A new era of retail is coming

On October 25 of this year — on an otherwise quiet day in retail news — Nike chief executive Mark Parker fired a reverberating shot across the bow of the entire retail industry.

He announced that out of Nike’s global universe of more than 30,000 retail partners the brand would, going forward, focus its time, attention and capital on forty — FORTY — retailers that Nike calls “strategic wholesale partners.” Partners, he explained, which are willing and able to build out unique and dedicated Nike spaces within their store environments.

With this one brief announcement, Parker had not only given tens of thousands of merchants around the world a Tony Soprano-style kiss on the cheek, but he’d also made the same sweaty-palmed decision that thousands of other brand CEOs secretly wrestle with on a daily basis: whether to abandon the intoxicating volume of the mass market in a sober effort to save their brands from almost certain ruin.

Barely a quarter goes by that I don’t speak with at least one brand executive awakening to the reality that the reach, ubiquity and market penetration that hyper-retailers, department stores and discounters once offered is now the very thing that is siphoning equity from their precious trademarks. The power-merchants that made these brands household names were now the very things rendering them commoditised hostages in a high-speed chase to the bottom. Once the salvation of many a fledgling brand, mass merchants have increasingly become like kryptonite. In a world constantly seeking what’s next, new or special, mass retail has become toxic in its overexposure. For consumers, to whom shopping experiences matter as much, or more, than products, mass merchants are bringing nothing to the table.

Nike is merely one in a growing list of labels rethinking their distribution strategies. Earlier this year Coach announced it would leave the floors of over 250 department stores. Michael Kors also made a similar decision. And high-end outerwear brand Canada Goose, a brand that has traditionally been sold through wholesalers, now has a long-term goal of generating at least half its profits from its direct-to-consumer business. One by one, brands are fleeing the mass market and their absence will weigh heavily on all mass merchants.

However, more important in Nike’s announcement was the bold declaration that only one tenth of one percent of their retailer network — those retailers who could deliver on the brand promise and experience — were even worthy of the brand’s time and attention. The remainder of Nike’s resources, according to Parker, would be dedicated to growing the brand’s direct-to-consumer business through its owned stores and websites, which currently represent about 30 percent of Nike’s total sales.
In a world constantly seeking what’s next, new or special, mass retail has become toxic in its overexposure.

This is by no means a minor shift. In fact, what it portends is a complete reformation of the retail market and a breakdown of the wholesale-retail model for revenue.

Where today the retail market is largely divided by luxury, mid-tier, and discount, the coming decade will see the market more clearly bifurcate into two distinct retail approaches. The first will encompass an ever-swelling number of vertically-integrated brands that focus on serving individual consumers at scale and in a manner that best befits the brand. The second will be a new class of “experiential merchants” that use their physical stores and online assets to perfect the consumer experience across a category or categories of products. They will define the ideal experiential journey, employing expert “product ambassadors” and technology to deliver customer experiences that are truly unique, remarkable and memorable. So memorable that they leave a lasting, positive experiential imprint on the shopper’s psyche.

The solitary aim of these new-era retailers will be to drive significant sales for their brand partners. But unlike stores of today that are single-mindedly focused on four-wall sales, experiential stores of the future will position themselves as true any-channel hubs. They will serve customers through multiple means of fulfilment that will include their own channels as well as direct-to-consumer sales from their brand partners. Attribution for these sales will matter less than delivering the powerful shopping experience responsible for generating them. And for this, brands like Nike will reward experiential merchants handsomely — not simply with conventional product margin but also with upfront media and agency fees. These experiential merchants will, in essence, be media channels and will be earn revenue as such. Brands like Nike will not be their vendors but rather their clients.

Taken in this context, Nike’s announcement on October 25, 2017 was a profound harbinger of a tectonic shift in the industry. One of the world’s largest brands was not merely communicating a new brand strategy but more clearly than ever before, foreshadowing an entirely new and revolutionary era of retail.

Doug Stephens for Business of Fashion

How Sappi changed its spots and its fortunes

Around 30% of Sappi shares are held by the Public Investment Corp, the Government Employees Pension Fund and the Industrial Development Corp — and that is a fat vote of confidence in the group from government.

This is, after all, a company that has struggled to appeal to the broader market in the years since the global financial crisis began. This is probably because it took seven years to more than double from below R20 to about R40 between 2009 and 2015. Now, having shot up to around R100 more recently, it’s been deemed a great-value share.

Sappi delivered “robust” full-year results to September 2017 on “strong growth” from speciality packaging and its dissolving wood pulp business. Full-year profit of $338m rose from $319m in 2016.

The group has further reduced debt in the period, as it continues to reorientate operations away from the core business of fine-coated paper used in upmarket advertising and publishing materials.

The focus now is on high-margin dissolving wood pulp, also called chemical cellulose, used in making clothing and textiles — and on specialised packaging products.

But the turnaround has been long and slow, and only the most optimistic supporters have stuck around. The recent upward rush may also have reached a peak for now, says Electus Fund Managers analyst Mish-al Emeran, as the “low-hanging fruit” has been picked.

“[There is a] need to strike a balance between growth and the risk of oversupplied markets. We think the share price reflects the turnaround, [but] key catalysts have played out,” he says.

Chemical cellulose is the key area of growth for Sappi, Emeran says. But there could be significant additional global supply in the medium term. In the past year there was strong demand for the product, Sappi says, growing at double digits.

This is why the group’s capital expenditure in 2018 is expected to increase to $450m as it continues to convert mills in SA, Europe and North America to produce greater amounts of its chemical cellulose and speciality packaging. The latter is a sector that has enormously benefited SA pulp, packaging and paper manufacturer Mondi, as the Internet cut into Sappi’s traditional fine-coated paper markets.

Mondi has built up world-class packaging production assets in emerging European markets, while Sappi has been hampered by more expensive output costs at its mills and factories in developed European countries. Mondi only really ever made office paper, so the Internet has not been as damaging to its paper business.

But with the move to chemical cellulose and also speciality packaging, Sappi is starting to reassert itself. Both Sappi and Mondi have significant facilities in SA, Europe and the US, which supply world markets. Meanwhile, with the rand remaining weak, SA is a good place for basic product inputs, including competitive forestry resources.
For Sappi, Europe is its biggest market at 41% of sales, followed by Asia at 26%, and the US 23%. SA accounts for 10% of the total. Coated paper is still Sappi’s biggest product segment, at 56% of all sales. Speciality paper makes up 11%, commodity paper 7% and chemical cellulose 20%. But with spending during 2018 focused on higher-margin growth segments, including chemical cellulose and speciality packaging, this will position Sappi for stronger profitability from 2019 onwards, says CEO Steve Binnie.

“We have been through a period of being very conservative,” Binnie says. “We halved debt over the past four years from $2.5bn to $1.3bn.

“Our success in bringing our debt levels to below our targeted leverage ratio of less than two times net debt to [earnings before interest, tax, depreciation and amortisation] in [financial 2016] meant we could turn our attention to increased investments in growth projects.”

Markets for chemical cellulose are predicted to grow at about 5%/year.

Sappi supplies about 20% of the global market – much of this to China, India and Indonesia. The product is also widely used in cigarette filters, cellophane, pharmaceuticals and in making foodstuffs.

But Binnie says demand for textiles has been so good that Sappi has not yet had the opportunity to enter these other markets.

Emeran says management has done well to turn the business around. He says balance-sheet strength and flexibility have been restored, amid good cost control across divisions. Investors will also be pleased that Sappi’s dividend in 2017 leapt 36% to US$0.15 year-on-year.

Wade Napier, diversified resources analyst at Avior Capital Markets, says Sappi “is very comfortable” in terms of its balance sheet. He says it has never fully repaid its debt because debt is a useful means of enhancing equity returns in a low global interest-rate environment.

By Mark Allix for Business Live

While some retailers managed to draw crowds and lines on Thanksgiving Day with Black Friday sales, other stores remained almost eerily empty as the holiday-shopping season kicked off.

However, that may not necessarily be bad news for companies banking on a profitable holiday season. On Thanksgiving Day, people spent $2.9 billion online, according to Adobe Analytics.

Here’s a look inside the shockingly empty stores this Black Friday.

Quite a few Targets seemed surprisingly empty, The Street’s Brian Sozzi noted.

“Hmmm not what I expected,” the reality-TV star Tamra Judge posted on Instagram after visiting a Target in California. “First time ever Black Friday shopping. I was so excited to fight the crowds.”

Part of the reason for empty stores could be chalked up to Black Friday sales kicking off on Thanksgiving Day.

As one commenter on Judge’s Instagram post put it: “That ’cause that crowd was there yesterday at 6pm!!! They are all sleeping now.”

However, many shoppers may simply be shopping online instead of visiting physical stores.

Target said on Friday that it had received more than three times the number of orders through its Order Pickup service than it did on Thanksgiving last year — which could explain the empty stores.

Some Best Buys seem to be facing a similar situation.

Though crowds lined up outside the retailer on Thanksgiving, Black Friday seems more tranquil — at least at some stores.

There were also empty Walmart locations, as well as some empty Big Lots.

Shoppers spent $2.9 billion online on Thanksgiving — a 18% increase over last year, according to Adobe Analytics.

Shoppers are expected to spend $107.4 billion online this holiday season, which would represent an increase of nearly 14% over last year, according to Adobe.

By Kate Taylor for The Independent

Why black friday is a fake

Since it was gleefully adopted by the UK seven years ago, the name Black Friday has been synonymous with amazing, money-saving deals.

It is the day when, for a glorious 24 hours of plummeting prices and discounts, the consumer appears to come out on top — and, this year, it’s at the end of this week.

Originally an American concept, Black Friday falls the day after their Thanksgiving holiday and marks the start of the Christmas shopping season.

The Samsung 55-inch Smart 4k Ultra HD HDR curved TV KU6670 was advertised as ¿Save £400, now £849¿ (was £1,249 from May 11, 2016 to June 22) but it was £50 cheaper at least 29 times in December, January and April, the same price at least seven times in April and £79 cheaper at least 18 times in May +9
The Samsung 55-inch Smart 4k Ultra HD HDR curved TV KU6670 was advertised as ‘Save £400, now £849’ (was £1,249 from May 11, 2016 to June 22) but it was £50 cheaper at least 29 times in December, January and April, the same price at least seven times in April and £79 cheaper at least 18 times in May

In Britain, it’s simply seen as a good excuse to go bargain hunting — and deals are starting earlier than ever this year.

With many shops already advertising their Black Friday offers, we’re expected to splash out £10 billion before this week is out.

But in this frenzy of spending are you really getting a good deal? In many cases, it would appear not.
The Nutri Ninja BL450 blender with pulse technology (silver) was advertised at £44.99 but was £5 cheaper at least 22 times in April and May.

The Fitbit Blaze was advertised as ¿Save £20, was £159.99, now £139.99¿ (£159.99 from March 1 to Nov 15). But it was £10 cheaper at least nine times in January, £7 cheaper for the rest of the Black Friday sale period (other than Black Friday itself), and the same price 124 times between October and May +9
The Fitbit Blaze was advertised as ‘Save £20, was £159.99, now £139.99’ (£159.99 from March 1 to Nov 15). But it was £10 cheaper at least nine times in January, £7 cheaper for the rest of the Black Friday sale period (other than Black Friday itself), and the same price 124 times between October and May

A year-long investigation by consumer experts Which? has found that an astonishing six out of ten of last year’s ‘deals’ were for products that were, in fact, cheaper or the same price at other times of the year.

The research tracked the prices of 35 of the most popular technology, home and personal care products on sale on Black Friday 2016, but the results throw the entire validity of the Black Friday ‘deal’ into question.

Richard Headland, editor-in-chief of Which? Magazine, says: ‘From a consumer point of view, it’s obviously very frustrating.

Beats Solo 2 wireless black headphones (also in yellow) were advertised at £169. But they were cheaper by £19 for at least two days in February and the same price for at least two days in December.

The one day on which you assume you’re getting the best deal ever is that last Friday in November.

‘We think it’s misleading on the part of the retailers, who are happy to hype up the size of Black Friday discounts.

‘Retailers disagree, though. They argue that just because a product is included in a Black Friday sale, it doesn’t stop them discounting it at other times of year, too. That’s true, but it’s also a tacit acceptance that there may be better times to shop for a bargain.’

Who are the culprits?

Some of the worst offenders were some of our top retailers and the deals make sorry reading.

There was the Neff Slide and Hide oven from Currys/PC World. It sounded like a good deal at £494.99, particularly as the retailer’s adverts claimed it had been priced at £599.99 throughout September and most of October.

But the oven was actually cheaper than the Black Friday price for at least 113 other days of the year. It cost £449.99 — £45 cheaper — just three weeks later.

The Neff Slide and Hide oven was cheaper than on Black Friday for at least 113 days of the year. It was advertised on Black Friday at ¿£494.99 ¿ 10 pc off the marked price of £549.99¿ (was £599.99 September 1 to October 18). The lowest price in the year was £419, at least 33 times in April and May. It was £449.99 at least 49 times from mid-Dec to February +9
The Neff Slide and Hide oven was cheaper than on Black Friday for at least 113 days of the year. It was advertised on Black Friday at ‘£494.99 — 10 pc off the marked price of £549.99’ (was £599.99 September 1 to October 18). The lowest price in the year was £419, at least 33 times in April and May. It was £449.99 at least 49 times from mid-Dec to February

A Samsung 55-inch Smart 4K Ultra HD curved TV was advertised in Currys/PC World as ‘Save £400, now £849’, but was £50 cheaper at least 29 times in December, January and April, the same price at least seven times in April, and £79 cheaper at least 18 times in May.

There were similar anomalies with the Fitbit Blaze, a Samsung Ecobubble 8kg washing machine, and an HP Envy 4524 all-in-one wireless inkjet printer.

The DeLonghi bean-to-cup coffee machine looked like a bargain last Black Friday at £349 in Currys/PC World — a huge saving on the £729.99 that the retailer’s advertising stated it had been for most of September and October.
The Samsung 49-inch Smart 4k Ultra HD HDR curved TV KU6670 was advertised as ‘Save £250, now £699’ (it was £949 from May 11 to June 22). But it was also £699 at least 18 times before Black Friday in August and September. It was also £50 cheaper at least 29 times afterwards in December, January and April.
However, Which? data showed that it was priced at £579.99 for nearly three weeks when the ad claimed it was selling at £729.99. Plus, it remained at the Black Friday price for almost all of December.

They also slipped up with a Braun 3040s Series 3 electric shaver and Sony MDR-ZX770AP on-ear headphones, among other items. An Oral B electric toothbrush from Amazon was advertised as ‘save 26 per cent — was £40.49, now £29.99’.

It sounded like a good offer, until you realise it was £5 cheaper on at least two days in July.

You may feel that this casts a bit of a cloud over the whole Black Friday experience. The build-up has already been diluted by the fact that so many shops have been discounting goods all month.

The Braun 3040s Series 3 electric shaver was advertised at £39.99 but was the same price at least nine times in June and July, and between £4 and £5 cheaper at least five times in December +9
The Braun 3040s Series 3 electric shaver was advertised at £39.99 but was the same price at least nine times in June and July, and between £4 and £5 cheaper at least five times in December

There are also suggestions that UK discounts aren’t as high as those in other countries.

While online prices here were cut by an average of 12 per cent last year, according to UK retail strategy expert Jamie Merrick, of Salesforce Commerce Cloud, they were down a whopping 29 per cent in the U.S., and 20 and 23 per cent in Germany and France respectively.

However, it seems that 31 per cent of households are planning on getting involved, and there are predictions that £1.74 million will be spent online every minute of the day itself, £3 billion will be spent over the four days from Friday to Monday and more than £10 billion during the week.

Commerce consultancy Salmon expects there will be £20 billion-worth of online sales in November, overtaking December sales — which, for retailers at least, is good news.

Currys/PC World — Eight deals were cheaper or the same price after Black Friday:

The Samsung 55-inch Smart 4k Ultra HD HDR curved TV KU6670 was advertised as ‘Save £400’ now £849 (was £1,249 from May 11, 2016 to June 22) but was £50 cheaper at least 29 times in December, January and April, the same price at least seven times in April and £79 cheaper at least 18 times in May.
The DeLonghi Magnifica bean-to-cup coffee machine was advertised at £349, ‘Save £380’ (was £729.99 from Sept 6 to Oct 10, 2016) but was the same price at least 28 times in December. Indeed, Which? price research shows it was actually £579.99 from Sept 6 to Sept 24.
The Samsung wireless soundbar and subwoofer HW-K430 was advertised as ‘Save £150, now £129.99’ (was £279.99 from Sept 28-Oct 31). It was then the same price at least 18 times in Dec and Jan.
The Fitbit Flex activity and sleep wristband (in black, slate or pink) was advertised at £39.99 ‘Save £40’ (was £79.99 from Oct 20 to Nov 12). But it was £2 cheaper at least six times at the beginning of Dec.
Beats Solo 2 wireless black headphones (also in yellow) were advertised at £169. But they were cheaper by £19 for at least two days in Feb and the same price for at least two days at the beginning of Dec.
The HP Envy 4524 all-in-one wireless inkjet printer was advertised at £35. But it was the same price at least three times after Black Friday in late December 2016 and early January 2017.
The Samsung Ecobubble 8kg washing machine WF80F5E2W4X was advertised at £349 but was the same price at least twice at the end of December.
Three deals were cheaper or the same price before and after Black Friday:

The Neff Slide and Hide oven was cheaper than the Black Friday price for at least 113 days of the year. It was advertised on Black Friday at £494.99 — 10 pc off the marked price of £549.99 (was £599.99 from Sep 1 to Oct 18. The lowest price over the year was £419, which it was at least 33 times in April and May. It was £449.99 at least 49 times from mid-Dec to Feb.
The Samsung 49-inch Smart 4k Ultra HD HDR curved TV KU6670 was advertised as ‘Save £250’ now £699 (it was £949 from May 11 to June 22). But it was also £699 at least 18 times before Black Friday in August and September. It was also £50 cheaper at least 29 times afterwards in December, January and April.
The Fitbit Blaze was advertised as ‘Save £20’ was £159.99, now £139.99 (it was £159.99 from March 1 to Nov 15). But it was £10 cheaper at least nine times in January, £7 cheaper for the rest of the Black Friday sale period (other than Black Friday itself), and the same price 124 times between October and May.
Argos — these deals were cheaper or the same price after Black Friday:

Beats by Dre PowerBeats2 wireless sports headphones (black) were advertised at £99.99 with the line ‘Save £30 — our lowest price ever’. But if you waited just three weeks, until Dec 17, they were £10 cheaper, as well as on at least 13 other days at the end of December.
The Dyson V6 Fluffy cordless vacuum cleaner was advertised at £229.99 but was the same price at least four days at the end of December.
The Philips Viva Air Fryer with rapid air technology was advertised at £69.99 but was the same price at least 20 times afterwards in December and January.
The Gtech AR02 AirRam filter bagless upright vacuum cleaner was advertised at £149.99 but was the same price on at least one occasion in early January.
The Nutri Ninja BL450 blender with pulse technology (silver) was advertised at £44.99 but was £5 cheaper at least 22 times in April and May.

Three deals were cheaper or the same price before and after Black Friday:

The LG UHD TV 4k LG49UH650V 49-inch UHD4k Web OS Smart LED TV was advertised as ‘£499 — Our lowest price’ but it was £20 cheaper at least seven times at the end of Dec, £4 cheaper at least 11 times in early Dec, and the same price at least 17 times between Nov and Jan.
The Braun 3040s Series 3 electric shaver was advertised at £39.99 but was the same price at least nine times in June and July, and between £4 and £5 cheaper at least five times in December.
Sony MDR-ZX770AP on-ear headphones (black) were advertised as £34.99 but were the same price for at least six days in early November 2016 and at least 16 times in December.
How to spot a true bargain

How do you avoid getting it wrong? Richard Headland, editor-in-chief of Which? Magazine, has some tips:

Do your research

Be focused. Identify which products you want to look for and get a feel for prices. You can use Which? to look up product reviews and find out current and historical prices at a range of popular retailers, or websites such as CamelCamelCamel for Amazon price history. Compare what looks like a good Black Friday deal with other retailers. Don’t be swayed by a claimed ‘saving’.

Watch the hype

We’re easily taken in by bright signs proclaiming ‘Was £100, now £50’, but these may not be true. By law, a product has to have been on offer at the higher price for 28 days before a discount is offered, but this isn’t always the case. As long as there is a note explaining the offer, shops get away with it.

Keep your cool

You are the target of aggressive marketing — so stay cool and calm. More than ever, it’s clear that it’s not just a day of discounts, so if you’re not convinced, then hold back.

Beware the RRP

Be suspicious of RRP prices (recommended retail price). Officially, the manufacturer isn’t allowed to set the price of a product. In reality, there is collaboration, so that a manufacturer will sell at a discount at the same time as an independent retailer. Apple is a good example of this. Having said that, you can still have a look at the RRP on the manufacturer’s website, to see whether a retailer is being honest.

Price promises

Try to buy from retailers with a price promise — those who’ll refund the difference if you find a better deal on the same product elsewhere, or if the price drops later.

Count in delivery

Look at delivery costs in advance. In a Which? survey, four in ten people said paying for postage and packing was an irritating part of online shopping. Some retailers offer a buy online and pick up later service, which means you don’t have to go near the shops on the day itself.

Product reviews

Check out reviews. In some cases, a discount on a product will be there for a good reason and shops might struggle to give them away.

By Alice Smellie for The Daily Mail

BIC sees increase in stationery sales

Back-to-school (BTS) trading and new products helped to lift BIC sales in an otherwise tough Q3 for the manufacturer.

In the manufacturer’s stationery division, quarterly sales rose 2.6% on a comparative basis to €191.3 million ($226 million).

Overall, BIC’s Q3 was below expectations with sales down 5% at €465.8 million while profit fell 21.5% to €57.8 million. The group said it would be cutting its full year forecasts of slightly less that 2% sales growth.

For the nine months ended 30 September, sales rose 2.9% to €619.4 million.

Sales in Europe recorded mid-single digit growth. It reported a good BTS period across all European countries, which managed to offset market softness.

The stationery segment gained market share across the board, most notably in France for the 14th consecutive year, and also in the UK.

The group attributed this to improved customer relationships, targeted brand support investment and the success of new products.

In North America, sales grew low-single digit in a slightly declining market. During the BTS period, it remained flat, but new product launches allowed BIC to gain share.

In developing markets, Latin America sales grew low-single digits. In Brazil, it continued to gain market share despite a weak environment. Good BTS trading in Mexico allowed BIC to outperform the market there.

In the Middle-East and Africa, it delivered robust growth alongside market share gains, particularly in South Africa.

Adjusted operating profit margins for the segment were reported at 8.9%, compared to 9.9% for the period last year. Q3 margins were also slightly lower at 3.6% compared to 4% last year. This was due to increased brand support investment.

BIC also announced that it is to invest around €28 million in a new writing instruments facility in India. Its subsidiary Cello has acquired land and building for the construction of a new writing instrument facility in Vapi, Gujarat.

The investment will enhance its manufacturing reach in India, and enable it to meet consumer demand more effectively in this rapidly growing market. The facility is expected to be operational by the end of 2018.

By Joshua Allsopp for OPI

Amazon introduces accounts for teens

Traditionally, teenagers who needed to buy notebooks or new sneakers on Amazon either had to ask their parents to do it for them, or log onto their parents’ account, where Mom and Dad’s viewing history would be on full display (“Fifty Shades Darker? Eww, Mother!”)

Amazon never really had clear rules regarding a minimum age for making purchases, simply stating in its service terms that anyone under 18 “may use the Amazon Services only with involvement of a parent or guardian,” and that you must be 21 to buy alcohol.

Now Amazon is giving teens ages 13 to 17 more autonomy – and let’s be real, hooking them onto the colossal shopping catalog early – by introducing teen accounts.

Parents choose a payment method and shipping address, and decide whether they want to be able to approve every order their teen makes or set a pre-approved spending limit. Then, to start shopping, teens must download the Amazon app, and create a login.

When they’re about to buy something, their parents will receive a text or email with the item, price and an optional note from their kid, saying something like, “Dad, can I get these pants for my ski trip?” or “I really, really need glitter slime.” Parents can reply “Y” for yes, or they can review the order further on the site.

Parents with Prime membership can share “select benefits” with their teen, including free two-day shipping on more than 50 million items, Prime Video and Twitch Prime. Teens and parents can sign up for a teen account at amazon.com/forteens.

By Michelle Woo for Lifehacker

The Amazon con

When Alexander Turney Stewart opened a brand new store in New York in the 1820s, he adopted a radical and original policy.

All goods had a fixed price. No longer would salesmen size up the apparent wealth of a customer and see how much they could get away with charging.

Rival retailers predicted the Irishman would be bankrupt within a week. Instead, he became a multi-millionaire and A. T. Stewart & Co was, for some time, the world’s biggest department store.

The idea that shops charge a set price for goods has been the norm for almost 200 years — but that’s changing thanks to the internet.

Most of us assume that prices at Amazon, the online retail giant, are not just low, but stable.

However, remarkable new analysis of the price of 100 random products during the course of year showed prices fluctuated by up to 260 per cent between the highest and lowest points, leaving customers who bought at the wrong time hundreds of pounds out of pocket.

The research, using data from CamelCamelCamel, a price-tracking website, found that a paddle board, for example, could be bought for as little as £234.87 or as much as £699 — a difference of £464.13 over a year.

A Jamie Oliver stainless steel induction saucepan changed price 51 times between first going on sale on Amazon in November 2016 and August this year, ranging in price from £44 to £18.27.

New analysis of the price of 100 random products during the course of year showed prices fluctuated by up to 260 per cent between the highest and lowest points, leaving customers out of pocket.

Some prices changed by large amounts on a weekly basis. On average, each product changed price every five days and one product changed price 300 times in a year. For example, the DVD of Stephen King’s 1990 thriller It changed price 24 times a month.

This strategy of prices moving up and down on a regular basis — and in real time — is known in the industry as ‘dynamic pricing’.

It is a technique that has long been used in the airline industry to sell as many seats as possible, as profitably as possible.

Some consumers have also experienced it with Uber, the app-based minicab company, which offers low fares compared with black taxis most of the time, but which sometimes adopts ‘surge pricing’ during periods of high demand.
Dynamic pricing is increasingly being used by online retailers, particularly Amazon.

Philip Downer is the former managing director of Borders, the High Street bookstore chain that faced fierce competition from the online giant.

He now runs small gift shops in Dorking, Surrey, and follows Amazon developments closely.

‘This price instability means the only certainty is that you can never be certain you are getting the best price for anything,’ he says.

‘Indeed, you probably never are getting the best price for anything. One senses as a consumer that they are playing games with you.’

Earlier this month, Amazon in the U.S. came under fire for allegedly using dynamic pricing to take advantage of Hurricane Irma.

Customers in storm-hit Florida took to social media to complain that packages of Nestle water were selling for $25 on Amazon, yet prices for those in the north-east of the country showed the same case of water selling for $18.50.
Amazon strongly denied that it was adopting ‘surge pricing’ for bottled water and insisted it did not alter prices according to the area of the country.


That, in turn, was leaving higher-priced offers from third-party sellers that use Amazon.

However, there is strong anecdotal evidence that all online retailers, not just Amazon, tweak prices of some products according to supply and demand.

Another price-tracking website is Idealo, which monitors 183 million live prices across 30,000 shops in Europe, including Amazon, Argos, John Lewis and Asos.

Over the course of three months, it studied a selection of consumer electronics, such as Fitbit fitness devices and computer games, to see how the average price fluctuated throughout the week.

In nearly all cases, prices were lower on a Monday or Tuesday — the least popular days of the week to shop online, according to retailers, and they were more expensive in the run-up to the weekend, when the bulk of online shopping takes place.

For instance, the average price of a Fitbit Charge HR was £89 on a Monday but £94.64 on a Saturday. Call of Duty: Black Ops III, a computer game, cost £12.49 on a Monday but £16.99 on a Friday and Saturday.

The average difference between a Monday and Saturday across all video games is 15 per cent, according to Idealo.

The price difference for a selection of four family games, including Monopoly and Articulate, was 18 per cent depending on the day of the week.

‘It is supply and demand driven, absolutely,’ says John Hoad at Idealo, which is based in Germany.
‘Just look at the Lego Millennium Falcon, which is a marriage of two very popular toy trends: Lego and Star Wars.’

On May 2, it was priced, on average, at £81.66 across all the retailers it monitors, including Amazon. On May 3, the day before so-called Star Wars Day, which occurs each year on May 4 and is hugely popular with fans, it shot up to £94.90, a 16 per cent leap — ‘a simple case of taking advantage of demand around Star Wars Day,’ says Hoad. On May 5, the price went back down to £83.99.

A retailer is perfectly within their rights to fluctuate prices according to supply and demand, but consumer experts worry that retailers have the potential to take it a step further.

With all the data that online retailers hold on customers, could they alter the prices according to who was doing the shopping?

In 2012, a Wall Street Journal investigation discovered online companies, including office-supply shop Staples and furniture retailer Home Depot, showed customers different prices based on ‘a range of characteristics that could be
discovered about the user’.

Customers, for instance, in locations with a higher average income — and perhaps more buying choice — were generally shown lower prices. Another study, in Spain, showed that the price of the headphones Google recommends to you in its ads correlated with how budget-conscious your web history showed you to be.

The travel site Orbitz made headlines when it was revealed to have calculated that Apple Mac users were prepared to pay 20 to 30 per cent more on hotels than users of other computer brands, and to have adjusted pricing accordingly.

Ratula Chakraborty, senior lecturer in business management at the University of East Anglia, and an expert in pricing, says: ‘So-called first-degree price discrimination, when prices are aimed at the individual by identifying them, is a very contentious subject, as Amazon found to its cost several years ago when it started trialling targeted higher prices to consumers based on their shopping history, which it could monitor.’

This was back in 2000, when online retailing was just taking off. Amazon was found to have charged some people more than others for the same DVD, with some alleging that older people were charged a higher price.

Within a fortnight Amazon was forced to apologise, issue refunds and strenuously state it never tests prices based on customer demographics.

An Amazon spokesman reiterated its position to the Mail this week, saying it might alter prices according to a customer’s location but does ‘not engage in surge pricing or vary its prices by demographics. Retail prices fluctuate all the time, and we simply seek to meet or beat the lowest competitive price for our customers.’

But, as Chakraborty makes clear, it is increasingly easy, in theory, for online retailers to use data they have gathered to change prices according to the customer.

Every time you visit a website, the company behind it downloads a tracker onto your computer, known as a cookie. These monitor what pages of the website you use and how frequently you click on a particular page.

In addition, in nearly all cases you have to hand over your email address to an online shop when you make a purchase; this can then be easily linked to your actual postcode, and other details available about you online, which in turn can be used to estimate your wealth thanks to large consumer databases that segment the population of Britain into about 60 different socio-economic categories.

John Readman, marketing director at Summit, a company that helps online retailers use this sort of customer data to boost their sales, says: ‘What’s fascinating with dynamic pricing is the amount of audience data that is now available to retailers, as consumers move around the internet.

‘Potentially, an unscrupulous or profit-hungry retailer could change the price of a product based on how much they want that product. That is technically possible.’

He insists that no retailer he has ever worked with has used data in this way to profiteer.

Instead, ‘it’s more about reducing the price to returning customers or to loyal customers to get them over the line’.
In other words, most retailers want to convert a browser into a buyer rather than make a bit more profit out of an individual buyer.

What is revealing, however, is how Readman shops online.
He does his initial searches for high-value products and then makes his purchases using an ‘incognito logged-out browser’.

This is a button most web browsers, such as Chrome or Internet Explorer, have (see box above for how to find this). Once clicked, users can visit web pages without the sites being able to track the identity of the consumer.
‘I have certainly seen different results from when I am logged in than when I am on an incognito browser,’ says Readman.

He says this is mostly true for travel and hotel websites, but he has also spotted different prices for the same product on Amazon.

Amazon’s strength is in ‘bundling’, he adds.

He is referring to the practice by which once you’ve selected your purchase, up will pop a selection of related items that, apparently, are ‘frequently bought together’ by other customers, in order to tempt you further.
‘Nearly 10 per cent of all their sales come from that extra bundling,’ Readman says. ‘I wouldn’t be surprised if they are not showing you the cheapest one on the bundle, but the one they are making the most [profit] margin on.’

In the UK, only £16 in every £100 is spent online. But dynamic pricing could soon enter the High Street thanks to technology called electronic shelf-edge labelling.

A number of retailers have started to experiment with electronic displays, rather than paper labels on their shelves.
Andrew Dark, is the chief executive of Display Data, which has developed electronic labels which are so high resolution they look like a printed ticket.

‘People can’t work out it isn’t paper,’ he says. The main benefit of this technology for retailers is cost-cutting.
Display Data has worked with both Morrisons, at its Guiseley branch in Leeds, and Tesco, at Braintree in Essex, to install a trial of electronic price displays.

‘It means the retailer doesn’t have to laboriously print a label, get a human being to cut it out, walk it to a specific location in an aisle and put it in the shelf,’ says Mr Dark.

‘Changing 50 items in 1,000 stores just isn’t easy to do manually. If you speak to store colleagues, they hate it. It’s so laborious.’

His system allows someone to change the price in thousands of stores within 17 seconds with the push of a button.
The supermarkets are adamant that they have no intention of using ‘dynamic pricing’ to push up the price of bottles of wine to commuters in the evening, for instance, or the price of umbrellas when it is raining.

A source close to Morrisons said: ‘Our customers would murder us if we did that. Yes, it’s technically possible, but as it is so competitive out there, we would be crazy to try this.’

However, electronic shelf-edge labelling has been used to cut prices throughout the day, explains Dark, one of whose customers is Kaufland, a large supermarket group based in Germany, which uses it particularly to encourage customers to buy fresh fruit and vegetables near to their use-by dates.

‘We buy so much with use-by dates and if it doesn’t get sold, it gets thrown away. That’s one of the biggest drivers in dynamic pricing: to reduce that wastage by lowering prices,’ he says.

Mr Dark believes that major British supermarkets as well as DIY shops and electronics stores will start to adopt the technology.

‘This is no longer a trial. The system works. You will see chains roll out this technology from the end of this year; you will start to see mass deployment across various UK retailers.’
If customers really do benefit, by seeing more promotions and discounts towards the end of the day, undoubtedly they will cheer this development.

But so much of dynamic pricing, especially online, with the continual fluctuation of prices, seems designed only to confuse the consumer. As Mr Downer says: ‘What I can’t stand is the message you get from politicians that if you are ripped off it is somehow your fault for not shopping around.

‘As if people have the time, let alone inclination or capability, to do all this.’

By Harry Wallop for The Daily Mail

One of the most important findings of Rand Merchant Bank’s (RMB) seventh edition of Where to Invest in Africa is that the continent could find itself hovering on the brink of disaster if it continues to depend on its current economic fundamentals and does not usher in economic diversification. Where to Invest in Africa 2018 highlights those countries that have understood the need to adapt to the prolonged slowdown in commodity prices and sluggish levels of production growth – and those that haven’t.

The theme for Where to Invest in Africa 2018 is “Money Talks” and this edition “follows the money” on the African continent to evaluate aspects crucial to each country’s economic performance. The report focuses on the main sources of dollar revenues in Africa, which allows it to measure the most important income generators and identify investment opportunities.

“Over the past three years, some African governments have had to implement deep and painful budget cuts, announce multiple currency devaluations and adopt hawkish monetary policy stances – all as a result of a significant drop in traditional revenues,” says RMB Africa analyst Celeste Fauconnier, a co-author of Where to Invest in Africa 2018.

“Some countries have been more nimble and effective than others in managing shortfalls,” says Nema Ramkhelawan-Bhana, also an RMB Africa analyst and co-author of the report. “But major policy dilemmas have ensued, forcing governments to balance economically prudent solutions with what is politically palatable.”

“The last three years have sounded an alarm, amplifying what is now a dire need for the economies of Africa to shift their focus from traditional sources of income to other viable alternatives,” says RMB Africa analyst Neville Mandimika, a contributor to Where to Invest in Africa 2018.

“These years have exposed a number of African nations to severe economic stress – especially that of liquidity shortages. Unfortunately, there is no quick fix to infuse into a context as complex as this, and traditional forms of revenue will remain a reality for many years to come,” says RMB Africa analyst Ronak Gopaldas, also a co-author.

In this edition of Where to Invest in Africa 2018, RMB’s Investment Attractiveness Index, which balances economic activity against the relative ease of doing business, illustrates how subdued levels of economic activity have diluted several scores on the index when compared with last year, resulting in some interesting movements within the top 10.

Notable omissions from the top 10 this year are Nigeria and Algeria, which have fallen from numbers six and 10 to numbers 13 and 15, respectively. Ethiopia and Rwanda, on the other hand, have climbed three and four places, respectively.

But probably the most notable change is that South Africa has fallen from first place for the first time since the inception of the report, ceding its place to Egypt, which is now Africa’s most attractive investment destination.

Egypt displaced South Africa largely because of its superior economic activity score and sluggish growth rates in South Africa, which have deteriorated markedly over the past seven years. South Africa also faces mounting concerns over issues of institutional strength and governance, though in its favour are its currency, equity and capital markets, which are still a cut above the rest, with many other African nations facing liquidity constraints.

Morocco retained its third position for a third consecutive year, having benefitted from a greatly enhanced operating environment since the “Arab Spring” that began in 2010. Surprisingly, Ethiopia, a country dogged by sociopolitical instability, displaced Ghana to take fourth spot mostly because of its rapid economic growth, having brushed past Kenya as the largest economy in East Africa. Ghana’s slide to fifth position was mostly due to perceptions of worsening corruption and weaker economic freedom.

Kenya holds firm in the top 10 at number six. Despite being surpassed by Ethiopia, investors are still attracted by Kenya’s diverse economic structure, pro-market policies and brisk consumer spending growth. A host of business-friendly reforms aimed at rooting out corruption and steady economic growth helped Tanzania climb two places to number seven. Rwanda re-entered the top 10 having spent two years on the periphery, helped by being one of the fastest-reforming economies in the world, high real growth rates and its continuing attempts to diversify its economy.

At number nine, Tunisia has made great strides in advancing political transition while an improved business climate has been achieved through structural reforms, greater security and social stability. Côte d’Ivoire slipped two places to take up 10th position. Although its business environment scoring is still relatively low, its government has made significant strides in inviting investment into the country, leading to a strong increase in foreign direct investment over the years and resulting in one of the fastest-growing economies in Africa.

For the first time, Nigeria does not feature in the top 10, with its short-term investment appeal having been eroded by recessionary conditions. Uganda is steadily closing in on the top 10, though market activity is likely to remain subdued after a tumultuous 2016 marred by election-related uncertainty, a debilitating drought and high commercial lending rates. Though Botswana, Mauritius and Namibia are widely rated as investment-grade economies, they do not feature in the top 10 mostly because of the relatively small sizes of their markets – market size has been a key consideration in the report’s methodology.

Where to Invest in Africa 2018 also includes 191 jurisdictions around the world, and measures Africa’s performance relative to other country groupings. The unfortunate reality is that African countries are still at the lower end of the global performance spectrum, which continues to be dominated by the US, the UK, Australia and Germany.

Source: Business Day 

Toys R Us files for bankruptcy

Toys R Us has filed for chapter 11 bankruptcy protection, the company announced Monday.

The bankruptcy filing helps the Wayne New Jersey-based toy retailer relieve itself of the debt left over from its $6.6 billion acquisition by Kohlberg Kravis Roberts, Bain Capital Partners and real estate investment trust Vornado Realty Trust in a 2005 deal valued at $6.6 billion.

The retailer has $4.9 billion in debt, $400-million of which has interest payments due in 2018 and $1.7 billion of which is due in 2019.

“Today marks the dawn of a new era at Toys”R”Us where we expect that the financial constraints that have held us back will be addressed in a lasting and effective way,” said Dave Brandon, the company’s chairman and CEO, said in a release announcing the filing.

“We are confident that these are the right steps to ensure that the iconic Toys”R”Us and Babies”R”Us brands live on for many generations,” he adds.

The toy seller also intends to seek protection in parallel proceedings for its Canadian subsidiary.

The company said it will continue to operate as usual its approximately 1,600 Toy R Us and Babies R Us stores around the world. The company’s operations outside of the U.S. and Canada are not part of the protections proceedings, it said.

The retailer said that it has already received a commitment from some lenders, including a JPMorgan-led syndicate, for over $3-billion in debtor-in-possession financing. Although that’s subject to court approval, Toys R Us said it “is expected to immediately improve the Company’s financial health and support its ongoing operations during the
court-supervised process.”

Restructuring that debt would give Toys R Us the financial flexibility to continue its turnaround. Initiatives include improving its website and revamping its Babies R Us business, by focusing on items like cribs that are less likely than diapers to be sold on Amazon.

A bankruptcy filing will also help the retailer manage the the crucial holiday season and give vendors like Mattel and Hasbro clarity into its long-term plans.

For its owners, the bankruptcy filing ends a chapter that started at a time when private equity dove into the retail industry, buoyed by low interest rates and the attraction of recognizable names. That flurry has come back to haunt many, as debt burdens have made it difficult for retailers to make the necessary investments to adjust to the rapidly changing retail industry.

Private equity-backed Payless ShoeSource and Gymboree are among those that have filed for bankruptcy over the past two years.

For Vornado, the deal was a bet on the value of Toys R Us’s real estate. It came just a year after K-Mart and Sears merged in an $11-billion deal based on the idea that combining the real estate value of the struggling stores would strengthen both.

Many retailers have over the past year shed their real estate footprint, finding the U.S. store-base too vast and too out of sync with the many American shoppers that no longer go to the mall.

By Lauren Hirsh for CNBC

Post-it notes with emojis. Locker magnets that resemble pizza and poop. Pencil boxes featuring T.rex. These are some of the many back-to-school items currently sitting on the shelves of a Wal-Mart store in Toronto.

But Rhonda Johnson, of Unionville, Ont., skipped all of that during a recent visit as she was browsing through the store with her nine-year-old son, Jahziah.
“I am the type of parent who buys something that is going to be functional and serve its purpose,” she says. “It’s going to be plain. It’s not going to be glittery.”

Back-to-school supplies, particularly stationery, have changed considerably in recent years, and are now marketed as “fashionable” items. Some feel the items allow kids to express themselves, but others argue that they detract from learning and are a waste of money.
Ms. Johnson finds fun, fashion-forward stationery expensive and “unnecessary.”

“I do not conform to society’s way of dragging you into certain trends,” she says.
The 42-year-old buys only unadorned stationery for her son, and it has always been that way for him and his older brother, Dre.
But that hasn’t stopped Jahziah from asking for a Pokemon binder or a notebook graced with the Minions from Despicable Me.
“I’ve said no for so long … [but] he still asks because it’s attractive,” Ms. Johnson says. “It’s marketing.”
Meanwhile, some 40 students in a small town in Britain won’t be allowed to use fancy gadgets at school, but not because their parents said so.

Ian Goldsworthy, a Grade 6 teacher at a school in Potters Bar, slightly north of London, has banned novelty stationery – erasers in the form of nail polish, that new “it” plastic water bottle, pencil cases almost taller than the child carrying them – from his classroom.
“It was causing too many arguments,” he says, noting that his students would flaunt the latest gimmick and wait for others to notice, get distracted when someone pulled out something shiny or sparkly and become obsessed when things went missing.

He says he had enough around Easter of 2016, when he asked his students to empty their desk drawers and put anything that they didn’t need for the lesson at hand in their backpacks.
“It wasn’t a big revolt,” he says. “There was some disappointment, but they were pretty understanding.”
They talked about the reason behind his decision as a class.
“It wasn’t me just saying from [up] high, ‘This is how it’s going to be,'” Mr. Goldsworthy says. “They could see the logic of the argument. [They] knew it would help [them] focus.”

On the first day of school every year, Mr. Goldsworthy draws up a classroom contract with his students about the rules they think will best support their learning. He’ll be adding “only bring in stationery I need” this time.
Not all teachers feel the same way.

Liane Zafiropoulos, who teaches Grade 5 at a school in Ajax, Ont., doesn’t have a problem with trendy stationery. She says her students already know the general rule that only items that infringe on their learning will be banned.
“As long as the children are writing and learning, I am happy,” she says.
The 40-year-old keeps a treasure box of special stationery in her classroom, which she lets students pick from whenever they exhibit good behaviour.
Ms. Zafiropoulos says children’s stationery is an expression of their individuality. “We might as well put them in uniforms if we are going to give them all plain pencils,” she says.
But what bothers Ms. Zafiropoulos is that some of her students cannot afford certain back-to-school supplies. “They illustrate how commercialism consumes us,” she says. “At the end of the day, it’s the corporations who get richer and the families who suffer.”

Households in Canada are expected to spend $883 on back-to-school shopping this year, up from $450 last year, according to a recent Angus Reid poll of more than 1,500 Canadians.
David Lewis, an assistant professor of retail management at Ryerson University, says manufacturers are trying to make stationery – what was traditionally a relatively utilitarian and straight-forward type of product – more “hedonistic.”
“If you can turn a pencil into a toy, then it creates an entirely new market for existing products,” he says, adding that stationery is now “more fun, exciting and pleasurable.”
Mr. Lewis also sees interesting parallels between how cereal and stationery are marketed to children these days. He says both products serve different purposes for the purchaser and the influencer. “Parents are looking at nutrition,” he says. “Kids are looking at fun,” which means cartoon characters and bright food colouring.

It’s the same with stationery, where parents are evaluating functions, while kids are concerned with fun and being unique, Mr. Lewis says.
Patty Sullivan, a Toronto mother of two, doesn’t mind.
“It makes [my kids] more willing to go back to school,” she says. “They complain less.”
She also sees it as a way for children to personalize their stuff and show their friends what they like. She recently bought 18 scented markers – which smell like cotton candy, cappuccino, evergreen trees and brick oven – for $10 at a DeSerres art supply store.
If Canadian schools were ever to follow in Mr. Goldsworthy’s footsteps, she thinks teachers should consult parents first. It would be kind of a big deal for her children, she says.
Her six-year-old, Aliyah, says she would feel “bad,” as would her 10-year-old sister, Veronica.
“I would probably feel disappointed and depressed,” says Veronica. “I like seeing my happy and amusing [stationery] in class.”
A retired elementary school teacher in London, Ont., can still relate to that feeling.
It’s why Debra Rastin discouraged – instead of banned – her students from using pencils with anything at the end, from 2010 to 2015, the last five years of her career. Whether it was trolls with blue hair or soccer balls, she considered them “toys” and too distracting.
But the 63-year-old also remembers what it’s like to be 6 and excited about having something new to bring to school.
“Fifty years ago, a pack of pencil crayons was fashion-forward,” she says.

By Chris Young for The Globe and Mail

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