Walmart to test in-home delivery program

Remember when you had to go down to the mailbox or onto your doorstep to pick up items you ordered online?

If a program Walmart is testing takes off, people may be asking that question within the next several years. The program will allow delivery drivers to leave packages inside a customer’s home, and groceries in the fridge or freezer, TechCrunch reports.

“…we want to do more in the future by delivering groceries and other orders in whatever location works best for our customers – inside the house for some and in the fridge/freezer in the garage for others,” said Sloan Eddleston, Vice President of Walmart’s eCommerce Strategy & Business Operations, in the official announcement.

When the delivery driver arrives at a participant’s home, he will enter a one-time passcode on an August Home smart lock to gain entry. Walmart says customers will be able to watch the driver enter and move around in their houses via a video feed on their smartphones. When the driver exits the home, the door will lock automatically.

Walmart has hired same-day delivery service Deliv to perform the deliveries themselves. Sam’s Club, a Walmart affiliate, partnered with Deliv in March 2016 to test a grocery delivery program.

This most recent pilot program will be available in Silicon Valley to a select group of August Home users who have chosen to participate. As TechCrunch points out, if the program is successful, Walmart may expand the list of supported smart-home providers beyond August Home.

TechCrunch further notes that Walmart has not indicated how long the program will run, nor whether the company intends to expand the trial to locales outside of Silicon Valley.

Walmart says it has designed the test to gauge how much customers are willing to pay for the service. The company has yet to disclose a pricing model.

Walmart has partnered with smart-home companies to enhance delivery operations in the past. In June, online retailer jet.com, which Walmart acquired in August 2016, teamed with Latch to install high-tech lockboxes on the front doors of 1,000 apartment buildings. Among other functions, the system allows customers to remotely grant access to their apartment complex so that drivers can deliver packages even when the customer is not home.

In its continued effort to keep pace with online retail giants like Amazon, Walmart has experimented with other augmentations to its delivery operations, TechCrunch notes. The company offered a discount to customers who had online orders shipped to Walmart stores, and tried allowing in-store employees to deliver packages from the store to customers’ homes.

In emulation of Amazon Prime, Walmart instituted a two-day shipping option that is free for rewards members.

In June 2016, the company tested a system whereby Uber and Lyft drivers delivered groceries to customers’ homes. Customers ordered groceries online, paying a $7 to $10 delivery fee. Then, a Walmart employee culled the requested items from the shelves, placed them in a bag, and called an Uber or Lyft driver to pick the order up from the store and deliver it to the customer’s home.

Meanwhile, Amazon—arguably Walmart’s chief competitor—is making its own efforts to cut delivery times. Through that company’s Prime Now program, customers can have tens of thousands of items delivered to their doors in less than an hour.

Amazon also offers grocery delivery and one-hour restaurant delivery through its Prime membership program

Moreover, the company is testing autonomous drones that can deliver items weighing under five pounds in 30 minutes or less. Last December, as part of a pilot program in the UK, Amazon completed its first drone delivery. The company says it is working with regulators to get Prime Air, as the service is called, off the ground around the world.

Featured image via Hurlburt Field

Best Buy is quietly thriving in an Amazon world

In an eCommerce age in which every brick-and-mortar enterprise is expected to roll over and die, Best Buy is adapting to the changing market. Under the guidance of CEO Hubert Joly, Best Buy is engineering an impressive turnaround, the New York Times reports.

According to the Times, Best Buy’s revenue has exceeded analysts’ expectations in six of the last seven quarters. The company’s stock has climbed more than 50 percent over the last 12 months.

Joly took the reins at Best Buy in 2012, as Amazon was capturing an increasing share of the retail market, and the iconic brick-and-mortar chain was struggling to keep up. The practice of “showrooming,” which involves customers testing and trying a product in a physical store, then buying it at a lower price online, was increasingly cutting into Best Buy’s sales.

So, the Times says, Joly instituted a price-matching guarantee so that customers who came in to check out a given product could feel comfortable buying it in-store.

“Until I match Amazon’s prices, the customers are ours to lose,” Mr. Joly said.

In order to slash prices, of course, one must cut costs. In fact, as the Times says, cutting costs is integral to the recovery of almost any struggling business. But, rather than induce a huge, public wave of layoffs, which would have crippled morale amongst employees and given shareholders the impression that the company was on thin ice, Joly quietly let go of extraneous employees at the middle management level. Rather than closing a massive number of stores, he waited for leases to run out at unprofitable locations.

Joly eliminated 400 Geek Squad positions that involved assisting customers remotely, via phone or internet chat. Rather than firing the employees who filled those positions, though, he offered them reassignment within the company.

“Taking people out is the last resort,” said Joly in 2015, according to the Times. “Because you need to capture the hearts and minds of the employees.”

One measure he took to recapture those hearts and minds was to reinstate an employee discount, the Times says.

Joly knows that Best Buy’s employees—and their ability to provide human interaction at the point of sale—give the company a competitive advantage over Amazon. Best Buy representatives serve as approachable, flesh-and-blood intermediaries between customers and the often-intimidating world of consumer electronics.

In an effort to double down on customer service, Joly retrained employees to improve their knowledge of cutting-edge devices like smart home appliances and virtual reality headsets. He expanded the Geek Squad overall, reassigning many of the aforementioned remote employees to roles in which they provide in-home consultations to customers, recommending products and installation techniques.

Best Buy tested the in-home program in select locales last year; now, it is going nationwide.

The company has also revamped its eCommerce operations, making shipping more efficient. Before Joly stepped in as CEO, Best Buy shipped all items ordered online from centralized warehouses. Joly gave stores themselves the means to ship products. Effectually, Best Buy stores are now also miniature shipping warehouses.

When a customer orders a product online, it is shipped from whichever location will provide the fastest delivery, whether that location is a nearby store or a traditional warehouse.

In an effort to turn the “showrooming” phenomenon to his advantage, Joly reimagined the manner in which items were displayed in his stores. He gave iconic electronics manufacturers like Apple, Microsoft and even Amazon their own kiosks in Best Buy stores. High-demand items are prominently displayed, and customers are excited about browsing the store.

Many factors beyond the company’s control have further spurred its revival. With competitors including Circuit City, Radio Shack, and HH Gregg having gone bankrupt or closing their doors, Best Buy is among the only brick-and-mortar electronics retailers left, the Times notes.

Many people remain reluctant to make big-ticket purchases online, so Best Buy’s highest-priced products are still in demand.

The company depends on manufacturers to continue to make products that create a buzz amongst customers. As Joly implied on the August earnings call, that dependence means Best Buy’s performance will ebb and flow with the popularity of new gadgets.

“They’re at the mercy of the product cycles,” said Stephen Baker, a tech industry analyst at NPD Group, per the Times. “If people stop buying PCs or they don’t care about big-screen TVs anymore, they have a challenge.”

Featured image via Flickr/Mike Mozart

High-tech retail startup Bodega raises $2.5 million in funding round

Bodega, a San Francisco-based startup that operates fully-automated kiosks roughly the size of vending machines, introduced itself to the world Wednesday. The company has raised $2.5 million in a funding round led by venture capital firms Homebrew and First Round Capital, TechCrunch reports.

Thirty Bodega kiosks (which the company calls “bodegas”) are already operational in apartment buildings, gyms and office buildings throughout the Bay Area. The company will presumably use the seed money to expand.

Bodega users create an account on the company’s smartphone app and input their credit card information. As a customer approaches a kiosk, he/she inputs a three-digit, kiosk-specific code via the app. The code unlocks the kiosk so the customer can reach in and grab what he/she needs.

Cameras track the movement of the customer’s hand to determine what he has picked out, and then automatically charge the customer’s credit card.

Though the eight-square-foot cabinets may sound like high-tech vending machines (essentially, they are), Bodega kiosks stock a wider and more customized range of products than traditional vending machines do. The particular items stocked at a given kiosk are tailored to the demands of the customers who use that kiosk. A Bodega in an apartment building, for instance, may offer everything from toothbrushes to Solo cups. A kiosk located in a gym might have health food, sportswear, etc.

Depending on its location, a kiosk will come stocked with a “base set of products” (TechCrunch’s words). As customers begin to buy things, the Bodega system tracks the purchases to gauge which products are in demand at a given kiosk, and surveys repeat customers to ask what they would like to see added. The company refines the offerings accordingly.

The kiosks bring “the relevant slice of a store” to within 100 feet of a customer, the company’s website says

“Retailers are contouring their business around this fact that users want convenience,” said Paul McDonald, a thirteen-year Google veteran who now runs the startup. “There’s really only been two options: you can go to the store, or you can order something online. What we’re trying to do is introduce a third option, a new way of buying things. Shrink the store, bring the best parts in a smaller form factor and bring it to where you are.”

Some have criticized the “Bodega” name and its implication that the company intends to compete with local corner stores like the bodegas in New York and Los Angeles, which are often centerpieces in their communities.

“Bodega” is a Spanish word meaning, more or less, “local shop.” McDonald says, per GQ.com, that his company surveyed the Latin American community as to whether the name was a misappropriation of the term, and 97 percent of respondents said “no.”

“But it’s clear that we may not have been asking the right questions of the right people,” McDonald admits. 

“Despite our best intentions and our admiration for traditional bodegas, we clearly hit a nerve this morning, we apologize. Rather than disrespect to traditional corner stores — or worse yet, a threat — we intended only admiration.”

McDonald said the company would review the criticism and consider changing the name.

Many are concerned Bodega, whatever it is called, will threaten traditional bodegas.  The company indicated Wednesday that it intends to offer the “same ease and convenience” the ubiquity of corner stores in places like New York City affords.

Bodega clarified that it does not intend to compete with tradition bodegas, which, McDonald says, stock more products than a Bodega kiosk ever could, and offer “integral human connection” between patrons and clerks. Rather than challenge established bodegas, the company says it wants to “bring commerce to places where commerce currently doesn’t exist.”

Still, it seems that, in the places where they do appear, the high-tech Bodegas might siphon a certain amount of business away from local shops. For instance, a person who generally goes to the local bodega when he/she needs milk at 2 a.m., might be inclined to get that milk at a Bodega kiosk were one available in his/her apartment building.

Bodega notes the grocery market is but one of many markets it is targeting. The company envisions itself a competitor more to huge chains like Wal-Mart than small, local shops.

“The market we’re going after is some combination of the grocery, gym market, and everyday essentials. Eventually, what we see is a world where you don’t have to go to the 30,000 square foot stores. Instead, we distribute the store based on products you buy once a week or month,” said McDonald.

The autonomy of Bodega kiosks may threaten retail jobs. “Retail in The U.S. is huge, 10% of Americans work in retail,” McDonald himself notes. “The folks who are retailers want technology to reduce their costs and bring products closer [to consumers].”

In reducing employers’ costs, one may infer, Bodega may take employees’ jobs.

But, McDonald says: “Rather than take away jobs, we hope Bodega will help create them. We see a future where anyone can own and operate a Bodega—delivering relevant items and a great retail experience to places no corner store would ever open.”

Featured image via http://observatoriodainternet.br

Facing $5 billion worth of debt, Toys “R” Us hires restructuring consultants

Toys “R” Us has hired law firm Kirkland & Ellis as restructuring consultants to help the reeling toy giant negotiate its debt as the holiday season approaches, CBS News reports. The company may seek bankruptcy protection.

In its first quarter earnings statement, the company reported over $5 billion in long-term debt as of April 29. Per CBS, $446 million of that is due by the end of this fiscal year, and $2.2 billion is due by the end of next fiscal year. Although Toys “R” Us is privately-held, it reports earnings because its debt is publicly traded, according to CBS.

“What Toys ‘R’ Us has been doing is extending the debt as it comes due and paying higher interest rates,” Howard Davidowitz, the head of the retail consultancy and investment bank Davidowitz & Associates, told CBS.

That approach has caused the debt to pile up. “They have got enormous debt,” says Davidowitz.

In its quarter two earnings call, scheduled for September 26, the company plans to discuss new fiscal strategies, and to unveil a program intended to improve customers’ experiences over the holiday season, spokeswoman Amy Von Walter told CBS.

Davidowitz said, per CBS, that a considerable percentage of Toys’ R Us’ debt results from the $6 billion sale of the company to a group of notable private equity firms in 2015. No evidence is available to corroborate the claim, though.

Toys “R” Us’ debt has prevented it from investing in online sales, which has, in turn, hampered its ability to compete with the likes of Walmart and Amazon. Over the last four years, CBS notes, the iconic toy retailer has spent just $100 million to bolster its online presence.

In 2013, Toys “R” Us generated 18 percent as much revenue as Amazon did; last year, Toys “R” Us’ figure was 8.5 percent of Amazon’s.

After Toys “R” Us failed to deliver many online orders in time for Christmas in 1999, the company partnered with Amazon in an effort to establish a stronger eCommerce presence. But, in 2004, Toys “R” Us sued Amazon for violating an exclusivity agreement, and relations soured. In 2009, Amazon paid Toys “R” Us $51 million to settle the case.

Founded in 1948, Toys “R” Us has been a household name in American industry for decades. Though the company has lost ground to competitors in recent years and is now buried under a potentially fatal mountain of debt, it maintains a strong presence in the market.

CBS quotes a June report by Moody’s, a credit rating agency, as saying: “We believe Toys ‘R’ Us remains a compelling competitive force in the toy and baby sub-segment of retail, however it is also our view that Toys’ competitive position continues to suffer challenges as a result of many of its larger, better-capitalized competitors such as Walmart, Target and Amazon using toys as traffic-drivers to both brick-and-mortar locations and websites, especially during the key holiday season, which seems to begin earlier every year.”

Forbes ranked Toys “R” Us the 22nd largest private company in the U.S. based on full-year revenue in 2016.  That year, the toy giant brought in $11.4 billion in revenue.

But, that figure marks a 2.2 percent drop from 2015. In fact, the company’s revenue has fallen in each of the last five years, according to data collected by D&B Hoovers. Since 2013, annual revenue has plummeted more than $2 billion—almost 15 percent. From 2013 to 2014, revenue dropped $1 billion (7.4 percent).

Gross profit has fallen $843 million—17 percent—since 2013, from $4.95 billion to $4.11 billion.

Toys “R” Us has reported net losses every year since 2014. That year, the company lost more than $1 billion. The bleeding has subsided each year since, though. In 2016, Toys “R” Us lost $36 million.

If anyone needs a good holiday, it’s Toys “R” Us.

Featured Image via Wikimedia Commons

Your new favorite beauty store: how Ulta beat Sephora

In 2013, beauty store chain Ulta welcomed a new CEO in Mary Dillon and ever since its star has been on the rise, Digiday notes.

It wasn’t long ago that Ulta was considered something along the lines of an expanded drugstore beauty aisle, while Sephora was considered to be the market leader in beauty. French giant Sephora has long held the preeminent position among beauty retail chains thanks to its wide roster of prestige beauty brands.

But Ulta evolved its own market strategy which allowed it to overtake Sephora in the beauty market in 2015, as reported by Bloomberg. So what’s Ulta’s strategy?

The popular beauty store stocks a mixture of less-expensive drugstore beauty brands and more-expensive prestige beauty brands. They offer products you could find at your local Walgreens as well as lines carried at Sephora and upscale department stores.

Urban Decay can be found gracing the beauty store’s shelves, and it recently made a deal to start working with MAC Cosmetics. Ulta has thus turned itself into a one-stop-shop for high-low beauty mavens. As its slogan runs: “All things beauty. All in one place.”

Additionally, Ulta developed an app to interface with guests. The app features makeup tutorial videos, and allows guests to try on makeup with its service “GlamLab.” It also allows guests to book in-store services for hair, brows, and skin. As of today, Sephora’s app has 535 ratings on the App Store, while Ulta’s app has 38,794.

Ulta also rejuvenated its previously-stale loyalty program. It made the program easier for guests to understand in order to cultivate long-term customers and repeated transactions. Last week at Boston’s eTail East conference, Ulta’s senior director of loyalty marketing Linh Peters stressed the importance of simplicity and ease of use in loyalty programs. That’s why, Peters claimed, 90 percent of Ulta’s business comes from loyalty program members.

Let’s look at how Sephora’s and Ulta’s respective loyalty programs differ.

In Sephora’s loyalty program, called Beauty Insiders, guests accrue points for every dollar spent. They can then trade those points and choose from a limited selection of mini beauty products, deluxe samples and in-store services.

Ulta’s loyalty program dispenses with the prizes and instead offers simple store credit, which means real savings for the customer. This way, guests can buy luxury brands cheaper than at Sephora, which rarely offers material discounts. Ulta also has a marketing team that works to offer targeted promotions to guests based on past shopping behavior.

Ulta has taken advantage of its boom in business to expand its store locations in flourishing strip malls, even as actual malls struggle.

Featured Image via Wikimedia Commons/Michael Rivera

Barnes & Noble Activist Investor Urges Privatization, Shares Soar

Sandell Asset Management, an activist investment firm, has accumulated a large number of shares in Barnes & Noble Booksellers, and is urging the company to go private, CNBC’s Lauren Thomas reports.

Sandell, which the Wall Street Journal says is now among the book retailer’s top ten investors, believes Barnes & Noble’s $520 million market value is “unconscionably low,” the result of investors’ skittishness to buy into brick-and-mortar retail operations amidst the continued boom of the online marketplace.

On Tuesday, in a letter to the formerly iconic bookstore chain, Thomas Sandell, CEO of the Sandell firm, said investors’ wariness of retail is ill-advised. “Physical books, and physical bookstores, are not going away anytime soon,” the letter read.

“What makes the under-valuation of Barnes & Noble all the more shocking is that…there is but one truly national bookstore chain,” added Sandell. The letter also called the Barnes and Noble stores “beachfront property,” referencing, presumably, the desirability of the stores’ locations from a retail perspective.

The letter claimed Barnes & Noble, currently valued at $8 a share New York Stock Exchange, could sell itself for around $12 a share on the private market.

Public investors seem to support the move toward privatization. Since news of Sandell’s letter was released Tuesday, Barnes and Noble’s share price has jumped more than thirteen percent as of 12:15 Eastern, clearing the $8 dollar mark.

Barnes & Noble’s 1993 IPO gave it a market value of nearly $2 billion, according to CrunchBase.com. By early 2006, shares were worth almost 2.5 times their IPO value. But, in May 2007, the stock began to decline and has yet to recover. Since then, share prices have fallen more than 71%. Revenue has fallen almost 25% since 2013, according to eMarket retailer

Some of the falls can be attributed to the struggles of Barnes & Noble’s Nook, an eReader the company introduced to the market in November 2009 to compete with Amazon’s Kindle. Nook sales generated just $105.44 million in revenue in 2010, but Nook-based revenue spiked by over 550% in 2011, and rose another thirty-plus percent in 2012. Since then, though, Nook sales have been on the decline. Nook- based revenue fell more than 15% from 2012 to 2013, almost 35% from 2013 to 2014, and close to 50% from 2014 to 2015. In total, Nook revenue has fallen 85% since 2012 (data via statista.com).

In fiscal 2017, Nook-based sales dropped more than 23%, according to a June article by Ellen Duffer of Forbes Magazine.

“Digital just seems to be something that B&N can’t quite get right,” Duffer writes.

However, Sandell believes the company’s efforts to capture the digital market have been misguided. The true value of Barnes and Noble’s business, the letter implied, is its niche—not, mind you, its Nook—in the physical book market.

Barnes & Noble has flirted with private ownership before. Ronald Burkle began stockpiling shares in the company in 2008, building his stake to 20% by May of 2010. Amidst disagreements with the company’s management, many of which were over the emerging Nook business, Burkle launched an ultimately unsuccessful proxy war. In response, management instituted a “poison pill” measure preventing investors from compiling a stake larger than 20%.

Leonard Riggio, the retailer’s chairman and largest shareholder, who acquired the Barnes & Noble name and its flagship Manhattan store in the 1970s and was instrumental in building the company into the household name it is today, made a bid to buy back the operation’s retail arm in early 2013.  In the letter, Sandell suggests that Riggio once again endeavors to buy out the company.

Despite all the trendy talk about the demise of paper books, Sandell maintains that success can still be had in that market, and considers privatization Barnes and Noble’s first step toward reclaiming its past financial success.

“We are strong believers in the vital service that Barnes & Noble provides as the nation’s largest book retailer,” Sandell said in his letter.

Amazon Meal Kit Plans

Amazon is proceeding with its expansion plan to diversify into surrounding markets and innovate in order to establish a dominant position. In recent news, Amazon expressed its intent to redesign and push the boundaries in the prepared meal kit world that is currently dominated by Blue Apron Holdings Inc.

Amazon is throwing itself in the deep end by competing with an already established IPO by challenging to compete with its major project. However, Amazon’s research team is well-experienced and confident that they can in fact provide a competitive edge in the food industry.

This announcement comes after Amazon filed a trademark for the phrase: “We do the prep. You be the chef,” which is closely related to prepared food kits similar to what Blue Apron provides. Meal kits provide the customer with recipes and the corresponding ingredients that enable the customers to prepare fresh food while having most of the preparations already being completed. This service caters well to an audience that is more time-starved but still looking to eat more fresh food.

With their intentions revealed, Amazon has helped elaborate the reasoning behind its recent acquisition of Whole Foods, which would act as a supply base for the meal kits while also generating income through its retail locations. Amazon is trying to incorporate more incentive into being a loyal customer instead of trying to attract new customers, capitalizing on the similar consumer base of customers who are young, urban and affluent.

The focus on having loyal customers spend more instead of attracting new customers is supported by the fact that about 81 percent of customers who have visited Whole Foods on more than one occasion are already Amazon customers. Furthermore, about just over half of all Whole Foods shoppers are Amazon Prime members, customers who are willing to pay $99 for free two-day shipping amongst other member benefits.

Due to the supposed correlation between Amazon and Whole Foods customers, Amazon’s acquisition of Whole Foods is estimated to increases its customer base by 5 percent. While this does have a large enough impact on Amazon’s revenue stream, as Amazon will accrue all revenue generated by customers of both, this shows that increasing its customer base was not Amazon’s prime concern.

The customers that do consistently shop at Whole Foods while also being Amazon Prime members spend average about $306 more, looking at an average of $1,371 spent during six visits during a 12-month period. But what has the most impact is the percentage of shoppers who online as compared to other food retailers, with 10 percent of Wholes Foods customers shopping online compared to the 6 percent for Albertsons and 5 percent for Kroger.

Amazon is using the opportunity that Whole Foods shoppers provide by offering more online food delivery services, and in doing so they ensure they have the largest consumer base for their new meal kit plans. Research firm NPD Group shows that while only 5 percent of consumers have purchased a meal kit over the past 12 months, 60 percent of millennials have purchased something from Amazon over the same time frame. Amazon’s priority is discovering a way to transition its customers into using meal kits, increasing its revenue stream by creating a greater dependence on online food delivery services.

Usually the meal kits have a high entry barrier, with Blue Apron requiring about $94 to acquire a new customer. Amazon advantages comes in the form of its Prime membership fees which should act as a reliable and effective way of managing its costs. Furthermore, Amazon already has a strong supply chain that can easily adapt to ensuring that customers receive their meal kit in the timeliest and efficient manner.

Amazon’s expansion plan proves troublesome to its competitors in the food industry, as its meal kit plans narrows the opportunities for other smaller food retailers to enter the meal kit market. Amazon has considerable experience with retail, and that might translate in food, which is by far the largest category in retail. If Amazon is successful in establishing a market leader position in food, then the possibilities for its growth into other markets will be that much easier.

Featured Image via Flickr/simone.brunozzi

No Longer Up for Sale: Abercrombie & Fitch’s Stock Drops

Teen clothing retailer Abercrombie & Fitch have said on Monday that it is no longer up for sale. Despite being in poor health and having fielded takeover offers, A&F have instead decided to fix itself. This update resulted in Abercrombie shares dropping 10 percent in premarket trading, and a decrease in market value down to about $740 million.

Abercrombie & Fitch first considered preliminary discussions with several parties after reporting another quarter of disappointing sales in May. In recent news, Abercrombie has needed to close another 60 U.S. stores despite attempts to rebrand its merchandise in a new yet ineffective advertisement campaign. Seeing the need for new funding and possibly new leadership, the once popular company was opening itself up for potential bidders including competitors such as Express and American Eagle Outfitters, as well as Sycamore Partners, a buyout shop focused on retail.

However, Abercrombie & Fitch have now decided to recant the possibility of selling the company and instead have decided to go alone in the hopes that their turnaround plan succeeds. This news comes after the Wall Street Journal reported that no acceptable terms between Abercrombie and potential buyers had been negotiated.

The company’s chairman Arthur Martinez has reported renewed faith and vigor in their business and the opportunities for their brands. Martinez further states that through commitment to an aggressive yet supported action plan the company will be able to deliver enhanced performance and long-term stockholder value. The current hit to Abercrombie & Fitch’s is part of a one-step back two-steps forward mentality that the company hopes to achieve.

While a positive company climate is vital is motivating employees to reach the target goals in order to turn a company around, the current consumer opinion of once popular brands has deteriorated significantly. Younger consumers are avoiding similar brands, as seen through the numerous rivals of Abercrombie & Fitch filing for bankruptcy in the past two years. These companies include Aéropostale, American Apparel, Wet Seal, and just last week, True Religion.

Furthermore, Abercrombie & Fitch have reported that comparable sales at its namesake brand fell 10 percent, continuing a long deterioration. However, Hollister, a comparable store than is California-based and a larger brand, saw its comparable sales a higher than anticipated 3 percent, signifying that there is still opportunity for growth in a fast-fashion retail market. Should Abercrombie & Fitch make the appropriate decisions, then there is an opportunity for the company to turn around.

Abercrombie & Fitch have conducted numerous attempts to reinvigorate the brand whose sales have declined over years. One major attempt was through a marketing campaign a few months ago to refashion the brand that is now logo free, however, the advertisement campaign was not successful. Abercrombie & Fitch now struggles to find an identity amongst a mass of dominating fashion chains including H&M and Zara. CEO Fran Horowitz has mentioned the possibilities of returning to Abercrombie & Fitch’s deep roots from before its 1990 peak when it was notorious for bare-chested store greeters and provocative catalogs.

Returning to your roots has the double effect of strengthening your foundation while also sending a message to your customer base that you are returning to what you are good at. One can argue that there is a lack of originality, and instead, it is better to continue diversifying yourself to match the ever-changing needs of the customer. One combination that could prove successful is utilizing what you know in a way that it meets the customer base, especially considering a time when Abercrombie & Fitch was a major competitor in fast fashion, having carved out its niche. Utilizing that niche to moderate a loyal customer base while expanding will ensure that Abercrombie & Fitch can fashion a steadily growing revenue stream.

This will be a difficult transitionary period for Abercrombie & Fitch, as retailer shares are hurting, and the mixed messages behind the fast fashion sector future growths. The decrease in stock will make deals harder to land, so it will be up to the mentality of the company, as well as its flexibility to adapt, that will determine whether Abercrombie & Fitch does indeed make a comeback.

Amazon Announces its Plan to Hire on 30,000 Part-Time Workers

Amazon announces that it will provide another stream of jobs. The online retail giant says that it hopes to add over 30,000 part-time jobs in the United States over a span of the next year.

Amazon says that many of the positions they will be opening up will be for virtual customer service. It will open at least 5,000 jobs in that division. But a great majority, the remaining 25,000 to be exact, would be for Amazon’s warehouses. Amazon says that any part-time employee who works at least 20 hours a week or more will be eligible for benefits.

This new wave of jobs is part of Amazon’s hiring kick that they’ve been on since January. Back then, the online giant said it was bringing 100,000 full-time jobs to the United states within the next 18 months. Those full-time positions also come with benefits, and most of the positions that need to be filled up would be in new centers like cloud technology and machine learning, as well as other fulfillment centers.

Amazon has been bulking up its staff over the last few years. Amazon, in 2011, stated that they had over 56,000 full and part-time workers on staff. Close to the end of the 2016 fiscal year, however, that number climbed up to a hefty 341,000.

It would seem that the fears many were having about robots replacing human jobs, has been put on the back burner with all these new positions being offered. While Amazon experimented with its Amazon Go stores, supermarkets that would allow customers to bypass long checkout lines, many people had mixed feelings.

It was thought by those who work at supermarkets that their jobs were at risk. If people were choosing the Amazon Go store, where all they had to do was pick up their items and leave, why would they go to regular supermarkets and wait in line? Yet Amazon disputed these thoughts and made sure that people knew how valuable humans are to the workforce. Amazon Go would be run by AI technology but it would also have humans in the store helping with stocking and such.

It was not long after, that the company began announcing new warehouse jobs as well as the part-time positions.

Amazon’s growth as a company has also given brick and mortar stores a run for their money. As most people are turning to online shopping, in-store retailers are beginning to feel the pain in the loss of customers and sales. Many, like Payless ShoeSource, are turning to bankruptcy and others, like Sears Holdings, had to take out large loans to stay in business.

But things at Amazon aren’t as perfect as they may seem. There have been great concerns about the quality of Amazon’s job perspective that employees will be getting. In the past, Amazon has been subject to complaints as well as lawsuits related to the type of working conditions they provide as well as the inadequate wages.

However, despite all that talk, Amazon’s president of worldwide customer service, Tom Weiland, made a comment to a source saying, “There are lots of people who want or need a flexible job — whether they’re a military spouse, a college student, or a parent — and we’re happy to empower these talented people no matter where they happen to live.”

So, while many brick and mortar stores are shutting their doors, leaving their workers without employment, online retail is swelling with growth. The expansion of Amazon is bringing in hundreds of jobs and worker benefits as well as further development of AI technology. It’s safe to say that retail will never be the same.

 

Alibaba Partners with China’s Largest Supermarket And Department Stores

Alibaba Group Holding has teamed up with Shanghai Bailian Group in executive chairman Jack Ma’s latest step toward shaking up old-fashioned retail with technology. Bailian is currently one of China’s largest supermarket and department store chains. Shares of the company surged to their daily 10% limit on Monday after the China Securities Journal reported on the partnership.

Alibaba’s chief executive officer Daniel Zhang wrote in an email statement, “Our partnership with Bailian is an important milestone in the evolution of Chinese retail, where the distinction between physical and virtual commerce is becoming obsolete.”

The online wholesale supplier plans to help upgrade some of Bailian’s 4,700 store chains spread across China, integrating customer relations, payment, logistics and everything in between. The upgrades will be similar in nature to its previous joint ventures with electronics chains Suning Commerce Group.

Moving on from defeating eBay and Amazon in China, Alibaba now aims to transform the $4 trillion world of brick-and-mortar retail with innovations in data and technology. The partnership with Bailian is not the online retailer’s online foray into old-economy deals’ Alibaba holds the lead in a bid to buy department store chain Intime Retail Group for $2.6 billion.

Intime operates 29 department stores and 17 shopping malls throughout urban China. Alibaba’s strategy is to focus on offline-to-online commerce, connecting brick-and-mortar sellers with the internet. Co-founder Jack Ma aims to build a network that will allow stores and brands to monitor transactions as they happen so that retail outlets can place orders in real time, cutting out layers of distributors.

Besides Intime, Alibaba has invested in other retail operators, including Suning and Sanjiang Shopping Club to further its experiment in retail. The Hangzhou, China-based company will not take a stake in Bailian, but will integrate membership databases with the retailer and use facial recognition technology in order to improve consumer experience.

Wet Seal Says All Stores to Close?

Wet Seal Inc. would appear to be one of the many retailers to close its doors as of late.

Wet Seal was established in 1962 in Newport Beach and named Lorne’s after its founder Lorne Huycke. The name of the company was later changed when Huycke’s wife saw a model in a black bathing suit and thought it looked like a “wet seal.”

It didn’t take long for the store to expand around the country within the 1980s and the 1990s. It provided young women with casual clothing. Wet Seal later started Limbo Lounge

In a round of many mall retail closing, Wet Seal announced its final notice that it will fire all 148 employees at the headquarters located in Irvine. Along with the firing of its employees, the vice president announced that Wet Seal would shut down all locations as well as get rid of all its employees.

Over the years, however, sales began to plummet. There was even a lawsuit filed on racial bias after the company replaced its African American employees with white ones. Wet Seal settled the lawsuit or $7.5 million in 2013.

Yet it would seem that the shut down of Wet Seal was inevitable. The company had to close nearly 330 stores in 2015 after suffering a loss of $150 million that year. To save itself, the company laid off 3,700 of its staff and filed for Chapter 11 bankruptcy.

Wet Seal isn’t the only retailer to close its doors recently. American Apparel and the Limited went through similar struggles. Gildan Activewear bought American Apparel after it suffered through its second bankruptcy. The Limited closed all of it’s stores, recently causing 4,000 employees to lose their jobs.

As consumers start to rely more on online shopping many retail stores and shopping malls continue to suffer. However, stores like Forever 21 and H&M continue to thrive due to their variety of fashion items at a discount price.

Wet Seal has 171 in over 42 states with over 3,000 employees.

The Andersons Announces its Closings

The list of companies to close their doors seems to get longer. The Andersons says it will close its Columbus and Toledo-based stores along with two other sites. The company says its retail business has been steadily losing money over the years and plans to shut down sometime between April and June.

The Andersons started in 1952 by the agribusiness that has brought in more than $4.2 billion in revenue. Yet the retail chains only pulled in an estimated $140 million. Over the past few years it’s been evident that the retail hasn’t been doing so well. It pulled in a pretax loss of $2.6 million around the first six months of 2016.

In a mandatory meeting at one store, employees were told of the stores closing. The retailer promised to aid its employees in their future job searches as well as provide them with severance. Employees at the store on Talmadge Road, however, didn’t appear too enthused after their meeting. Someone from human resources described the situation as “the worst day.”

The closure of the retail chain is a drastic blow the community. For almost seventy years, The Andersons provided all types of options for its shoppers. The store even earned its key slogan “A store like no other” by offering thousands of items from groceries o household furniture. However, the chain lost more than $20 million within the last eight years of business.

In a meeting deciding the fate of the retail company, Mike Anderson who is not only the founder’s grandson but current chairman said, “A few years ago we put quite a bit of money back in the stores and we got a little bit of a lift, but it didn’t last.”

The closing of the stores in Columbus and Toledo effects a total of 1,050 employees who will soon be without jobs. Although the retail stores will close, the grain, plant, ethanol and rail aspects that The Andersons established remains untouched.

Amazon Provides 100,000 Jobs

On Thursday, the online giant Amazon announced that it plans to provide 100,000 new jobs over the next 18 months. This addition of new positions increased the 56 percent in the 180,000 full-time positions in the United States reported near the end of 2016.

In Baltimore, Amazon has a new warehouse that currently employs around 3,000 full-time workers. The Baltimore warehouse is one of 70 others in the U.S. that provide opportunities for many Americans. This comes as good news since Macy’s recently announced that it is tanking 10,000 job positions and closing many of its stores. The Limited has also reported that after sixty years its closing its doors for good. This gets rid of 250 stores and more than 4,000 jobs.

It is also fortunate that many new positions are becoming available. Online shopping has been the bane of many retailers this season. It’s safe to say that the increase in online shopping over the last few years has cost more jobs than Macy’s and the Limited combined. It’s reported that online retailers usually obtain $1,267,000 in sales as opposed to the in-store number $279,000.

Yet in order to boost the economic growth, there has to be an increase in productivity. Amazons 100,000 jobs are open to software developers as well as engineers. This comes at a time when the company is furthering its use of technology that one day might replace the human worker all together. Amazon, on the other hands, says its robots work with humans instead of replacing them.

Amazon hasn’t been shy when it comes to the details of its hiring. Since the company has begun building more warehouses that specialize in the packaging and shipping of goods. Amazon’s expansion started in 2011 when it began agreements with certain states to collect taxes in them. While the company did this, it also decided to make fast shipping part of its top priority which can only happen if Amazon opens more shipping and packaging warehouses around the country.

During the presidential elections, Donald Trump had a few words for Amazon and its owner Jeff Bezos who also owns the Washington Post. Trump accused Bezos’ Amazon of having an “antitrust problem”. However, Bezos went with many other technology executives to meet with the president-elect just last month. There was also a meeting with Trump after Amazon’s announcement of its new jobs.

Globally, Amazon employs an estimated 300,000 part time and full time workers. The company doesn’t think the figures representing its employment do it justice. The marketplace business that Amazon also owns allows independent merchants to sell their goods through Amazon. Amazon says that the marketplace sustained more than 300,000 jobs as well.

Alibaba Bids $2.55 Billion for Intime

Alibaba Group Holding, an E-Commerce firm, and the founder of Intime have joined together to bid on Intime, a noted Chinese department store. Alibaba, along with Shen Guo Jun, offer HK$10 per share. It announced recently that both partners will obtain Intime for HK$19.79 billion ($2.55 billion).

Intime currently runs seventeen shopping malls and 29 department stores in China. Since E-Commerce upgraded competition, Intime reported a drop in sales by 21.3 percent. Alibaba presently has 27.82 percent of Intime and Shen has 9.17 percent.

China’s retail division has an estimated worth $4.5 trillion with an expected growth of 10.7 percent. Alibaba believes they can turn around the retail industry and bring a better shopping experience to consumers. In response to this new venture Alibaba chief executive officer Daniel Zhang says that “Those who cling on to the old ways of retailing will be disrupted.”

Alibaba’s Executive Chairman, Jack Ma, recently met with President-elect Donald Trump. Ma explained to the President-elect that the E-Commerce firm plans to bring at least one million small U.S. business to sell in China within the new five years. Back in 2014, however, bought an initial share of Intime for $692.25 million.

The Limited Closes Its Doors

Many retailers suffered at the hands of online shopping this holiday season. The Limited has also announced that it is closing all 250 of its stores. It’s assumed that this is due to consumer preference for online shopping.

Leslie H. Wexner started The Limited in 1963. The store got its name for its limited variety of women’s apparel. What started out as a 2,000-square foot establishment, became the largest presence to circulate shopping malls. The Limited even began to dominate many larger retailers.

The more his business grew, the more ideas Wexner began to harbor. He opened The Limited Express and Structure, which sells men’s apparel. His company L Brands had brief control of Abercrombie & Fitch, Lane Bryant, and other companies. Wexner even took ownership of Bath & Body Works and Victoria’s Secret in 1982.

However, the red flag went up to shoppers in December. The stores posted 80 percent mark downs at many of its locations. What really sparked concern was the refusal of returns.

Back in November, the company released a letter to its employees announcing that mass layoffs were in the future. According to the Washington Post, The Limited said,  “product misses and massive shifts in retail shopping trends have been especially difficult for the company’s business, and the company is dealing with significant debt obligations.”

Shopper from Washington to New York have been receiving e-mails from The Limited announced store closures near them. It seems that shoppers are also seeking alternatives for fashion these days. Liz Dunn, from Talmage Advisors, says shoppers are looking for “inexpensive” apparel. She also pointed out that many consumers seek “what’s going on in fashion right now.”

Despite the 4,000 jobs lost due to store closings, the company’s website will remain open. The Limited joins Macy’s who closed many of its stores and eliminated 10,000 jobs.

How Many Stores Is Macy’s Closing?

The holiday sales weren’t too kind to Macy’s this year. Sales for the retailer fell by two percent between the months of November and December. Macy’s sales earnings were $2.95 to $3.10 which is lower than the $3.15 to $3.40 the company expected.

To improve their sales performance, the company plans to close nearly sixty-eight stores. Along with closing stores, Macy’s strategy is to remove management. The company will terminate over 6,200 workers. To cut non-payroll costs, Macy’s also plans to reallocate or let go of, at least 3,900 other workers.

These closures can save Macy’s a predicted $550 million starting this year. The closures, however, were part of plans made in August to get rid of a large amount of store locations in efforts to reverse the sales drop.

With the $550 million, Macy’s will save in eliminations, the company can invest about $250 million in other ventures. Macy’s announced more Bluemercury beauty shops coming to existing stores. Macy’s also says it wants to focus more on China as well as Backstage stores.

The company, however, isn’t the only retailer suffering from diluted sales. Kohl’s recorded a drop in their sales as well. They received between $2.92 and $2.97, which is lower than the estimated $3.12 to $3.32. Yet it seems that a drop in department stores sales is due to the mass surge in online shopping.

The retailer closed three out of the sixty-eight stores in the middle of the year. Two will close in the middle of 2017, and sixty-three will close in the spring. The company hopes to maintain sales on the internet and in existing stores, as the mass closure will cause Macy’s to lose about $575 million.

Once their lease is up, thirty more stores will shut their doors. The company called the stores “unproductive”.  Macy’s decision is to eradicate locations that are “no longer robust shopping destinations.”

Macy’s may be closing many locations, but they will be opening a new Bloomingdale’s in Kuwait. There is also going to be a new Bloomingdale’s and Macy’s coming to the United Arab Emirates later in 2018.

A few of the stores closing are as follows:

Year-end closings

  • Mission Valley Apparel, San Diego, CA (385,000 square feet; opened in 1961; 140 associates);
  • Paseo Nuevo, Santa Barbara, CA (141,000 square feet; opened in 1990; 77 associates);
  • Lakeland Square, Lakeland, FL (101,000 square feet; opened in 1995; 68 associates);
  • Oviedo Marketplace, Oviedo, FL (195,000 square feet; opened in 2000; 83 associates);
  • Sarasota Square, Sarasota, FL (143,000 square feet; opened in 1977; 86 associates);
  • University Square, Tampa, FL (140,000 square feet; opened in 1974; 73 associates);
  • CityPlace, West Palm Beach, FL (108,000 square feet; opened in 2000; 72 associates);
  • Georgia Square, Athens, GA (121,000 square feet; opened in 1981; 69 associates);

 

A complete list can be found on CNBC.

Sears to Close More of its Stores

It’s true that Kmart has been in the game for a long time and the same goes for Sears. However, it would seem that the round of stores closing for Sears Holdings isn’t over.

The company will be closing twenty-four Kmart stores and eight Sears stores late on in April. Liquidation sales are scheduled to take place the beginning of January. It’s more than likely that this won’t be the only round of store closures for 2017.

The holiday sales for the company were not as high as expected and with the steady decline of many of its stores, it could possibly lead to the company filing bankruptcy sometime in the distant future.

There had been talks earlier in the fall that Sears had planned to sell Craftsman, but the deal never took place. However, if things don’t pick up for Sears, KCD brands could be facing a large drop in Sears distributions and annual percentages.

Sears also is on the verge of securing a loan from ESL Investments for $200 million with the possibility of expansion to $500 million. This gradually improves the liquidity of the company by securing a letter of standby with its creditors.

The closing of these stores may be the only option Sears Holdings has at staying afloat. However, what does the mass closing of stores mean for bands like KCD who are mainly dependent on the retail chain and its customers?

Retail Sales Rise as Consumers Open Their Wallets

It has become a popular saying; Consumers are opening their wallets. With the economic growth seen in 2015, mall shoppers have spent more than usual in the month of May.

The Commerce Department announced the results of the Bloomberg surveys; Economists reported a 1.2 percent jump in retail sales for the month. That is over half of the 0.5 percent they had projected.

Just in the month of March there was a substantial increase as well, from 0.5 percent to 1 percent.

For May, all categories of retail sales saw an increase; Auto dealer sales had a 2 percent rise, hardware stores saw a 2.1 percent rise, clothing stores had a 1.5 percent rise and furniture, sporting and general goods stores, such as department stores, saw a 0.8 percent increase.

The only area in retail that struggled to increase their sales was health and personal care stores who saw a 0.3 percent drop. Yet they did have a significant increase in April, so the effect was not detrimental.

Economist connect this rapid growth in consumer spending to the lower fuel prices. With lower gas prices, consumers feel comfortable to spend more money which is helping to drive the economy.

Economist, Paul Ashworth of Capital Economics, also noted that the reason people had not spent as much in the past was due to bad weather conditions.

“These data confirm unequivocally that the earlier weakness in spending was a temporary weather-related blip,” he said.

While this is being a driving force for the economy now, increase in healthy labor market and household stock market are said to push the economy for the second half of the year.

Economist, Andrew Labelle of TD Economics notes, “With an improving job market and strong real wage gains, alongside savings from lower gas prices, there is every reason to believe that further strength in consumer spending lies ahead.”

No matter what, the economy is happy with the spending, so I guess that just gives everyone a reason to shop till you drop!

 

 

Prada Regresses With Sales Only Up 1 Percent

Milan-based luxury group Prada SpA reported sales were only up one percent, which indicates an unfortunate decrease from previous years. According to Bloomberg News, this downfall marks the slowest half-yearly sales increase in three years, which is partially accredited to a slower demand from Asia and Europe.

MarketWatch reported that sales for the first half of the year totaled to $2.34 billion, but the company argues these figures are due to decreased sales in Korea, Hong Kong, Singapore and Europe. Even with sales at an eight percent increase in America, the weak economic stability of the other nations left Prada in the dark.

“In the first six months of the 2014, the Group has operated in a more difficult political and macroeconomic environment than expected with unfavorable exchange rates and a general fall in consumption,” said Chief Executive Officer Patrizio Bertelli in a press release.

Nonetheless, the raise of concern is justified, as handbags and other leather goods are usually in year-round demand. However, 4-Traders reported that Prada, Louis Vuitton and Gucci all earn more profit from bags than other retail, yet Louis Vuitton and Gucci have plummeting sales. Prada is holding its breath that it will not follow in the footsteps of these likewise brands.

“In the coming months, our priority commitment shall be towards monitoring market trends and performance without, however, interrupting the implementation of our plans for growth. At the same time, we will implement a rigorous cost control program with the aim of protecting margins,” Bertelli said.

Hong Kong retail sales fell nearly seven percent year-on-year during June, which plays a large part in Prada’s revenue loss. Prada’s plans for growth will need to overcome these tall hurdles, but Bertelli and the company seem confident that their new plans of action will bring in high profits.