The owner of HomeGoods just opened its first Homesense store. Here’s how the two compare

August 23, 2017 in Latest News

Who says people don’t get excited about retail anymore?

Big crowds gathered outside the first Homesense store to open in the U.S. this past week in Framingham, Massachusetts.

TJX, the parent company of TJ Maxx, Marshalls and HomeGoods, is rolling out another home furnishing brand, promising this one will be different.

Taking a walk inside the Massachusetts store, one will find Homesense is organized mostly by color, pairing similarly patterned pieces throughout for shoppers in need of a little creative assistance.

Homesense’s lighting, art and furniture sections — they’re huge. But unlike HomeGoods, one won’t see many items for kids nor pets sold by the new brand.

“Just as our customers enjoy shopping both TJ Maxx and Marshalls, we are confident that loyal customers and new shoppers alike will be excited about shopping both Homesense and HomeGoods,” HomeGoods President John Ricciuti has said.

The company has promised both investors and shoppers that the overlap between a HomeGoods and a Homesense store is so minimal that TJX would consider positioning the two brands within the same strip center without fearing sales cannibalization.

Homesense locations will include a “General Store” that sells cleaning supplies and home improvement essentials like hardware, outdoor fixtures and mailboxes — more reminiscent of a Home Depot or Lowe’s.

The layout of a Homesense store aims to mimic how items would be actually be arranged in someone’s home, according to TJX. And there will also be sections throughout tailored to specific holidays or special occasions.

Come Sept. 7, TJX will open its second U.S. Homesense location in East Hanover, New Jersey, with many more to come.

And while TJX is rolling out Homesense across America, the company still plans to open about 100 HomeGoods stores this year.

“Again, we are seeing great opportunity for the future of our company within the U.S. home sector,” TJX CEO Ernie Herrman said on a recent call with analysts and investors.

Compare and contrast HomeGoods and Homesense for yourself.

Source: CNBC

Retailers personalize holiday shopping for millennials, baby boomers

August 15, 2017 in Latest News

Stores are already gearing up for the busy holiday retail reason, when retailers bring in more than 40 percent of their revenue for the year.

Brands have already started preparing for the impact that the changing industry landscape will have on the holiday season — focusing on convenience and speed to make holiday shopping a good experience for consumers. About 76 percent of U.S. consumers expect theirs interactions with a brand to be easy, while 60 percent of shoppers ages 45 and under say they look online first, then buy products in brick-and-mortar stores.

Locking into these trends will help retailers address the landscape shift and keep sales up this holiday season, according to the report. The federation is encouraging retailers to produce quality over quantity, reward employees for relationship-building actions with customers, and use data insights to prioritize customers’ most enjoyable shopping experiences.

“Especially during peak holiday times, optimize in-store and online shopping experiences,” the report said. “Customers should be able to quickly navigate your brand, get through checkout and get on their way.”

Holiday retail sales during November and December 2016 increased 4 percent over 2015 to $658.3 billion, exceeding NRF’s forecast of $655.8 billion. The number includes $122.9 billion in non-store sales, which were up 12.6 percent over the year before. Consumers showed more confidence during the holiday season, and December was up 0.2 percent seasonally adjusted from November and 3.2 percent unadjusted year-over-year.

Stores are specifically targeting different age demographics, and found these are what consumers want out of their shopping experiences:

1. MILLENNIALS: Price and value are the most important factores for this group, and more than 71 percent of 25 to 34 year olds use their smartphone to look up product information while shopping in stores. “They also recognize the importance of both functional and emotional aspects of the shopping experience; both are represented in where and how they decide to shop,” the report found.

2. BABY BOOMERS: About 20 percent of all baby boomers want personalized offers through their mobile device, according to the report. Boomers place value on the functional attributes when they decide whether to buy an item or not. Boomers want to shop at retailers that give them: reliability, product quality, value for the money they’ve spent and a store that allows them to stay on budget.

3. Gen X: Generation X, those born roughly between the early 1960s to the early 1980s, are described as the “on-the-go generation,” and they want to see clear value for what they buy this holiday season. They are most likely to buy products that will make their busy lives even easier. About 40 percent of Gen Xers say a fast checkout is a key factor in where they’ll shop this holiday season.

Early warning signs point to a slowdown in beauty retail, with Ulta a potential victim of its own success

August 7, 2017 in Latest News

Following quarter after quarter of rampant growth, some signs of a slowdown in the U.S. beauty market are starting to appear, cooling some optimism for this once-hot sector.

The initial warning sign occurred in early July when reports surfaced that there was more promotional activity at department stores’ cosmetics counters — once a big no-no for these large retailers.

“We’ve seen our competitors start to discount items like cosmetics, and I’m sure they’re saying we’re doing it,” Jerry Storch, CEO of Hudson’s Bay, the parent company of department store chain Saks Fifth Avenue, said on a recent conference call. “Once you get into that kind of a situation, everyone is fighting for every inch.”

Department stores had long been the only destination for women to browse for more expensive brands of blushes, lipsticks and perfumes. But nontraditional players like UltaLVMH’s Sephora and Macy’s Bluemercury came into the mix and changed the beauty landscape, and were rewarded with robust growth.

However, cosmetics giant L’Oreal on its latest earnings conference call pointed to softer trends in its North American beauty business. This caught one analyst’s attention, and he quickly issued a downgrade on Ulta’s stock.

“If our read of L’Oreal’s assessment is accurate, this, coupled with increased department store discounting, could suggest a less robust U.S. beauty market,” Oppenheimer & Co. analyst Rupesh Parikh wrote in a Monday note to clients. “As a result, we now view the backdrop as more challenging for ULTA to deliver the same level of comp and earnings upside investors have grown accustomed to.”

This news, when combined with tough year-over-year comparisons, all point to a more “challenging beauty backdrop” for certain retailers in the coming quarters, Parikh said.

And one can’t forget the ever-present threat of Amazon, which isrumored to be considering partnering with beauty supplier Violet Grey. The younger e-retailer’s website sells products from big-name brands ranging from Chanel to MAC to Tom Ford to Dior. These are partnerships Amazon.com hasn’t been able to secure yet.

“Because you have this area of strength [in beauty], a lot of retailers are trying to play,” Parikh said.

A representative from Amazon didn’t immediately respond to CNBC’s request for comment.

Within the past two years, Ulta has surpassed smaller rivals Sephora, Bluemercury and others to become the nation’s largest makeup merchant. Amid growing competition and the threat of falling foot traffic at stores, Ulta is still finding ways to lure shoppers through its doors.

“ULTA’s loyalty, prestigious brand access, & mass offerings drive traffic and are competitive moats, enabling ULTA to protect & gain share,” Cowen and Co. analyst Oliver Chen wrote in a recent note to clients. In some ways, Chen said he believes Ulta could become the “Amazon of beauty.”

The beauty retailer has managed to turn itself into both an online and offline shopping destination, and importantly one that key cosmetics and skin care brands are actually looking to partner with, he added.

“As our readers know, we have been and remain quite bullish on ULTA’s prospects due to a combination of company-specific initiatives, new product launches including MAC, and one of the strongest managements in retail,” Oppenheimer’s Parikh made sure to mention when he downgraded the stock earlier this week.

But for now, the company is struggling to convince Wall Street of the same story. Expectations have been set sky-high.

Ulta’s stock has fallen about 8 percent over the past six months and is down nearly 14 percent for the past three months, owing much to recent chatter about increased promotions and makeup demand on the decline.

“Ulta is a victim of their own success,” KeyBanc analyst Jason Gere told CNBC. “I think the stock is weak because people are saying all these good things can’t last forever. … [Business] has to slow at some point.”

But if you “peel back the layers of the onion,” Ulta still has tremendous runway for growth, he added, and at least for a number of years.

Ulta has managed to come out of the “shadow” of the department stores, proving it can survive and thrive as a stand-alone business, Chris Conlon, chief operating officer of retail real estate investment trust Acadia, told CNBC in an interview. “They are the best example of moving out of that [department store] box.”

After being “defined for decades as the ground floor of a department store where you were assaulted … with samples and testers,” the beauty sector has shown it’s capable of changing from that, Conlon said.

The beauty business, he added, is still a hot-ticket item for real estate folks. Landlords want a bite of that apple, if they can get it.

Time Equities, a New York-based real estate agency and advisor, told CNBC that its business is still seeing strong demand from beauty operators in 2017, despite talk of the sector cooling off. Ami Ziff, who leads the firm’s national retail team, said Time Equities is currently working on four prospective Ulta stores within its portfolio.

Meantime, Ulta is scheduled to open its first location in Manhattan later this year — a 12,000-square-foot box on the Upper East Side. Sephora and Bluemercury are both in close proximity down the block, but Ulta’s footprint will undoubtedly be the biggest of the group.

The market still looks to be fair game for other retail players, too. At least no one company is really slowing growth.

Target and internet giant Amazon, for example, are looking to beef up their beauty offerings.

“[Target is] bringing in things that are trending, bringing in reasonably priced product and trying to get consumers excited,” NPD Group’s beauty analyst, Larissa Jensen, told CNBC. “Amazon is definitely going after beauty in a different way.”

Amazon, Jensen said, is really able to win in beauty when it comes to replenishment — when women know exactly what they want, and when they want it.

Online players still only bring in less than 20 percent of total beauty dollar sales, NPD has found. Most females refuse to give up the “touch and feel” aspect of shopping when looking for the right shade of powder, lip gloss or eye shadow.

The threats and talk of Amazon making a bigger push into prestige beauty online are overblown and shouldn’t steal from Ulta’s success, Cowen’s Chen said. In fact, Ulta is looking to make its own push online, he pointed out.

Ulta has set the bar high because of what investors have seen — double-digit growth in the high teens for same-store sales, quarter after quarter, Anthony Chukumba, an analyst at Loop Capital, told CNBC in an interview.

“But a sequential slowdown wouldn’t end well. Absolutely not. … The next earnings report is going to be so pivotal.” Ulta is set to report earnings after the bell on Thursday, Aug. 24.

For now, Ulta’s biggest concern is that the company doesn’t get too complacent with where it stands against its competitors. And that it keeps its store concept fresh, its customers satisfied and its investors believers.

Source: CNBC

 

Staples may spin off its retail chain to Office Depot

July 31, 2017 in Latest News

A merger between Staples and Office Depot may finally be in the cards — but it won’t be the kind that company brass had longed for, or that regulators had feared.

Staples, which agreed a month ago to be acquired by private-equity firm Sycamore Partners for $6.9 billion, has also lately held talks to spin off its 1,500 retail stores to longtime rival Office Depot, sources told The Post.

Such a deal would create the nation’s only big-box office-supplies chain, with thousands of locations coast to coast. Still, its price tag would be dwarfed by the value of Staples’ pending buyout as doubts about the prospects for brick-and-mortar stores grow, according to insiders.

If Staples got out of the retail business, “It would be the end of an era,” says Craig Johnson, president of retail consultancy Customer Growth Partners. “This is a company that helped create the idea of a superstore. Unfortunately, the concept of a superstore has come and gone.”

Staples revealed in a public filing last week that on June 5, a bidder it called “Party A” offered between $625 million and $700 million for Staples’ North American retail locations.

“Party A” was Office Depot, which was angling to rebrand the Staples locations under its own name, according to a source close to the situation. Staples shunned the bid, agreeing instead on June 28 to go private under Sycamore in a buyout valued at 10 times the price of Office Depot’s retail deal.

Indeed, Sycamore Partners paid a premium not for Staples’ stores, but rather to control the company’s lucrative business selling paper, pens and ink cartridges to mid-size and big corporate clients.

As such, sources say Sycamore has signaled a willingness to offload the stores which, like much of the retail sector, are struggling as shoppers increasingly shift their buying to online rivals led by Amazon.

It’s not clear whether Office Depot and Staples have rekindled talks, but with Sycamore a willing seller, Office Depot is the most logical buyer, insiders said.

In a call last week with potential lenders to Staples’ distribution or “delivery” business that serves corporate accounts, Sycamore executives “tried very hard not to talk about retail,” according to an investor who listened to the presentation.

“They only thing they said about retail was they did not see much delivery business happening in the stores,” according to the source.

As it looks to finance the buyout, Sycamore is separating the distribution business from the retail side. Likewise, Sycamore execs have assured lenders that if the stores are sold, there will be no impact on lenders to Staples’ distribution business, according to sources.

The nation’s two leading office-supplies chains tried and failed to combine their businesses in a pair of mega-deals — one in 1997, the other in 2015 — but were smacked down both times by the Federal Trade Commission on antitrust concerns.

Fears of a retail monopoly helped thwart the 1997 deal, but by 2015 then-FTC Chairwoman Edith Ramirez fretted that a merger was “likely to eliminate beneficial competition that large companies rely on to reduce the costs of office supplies.”

Staples said in its filing last week that the all-stock offer last month from “Party A” carried regulatory risks. But with competitors like Walmart, Costco and Target selling office supplies in a tough sector, few expect an Office Depot acquisition of stores would get blocked.

“Combining Staples and Office Depot may well make sense,” according to Johnson. “Granted, the combined fleet will still have to be consolidated and there would be store closures.”

Meanwhile, Sycamore appears to be betting that Staples’ expertise negotiating the hassles of corporate supply contracts will remain a significant barrier as Amazon looks to gain a foothold in office supplies.

That may turn out to be a risky bet, too. Last week, Amazon said its office-supplies business has served 1 million business customers since its launch two years ago, and that it has grown 150 percent over the past year.

Staples and Sycamore spokespeople declined comment. Office Depot did not return calls.

 

Source: New York Post

Shares of this sports retailer are crashing, dragging Foot Locker, Nike down with it

July 26, 2017 in Latest News

 Sporting goods retailer Hibbett Sports issued a profit warning Monday that sent its shares spiraling down more than 25 percent and delivered a blow to some of the company’s peers.

Hibbett said it expects its comparable-store sales — a metric closely watched by Wall Street for retail stocks — to fall about 10 percent during the fiscal second quarter on account of “very challenging sales trends.”

The drop in sales combined with “significant pressure on gross margins” is expected to result in the company reporting a loss of 19 cents to 22 cents per diluted share for the second quarter, Hibbett said.

The retailer’s forecast sent shock waves across the entire sporting goods sector, with shares of Foot Locker falling 3.9 percent, Dick’s Sporting Goods dropping about 2.4 percent, and Finish Line was down about 4.8 percent. Sporting apparel brands also took a hit, with Nikeshares sliding 1.2 percent, and Under Armour‘s stock dropped about 2.9 percent Monday morning.

The downward pressure from these stocks was weighing on the S&P Retail ETF (XRT), which was recently down about 1.1 percent.

“Hibbett’s results suggest that the sports market is still in a state of flux following the recent spate of bankruptcies,” Neil Saunders, managing director at GlobalData Retail, told CNBC.

“This, combined with the fact that consumed interest in sports has waned slightly, has been unhelpful to sales and especially to margins.”

Hibbett also said it launched a new e-commerce platform that is integrated with its stores, so shoppers can view available in-store inventory and also fulfill online orders from stores.

“Despite the difficult retail environment, the Company remains focused on improving its business for the long term,” Hibbett CEO Jeff Rosenthal said in a statement. “Launching an e-commerce site has been a key strategic goal for Hibbett, and we took time to invest in our omnichannel infrastructure to do it the right way.”

Hibbett is in a particularly weak position compared with its rivals and doesn’t have as much “financial muscle,” GlobalData Retail’s Saunders said. Thus, the retailer has made “lackluster efforts” in investing in digital and won’t reap as many benefits, he added.

“Hibbett used to point out that the local nature of its store locations made it defensible against larger players and online. That logic no longer applies, and Hibbett is feeling the pain of not investing in new channels fast enough,” Saunders said.

With Monday’s declines, shares of Hibbett Sports have tanked more than 60 percent over the past 12 months, and the stock is down about 62 percent for the year so far.

Source: CNBC

 

RIP Retail: These 19 retailers are closing hundreds of stores in 2017

July 20, 2017 in Latest News

As Americans do more and more of their shopping on their devices instead of at the store, traditional retailers are reeling. Some are being forced to shrink — or go out of business altogether.

Already 2017 has been a year of massive store closings, led by these chains.

Gymboree

Gymboree is scaling back its playground. It’s closing more than a quarter of its kids’ clothing stores as it tries to adapt to an “evolving retail landscape.”

The company filed for Chapter 11 bankruptcy protection on June 11; exactly one month later, it announced it was shutting down 350 of its Gymboree and Crazy 8 locations, out of a total of nearly 1,300.

Payless

Payless ShoeSource filed for Chapter 11 bankruptcy protection in April and said it would shut down around 400 of its weaker stores. In May, the company indicated it could close 408 additional locations.

The discount footwear chain — founded more than 60 years ago in Topeka, Kansas — has found itself running behind online competitors.

RadioShack

RadioShack used to be everywhere, but now the electronics chain has largely vanished from the retail map. The company that once operated 7,300 stores says it closed more than 1,000 of its remaining locations over Memorial Day weekend — leaving just 70 stores still operating.

The retailer that began in Boston in 1921 says the closings continue a move from brick-and-mortar stores to RadioShack.com.

More on this

J.C. Penney

Mall mainstay J.C. Penney says it’s shutting down as many as 140 of its department stores — up to 14 percent of the total — by mid-2017. The company is offering 6,000 employees early retirement.

Closing stores will allow Penney to “effectively compete against the growing threat of online retailers,” chairman and CEO Marvin Ellison said in a news release.

Macy’s

After shuttering dozens of stores in 2016, department store giant Macy’s began 2017 by announcing plans to close 68 more of its locations, including a store in downtown Minneapolis that opened in 1902. The company estimates that 3,900 jobs will be lost as a result of the closures.

“We continue to experience declining traffic in our stores,” Macy’s CEO Terry Lundgren said in a news release.

Sears and Kmart

Struggling Sears Holdings Corp. began the year saying it would shut down 42 of its Sears stores.  In May it moved to close a dozen more, in June another 20 locations were added to the closure list, and in July eight more were targeted.

Where will it end? Here’s one possible clue: In a March 21 filing with regulators, the retailer warned that there’s “substantial doubt” about the company’s ability to continue.

At the start of 2017, Sears’ parent company said it also was closing 108 of its Kmart discount stores. In the spring, the company quietly started winding down business at 18 additional Kmart locations. And in July, 35 more made a closings list.

The stores going out of business in 2017 have included the very first Kmart, which opened in 1962 in Garden City, Michigan.

The Limited

In early 2017, women’s clothing retailer The Limited announced it was turning out the lights at all 250 of its stores.

The company showed signs of doom during its major holidays sales (with a no-returns policy) and ultimately filed for bankruptcy. Some 4,000 workers were laid off, according to Business Insider.

Abercrombie & Fitch

Abercrombie & Fitch — whose torn jeans and ripped models epitomized cool in the 1990s and early 2000s — says it will shut down 60 of its U.S. stores in 2017 as their leases expire. That’s out of approximately 285 stores worldwide.

Research group Fitch Ratings predicts Abercrombie will continue to struggle.

Michael Kors

Luxury fashion brand Michael Kors announced in May it would be closing up to 125 of its more than 800 retail stores over the course of two years.

The company is in “a difficult retail environment” and under pressure from price-cutting rivals, Kors chairman and CEO John Idol says.

More from Bankrate

Guess

Contemporary apparel, footwear and accessory brand Guess says it’s closing 60 of its stores by the end of the year. The company says in a statement that it’s shrinking its footprint because its business in the Americas has been “soft.”

As of April 2017, Guess operated about 950 stores worldwide.

American Apparel

The hip U.S.-made clothing retailer American Apparel filed for bankruptcy early in 2017 and has since closed all of its more than 100 U.S. stores. Canada’s Gildan Activewear acquired the American Apparel brand but passed on taking over the retail stores.

hhgregg

Electronics and appliance chain hhgregg filed for Chapter 11 bankruptcy protection in early 2017 and announced plans to close 88 of its 220 stores. The retailer says it expects to emerge from bankruptcy as a stronger and more agile company. The closings will eliminate approximately 1,500 jobs.

BCBG

Another chain going to bankruptcy court in 2017 is the women’s apparel retailer BCBG Max Azria. It filed for Chapter 11 in March after announcing it would shutter 120 of its locations, more than a quarter of the total.

Acting Interim CEO Marty Staff says BCBG is trying to address “the shift in customer shopping patterns and the growth of online shopping.”

CVS

Pharmacy giant CVS says it will close 70 stores in 2017, out of its total of more than 9,600.

The company says the effort is part of streamlining initiative to improve efficiency, lower overall costs and remain nimble in an ever-changing health care environment.

The Children’s Place

The Children’s Place, a clothing chain for kids, announced in March 2015 that it would close approximately 200 stores through 2017.

The retailer had originally said it would shut down 125 stores through 2016, but it expanded that plan because of a weak outlook. As of January, The Children’s Place operated about 1,040 stores.

Wet Seal

Early in 2017, teen fashion retailer Wet Seal closed its remaining 171 stores. The company had been shrinking since filing for bankruptcy protection in January 2015. The Wall Street Journal reports Wet Seal’s sales dwindled because of fading foot traffic at shopping malls.

rue21

Teen apparel chain rue21 began shuttering some 400 stores of its nearly 1,200 stores in April and announced a bankruptcy filing the following month. In a news release, CEO Melanie Cox says even in a tough business climate, the company continues to enjoy “an enthusiastic and loyal customer base, and hundreds of highly performing stores.”

Bebe

Women’s clothing seller Bebe closed all 175 of its brick-and-mortar stores this spring and said it would explore new strategies for its business. The company had previously said it would shut down just 21 locations.

Sears, Kmart to close 43 more stores as retail crisis continues

July 10, 2017 in Latest News

Sears Holdings continued its steady drip of store closures Friday with the announcement that it would close 35 more Kmart locations and eight Sears stores.

The department-store chain’s troubles have included several rounds of store closures this year, now totaling more than 300.

Although the iconic American department store chain still has more than 1,000 locations, Sears has buckled under pressure from online competitors, having failed to reinvent its traditional store experience.

“We have fought hard for many years to return unprofitable stores to a competitive position and to preserve jobs and, as a result, we had to absorb corresponding losses in the process,” Sears CEO Eddie Lampert said in a blog post.

“It is obvious that we don’t make decisions to close stores lightly. Our efforts have been, and will continue to be, fact-based, thoughtful and disciplined, with the goal of making Sears Holdings more relevant and more competitive for our members and other constituents.”

The new closures include four Kmarts in Florida and three in Ohio, and three Sears locations in Indiana. (See the full list.)

Sears is one of many retail giants struggling to find its footing, or simply survive, amid a landscape dramatically transformed by a shift to online shopping and rise of Amazon.

J.C. Penney has said it will shutter 138 locations, roughly 14% of its stores, and give buyouts to 6,000 employees. Macy’s plans to shut 68 stores. Radio Shack, which has sought bankruptcy protection twice in two years, has closed more than 1,000 locations since Memorial Day weekend. And one-time mall favorites Bebe, The Limited, and Wet Seal have closed or are in the process of shuttering all of their storefronts.

Sears’ latest round of cuts comes less than a month after the most recent round, in which the company quietly announced plans to close 20 locations.

 Sears acknowledged in March that there was “substantial doubt” it would survive on its own, though the company said its cost-cutting maneuvers and other retail strategies would greatly improve its chances of carrying on. Lampert has blasted critics for treating Sears like it’s dead.

Lampert said Friday in a blog post that the company would add small-format locations, though he did not provide specifics on the plan.

The company is close to meeting its previous target of $1.25 billion in cost cuts for the year, which includes the store closures and corporate layoffs. And it said Friday that it had gotten an agreement that would allow it to borrow up to $500 million more from a current loan, as well as finalized the sale of more than $200 million in properties which allowed it to pay off part of its debt.

“We expect additional real estate sales to pay down even more of our debt and to generate liquidity for the company,” Lampert said in the blog post.

Sears has also raised about $900 million by selling its Craftsman brand.

 

Source: USA TODAY

 

Analyst: Amazon poised to enter drugstore market

July 5, 2017 in Latest News

Dive Brief:

  • Walgreens Boots Alliance’s CEO Stefano Pessina on Thursday shrugged off the idea that Amazon might get into the drugstore business, saying the e-commerce giant was more likely to focus on less complicated retail areas. “Honestly I don’t believe that Amazon will … because they have so many opportunities around world and in many other categories, which are much, much simpler than healthcare, which is a very regulated business,” Pessina told analysts, according to a transcript from Seeking Alpha.
  • Amazon already sells medical devices and employs executives to deal with health care-related regulatory issues, and is said to be exploring how to ramp up its efforts in the pharmacy space.
  • Despite reservations, Pessina did say that Walgreens would be open to partnering with Amazon if it came to that: “If we were wrong and our belief was wrong, I believe that at the end of the day, we could find our goal in the new environment and we wouldn’t exclude to partner with them, we wouldn’t exclude to analyze the new situation of the market and to find our place adapting ourselves.”

Dive Insight:

Sales of prescription drugs provide drugstore chains with a steady stream of customers, but it’s a volatile space. Big-dollar corporate and government contracts are won and lost, generic versions of often-prescribed medicines can ding sales, and the Affordable Care Act has brought some price pressures to the health care sector in general, bringing costs down for consumers but not necessarily for retailers. Added to the instability is the current political environment, where recent actions by Congress and the Trump administration are poised to disrupt the space further.

Amazon’s major foray into brick-and-mortar via its proposed $13.7 billion acquisition of grocer Whole Foods has led to speculation that it could make a similar play in pharmacy.

Although Pessina downplayed Amazon’s ambitions in the segment, Leerink Partners analyst David Larsen said in a note to investors that the segment is primed for an entry by Amazon, considering Rite Aid’s availability and Amazon’s strengths, including its logistical prowess and sticky Prime membership base. Amazon has “the scale, logistical expertise, distribution footprint, and devoted consumer following,” he wrote, according to Barron’s. “What it lacks are relationships with pharmaceutical companies and distributors.”

It’s not just Walgreens, Rite Aid or CVS that would be challenged by such a move; Amazon in the pharmacy space would also challenge Walmart, a major pharmacy player with the advantage of a huge physical store fleet that is increasingly willing to go head-to-head with Amazon in e-commerce. With new features added to its mobile app for pharmacy and money services customers, including new ways for shoppers to skip regular checkout lines, Walmart is looking to differentiate the shopping experience by offering the same level of convenience as Amazon while continuing to leverage its physical footprint, Stephan Schambach, founder and CEO of mobile platform NewStore, told Retail Dive in an email. (Schambach is also the founder of e-commerce platform Demandware, which recently sold to Salesforce).

But Walmart’s new features won’t necessarily stop Amazon from bringing its own strengths to the space, which is highly regulated, but also highly lucrative, he noted. “Though challenges may arise in entering a regulated market, breaking into a multi-billion market opportunity for the e-commerce company can lead to huge success,” he said. “Speedy delivery options and lower drug prices is the next step for Amazon in addressing the massive demand for a simpler, faster, overall more convenient shopping experience.

Source: Retail Dive

The Future Of Retail: How We’ll Be Shopping In 10 Years

June 27, 2017 in Latest News

You’ve probably heard that brick and mortar retail is in trouble. Even industry giants are closing hundreds of stores.

Given retail’s steady migration to mobile and e-commerce, you may be wondering what retail will look like in the future. As predicted by futurist Faith Popcorn, we can continue to expect hyper-customized concierge and on-demand services, and what she calls “consutainment,” the integration of ultra-convenience, consumption, and entertainment.

Are we all going to shop at home in our underwear? Will physical storefronts go away? Move over, Jetsons. Here are a few things you can expect to see based on current technology that’s in the works.

Ultra-Fast Delivery

Today, the norm is two-day delivery. But if you’ve been paying attention, you know that’s changing. In fact, a surprisingly high 25% of consumers said that they would abandon their orders if one-day delivery wasn’t available.

Of course, that’s just the beginning. Two-hour drone delivery is coming in the foreseeable future, and Amazon is already talking about 30-minute drone delivery.

Your Kitchen Will Restock Itself

While Amazon has pioneered the “Dash Button,” in the not-so-distant future, your pantry will literally order your products for you. One stealth startup, WePlenish, is already launching a line of “IoT-powered” smart containers that promise to revolutionize the modern kitchen.

You won’t have to worry about running out of essentials like coffee, pet food or snacks because your containers will sense inventory levels and replenish those items without you having to lift a finger. No more waking up to find your coffee stash is empty or last-minute trips to the grocery store because you forgot to buy pet food.

Know Exactly What’s In Stock Where

Have you ever gone to a store hoping to buy something, only to learn that they were out of stock? A new feature from Google Home allows people to ask Google Assistant to find in-stock products at the closest store.

For example: “Google, where can I find the Nintendo Switch console?” Assistant will tell you how many stores have it right then and how close they are.

Of course, it isn’t currently available for all stores in all locations, but you can already see a future when it has become standard.

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“With the proliferation of mobile devices, smart glass and smart appliances, e-commerce and the marketing associated with it will become more intertwined to our future instant gratification lifestyles,” says Greg Yevich, co-founder and technology director of OperationROI, an e-commerce marketing firm and our client. “Every touchpoint — from digital to TV, radio and social networks — will let shoppers complete immediate purchases on the spot.”

Source: Forbes

The Day That Changed Retail

June 19, 2017 in Latest News

 

It’s the moment Amazon.com investors have been waiting for and everyone else has been dreading. For years, Amazon watchers have wondered when founder and CEO Jeff Bezos would pull the trigger on a broader plan to remake the retail landscape. Friday seems to be the day.

 This morning, Amazon announced it had agreed to buy Whole Foods Market for $13.7 billion.

The idea has been percolating in recent months, but it still caught Wall Street by surprise. Shares of the big grocery chains tumbled on the news. Kroger was down 13% and Sprouts fell 11%. Even more diversified names are feeling the pain, with Target down 9%, Costco down 6%, and Wal-Mart falling 5%. Amazon shares, already on a tear in the last 18 months, were up 3% on the news.

(Wal-Mart made its own purchase Friday, buying online apparel maker Bonobos for $310 million.)

Whole Foods investors were thrilled that Amazon had arrived to save the struggling chain. Its stock soared 27% on the offer, even though the deal, priced at $42 per share, values Whole Foods at 35% less than its 2013 peak.

After reshuffling — some might say ravaging — the bricks-and-mortar landscape from the sidelines, Amazon is now jumping in with both feet. The company was typically demure in its short press release on the deal. “Whole Foods Market has been satisfying, delighting and nourishing customers for nearly four decades – they’re doing an amazing job and we want that to continue,” Bezos said in a press release. But it would be naive to think Amazon simply wants to nourish organic food customers. Grocery stores are a tough business without much profit to be made.

For Amazon, the deal is likely part of a broader strategy to bring Amazon physically closer to customers. Having a network of bricks-and-mortar stores could shorten delivery windows for all manner of products, whether heirloom tomatoes, batteries, or books.

Amazon has been working on ways to improve its network for years. It’s started AmazonFresh, a grocery delivery service in 2008. And it’s been leasing planes to create its own shipping service. Whole Foods has become the latest piece of the puzzle.

Source: Barrons Next