wellness categories. E-commerce sales in the segment jumped by 79% and contributed about 570 basis points to comparable sales growth.
• Total revenues increased by 5.2%, with international revenues up by 1.3% as reported and up by 5.0% excluding currency effects, driven by business in Canada, India and Mexico. Operating income rose by 22.5%, attributed in the company’s third-quarter earnings release to “underlying productivity in stores and e-commerce remain[ing] strong.” The company did not provide guidance but expects Covid-related costs to affect the topline by $1 billion in the fourth quarter.

Home Depot Announces 24.1% Jump in Comparable Sales in Its Third Quarter (November 17) Company press release

• Home Depot reported 24.1% comparable sales growth, with US comparable sales up by 24.6% in its third quarter, ended November 1, 2020. Total sales increased by 23.2% as the company continued to experience “outsized demand for home-improvement projects.”
• Operating income was up by 22.9% and net income by 23.9%. The company did not provide guidance but plans to transition its temporary weekly bonus program into permanent compensation enhancements for its frontline workers, which will result in approximately $1 billion in incremental compensation annually.

Kohl’s Revenues Decline by 14.0% in Its Third Quarter (November 17) Company press release

• Kohl’s reported a revenue decline of 14.0% in its third quarter, ended October 31, 2020. Gross margin contracted 48 basis points to 35.8%, and net income fell by 110%. Comparable sales declined by 13.3%.
• CEO Michelle Gass remarked that the company’s performance exceeded expectations, with sequential improvement in sales and profitability and strong digital sales. Kohl’s also improved its cash position through the quarter and paid back its entire revolver loan. It plans to reinstate dividends in the first half of fiscal 2021.

Instacart Announces Same-Day Delivery Partnership with Best Buy (November 17) Company press release

• Instacart has partnered with Best Buy to offer same-day delivery of consumer electronics orders from almost all of its Best Buy locations across the US.
• Shoppers can buy a range of products from Best Buy, such as gaming devices, home-office electronics, selected laptops, small appliances, TVs and tablets for same-day delivery.

Amazon Launches Amazon Pharmacy (November 17) Company press release

• Amazon has launched Amazon Pharmacy, a new service that offers home delivery for prescription medication. Users are required to sign up and create a pharmacy profile with basic information about themselves, existing prescriptions, allergy history or health conditions, and insurance information.
• Users can ask their prescribers to send their prescriptions to Amazon or have Amazon contact the prescribers—a process that may take two to four days. Users can pay for their prescriptions with or without notifications and have the medication delivered. Amazon Prime members get free two-day delivery.

Bankruptcy Court Approves Tailored Brands Reorganization Plan (November 13) Company press release

• The US Bankruptcy Court for the Southern District of Texas has approved Tailored Brands’ reorganization plan, which could see the company exit bankruptcy by the end of November.
• According to the terms of the plan, Tailored Brands will eliminate $686 million from its balance sheet, allowing for a stronger capital structure and access to a $430 million asset-based lending facility, a $365 million exit term loan and $75 million in cash from a new debt facility to sustain operations and strategic initiatives.

Simon Property Group and Taubman Centers Settle Pending Litigation (November 13) Company press release

• Mall owners Simon Property Group and Taubman Centers have settled their pending litigation, with the latter agreeing to a lower price to merge with the former.
• Simon Property Group will now pay $43 per share of Taubman Centers, down some 18% from the original price of $52.50, saving close to $800 million. In February, before the pandemic hit the US, Simon had agreed to buy Taubman Centers for $3.6 billion but announced a decision in June to exercise its contractual rights to abandon the deal, leading to a court battle between the two.

EUROPE RETAIL AND TECH HEADLINES

Debenhams Launches Virtual Beauty Room (November 17) TheRetailBulletin.com

• British department store retailer Debenhams has unveiled a virtual beauty room to help customers get advice from beauty specialists, as stores remain closed in England under new lockdown rules in place until early December.
• The new service allows customers to book one-to-one virtual consultations on the website with skincare brand Shiseido and makeup brands Bare Minerals and Givenchy. Debenhams will also hold weekly masterclasses with brands and beauty experts on its social media platforms.

Carlyle Group Reportedly Weighing Sale of Hunkemöller (November 16) Bloomberg.com

• Private equity firm Carlyle Group may be considering a sale of its Dutch lingerie and swimwear chain Hunkemöller, according to sources that spoke to Bloomberg.
• The sources also stated that Carlyle has enlisted investment bank JP Morgan on the potential sale, and as the decision is not final, the private equity group may still decide to retain the business.

Asda Announces 2.7% Comparable Sales Growth in the Third Quarter (November 17) Company press release

• Asda grew comparable sales by 2.7% in the third quarter, ended September 30, 2020, with the core grocery and back-to-school clothing categories driving growth. Combined net sales for asda.com and george.com were up by 72% year over year.
• Asda said it is seeing a surge in demand for festive products: Sales of Christmas trees have grown by 83%, festive lights by 57%, Christmas puddings by 71% and mince pies by 44%, year over year. The retailer said that it is also seeing signs of plans for smaller family gatherings rather than large groups and that sales of frozen turkey crowns, which typically serve three to four people, have increased by 230% year over year.

Monki Launches Capsule Clothing Collection Made with Recycled Textiles (November 17) DrapersOnline.com

• H&M-owned brand Monki has launched a capsule clothing collection using a new textile-to-textile recycling process. The collection currently consists of just two products—a grey hooded shirt and track pants.
• The products are made by separating different fibers, such as cotton and polyester, using a hydrothermal method with a “Green Machine” that Monki has developed in collaboration with H&M’s nonprofit research body H&M Foundation, the Hong Kong Research Institute of Textiles and Apparel, and one of Monki’s suppliers.

Klarna Launches Price-Tracking Feature (November 17) ChargedRetail.co.uk

• Swedish payment tech firm Klarna has launched a price-drop feature that allows users to track promotions and sales. Users can save items from various retailers through the Klarna app and be notified when their prices change.
• Klarna’s senior Product Director Daniel Lange explained, “With these new features, we want shoppers to feel in control while getting access to all of the best products and brands in a simple and tailored way.”

ASIA RETAIL AND TECH HEADLINES

Reliance Industries Acquires Urban Ladder (November 15) Reuters.com

• Indian conglomerate Reliance Industries Limited has acquired a 96% stake in online furniture retailer Urban Ladder for approximately $24 million, as it looks to consolidate its presence in online retail.
• Reliance’s filing to the Indian stock exchange stated that the acquisition “will further enable the group’s digital and new commerce initiatives and widen the bouquet of consumer products provided by the group.”

Walmart Offloads Majority Stake in Japanese Seiyu Supermarket (November 16) Company press release

• Walmart plans to sell 85% of its stake in its wholly owned Japanese subsidiary Seiyu to investment firm KKR & Co. and Japanese e-commerce firm Rakuten for approximately $1.6 billion.
• KKR will hold a 65% stake in Seiyu, and Rakuten will hold a 20% stake, through a newly formed subsidiary. Walmart will retain the remaining 15%.

JD.com Announces 29% Revenue Growth in the Third Quarter (November 16) Company press release

• JD.com reported revenue growth of 29.2% in the third quarter, ended September 30, 2020, driven by double-digit growth in product and services revenues. Among products, general merchandise revenues were up by 35%, and electronics and appliances revenues were up by 23%.
• Annual active customer accounts increased by 32.1% in the 12 months to September 30. A number of luxury brands, such as Balmain, Rimowa, Yohji Yamamoto and Zegna, launched stores on the platform in the third quarter.

Pinduoduo Raises Funds To Invest in Agricultural Logistics and Manufacturing (November 17) Company press release

• Chinese marketplace platform Pinduoduo plans to raise funds through an offering of shares and convertible notes to invest in agricultural logistics infrastructure and manufacturing as consumers increasingly migrate to e-commerce.
• The company intends to serve growing demand for next-day delivery of fresh produce through the new investment, as the current infrastructure was built to serve demand for durable items rather than perishable goods.

Baidu To Acquire Livestreaming Platform from JOYY (November 16) Company press release

• Chinese search engine and Internet platform Baidu has announced plans to acquire the livestreaming business YY Live from social media platform JOYY for approximately $3.6 billion, in a bid to progress in the livestreaming segment and diversify its revenue sources.
• The acquisition includes the YY mobile app, YY.com website and the YY desktop app. The transaction is expected to close in the first half of 2021, subject to regulatory approvals.