FROM THE DESK OF DEBORAH WEINSWIG

Retailers and Consumers Continue To Be Buffeted by Global Supply Chains Supply-chain participants including retailers and consumers are continuing to feel the repercussions of surges, rapid declines and the resurgence of demand in global supply chain as we progress through the second half of 2021. Many serious shipping bottlenecks continue, alongside recent additional challenges. According to the Marine Exchange of Southern California there were 44 ships anchored at the US West-Coast ports of Los Angeles and Long Beach, California, at the end of August (versus a prior record 45 ships in January which included oil tankers). Exacerbating the situation, a positive Covid-19 test at the world’s third-largest port, China’s Ningbo-Zhoushan port, resulted in a two-week shutdown from August 11 to 25, amid China’s practice of aggressively snuffing out any emerging outbreaks. These bottlenecks have driven up freight-container rates, with the rate for a 40-foot container increasing by 351% year over year to nearly $10,000 as of August 28, according to the Drewry World Container Index. These costs will hurt retailers’ margins and/or be passed on to consumers. On the supply side, Ho Chi Minh City in Vietnam implemented a large-scale lockdown on July 9, affecting numerous apparel and footwear manufacturers, including Gap, NIKE, PVH, Steve Madden and Urban Outfitters. Following trade disputes with China, many brands moved their manufacturing out of China, including to Vietnam, and the country accounts for nearly one-third of US footwear manufacturing and one-fifth of US apparel manufacturing in dollar terms, according to the American Apparel & Footwear Association. At the same time, the global chip shortage continues, with chipmakers fervently adding capacity, which can take several years. The shortage has prompted shutdowns of automotive lines (which affect the delivery of retail goods) as well as the availability of appliances, gaming consoles, PCs and smartphones. Chip foundries are running at above optimal capacity utilization, which increases costs, and the largest chip foundry, TSMC, has hinted at price increases. Apple, one of TCMC’s largest customers, is likely to announce price increases for the iPhone 13 at its new product event on September 14. These supply-chain gyrations have resulted in periodic shortages and long lead times, with consumers reacting to headlines about the spread of new variants by returning to prior behavior: stocking up. There are reports of renewed toilet paper shortages, and after being virtually given away during the summer, face masks are back in demand. These events present a great deal of variability for retailers. Retailers are keenly aware of the shipping bottlenecks and placed their holiday orders amid continuing healthy retail demand from consumers. They face the concerns of ordered items not arriving on time to make it to the shelves for the holidays, given the unanticipated recent port closures. Much consumer behavior this holiday season is likely to parallel that of last year. We expect to see consumers that are aware of port closures starting their shopping early to avoid last-mile capacity bottlenecks. The US Postal Service has already announced holiday shipping surcharges—and other major carriers are likely to follow suit—in what should be another record shipping season due to ever-growing e-commerce demand. Savvy shoppers should shop early to avoid those surcharges. There also appears to be a race among retailers to be first to launch holiday promotions, blurring the meaning of traditional peak shopping days such as Black Friday—and again encouraging consumers to shop early. Our latest weekly US consumer survey identifies the trend of increasing consumer avoidance of public places, with a marked jump in the past week. This sentiment decreases the likelihood of consumers embracing doorbuster Black Friday sales. The silver lining is that brands and retailers have learned from last year’s supply chain fluctuations and there are several industry leaders and innovators offering tools to help them manage and mitigate the impact. Although the events of this year have presented new and renewed challenges, retailers are likely better equipped for expecting the unexpected.

US RETAIL AND TECH HEADLINES

Beautycounter Launches Livestream Shopping Series in Partnership with Klarna (September 7) Glossy.com

• Direct-to-consumer beauty retailer Beautycounter has partnered with payments and shopping service provider Klarna to launch a livestream shopping series. The first of the four-episode series aired live from Beautycounter’s content studio in its store in Venice, California, on September 8.
• Celebrity makeup artist and Chief Artistic Officer at Beautycounter Christy Coleman is the host of the livestream episodes, offering beauty routine insights, techniques and tips. Customers have a chance to win a free Beautycounter gift at checkout if they pay with Klarna.

Dick’s Sporting Goods To Open Two New Stores, Including First Outdoor-Focused Concept Store (September 7) Company press release

• Dick’s Sporting Goods will open its first outdoor-focused specialty concept store, Public Lands, in Pittsburgh, Pennsylvania, on September 24. The store will carry an assortment of equipment, footwear, and outdoor and lifestyle brands. It will feature a 30-foot rock climbing wall, an in-store gear repair and rental shop, and specialized shopping departments for biking, camping, climbing, fishing, hiking, running and skiing.
• The company also plans to open an off-price store, Going, Going, Gone!, in Royal Palm Beach, Florida in September. The store will feature discounts of up to 70% off athletic apparel and footwear brands. Combined, the two stores will employ approximately 120 full-time, part-time and temporary associates.

Publix Announces Expansion into Kentucky (September 7) BizJournals.com

• Florida-based supermarket chain Publix has announced plans to enter its eighth state, with a new store opening in Kentucky in the fourth quarter of 2023.
• The store will also have an adjacent Publix Liquors outlet—its first outside Florida—that will sell beer, spirits and wine.

Save A Lot Sells 32 Stores in Ohio, Illinois and Wisconsin (September 7) SupermarketNews.com

• Discount retailer Save A Lot has announced the sale of 32 stores to retail grocery platform Yellow Banana LLC for an undisclosed sum. The stores are located outside of Cleveland, Chicago and Milwaukee and generate a combined annual revenue $130 million.
• Yellow Banana LLC plans to keep the retailer’s 400 associates, maintaining their current wages, insurance and retirement benefits. The company also intends to expand each store’s assortment of local products and hire talent from local communities.

Walmart Announces Wage Hike for 565,000 Store Workers (September 7) EconomicTimes.com

• Walmart has announced that it will increase the wages of more than 565,000 store workers by at least $1 per hour—increasing its average US hourly pay to $16.40. The wage hike is the company’s third in the last 12 months, following raises in March 2021 and September 2020.
• The pay rise will come into effect on September 25 and will cover employees in its front end, food and consumables, and general merchandise divisions.

EUROPE RETAIL AND TECH HEADLINES

AO.com Introduces Health and Beauty Category Before the Holiday Season (Sep 7) RetailGazette.co.uk

• Online consumer electronics retailer AO.com has introduced a new health and beauty electrical products category ahead of the holiday period. The category includes beard trimmers, electric toothbrushes, and hair curlers and straighteners.
• The category launch follows the company’s July 2021 announcement of its plans to expand its presence to five countries within the next five years, which would more than double the size of its business.

John Lewis Plans To Add Apparel to Its “Anyday” Value Label (Sep 7) UK.FashionNetwork.com

• British department store retailer John Lewis has announced plans to add 700 apparel items to its “Anyday” value label, spanning kidswear, menswear and womenswear. The assortment will launch on September 13.
• The expansion of Anyday comes in response to strong results for the label, which has recorded almost £60 million ($82.6 million) in sales since its launch in April 2021.

Lidl Belgium Announces Launch of New Sustainability Campaign “ZAAM” (Sep 8) ESMMagazine.com

• International discount retailer Lidl has launched a new sustainability campaign in Belgium named “ZAAM.” The campaign aims to promote products that combat pollution, protect biodiversity, and prevent excessive usage of water and raw materials, at an affordable price.
• ZAAM products will replace Lidl’s current own-brand sustainable product range across the country. Lidl Belgium also plans to invest savings that result from the introduction of ZAAM products into sustainability initiatives.

Plus and Coop Join Hands To Form Third-Largest Grocery Chain in the Netherlands (Sep 7) ESMMagazine.com

• Dutch retail cooperatives Plus and Coop have announced plans to combine forces to form a new cooperative, Plus U.A., which will open around 550 outlets across the country. The new retailer will be the third-largest grocery chain in the Netherlands.
• The companies estimate that Plus U.A.’s annual sales will be approximately €5 billion ($5.91 billion), with a market share of more than 10%. The group plans to employ 40,000 people and expects to serve over 4.5 million customers per week.

Shopee Set to Enter Europe with Poland Launch (Sep 8) UK.FashionNetwork.com

• Singapore-based e-commerce company Shopee plans to launch operations in Poland and is currently recruiting sellers, according to company sources.
• Shopee is scaling up its global expansion, with its launch in Poland launch marking the company’s entry into European e-commerce. This follows Shopee’s announcement on August 30, 2021, of its expansion into India.

ASIA RETAIL AND TECH HEADLINES

AIMS APAC REIT Appoints Russell Ng as CEO (September 8) BusinessTimes.com

• Singapore-based real estate investment trust AIMS APAC REIT has announced the appointment of its new CEO Russell Ng, who previously served as the company’s Head of Investor Relations.
• Ng will assume his new role on November 29, 2021, following the handover from current CEO Koh Wee Lih on November 28.

Dukaan Raises $11 Million in New Financing Round (September 6) Business-Standard.com

• India-based online retail platform provider Dukaan has raised $11 million in pre-Series A funding, as it looks to expand its services and operations. Following the funding round, its valuation has risen to $71 million.
• The company’s platform allows retailers to open their own e-commerce store. It currently hosts over 3.5 million small and medium-sized businesses across India and has facilitated over 1.5 million transactions since its inception in June 2020.

PayPal To Acquire Paidy for $2.7 billion (September 8) IndianExpress.com

• American online payments company PayPal is set to acquire Japanese buy now, pay later firm Paidy for $2.7 billion. Paidy allows customers to buy online without a credit card and does not require pre-registration.
• PayPal’s acquisition of the company will expand its capabilities and distribution in Japan—the third-largest e-commerce market in the world.

JD.com Founder and CEO Withdraws from Daily Operations, Appoints Xu Lei as President (September 6) CNBC.com

• JD.com has announced that Xu Lei has been appointed the company’s President, a newly created role at the company, as Chairman, CEO and Founder Richard Liu withdraws from running daily operations. Lei was formerly CEO of JD Retail.
• Liu will retain his positions but will now focus on the company’s long-term strategy, mentor younger management and contribute “to the revitalization of rural areas,” according to the company.

Reliance Retail To Enter Saree and Traditional Indian Clothing Market (September 6) BusinessToday.in

• Reliance Retail, the retail arm of India-based Reliance Industries, is set to open a chain of stores under the brand name Avantra, focusing on sarees and traditional Indian clothing. It will also offer accessories, jewelry and tailoring services.
• Reliance Retail will launch the first Avantra store in Bangalore during the upcoming holiday season. The stores will carry own-brand products, made in collaboration with local weavers, as well as items from private labels such as Nalli Silks and Pothys.