Nitheesh NH
FROM THE DESK OF DEBORAH WEINSWIG
A Wave of Returns Is Set To Hit Retailers While the Covid-19 lockdown prevented consumers from shopping in stores, it also meant they could not return unwanted products. Returns cost US retail hundreds of billions of dollars each year, according to the National Retail Federation, and that cost is growing in line with the expansion of e-commerce. As with shipping, returns comprise a variable cost that is inherent in selling online, and one that contributes to pure-play e-commerce being an unprofitable model for so many retailers. However, unlike shipping, there are few opportunities to automate the returns process, given that returned products typically need to be inspected and assessed for resale, one item at a time. Any structural shift from brick-and-mortar stores to e-commerce in the wake of the coronavirus crisis will therefore accrue more costs for retailers and thus threaten to erode margins across the sector. What Have US Consumers Done with Their Returns? In the short term, retailers face a wave of pent-up returns post lockdown, which could be challenging to handle. On July 1, 2020, Coresight Research surveyed US shoppers on what they have done with returns during the store-closure/lockdown period and found that many were yet to return products, and one-third of all respondents said that temporary store closures had prevented them from returning unwanted purchases.- Three in 10 of those who had products to return stated that they plan to return them in store; 12% plan to post returns via mail.
- Post lockdown, returning in store is a more popular option than returning by mail. However, during lockdown, more consumers understandably turned to mail.
- The demand for returning products in stores will add to the logistical challenges of managing traffic flows and social distancing in brick-and-mortar formats—although one silver lining is that this demand will drive shoppers into stores, providing retailers with opportunities to boost unplanned and incremental purchases.
Respondents could select multiple optionsBase: US Internet users aged 18+ who were prevented from returning unwanted products by lockdown/stores being closed, surveyed on July 1, 2020
Source: Coresight Research[/caption] Retailers Should Seek Longer-Term Solutions Although retailers have very limited opportunities to prevent an influx of returns in the near term, they must explore ways to drive down returns rates and process returns more efficiently over the long term. Technology vendors and service providers can provide support to this end.
- Fitting technologies can drive down returns of non-fitting clothing or footwear by giving apparel shoppers the confidence to buy just one size that they know will fit—instead of buying multiple sizes out of caution.
- Artificial intelligence platforms can identify the root cause of returns and give retailers timely, in-season recommendations to curb negative trends.
- Returns innovators and startups provide solutions for retailers to more efficiently manage and process returns. These range from software-as-a-service returns-optimization platforms to returns-handling firms that consolidate and process returns to real-world returns drop-off points.
US RETAIL AND TECH HEADLINES
Levi’s Sales Fall 62% in Second Quarter (July 7) Company press release- Denim brand Levi’s reported a 62% year-over-year decline in net revenues for the second quarter, ended May 24, 2020, due to temporary store closures during the pandemic. Levi’s e-commerce business grew 25% during the period, partially offsetting the store-based revenue decline.
- Levi’s announced that it will trim about 15% of its global corporate workforce, affecting around 700 jobs, in an attempt to cut costs and generate annualized savings of $100 million. Levi’s closed the quarter with nearly $2 billion in total liquidity, with $448 million still accessible under its revolving credit facility.
- Supermarket chain Kroger has announced the retirement of its SVP and Chief Merchant Joe Grieshaber, after 37 years of service, effective August 15, 2020. The company has appointed Stuart W. Aitken—who is currently SVP of Alternative Business and CEO of Kroger’s data analytics subsidiary 84.51°—as Chief Merchant and Marketing Officer, to succeed Grieshaber, effective August 1.
- Kroger also announced that its SVP and CIO Yael Cosset will assume responsibility for Alternative Business and 84.51°, effective August 1. Cosset will continue to lead Kroger Technology & Digital.
- Walmart reportedly plans to roll out a subscription-based service, Walmart+, later in July. According to a previous report by Vox’s Recode, Walmart planned to launch the service in late March or April but delayed it due to the coronavirus pandemic.
- The membership program is expected to be priced at $98 per year and will include same-day delivery of groceries, fuel discounts at Walmart gas stations, early access to product deals and other perks.
- Social networking platform Instagram has partnered with media and entertainment company Time Out to host a two-day, virtual festival designed to benefit small, independent retailers. The interactive festival will be livestreamed via Instagram Live on July 9–10, to support businesses in both New York City, US, and London, UK.
- The festival will be livestreamed exclusively on the Time Out New York and Time Out London Instagram pages. Audiences will be encouraged to buy gift cards, food orders and gifts to charities such as Robin Hood in the US and Hospitality Action in the UK.
- Home-furnishing retailer Pier 1 Imports has entered into an agreement with Pier 1 Imports Online and its guarantor Retail E-Commerce Ventures to sell all of its owned intellectual property (IP), data and other e-commerce-related assets to Pier 1 Imports Online on July 1, 2020. Pier 1 sold its IP and related assets for $20 million, according to a document filed with the Securities and Exchange Commission on July 6.
- Pier 1 had filed for Chapter 11 bankruptcy protection in February. The company announced plans to liquidate its brick-and-mortar store holdings in May after failing to emerge from bankruptcy as a viable business.
- Uber Technologies has announced that it will acquire food- and grocery-delivery firm Postmates in an all-stock $2.65 billion deal. After the acquisition, the Postmates app will continue to run separately, but it will be able to tap into a merchant and delivery network in combination with Uber Eats.
- The deal also enables both companies to streamline the delivery process by combining the delivery and ride networks. The transaction is subject to the approval of Postmates stockholders, regulatory approval and other customary closing conditions; it is expected to close in the first quarter of 2021.
EUROPE RETAIL AND TECH HEADLINES
Supermercato24 Rebrands as Everli (July 7) ESMMagazine.com- Italian online supermarket platform Supermercato24 has rebranded as Everli under its international rebranding and repositioning strategy. The company began its international expansion with the acquisition of Polish grocery-delivery firm Szopi in October 2019.
- In addition to the rebranding, the company will offer users more flexibility in tracking or making changes to their orders, and it will install new equipment to maintain the freshness of fresh and frozen products. Everli currently has an online presence in 50 Italian provinces and 12 Polish cities.
- Sports-fashion retailer JD Sports posted a 30% increase in revenue for the fiscal year ended February 1, 2020. Total comparable sales grew 12%, including over 10% growth from its core UK and Republic of Ireland sports-fashion banners.
- The company registered 3% growth in pre-tax profits to £348.5 million ($437 million) during the period. During the year, the company announced a net increase of 52 JD stores across Mainland Europe and a net increase of 18 JD stores in the Asia-Pacific region.
- Dior has opened a new flagship store on Rue Saint-Honoré, in Paris’ luxury shopping district. The five-story store spans 9,688 square feet.
- The flagship store offers a range of menswear and womenswear collections, leather goods, shoes and accessories, as well as jewelry line Dior Joaillerie and homeware line Dior Maison.
- British fashion retailer AllSaints has announced that its creditors have approved the company voluntary arrangements (CVAs) of All Saints Retail Limited and its subsidiary AllSaints USA Limited. Both CVAs have passed with 93% of creditors voting in favor in the UK and 90% in the US, above the required 75% threshold.
- AllSaints announced the launch of a CVA proposal last month, which aimed to see a major revamp of its store portfolio in the UK and the US. The retailer proposed to pay turnover rent on its 41 stores in the UK and 42 in the US as part of the restructuring.
ASIA RETAIL AND TECH HEADLINES
Amazon Seller Services Receives Fund Infusion (July 8) EconomicTimes.com- The Mauritian and Singaporean arms of Amazon have infused ₹23.1 billion ($307 million) into one of Amazon’s Indian units, Amazon Seller Services, according to regulatory documents.
- These funds will enable Amazon to expand its infrastructure and enhance consumer and seller experiences in India. In January this year, Amazon’s founder, Jeff Bezos, announced a $1 billion investment in India to help small and medium enterprises go online.
- Indian beauty and fashion products retailer Nykaa has expanded its Nykaa Fashion vertical by launching kidswear on its online portal. This category includes apparel, footwear, sportswear, toys and accessories across over 30 international and Indian brands.
- The portfolio includes international brands such as Gap, Mothercare, Pepe Jeans, Ralph Lauren and Skechers, and Indian brands including Biba, Gini & Jony and Ruff Kids. Nykaa also plans to expand its portfolio by offering infant wear and footwear across subcategories such as party and ethnic wear.
- Brazilian flip-flop retailer Havaianas has announced plans to invest $50 million in the expansion of its retail footprint in the Asia-Pacific region, from now until 2024. The retailer intends to reach out to more Asian consumers and introduce a concept in which flip-flops are not only seen as a functional footwear but also as a fashion accessory that provides comfort and style.
- In the Asia-Pacific region, Havaianas’ current major markets are China, Indonesia, Malaysia and Thailand. The retailer operates flagship stores in Philippines and Australia, and it also has virtual stores on Chinese e-commerce platforms JD.com and Tmall.com.
- San Francisco-based luxury handbag brand Senreve has opened a standalone pop-up store in Hong Kong, which will operate until August 6, 2020. The pop-up store will conduct workshops in collaboration with female entrepreneurs and artists.
- Senreve recently raised $16.75 million in a Series A funding with plans to expand in Asia. Senreve was founded in 2016 and currently operates a flagship store in San Francisco.
- Sportswear brand PUMA has expanded its experiential store concept in India by remodeling two stores in Hyderabad and New Delhi. The stores combine technology, sports and experiential retail to offer interactive and personalized experiences.
- PUMA has also launched its PUMA SELECT shops-in-shops, which offer the brand’s latest global collaborations with streetwear labels and designers. The stores feature a PUMA x YOU customization studio, in which customers can personalize apparel, footwear and accessories with embroideries and prints.