FROM THE DESK OF DEBORAH WEINSWIG

Renewed Lockdowns Come at a Crucial Time for Retail Earlier this week, the UK announced the enforcement of Tier 3 restrictions in London and several areas in the southwest of England, which came into effect on Wednesday, December 16, to stem a surge in Covid-19 cases. Fortunately, the new restrictions do not require nonessential shops to close. Tier 3 is the highest level of coronavirus restrictions in the UK and requires hospitality venues such as bars and restaurants to close, except for delivery or takeout service. People are encouraged to work from home. Outdoor sports, including amateur team sports, are allowed to continue, though without spectators. Nonessential businesses permitted to remain open include gyms, hair salons and personal-care businesses. The UK is not alone in tightening restrictions ahead of the holidays: Germany will go into a hard lockdown from December 16 to January 10; Italy is reportedly considering a lockdown of its own; and France is ending a lockdown on December 15 but will maintain a curfew from 8:00 p.m. until 6:00 a.m. the next day (which is planned to be relaxed on December 31), and movie theaters, theaters and museums will also remain closed. Will these lockdowns put a lump of coal in retailers’ stockings this year? At the time of this letter’s writing, there is just one week until Christmas Day, so the heightened restrictions will primarily affect last-minute shoppers. Savvy shoppers likely monitored the rising rate of new coronavirus cases and accelerated their shopping. Turning to the US for a moment, large retailers urged shoppers to begin their shopping as early as October, likely anticipating bottlenecks from store occupancy limits and shipping capacity. The softer-than-expected results from Black Friday weekend suggest that consumers did start shopping earlier; several shopping holidays such as 10.10 and Amazon's Prime Day took place in October, and many retailers began holiday deals early. Consumers in Europe, like everywhere, have had to rely on e-commerce to shop during lockdown periods. On November 18, the UK’s Office for National Statistics reported that total online retail sales climbed 79.6% year over year in November, compared to a 60.3% rise in October. Online sales accounted for 36.0% of all UK retail sales in November, versus 28.2% in October. E-commerce penetration in the UK is higher than in the US: Statista forecasts that e-commerce penetration will hit 26.2% in the UK and 16.2% in Europe in 2020, compared to 19.0% in the US, according to Coresight Research estimates. In the US, New York City ordered restaurants and bars to again suspend in-door dining this week, although outdoor dining is still permitted. Currently, there have been no new restrictions on stores or businesses, although city government officials have hinted that a resumed full lockdown of nonessential businesses remains possible if the number of cases continues to rise and exhausts spare hospital capacity. Perhaps as a parting gift, US President Trump gave US federal government employees an additional day off—December 24—this year, beyond the 10 official government holiday count. This extra day off would give some procrastinators an extra day to engage in some additional in-store shopping. Despite the expanding repeat of lockdowns, consumer sentiment is much sunnier now than it was in March, particularly as major vaccines have been approved in the US and the UK. Throughout the course of 2020, we have seen much creativity and resourcefulness among retailers and consumers, and we believe that consumers will find a way to get their holiday shopping done: whether it is in-store, online or via other means such as physical or electronic gift cards.

US RETAIL AND TECH HEADLINES

Bed Bath & Beyond Set To Sell Cost Plus World Market (December 14) Forbes.com

• Home-goods retailer Bed Bath & Beyond has announced that it has struck a deal with Kingswood Capital Management, a private equity firm, to sell Cost Plus World Market. The sale is part of a turnaround effort being led by Mark Tritton, which saw the company divest several other brands.
• The company also stated that it is accelerating its stock buybacks with the approval of a $150 million share repurchase program in addition to the $225 million program that it announced in late October.

Walmart Extends Driverless Delivery Pilot to Arkansas (December 15) BusinessInsider.com

• Walmart has confirmed that it is expanding its driverless delivery pilot with autonomous vehicle startup Gatik. From 2021, its Walmart Neighborhood Market in Arkansas will start receiving shipments delivered via a driverless box truck without a safety driver.
• The company began testing the efficacy of self-driving vehicles in July 2019 through its partnership with Gatik, by transporting grocery orders on a two-mile (3.2km) route between a dark store and the Neighborhood Market store in Arkansas. Since then, the Gatik pilot has safely driven more than 70,000 operational miles in autonomous mode with a safety driver, according to Walmart.

Christopher & Banks Assesses Strategic Options Including Bankruptcy (December 15) ChainStoreAge.com

• Women’s apparel retailer Christopher & Banks has roped in strategic advisers, including B. Riley Securities, to appraise “available strategic alternatives” as it continues to experience strained sales and liquidity.
• The company, which operates around 450 stores, issued a “going concern” warning, citing uncertainty regarding its survival over the next 12 months, and also suggested that filing for bankruptcy, out-of-court debt restructuring and a sale of the company are possible strategic options.

JD Sports Announces the Acquisition of Shoe Palace (December 15) Company press release

• British retailer JD Sports Fashion has acquired California-based footwear retailer Shoe Palace for approximately $325 million. The acquisition is being funded by the group’s existing resources and bank facilities.
• The acquisition is in line with JD Sports’ objective of expanding in the US sneakers and lifestyle apparel market and growing the group’s presence on the West Coast of the US.

Instagram Launches Shopping in Reels (December 15) RetailDive.com

• Following the company’s initial announcement in October, Instagram launched “Shopping in Reels” on its platform on December 10. The feature enables merchants and creators to tag products when they create Reels on the platform, according to the company. Through a “View Products” button, users can purchase, save or learn more about the products tagged within the Reels. Creators can also include a branded content tag to Reels when they collaborate with brands for product promotion, according to the company.
• Instagram had launched the Reels feature (which enables users to create short video clips and add music tracks or other effects to them) in the US and other international markets in August this year.

EUROPE RETAIL AND TECH HEADLINES

Debenhams Begins Closing Down Sale After Failing To Attract Buyers (December 16) RetailGazette.co.uk

• UK department store chain Debenhams has commenced a closing down sale after it failed to receive offers from interested parties since it went into liquidation on December 1, 2020. The retailer is offering discounts of up to 70% on selected products.
• Frasers Group has expressed interest in the retailer’s online business and US-based Authentic Brands Group is reportedly considering buying the retailer. If no offers are made, Debenhams will close down, placing 12,000 jobs at risk.

Aldi Plans To Expand Its Contact-Free Grocery Service (December 15) Retailgazette.co.uk

• Aldi plans to roll out its click-and-collect grocery services to around 200 stores in the UK by Christmas. This contactless shopping service will allow shoppers to select grocery items online, drive to a local Aldi store and have Aldi staff deliver the order to customers’ cars, adhering to social distancing.
• Aldi will use omnichannel commerce platform Orckestra Commerce Cloud, developed by Canadian e-commerce and strategic sourcing firm MDF Commerce, for this purpose.

Adidas Considers Selling Reebok (December 14) Company press release

• Sportswear retailer Adidas has confirmed that it is considering a sale of its subsidiary Reebok and other “strategic alternatives” that could include retaining Reebok in its brand portfolio.
• The possible sale is in line with Adidas’ development of its five-year strategy. The company’s decision on the potential sale of Reebok will be announced on March 10, 2021, per a company press release.

H&M Reports a Sales Decline in the Fourth Quarter of 2020 (December 15) Company press release

• H&M Group reported a 10% decline in its net sales in its fourth quarter of 2020, ended November 30, 2020, compared to the fourth quarter of 2019. Total net sales in the period amounted to kr52.5 billion ($61.7 billion).
• Total net sales for fiscal year 2020 declined by 18%, mainly due to the impact of Covid-19. Large declines in customer footfall and temporary store closures led to the decline in sales.

Inditex Reports Sales Improvement in the Third Quarter of 2020 (December 15) Company press release

• Inditex reported a decline of 14% in sales in its third quarter, ended October 31, 2020, an improvement from the 31% decline in the second quarter, as its initial autumn/winter collections “were very well received by customers.”
• The company reported a net income decline of 26%. Online sales grew 76% during the period and are expected to grow at a similar rate in the fourth quarter. Inditex plans to make investments of up to €1 billion ($1.2 billion) over the next three years as part of its digitalization strategy.

ASIA RETAIL AND TECH HEADLINES

JD.com Announces $700 Million Investment in Xingsheng (December 15) TechInAsia.com

• JD.com has entered into a preferred share purchase agreement to invest $700 million in community group-buying e-commerce platform Xingsheng Preference Electronic Business Limited.
• The companies expect the deal to create synergies in technology, supply chain and logistics in lower-tier cities in China. The deal is subject to customary closing conditions.

Delhivery Raises $25 Million, Prepares for IPO Launch in 12–15 Months (December 15) ETRetail.com

• Indian last-mile delivery firm Delhivery has received $25 million from Steadview Capital as the latter acquired all the shares of an early investor. Delhivery is also heading toward an initial public offering (IPO), CEO Sahil Barua said.
• Delhivery serves e-commerce firms, brands and other businesses, and Steadview Capital Founder Ravi Mehta stated that its tech-centric approach has enabled faster delivery speeds and greater e-commerce adoption in India.

Big Bath To Expand Network Through Franchising (December 16) insideretail.asia

• Malaysian bath and kitchen specialist Big Bath plans to open 86 stores across East and West Malaysia over the next three years, as the retailer has observed growing demand for bathroom and kitchen products since September.
• The retailer operates nine stores and is focused on physical retail despite a surge in e-commerce, as it wants to provide a better shopping experience for its customers.

Baidu Considering Making Own Electric Vehicles (December 15) Reuters.com

• Chinese search engine firm Baidu is reportedly considering making its own electric vehicles through contract manufacturing or by creating a majority-owned venture with automobile manufacturers, according to sources that spoke to Reuters.
• Baidu already has an autonomous driving unit which supplies artificial intelligence-powered technology to automakers such as Ford and Toyota.

Tencent Invests in Agri-Tech Startup (December 15) Company press release

• Chinese tech firm Tencent and other unnamed investors have invested “hundreds of millions of yuan” ($1= around ¥6.60) in agricultural automation technology startup FJ Dynamics.
• FJ Dynamics makes smart tractors and rice planters, and autonomous vehicles for ports and factories. It will use the investment to increase commercialization of its products and technologies.