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FROM THE DESK OF DEBORAH WEINSWIG
Talking Startups, Payments, Loyalty and China in Three Packed Days at Shoptalk Europe This week, I had the pleasure of hosting sessions on each of the three days of Shoptalk Europe—the first Shoptalk event in Europe in five years. At the Startup Pitch, on day one, I was delighted to present the Judges’ Choice award to Jess Anuna, Founder and CEO of Klasha, a company that enables retailers and brands worldwide to accept payments in local currencies from consumers in Africa; and the Audience Choice award to Rosie Bailey, Co-Founder and CEO of Nibble, a company that offers an AI (artificial intelligence) price-negotiation chatbot as an alternative to regular price promotions. [caption id="attachment_149215" align="aligncenter" width="700"]
Deborah Weinswig, CEO and Founder of Coresight Research (standing, left), Jess Anuna, CEO and Founder of Klasha (standing, center), and Rosie Bailey, CEO and Co-Founder of Nibble (standing, center-right)Source: Coresight Research[/caption] Payments and Loyalty On day two, I had a fascinating discussion on payments and loyalty programs with Sanja Kon, CEO of Utrust, Paul Anthony, Co-Founder of Primer, and Rania Lamprou, CEO and Co-Founder of Simpler—for the Payments and Loyalty Solutions Tech Startup Spotlight. Kon argued for the benefits of cryptocurrencies, including the absence of borders and intermediaries reducing time and cost for payments. Interestingly, Kon told me that merchants are increasingly happy to settle in cryptocurrencies—whereas just a couple of years ago, most wanted to settle in fiat currencies. Kon also noted that companies can issue their own tokens as part of a crypto-based loyalty program, too—a “perfect flywheel effect” will see a two-sided market of buyers and sellers rewarded. Continuing the “single source of truth” theme from the crypto discussion, Anthony told me that the proliferation of payment providers and other vendors (such as for fraud detection) is making integration more difficult for retailers. New services such as buy now, pay later look likely to add even more complexity. Anthony said that his company’s product means developers and merchants only have to think about payments once. Continuing the theme of avoidable complexity, Lamprou explained how it takes a shopper an average of 22 clicks to check out online. Like a number of speakers at Shoptalk, Lamprou pointed to the estimated 70% online cart abandonment rate on desktop (and the 85% abandonment rate on mobile) as an opportunity to boost conversion rates by recovering lost sales. Her company offers a one-click purchase button that can be used across websites, online ads and email newsletters, and offline through QR codes. China Retail Innovation On day three, I wrapped up the conference in discussion with Mei Chen, Head of Fashion and Luxury UK, US and Northern Europe, Alibaba Group, and Claudia Vernotti, Director and Co-Founder, ChinaEU. We discussed how some of the distinctions between consumption in China and consumption in Western countries are due to generational differences: Chen explained that consumers in China are around 10–15 years younger than those in Europe or the US, meaning replicating strategies from those regions will not work for luxury brands. Complicating matters more, consumers in China, especially young consumers, often don’t use the same apps as consumers in the West. Also reflecting younger consumer demand is the demand for more street-fashion influenced styles in luxury fashion (see here for our new report on luxury streetwear, published just this week). We also discussed how Gen Zers (referred to as “post-2000” in China) are interested in augmented and virtual reality, livestreaming and other tech-enabled ways of interacting, and that brands and retailers must keep this in mind while developing new strategies. Vernotti and I discussed what companies should consider when looking to the China market, and she noted the multitude of shopping, social media and livestreaming platforms. Companies must select the right channels and allocate a budget accordingly, as it would be near-impossible to work with all platforms. Vernotti also highlighted the need for entrants to understand China’s social and cultural context, which, she said, is sometimes underestimated. One conclusion that we all came to was that “China speed,” such as in new product development, can be very different from how companies work in the West.
- Subscribers can find our daily reports from Shoptalk Europe 2022 here: Day One, Day Two and Day Three.
US RETAIL AND TECH HEADLINES
Academy Sports and Outdoor Reports Sales Decline in Its First Quarter, and Revises Down its Sales and Comp Growth Guidance (June 7) Company press release- Apparel specialty retailer Academy Sports and Outdoor has reported a sales decline of 7.1% year over year in its first quarter of fiscal 2022 (ended April 30, 2022). Its comparable sales declined by 7.5% year over year. Adjusted EPS declined by 8.5%. The company’s gross margin decreased by 20 basis points (bps) year over year to 35.5%, due to increased inventory and e-commerce shipping costs.
- The company revised down its sales and comp sales guidance for fiscal year 2022 and now expects sales of $6.4–$6.6 billion, compared to prior guidance of $6.6–$6.8 billion and comp sales of (3.0)%–(6.0)% year over year, compared to prior guidance of (1.0)%–(3.0)%. The company also revised down its EPS and now expects it to be $6.6–$7.3, down from $6.7–$7.3, representing a decline of 3.9%–13.2% year over year.
- Fashion retailer Forever 21 has collaborated with the US-based toy company Mattel to introduce a limited-edition collection of Barbie-inspired products, including accessories, beauty products, home decor, sleepwear, swimwear and vintage-style apparel items.
- The new collection will be available in Forever 21 stores, along with its mobile app and e-commerce website, and in the Forever 21 Shop City immersive virtual experience that Forever 21 launched on Roblox in December 2021.
- Warehouse club retailer Sam’s Club, owned and operated by Walmart, has announced a partnership with Gatik, a self-driving vehicle startup, Georgia-Pacific, a tissue, pulp and paper-based packaging manufacturer and distributor, and KBX, the transportation arm of Koch Industries, to expand its autonomous delivery truck pilot program.
- Under the partnership, Gatik will automate a portion of the Georgia-Pacific-KBX on-road transportation network in the Dallas-Fort Worth metroplex with six autonomous box trucks, delivering goods 24 hours a day, seven days a week to 34 Sam's Club locations.
- Target announced plans to reduce its inventory for the remainder of 2022 by setting additional markdowns, removing excess inventory and canceling orders. In addition, Target plans to build additional capacity in its supply chain to support future growth, adding five distribution centers over the next two fiscal years.
- Target also intends to increase its supplemental holding capacity near US ports, in an effort to increase flexibility and speed in the parts of the supply chain most affected by external volatility. Target also intends to adjust its pricing to counter unusually high transportation and fuel costs, as well as to work with suppliers to shorten distances and lead times in the supply chain.
- Beauty retailer Ulta Beauty has launched its MUSE accelerator program, dedicated to assisting early-stage Black, indigenous and people of color (BIPOC) beauty brands in launching and thriving in the beauty retail sector.
- Ulta Beauty’s MUSE accelerator program will educate, encourage and support participants through mentorship and resources for retail readiness, while also cultivating a community. The program includes a 10-week curriculum with training in brand strategy, succeeding in retail and navigating supply chain logistics. It will conclude with pitches to investors and Ulta Beauty merchants.
EUROPE RETAIL AND TECH HEADLINES
Crew Clothing Partners with Thrift+ To Resell Secondhand Clothing (June 7) RetailGazette.co.uk- UK-based casualwear clothing retailer Crew Clothing has announced a partnership with Thrift+, a UK secondhand clothing resale platform, to resell previously owned clothing.
- Thrift+ offers circular shopping solutions for brands and retailers and encourages customers to send previously owned clothing through free returns or home collection for a fee. Customers will receive credits for clothing items resold on the Thrift+ platform, which they can donate to charity or redeem against secondhand clothes on the Thrift+ website or new clothes from various retailers, including Crew Clothing.
- Spanish discount supermarket chain DIA has announced plans to expand its delivery services to towns across the Spanish coastline, from Girona to Huelva, reaching over 5 million new customers. The grocery delivery service is currently available in about 800 towns in Spain. It also enables customers to opt for flexible delivery between 8am and 10pm and delivery in under one hour in Alicante, Barcelona, Madrid, Malaga and Valencia.
- Its online delivery offers around 7,000 products, including 1,500 private-label stock keeping units (SKUs). New customers receive a discount of €20 ($21.40) on their first order.
- German on-demand grocery delivery company Gorillas has launched four private-label brands, Gorillas Daily, Gorillas Premium, Hot Damn and Start-up Beer, in some of its key European markets: France, Germany, the Netherlands and the UK. The company said it launched the four private-label brands based on consumer insights.
- Gorillas also plans to launch private-label offerings for around 50 products in 11 grocery categories witnessing higher consumer demand. The first private-label products launched on the Gorillas app on June 9, with more to follow in the summer.
- Spanish apparel retailer Zara’s parent company Inditex has reported revenue growth of 36% to €6.7 billion ($7.2 billion) in its first quarter, ended April 30, 2022. The company has attributed the increase in revenue to a recovery in store traffic and positive consumer response to its new season collections under all seven of its brands.
- Inditex reported an 80% year-over-year increase in net profits to €760.0 million ($812.5 million). The company has also allocated €216 million ($231 million) to cover the costs of what it describes as the “temporary” closure of its business in Russia and Ukraine, without which its profits would have been €940 million ($1.0 billion).
- Denmark-based online food and beverage discount retailer Motatos has officially launched online in the UK. Motatos sells branded products, including prominent household names such as Cadbury, Heinz and Kellogg’s.
- The company claims that it offers products at much lower prices than other leading supermarket chains by selling surplus food from wholesalers. It also offers some items for bulk purchases, which it says will offer the best value for consumers.
- Walmart's Indian-based e-commerce subsidiary Flipkart and Indian multinational conglomerate Adani Group are in talks to expand their partnership beyond warehousing and data centers to new domains, such as wholesale e-commerce and the sourcing of groceries and household goods.
- This relationship will not only give Flipkart a greater range of products to sell to consumers, but it will also bring in new wholesale clients affiliated with Adani Group firms in the packaged goods and consumer durables businesses.
- Multinational media and entertainment corporation Disney Southeast Asia has launched shopDisney, its flagship e-commerce destination in Singapore. Featuring over 1,000 products online on its platform, shopDisney houses Disney, Marvel, Pixar and Star Wars merchandise.
- The launch will take place on June 14 with a selection of adult apparel and accessories, baby products, collectibles, gifts, home products, stationery and toys. Customers will have access to the limited-edition Disney x Coach collection, developed in collaboration with luxury brand Coach.
- Japanese casual apparel retailer Uniqlo, owned by Fast Retailing, plans to raise prices for mainstay items for autumn and winter this year in response to soaring material costs. The company noted that many popular fleece products will be priced at ¥2,990 ($22) this year instead of ¥1,990 ($15), and it is unusual for Uniqlo to raise prices by ¥1,000 ($7) year over year.
- Tadashi Yanai, Chairman, President and CEO of Fast Retailing, said that given the current economic circumstances, it is difficult to raise prices. However, he also stated it was “impossible to maintain the current prices” if materials costs rise by 50%.
- Watsons, a health and beauty store chain, has launched a recycling initiative in Hong Kong. This is based on the success of its previous recycling programs in Indonesia, Thailand and Taiwan. Watsons has teamed up with beauty brand owner L’Oréal and V Cycle, a recycling social company, for its 'Beauty for the Future' recycling campaign.
- The campaign aims to encourage customers to recycle their empty cosmetics and skincare containers from any brand at Watsons or L’Oréal outlets and stores. Customers can recycle washed beauty containers, such as foundation bottles, lipstick tubes, mascara wands and skincare product tubs for benefits at any Watsons store in Hong Kong. Once the waste has been collected, V Cycle will break it down, separate it by material, and work with local partners to recycle it into new raw materials.
- Zomato, an Indian food delivery company, is expected to call an extraordinary general meeting on June 17 to approve the acquisition of rapid delivery company Blinkit (previously Grofers). Zomato invested $100 million in Blinkit in August 2021, extended a loan of up to $150 million, and had plans to invest a total of $400 million over the next two years in quick commerce—part of which would be structured as convertible notes. Zomato acquired a 9.3% stake in Blinkit in August 2021.
- Blinkit was valued at $700 million during the deal discussions in March 2022; however, the final agreement is projected to be less valuable because it involves a stock swap of a specific number of shares in the ratio of 1:10, where Zomato would receive 10 shares of Blinkit for every one of its own.