FROM THE DESK OF DEBORAH WEINSWIG

Is the US Consumer Back for Good? The US retail sales figures for May 2020—which showed a 17.7% month-over-month improvement and an increase even compared to May 2019—provided a much-needed dose of good news to stakeholders in the retail sector. But will these gains persist? Due to Covid-19, the temporary closure of nonessential stores began in the second half of March, and stores remained closed through April. However, discretionary retail began to reopen across the US in May as many states eased lockdown measures. The gains seen in the month were therefore driven by store reopenings, and retailers will be able to capture more revenues as reopenings expand throughout June and July. New York City allowed stores to offer curbside pickup from June 8 under the first phase of the state’s “Pause” plan, and the second phase will see retail stores allowed to reopen on June 22. Furthermore, the release of pent-up consumer demand is likely to have positively impacted May’s retail sales figures. During the coronavirus-led lockdowns, shoppers were unable to buy products in certain retail categories unless they shopped online. With many consumers having sheltered in place through the crisis, they likely welcomed the opportunity to leave the house and visit stores. The same trend was seen in China, where many consumers practiced “revenge shopping,” making purchases to show that the outbreak could not defeat them. Two factors driving retail spending are consumers’ willingness and ability to spend. The University of Michigan Consumer Sentiment Index rebounded in June from April’s low (see Figure 1), reflecting consumers’ increased willingness to shop as stores reopen. At the same time, the latest data shows that the Personal Saving Rate spiked in April, which indicates that consumers have been accumulating cash that they were unable to spend in physical stores or on experiences—such as travel, entertainment and restaurants. With retail reopening largely before restrictions on food-service businesses are lifted across many US states, we may see consumers release their pent-up spending ability in stores, resulting in gains for retail.   In addition, the US unemployment rate declined to a still-high 13.3% in May from 14.7% in April, indicating that some people have found work again. We are cautiously optimistic that retail results will continue to improve as people return to work and are able to resume normal behaviors including those that support retail traffic, such as visiting restaurants and entertainment venues. Readers may be interested in the first two reports in our new Post-Crisis Outlook series, each of which includes proprietary estimates for categories and sectors in US retail: US Apparel Retail: Post-Crisis Outlook US Home and Home-Improvement Retail: Post-Crisis Outlook

US RETAIL AND TECH HEADLINES

Neiman Marcus Secures DIP Financing Approval (June 16) Company press release

• Department-store chain Neiman Marcus Group has secured approval from the US Bankruptcy Court for the Southern District of Texas for a $675 million debtor-in-possession (DIP) financing package. The package provided by creditors includes $250 million in immediate availability, as well as an additional $150 million after September 4, 2020, as needed.
• Neiman Marcus previously received interim approval for $275 million, provided by creditors, when Chapter 11 proceedings began in May 2020, after the coronavirus pandemic pushed it to temporarily close all of its stores in mid-March.

Beautycounter Partners with Sephora (June 16) CNBC.com

• Clean-beauty brand Beautycounter has entered into a partnership with LVMH-owned Sephora to launch online and in-store pop-up shops. Beautycounter will launch a range of products on Sephora’s website from July 7 and at Sephora stores from August 7, for a limited time.
• Sephora will feature Beautycounter’s products alongside brands such as Kosas and Supergoop! on its “Clean Makeup” page. Currently, Beautycounter has three boutiques—in Denver, New York City and a seasonal pop-up in Nantucket—with another set to open later this year in Los Angeles.

Amazon To Use AI Tech To Impose Social Distancing in Its Warehouses (June 16) Reuters.com

• Amazon has implemented a tracking system that uses artificial intelligence (AI) to encourage social distancing at its offices and warehouses and lower the risk of spreading the coronavirus among employees. The new system, “Distance Assistant,” uses surveillance videos to locate high-traffic areas.
• The tracking system also provides monitoring that will show staff maintaining a safe distance in green circles, while those closer to them will be highlighted in red circles.

Etsy Adds Augmented Reality Shopping Feature on iOS (June 16) Company press release

• Online marketplace Etsy has added a new feature on its app that allows users to shop for wall art by previewing the product on their wall through augmented reality. The company announced that the augmented-reality capabilities will be initially launched on its iOS app and will be rolled out on android apps shortly.
• Etsy currently offers over 5 million items in the Art and Collectibles category. Users can now pick any product in the Paintings, Photographs or Prints subcategory and tap the new Augmented Reality icon at the top-right corner of the item graphic to see it appear in their own house or workplace.

Walmart Collaborates with Shopify To Boost Online Marketplace (June 15) Company press release

• Walmart has partnered with Canadian e-commerce company Shopify to expand its online marketplace site. The partnership will connect Walmart’s Marketplace to small business sellers from Shopify, with the aim of bringing 1,200 Shopify sellers to the marketplace in 2020.
• This collaboration enables authorized Shopify sellers to list their goods on Walmart.com.

EUROPE RETAIL AND TECH HEADLINES

Boohoo Revenues Up 45%; Acquires Oasis and Warehouse (June 17) Company press release

• UK-based online fashion retailer Boohoo Group reported a 45% year-over-year increase in total revenues for the three months ended May 31, 2020. In the UK, which accounts for half of total revenues, sales were up 30%. Sales in the US were up 79% (83% at constant currency).
• Boohoo announced the acquisition of the online businesses and all associated intellectual property of fashion brands Oasis and Warehouse from Hilco Capital in a deal worth £5.25 million ($6.58 million). The company also purchased the remaining 34% stake in PrettyLittleThing from its minority shareholders during the period.

Carrefour Teams Up with Google To Launch Voice Grocery Shopping Service (June 16) Company press release

• Grocery and general-merchandise retailer Carrefour and Google will launch a voice-based grocery shopping service in France, within the framework of their strategic partnership signed in June 2018, to accelerate Carrefour’s expansion into food e-commerce. The service enables users to associate their Google and Carrefour accounts and add items to a shopping list by saying generic words via the digital voice assistance service Google Assistant.
• Linked to Carrefour’s e-commerce inventory, Google Assistant then translates the list into a shopping cart available on the Carrefour.fr website. It also includes an option to delete, modify or add products.

Richemont Appoints Philippe Fortunato as CEO of Fashion Business (June 16) Reuters.com

• Swiss luxury-goods holding company Richemont has appointed Philippe Fortunato as CEO of its fashion and accessories business, effective September 1, 2020. Fortunato most recently served as the CEO of LVMH-owned luxury brand Givenchy.
• Fortunato replaces Eric Vallat, who left the company last year to take on the CEO role at Remy Cointreau.

H&M’s Second-Quarter Sales Drop 50% (June 15) Company press release

• Swedish fashion group H&M has reported a 50% year-over-year drop in net sales for the second quarter, ended May 31, 2020, impacted by the Covid-19 situation. Online sales were up 36% year over year, with 48 of its 51 online markets functional amid the pandemic.
• As a result of the pandemic, H&M was forced to temporarily close about 80% of stores globally in April, and 18% of its stores are still closed. Total sales in the first half of June declined 30% in local currencies compared to the same period in 2019.

X5 Retail Launches Pilot Click-and-Collect Service (June 15) RetailTechInnovationHub.com

• Russian food retailer X5 Retail Group has announced a pilot click-and-collect service from grocery lockers in selected Perekrestok and Pyaterochka stores. The service was launched by the group’s online supermarket Perekrestok.ru and parcel delivery service subsidiary 5Post.
• To use the pilot click-and-collect service, customers need to spend a minimum of ₽500 ($7.20) on Perekrestok.ru with free delivery to the lockers. The orders will be assembled at dark stores and delivered to the lockers by couriers.

Kinnevik To Sell 16.2% of Its Stake in Zalando (June 15) Company press release

• Swedish investment firm Kinnevik has launched an accelerated book-building process of 10.6 million existing shares in Berlin-based online fashion retailer Zalando to institutional investors. The shares represent 4.2% of the company’s issued share capital and comprise 16.2% of the Swedish private-equity firm’s shareholding in the company.
• Kinnevik does not intend to realize further cash proceeds from the Zalando investment. The investment firm has appointed Credit Suisse Securities Limited and BofA Securities as joint bookrunners in the transaction.

ASIA RETAIL AND TECH HEADLINES

Flipkart To Start Hyperlocal Delivery Services (June 17) IndiaRetailing.com

• Walmart-owned e-commerce firm Flipkart plans to launch a new hyperlocal delivery service that will enable customers to order groceries and essential items from nearby stores. The company is looking to trial the service in Bengaluru in the next few weeks, beginning with grocery deliveries.
• The service is accessible via the Flipkart app, and initially deliveries will be done from local warehouses and select shops. Flipkart will facilitate the deliveries using Shadowfax logistics company’s last-mile capabilities, according to the Press Trust of India.

eBay India Launches #LocalToGlobal Campaign (June 17) Retail4Growth.com

• eBay has launched a #LocalToGLobal campaign in India to encourage small and medium businesses to expand their businesses globally. The campaign is part of a broader strategy designed by the company to promote the cross-border e-commerce potential to homegrown businesses and help them to start selling globally.
• The campaign was launched by showcasing the theme “From India to the World,” with a collection of specially crafted advertisements across its social media handles. As part of the promotion, eBay has also created a video montage featuring small and medium businesses that have leveraged the platform to build a global footprint.

Didi Ventures into E-Commerce (June 16) KR-Asia.com

• Chinese transportation platform Didi Chuxing has launched a trial mini-program called Chengxin Youxuan on social media and mobile payment app WeChat. The trial service will be initiated in the capital of China’s Southwest Sichuan province, Chengdu.
• The program allows customers to order groceries and essentials online via WeChat, which can be collected in store or delivered within two days. The delivery will be provided by third-party couriers.

Alibaba Launches Intangible Cultural Heritage Shopping Festival (June 15) China.Org.Cn

• On June 12, Alibaba launched its first shopping festival to promote intangible cultural heritage (ICH) on China’s Cultural and Natural Heritage Day. The opening ceremony was broadcast live on Alibaba’s e-commerce platform Taobao.com.
• Over 100 million users have placed online orders for ICH-themed products from Taobao.com in the past year, according to company data. Over the time, nearly 25,000 active Taobao sellers sold ICH handicraft goods worth almost ¥3 billion ($ 423 million).

VisionNav Robotics Raises $14 Million in Series B1 Funding (June 15) KR-Asia.com

• Chinese unstaffed storage services provider VisionNav Robotics has raised ¥100 million ($14 million) in a Series B1 round. The funding was led by venture capital firm Lenovo Capital and joined by investment funds Flyfot Ventures and Eastern Bell Capital.
• The new investments will primarily be used to improve visual control and sensing systems for autonomous vehicles and for business development. Established in 2016, VisionNav has rolled out a range of automated guided vehicles that can be integrated into the construction of unstaffed warehouses across sectors, including manufacturing and logistics.