FROM THE DESK OF DEBORAH WEINSWIG

Hundreds of Amazon Fresh Stores Heading for the UK Grocery Sector? Amazon is targeting 260 Fresh grocery stores in the UK by the end of 2024 and expanding this cashier-free format into further European countries, according to media reports this week. However, given the pace of expansion so far, we are skeptical that it will achieve this ambitious store-opening target. This week’s reports are based on internal Amazon documents from 2020, and were in addition to a target of 25 UK Fresh store openings in 2021. Our own data, based on tracking store openings week by week, has identified nine Fresh UK store openings in 2021. With just six weeks left in the year, Amazon is already severely undershooting its target. Those internal documents indicate targets of 60 new stores in 2022, 100 in 2023 and another 100 in 2024. They also suggest that Amazon then aims to expand to Germany, Italy and Spain. Nevertheless, the target itself is another indicator of how seriously Amazon views grocery—which, along with other pockets in retail such as luxury, remains a category in which Amazon underindexes sharply. In July, Amazon hired Tesco veteran Tony Hoggett to run its stores division; he will join in January 2022 as Senior Vice President of Physical Stores. Competition and Challenges In the UK, Amazon Fresh is a small convenience format more akin to Amazon Go stores in the US (and offering the same “Just Walk Out” experience) than the full-range Amazon Fresh supermarkets seen in the States. Should Amazon Fresh continue to focus on urban convenience formats in the UK, it will be entering a well-supplied market: Major grocery retailers have focused aggressively on convenience formats over the past decade. Among those major chains, Tesco now has 1,941 Express stores and 943 One Stop convenience stores; Sainsbury’s has 811 Local c-stores; The Co-op has 2,613 stores, mainly in convenience formats; and Marks & Spencer has 748 food-only convenience stores. Some of those chains are trialing Amazon-style “Just Walk Out” technology, too. In October, Tesco opened its first checkout-free store, named GetGo, in Holborn, London. Just this week, Sainsbury’s announced that it will open a “Just Walk Out” store powered by Amazon’s technology, also in Holborn, in late November. And to add to the burgeoning Holborn hub, Amazon Fresh is set to open a store there, too. (Both Amazon and Sainsbury’s have their head offices in Holborn.) In mainland Europe, meanwhile, Amazon will be facing a diverse set of markets: There is no one “European” grocery market. For example, German shoppers tend to frequent discounters and small supermarkets, habits that have stifled the growth of a substantial convenience sector. If Amazon wants to focus on convenience on the continent, it will also have to contend with local regulations such as strict restrictions on Sunday trading in Germany, which have been one inhibitor of c-store expansion in the country. In a wider context, Amazon is entering store-based convenience retail just as the concept of convenience is leaving the physical store. In Europe, as in the US, burgeoning quick-commerce players, including vertically integrated instant-needs companies, are bringing convenience purchases to shoppers’ doors in as little as 10–15 minutes. Reflecting this, just around a week ago, the biggest US instant-needs player, Gopuff, launched in the UK market with an eye—like Amazon—on then entering mainland European markets. Should these companies pull time-sensitive purchases out of convenience stores, Amazon may find itself competing in a slow-growth or zero-growth market. The Rewards If Amazon can reach 260 UK stores and turn over an average of around £3 million ($4 million) per store, that implies sales of £780 million or $1.05 billion each year (£3 million is our estimated sales-per-store average for Tesco Express, Sainsbury’s Local and The Co-op). In turn, we estimate that would give Amazon a total share of 0.4% of UK food retailers’ projected sales in 2025 (assuming its stores reach full maturity rapidly)—a tiny share but a springboard from which to aim for an incrementally greater share of everyday retail spend and shopper loyalty. The total Western European store-based grocery sector will be worth $1.67 trillion in 2025, per Euromonitor, underscoring the scale of the opportunities.

US RETAIL AND TECH HEADLINES

Champs Sports and Eastbay Merge; New Entity Partners with Uninterrupted   (November 15) Company press release

• Foot Locker’s athletic apparel banners Champs Sports and Eastbay have announced a merger, forming Champs Sports x Eastbay. The new entity features its own unified logo and aims to position itself within the youth sports market, targeting Gen Z athletes.
• Champs Sports x Eastbay has simultaneously announced a partnership with media and consumer product company Uninterrupted to roll out an exclusive “More Than An Athlete” apparel line, focused on basketball items such as arm sleeves, beanies, joggers, hoodies, socks and T-shirts.

Home Depot Reports Strong Revenue and Profit Growth in Third Quarter   (November 16) Company press release

• Home Depot has reported total sales of $36.8 billion for its third quarter, ended October 31, 2021, up 9.8% year over year. Net income increased by 21% year over year to $4.1 billion and US comparable sales grew 5.5%.
• Home Depot’s CEO Craig Menear stated that home-improvement demand remains strong, as customers continue with large home-improvement projects. The company will continue to invest in stores to drive space productivity and improve customers’ shopping experiences.

Kohl’s To Add Draper James RSVP Collection to Its Portfolio of Exclusive Brands (November 16) Company press release

• Kohl’s has announced a partnership with Draper James, a clothing company founded by American actor Reese Witherspoon, to launch Draper James RSVP. The new clothing line will be exclusive to Kohl’s and is set to debut at its stores in February 2022.
• The collection will feature structured blazers, blouses, bodysuits and button-down cardigans, as well as rompers, seasonal capris and skirts. The line will be introduced in 500 Kohl’s stores, with an expanded presence in 300 Sephora at Kohl’s locations, and on Kohl’s.com.

Walgreens and VillageMD Expand into Texas To Launch Primary-Care Clinics  (November 16) Company press release

• Walgreens and VillageMD have announced plans to open more than 20 “Village Medical at Walgreens” primary-care clinics in Dallas, Texas, in 2022. Walgreens and VillageMD offer a coordinated care model, with patients receiving comprehensive primary care from physicians, alongside pharmacy services.
• The first Village Medical at Walgreens location in Dallas opened on October 26 and additional locations will be added later in November and December. The openings represent the group’s fourth major expansion in Texas, following Austin, El Paso and Houston.

Walmart Raises Full-Year 2021 Earnings Guidance amid Strong Third-Quarter Results (November 16) Company press release

• Walmart has reported total revenue of $140.5 billion for its third quarter, ended October 29, 2021, up 4.3% year over year. Its US comparable sales surged by 9.2% year over year (15.6% on a two-year basis), driven by strong momentum in its grocery business.
• Walmart raised its full-year 2021 earnings guidance for the third consecutive quarter. It now expects US comparable sales growth of more than 6% and adjusted earnings per share of $6.40, up from its previous guidance of $6.20–$6.35.

EUROPE RETAIL AND TECH HEADLINES

Amazon To Face Black Friday Strike in Italy Over “Unsustainable” Workloads (November 15) WantedInRome.com

• Amazon is facing a walkout at its main site in Italy on Black Friday as trade unions call for workers to mobilize for greater pay and a bonus. The Black Friday strike is set to include 12,000 couriers, represented by employer association Assoespressi, along with an additional 3,000–4,000 seasonal employees hired to meet holiday-season demand.
• The nationwide strike will demand “reduced workloads and pace,” which have become “unsustainable,” as well as a reduction in drivers’ weekly working hours, according to Assoespressi.

Deliveroo Partners with Picard Groupe for Rapid Grocery Delivery in France (November 15) Bloomberg.com

• UK-based delivery service Deliveroo has partnered with French frozen food company Picard Groupe SAS to offer rapid food deliveries across France—marking the company’s third partnership with a major food provider in the country. Deliveroo’s express delivery service will be available in more than 100 cities across France.
• Deliveroo is also looking to bring its latest grocery delivery service, Hop, to new markets, such as France, Italy and Hong Kong. Hop offers deliveries in little as 10 minutes and relies on dark stores.

Louis Vuitton Unveils Corn-Based Vegan Sneaker Collection (November 16) TheRetailBulletin.com

• French fashion house Louis Vuitton has launched a vegan sneaker collection, the brand’s first sustainable footwear range. The Charlie sneaker is manufactured from a corn-based leather alternative.
• The company stated that its “eco-designed shoes” are made with 90% sustainable resources: The soles are constructed entirely of recycled rubber and the laces completely from recycled fibers. Additionally, the sneakers’ packaging is made solely of recyclable cardboard and transforms into a bag with a handle.

Mark and Spencer Partners with Hirestreet To Launch First Apparel Rental Trial  (November 16) Company press release

• Marks and Spencer (M&S) has collaborated with UK-based clothing rental website Hirestreet to launch its first clothing rental trial, which includes its new season M&S x Ghost collaboration. For the trial, dozens of products—which retail anywhere between £69 and £299 ($78.2 and $388.9)—are available to rent for £13 ($14.7) for four days on Hirestreet.
• M&S stated that the trial will allow the company to better understand consumers’ changing habits and that it supports the company’s commitment to the circular economy, as part of its target to become net-zero in carbon emission by 2040.

ASIA RETAIL AND TECH HEADLINES

BrandMan Retail To Handle New Balance Expansion in India  (November 16) IndiaRetailing.com

• Indian retail solutions provider BrandMan Retail has acquired the rights to operate US-based sports company New Balance’s stores in India. BrandMan will also handle New Balance’s omnichannel retail and boost its operations in the country.
• As part of its India expansion, New Balance will launch 35 additional stores across the country by March 2022. The company currently has stores located in Select CITYWALK and Pacific Mall in Delhi, Alpha One Mall in Ahmedabad and Mall of India in Noida.

IKEA To Open Its Largest Store To Date (November 16) RLI.uk.com

• Swedish home-furnishing retailer IKEA is set to open its largest store so far on November 25, which will be located in Manila, the Philippines—the company’s first location in the country. The new store is five stories tall, with two floors for retail—the remaining will be used for stock and e-commerce operations.
• The store spans 729,000 square feet and will offer over 8,000 appliance and home-furnishing products as well as housing a restaurant.

Myntra Launches Luxury Store “Myntra Luxe” on Its E-Commerce Platform (November 16) LiveMint.com

• Myntra, an Indian online fashion retailer owned by Flipkart, has launched a luxury segment, “Myntra Luxe” on its e-commerce platform. In partnership with The Collective, a multi-brand luxury lifestyle retailer owned by India-based Aditya Birla Fashion Retail Limited (ABFRL), Myntra Luxe will offer 65 premium brands including Fred Perry, Hackett London, Hugo, Polo Ralph Lauren and Ted Baker.
• The initiative will allow the company to compete with Tata Group’s high-end premium e-commerce store Tata Cliq Luxury and Reliance Retail’s digital commerce platform Ajio Luxe.

Ula Receives $23.1 Million in New Funding  (November 16) Pymnts.com

• Indonesian wholesale e-commerce marketplace Ula has closed its Series B funding round with $23.1 million in new investment, bringing its total Series B funding to $110.1 million. The additional funding was led by Flipkart co-founder Binny Bansal and Tiger Global.
• Ula will use the funding to focus on retailers based in Tier 2, Tier 3 and Tier 4 cities. It will also expand its buy now, pay later offerings and incorporate artificial intelligence to support merchants in optimizing business management.

Vietnamese Startup Kilo Raises $5 Million  (November 15) TechInAsia.com

• Kilo, a Vietnamese business-to-business online marketplace, has raised $5 million in a pre-Series A funding round, co-led by Alto Ventures and January Capital, investment firms based in America and Singapore, respectively. Kilo’s existing investor Goodwater Capital also participated, alongside new investors Ascend Vietnam Ventures, Decisive Capital Management and Ratio Ventures.
• Kilo plans to use the funding to expand its team fourfold by the end of next year. It will also develop additional features, such as in financing, logistics and online stores for retailers.