FROM THE DESK OF DEBORAH WEINSWIG

Lockdowns and Store Closures Are Back—Is It Different Now? Many of the country-wide lockdowns and temporary retail store closures from March and April are back. Most recently, UK Prime Minister Boris Johnson delivered a major Halloween trick on October 31, announcing that all pubs, restaurants and nonessential businesses in England would be required to close from November 5 through December 2, though with schools and universities remaining open this time around. People are allowed to leave their homes for essential reasons such as school, work, food shopping and for health and exercise reasons, with all nonessential travel discouraged. If the lockdown is successful, then Christmas this year will be “as normal as possible,” said Johnson. Several other European countries—including Belgium, France, Germany and Italy—have also implemented various measures to arrest the spread. In the US, the outbreak intensity varies dramatically by region. Last week, a judge in El Paso, Texas, ordered nonessential businesses to close, although this order was challenged by Texas state authorities. Although New York State and New York City made great strides in bringing down the number of cases, several hotspots in the boroughs of Brooklyn and Queens have emerged recently, leading to temporary lockdowns of those areas until a return to manageable levels while retail and restaurants remain open in the less-afflicted areas. Is retail in for a repeat of the industry blows from this spring and summer? Store reopenings in May followed a “yo-yo” pattern, with many stores reopening, temporarily closing again and then reopening as conditions improved. For example, shoemaker Steve Madden said during the company’s third-quarter 2020 conference call that it had to “reclose 14 stores in California from mid-July to the end of September due to reimposed government restrictions and 21 stores in Israel that reclosed in September had to remain closed due to the reimposed lockdown.” Part of the answer depends on consumer behavior, which has adapted in many ways to the new environment. Consumer shopping has gravitated online, driving a surge in e-commerce sales, as well as changed shopping behaviors. Most shoppers now make fewer, targeted trips so as to minimize their time inside stores. Consumers have also embraced new shopping and fulfillment methods such as contactless ordering and delivery, including BOPIS (buy online, pick up in store) services and curbside pickup. At the same time, retailers have also adapted to the new world. They have ramped up their e-commerce and delivery capabilities, made adjustments to the parameters of their supply-chain software and remained nimble. Retailers are also building inventory of health and safety items ahead of runs on these supplies following potential political unrest or subsequent waves of Covid-19 cases. It could be argued that any potential lockdowns and store closures should be less disruptive than in March and April, since most retailers are now better prepared to cater for them and minimize their economic damage. In addition, consumers have rapidly adopted contactless shopping and e-commerce, including many first-timer online shoppers who have now become accustomed to shopping online. As we approach the holidays, numerous retailers have already launched holiday and Black Friday promotions so as to pull holiday sales forward in this dynamic environment.

US RETAIL AND TECH HEADLINES

Wayfair Revenues Surge 66.5% in Third Quarter (November 3) Company press release

• Online furniture and home retailer Wayfair reported 66.5% growth in revenues to $3.8 billion in the third quarter ended September 30, 2020. The number of active customers in its Direct Retail business increased 50.9% year over year to 28.8 million during the quarter.
• The company’s gross margin was up 7.1 percentage points year over year to 29.9% and the adjusted EBIDTA margin turned positive to 9.7%, versus (7.1)% in the third quarter last year. CEO Niraj Shah remarked that “demand is moving online at an accelerated pace, and we expect the home to be even more important than usual when it comes to celebrating the holidays this year.”

PREIT and CBL File for Bankruptcy (November 2) RetailDive.com

• Mall operators PREIT and CBL have filed for bankruptcy. Over 30 of CBL’s retail tenants have filed for bankruptcy and many have closed stores this year, while some other tenants have agreed rent deferrals or concessions with CBL, according to court papers.
• PREIT entered bankruptcy with a deal with 95% of its lenders that provides the company an additional $150 million to recapitalize its business and prolong its debt maturity schedule, while CBL’s earlier deal with lenders will allow it to write off $1.5 billion in debt and other obligations.

Walmart Stops Using Robots for Shelf-Scanning (November 3) Reuters.com

• Walmart has ended its partnership with Bossa Nova Robotics and stopped using roving robots to scan shelves and track inventory. Walmart reported that the technology “was tried in roughly 500 stores just as [it is] trying other ideas in additional stores.”
• Walmart added that it will continue to trial new technologies and invest in proprietary apps and processes to track stock and move it to shelves promptly.

NIKE Expects To Lay Off 700 Staff (November 3) NASDAQ.com

• NIKE has announced that it expects to lay off 700 staff, up from the 500 job cuts stated in its announcement earlier this year.
• This move is part of NIKE’s strategic shift, which will increase focus on direct-to-consumer sales and reduce emphasis on wholesale sales.

Amazon Reportedly Planning New Rural Delivery Service (November 2) TheInformation.com

• Amazon may be planning to manage its own deliveries to rural areas rather than relying on the US Postal Service, according to job postings and sources that spoke to The Information.
• The new program is reportedly called “Wagon Wheel” and could likely involve Amazon setting up small shipping hubs across rural areas in the US.

EUROPE RETAIL AND TECH HEADLINES

Marks & Spencer Group Revenues and Operating Profit Decline in Half Year (November 4) Company press release

• Marks & Spencer reported a decline of 15.8% in group revenues and a 77.1% fall in unadjusted operating profit in the half year ended September 26, 2020. The company’s food segment performed strongly, up 2.7% on a comparable basis, and up 6.6% excluding its cafés and counters business.
• Clothing & Home (C&H) revenues declined 40.8% due to lockdowns earlier in the year, online sales within this segment, however, were up 34.3%. The company reported Food revenues up 3.0% and C&H revenues down 21.5% in the first four weeks of the second half. It expects newly announced lockdowns to negatively impact C&H revenues.

Zalando’s Revenues Jump 21.6% in Third Quarter (November 4) Company press release

• European fashion pureplay Zalando reported 21.6% growth in revenues to €1.8 billion ($2.1 billion) in the third quarter ended September 30, 2020. The EBIT margin was up six percentage points from last year, to 6.4%.
• Increased online shopper demand led to a 26.7% jump in order numbers and increased basket size drove growth. Zalando upgraded the full-year outlook to expect 20–22% revenue growth versus the previously announced 15–20%. The company adjusted the EBIT to €375–425 million ($438–497 million) versus the previous €250–300 million ($292–351 million).

Primark Reports Drop in Full-Year Revenues and Profits (November 3) Company press release

• Associated British Foods (ABF) reported that the revenues of its retail business Primark plunged by 24% at actual and constant-currency rates in the year ended September 12, 2020—mostly driven by losses incurred from forced store closures due to coronavirus restrictions in the third quarter. Operating profit fell by 62% at constant currency and 63% as reported, primarily due to the sales shortfall.
• In a separate statement, ABF announced that all Primark stores in Belgium, France, Slovenia, the Catalonia region of Spain and the Republic of Ireland were closed. The company announced that as of November 5, Primark stores in England will remain closed as a result of the nationwide four-week lockdown. These stores represent 57% of its total selling space and the estimated loss for the period of closure will be £375 million ($487 million).

Boots Lays Out Plans for England Lockdown (November 3) Retailgazette.co.uk

• Boots has announced plans for its store operations during the four-week lockdown in England from November 5. The health and beauty chain will remain open throughout the period, and its Boots Optician and Boots Hearingcare services will continue to operate.
• Customers can shop the entire Boots range of medicines, health-care products and toiletries, with staff on hand to assist them. The chain said that its safety measures, including social distancing and enhanced cleaning, remain in place.

Ocado Acquires American Robotic Firms Kindred Systems and Haddington Dynamics (November 3) Company press release

• British online grocery retailer Ocado has acquired Kindred Systems for approximately $262 million and Haddington Dynamics for approximately $25 million. The first is a piece-picking robotics firm and the second is a robotic arm designer and maker.
• Ocado expects the synergies from the acquisitions to “accelerate the commercialization of robotic picking and other automation tasks” for clients of its grocery retail tech business Ocado Smart Platforms.

Hema Expects €100 Million Impact from the Pandemic (November 3) RetailDetail.eu

• Dutch department store chain Hema has written off €100 million ($116 million) on its bakeries, goodwill and real estate for its current fiscal year, which ends February 2021, due to the crisis brought on by the pandemic. The retailer expects further pressures to its finances in the coming years.
• The retailer reported 0.8% growth in revenues to €1.3 billion ($1.5 billion), halving its losses to €117.4 million ($136.7 million), in its last fiscal year ended February 2020—just before the coronavirus outbreak in Europe.

ASIA RETAIL AND TECH HEADLINES

Bukalapak Forms Strategic Partnership with Microsoft (November 3) Company press release

• Indonesian e-commerce platform Bukalapak and Microsoft have formed a strategic alliance, which will see Bukalapak adopt Microsoft Azure as its cloud platform. The tech giant will also invest in Bukalapak, but neither company disclosed the sum.
• Microsoft will help build out Bukalapak’s cloud infrastructure to help service its 12 million online and offline merchants and 100 million customers. Microsoft will also provide digital skills training to Bukalapak staff and merchants.

Wanwu Dezhi Raises $80 Million in Series C Funding (November 4) DealStreetAsia.com

• Chinese antiques and collectables platform Wanwu Dezhi has raised $80 million in Series C funding. The round was jointly led by investment bank China Renaissance’s Huaxing New Economy Fund and Beijing-based Source Code Capital, with participation from GGV Capital and United Media FOFs.
• Wanwu Dezhi will use the funds to enhance its e-commerce platform and improve its user service infrastructure, as well as spending on talent acquisition.

Watsons Loyalty Members Pass 100 Million Mark (November 3) RetailNews.Asia

• Health and beauty chain Watsons announced that it has gained 100 million loyalty members across Asia since it was established in 2008. The Watson membership program is now available in 14 markets across the globe.
• The Watsons membership program is growing at roughly 1 million new members each quarter, according to Malina Ngai, CEO of A.S Watson Group’s Asia and Europe business, as the chain focuses on improving customer wellness.

Future Group Files Caveat Against Amazon in Indian Court (November 3) MoneyControl.com

• Indian firm Future Retail Limited has filed a caveat against Amazon after a Singapore arbitration court ruled in favor of Amazon. This halted proceedings related to Future’s acquisition by Reliance Retail Ventures. Amazon India is owned by an entity incorporated in Singapore.
• Amazon holds a stake in Future Coupons, one of the companies that form Future Retail, and claims that its agreement with Future Retail’s founders and a separate agreement between the founders and the Future Retail entity constitute a single integrated transaction. Future Retail claims the contrary and that Amazon has no bearing on the former’s acquisition by Reliance Retail Ventures.

IDS BuyBuyBuy Raises $40 Million in Series B Funding (November 4) TechInAsia.com

• Chinese beauty e-commerce startup IDS BuyBuyBuy has raised $40 million in Series B funding. Orchid Asia Group led the round, and existing investors Lightspeed China Partners and SIG China participated.
• The startup will use the funds to expand overseas and further build its global supply chain and business relationships.