By Josh Hall for Prolific London

Retail sales rose by just 0.3 per cent in July, their lowest level since records began.

The figure was down significantly on the 1.6 per cent increase seen in the same month in 2018, and follows what was also the worst June on record.

The survey, conducted by the British Retail Consortium and KPMG, are based on responses from retailers making up an estimated 40 per cent of all British retail sales. Their records began in 1995.

According to the Consortium, “the combination of slow wage growth and Brexit uncertainty” are to blame for the collapse.

But the group also said that last year’s figures had been inflated by the World Cup.

KPMG head of retail Paul Martin said: “Shoppers are notably disengaged overall. The pressure continues to build between online and physical offerings, costs continue to rise and the demands of consumers continue to grow.”

Meanwhile as we reported yesterday the UK service sector recorded a slight and unexpected growth during July.

The performance put it out of kilter with other UK sectors, in which the outlook remains gloomy.

By Deborah Williams for Retail Insight 

June 2019 UK retail sales have been the worst on record, with a 1.3% total basis decline, according to a report by the British Retail Consortium (BRC). June UK retail sales saw a 2.3% increase in 2018.

Covering the five weeks from 26 May to 29 June 2019, the report found that the decline brings the three month average into a decline of 0.1% and the 12 month average to an increase of 0.6%, the lowest since its records began in December 1995.

BRC chief executive Helen Dickinson OBE said: “June sales could not compete with last year’s scorching weather and World Cup, leading to the worst June on record. Sales of TVs, garden furniture and BBQs were all down, with fewer impulse purchases being made. Overall, the picture is bleak. Rising real wages have failed to translate into higher spending as ongoing Brexit uncertainty led consumers to put off non-essential purchases.

“Businesses and the public desperately need clarity on Britain’s future relationship with the EU. The continued risk of a No Deal Brexit is harming consumer confidence and forcing retailers to spend hundreds of millions of pounds putting in place mitigations – this represents time and resources that would be better spent improving customer experience and prices. It is vital that the next Prime Minister can find a solution that avoids a No Deal Brexit on 31st October, just before the busy Black Friday and Christmas periods.”

On a like-for-like basis, June UK retail sales decreased by 1.6% from June 2018. This is lower than the three month and 12 month averages of -0.4% and -0.1% respectively. The report stated that this represents the worst 12 month average since April 2012.

In-store sales of non-food items declined 4.3% on a total basis and 4.1% on a like-for-like basis, over the three months to June. This decline is lower than the 12 month total average decline of 2.8%.

Non-food UK retail sales declined by 2.1% on a total basis and 2% on a like-for-like basis, over the three-months to June. This is also lower than the 12 month total average decrease of 0.8%. The BRC said that this is the worst quarterly decline since February 2009.

KPMG UK head of retail Paul Martin says: “There are few places retailers can hide from the difficult trading conditions that have been hitting the industry for some time. June’s retail performance did little to ease that, with like-for-like sales falling 1.6% compared to last year.

“On the high street, consumers were eager to pull up a pew for the summer’s sporting events, with added interest in the furniture category. Otherwise, consumers largely turned a blind eye to offers in the physical retail space.”

Non-food online sales increased 4% in June 2019, against an increase of 8.5% in June 2018. The three month and 12 month average growths were 3.3% and 5% respectively. Non-food online penetration rate increased to 30.7% last month, from 28.5% in June 2018.

Martin adds: “With 4% online growth, shoppers were thankfully more engaged in this channel, making the most of the added convenience and continued aggressive pricing. Fashion performed particularly well thanks to end-of-season sales and upcoming holidays.

“Pressure on retailers continues to mount and is seemingly coming from all angles: economic, geo-political, environmental and behavioural. Consumer spend is only likely to fall further as things stand, and cost efficiency remains vital. The focus for most in the industry will be preservation and adaptation in order to see them through these tough times.”

Food sales experiences ‘above total average growth’ for June 2019 UK retail sales
Over the three months to June, food sales increased 2.4% on a total basis and 1.5% on a like-for-like basis – an increase above the 12 month total average growth of 2.2%.

IGD CEO Susan Barratt said: “A late start to the summer weather in June compared unfavourably with consistently drier and warmer conditions in 2018, so while year-on-year growth in food and grocery sales last month was small, it is still encouraging.

“If the recent pick up in temperatures is sustained, there’s hope for stronger figures in July. Shoppers feel slightly more positive at the moment, with the percentage expecting to become worse off financially in the year ahead falling from 32% in February to 27% today.”

By Andrew Liptak for The Verge

Walmart has introduced an unlimited grocery delivery service called Delivery Unlimited, as spotted by TechCrunch. The service is an expansion of the company’s existing delivery and pickup efforts, and costs $98 a year.

The company already offered a delivery service for online orders: customers could have items shipped to their nearest store for free, or to their home for a $9.95 delivery fee for each order. TechCrunch notes that this new annual subscription will cost $98 for a year, or $12.95 a month, and allows customers to skip the per-order fee. To use it, customers place their order on Walmart’s site or app, and can select a delivery window for when they want their order delivered.

This annual service comes as Walmart has introduced a number of other initiatives to try and entice online shoppers to its stores, including introducing free, one-day shipping for orders over $35, pickup towers a number of its stores, and even an in-home delivery service that will allow employees into your house to place groceries directly into your refrigerator.

Walmart has been stepping up its efforts against other online retailers in recent months, and Amazon’s Prime membership appears to be the target here. Walmart’s annual fee is lower than Amazon’s $119 annual cost, while Target’s new delivery service with Shipt costs $99 a year, as well as Instacart.

Print is still growing in Africa

GroupM, WPP’s world-leading global media investment group launched the Africa Media Index: its inaugural study on the media landscape in Africa. The study aims to provide insights on trends and knowledge of the media sector and how it affects investment, governance, local business and economies.

This study comprises data from 14 African countries, namely: Ivory Coast; Ghana; Nigeria; Kenya; South Africa; Uganda; Zambia; Namibia; Zimbabwe; Tanzania; Mozambique; Botswana; Angola and Ethiopia. It identifies trends that are relevant to industry investors looking to increase their footprint and reach multiple audiences in a meaningful way across Africa. The report focuses on five key categories which are Economy & Business; Media Landscape; Media Consumers; Technology; as well as Governance & Legislation.

Federico De Nardis, CEO at GroupM Sub-Saharan Africa (SSA), says, “Many companies – both those already on the continent and those wishing to reach consumers and businesses across Africa – often struggle to find consistent and reliable information which gives a clear understanding of the media landscape. The intention of the Africa Media Index is to bridge that gap.”

Africa’s media landscape is a whirlwind of change and growth in activity, and its power can be harnessed by knowledgeable investors. Sub-Saharan Africa hosts 17% of the world population today, but only represents 2% of world GDP, and even less when we look at advertising investment, which is USD 2.6 billion or 0.47% of global investments. However, due to mobile and Internet expansion, strong urbanisation and a booming middle class, the next 30 years should tell a very different story.

The media consumers and media landscape
While the African middle class population is growing impressively, so is their access to technology and media consumption. This is demonstrated through the rising sales of televisions, which now replace radio as a preferred purchase option in places where electricity supply is increasingly available.
Access to the internet also accounts for a large growth in the media landscape, however, internet use is restricted by high data prices in various regions. More than 83% of respondents believe online media is growing significantly, while 75% of them think radio, through internet broadcasting is on a high trajectory. However, the same respondents are also bullish on television, with nearly 62% of positive growth.
In addition, print media is experiencing positive growth, contrary to what is happening in the rest of the world. For example, in Kenya newspaper consumption has grown by 14% in 2018 versus the previous year and 12% in Nigeria according to ‘This Year Next Year’ report, by GroupM Global.

Governance and legislation
Media growth in Africa is beneficial and a contributing factor to deepening democratic processes. In recent years, political uncertainty dominated the business headlines where heightened political tensions saw a military coup in Zimbabwe, a widely disputed election in Kenya, and highly contested elections in South Africa and Nigeria. These might appear as isolated events but they are an amalgam of events that increased media interest in Africa.
Of the surveyed respondents, 49% of East Africans and over 36% Southern Africans think media corruption is “highly prevalent”, while 41% West Africans say the media is hopelessly corrupt. Corrupt state media, bribe taking journalists and self-censorship by the independent press were cited as examples of corruption.
As a result, the risk impact of changes in legislation and regulation has increased considerably as many African governments continue to implement laws governing information and ethical operations of businesses.

Economy and business
When investors seek media investment opportunities, a holistic knowledge of the investment environment is required, including the relevant forces at play in governance, local business and economies that affect the media sector. The sector is influenced by the society it services, and in turn the media influences the societies that hear, read and see its output.
Investment indicators, as opposed to business confidence, for Southern Africa are good overall. Leading in this is South Africa with an overall score of 65.97, which takes three of the top five positions in overall Economy and Business rankings. However Ghana (51.65), and Kenya (47.67), being in the top five, reflects a mixed regional picture. Meanwhile at the lowest of the spectrum on the continent is Mozambique, whose overall score is 34.89.

Technology advancements
One of the biggest challenges for African governments and media houses will be to close the media access gap between urban and rural areas. If this is left unattended, there is an increased risk of widening inequality between those who have access to a plethora of innovative and rich media options (TV and video in all forms: Linear, VOD, SVOD, OTT and all online platforms) and those who are not exposed to it.

Electricity is a necessity for new media expansion for all regions, and West Africa is seen prioritising urbanisation more than others. Southern Africa is viewed as prioritising fibre lines according to 17.66% of respondents, particularly with the South Atlantic Cable System arriving in the region. These respondents have however reported the highest data prices, with three quarters classifying prices as expensive and 33% say data is somewhat expensive, however 40% of them say it is very expensive.

“The 21st century new media wave has been driven by the African people as they are choosing preferred mediums and content. Investors in Africa’s media industries can be assured that African media consumers are the same as media consumers in other markets who are perpetually craving better media services that are interactive and advertising that is created to each market’s unique nuances,” concludes De Nardis.

By Taizo Wada for Nikkei Asian Review

Japanese stationery maker Kokuyo has indirectly taken a 37% stake in compatriot pen maker Pentel through an investment fund, the company said Friday.

Kokuyo, the country’s leading maker of stationery products with a strength in notebooks, will invest 10.1 billion yen ($92 million) in a fund operated by Mercuria Investment, which currently serves as the largest shareholder of Pentel. Kokuyo will become the fund’s, and through it, Pentel’s top shareholder.

Pentel is an unlisted company known for producing the world’s first modern mechanical pencil in 1960. More recently its colorful gel ink ballpoint pen has won a devout following around the world.

Kokuyo aims for growth in Asia, where stationery demand is expected to increase, and other markets by tapping Pentel’s overseas sales network.

Kokuyo only makes about 20% of its stationery-related sales overseas, while Pentel generates over 60% of its revenue abroad through roughly 20 foreign sites. The companies’ products are also complementary, given Kokuyo’s strength in notebooks and Pentel’s know-how in writing instruments.

The fund operated by Mercuria, a private equity company listed on the Tokyo Stock Exchange’s first section that counts the state-run Development Bank of Japan as an investor, acquired Pentel shares from the pen maker’s founding family last year.

Mercuria will continue to contribute to Pentel’s management after Kokuyo’s investment.

“We do not know any information other than what was in the disclosure. We will explore a response going forward,” Pentel said.

Pentel booked sales of 40.9 billion yen in the year ended March 2018. Kokuyo has sales of 315.1 billion yen.

Over the past few years much has been said about the demise of print and the perception that the traditional printed word is no longer the force it used to be. However, it seems that we may be coming full circle as once again the written word is being used to entertain, promote and educate.

This is particularly evident when companies that are primarily focussed on visual media are opting to make use of published media. Take Netflix for example, the streaming service is using a tactic far removed from the nature of its service to make the best of its movies and TV series stand out. Netflix has announced that it will be publishing its own magazine to, called Wide, to promote their own stars and programmes ahead of the 2019 Emmy Awards. The first issue of Wide is set to launch in June this year.

“As the world of publishing is constantly evolving, we are seeing more innovative uses of the written word to encourage more reading,” says Josephine Buys, CEO at The Publisher Research Council (PRC). “These examples are by no means a once off, but rather a demonstration of the power of reading matter.”

A prime example of encouraging more reading takes place in London where tube commuters are able to read short stories, printed on eco-friendly paper and dispensed free by vending machines installed at Canary Wharf. Author of the short stories, Anthony Horowitz, notes: “What appealed to me was that I travel on the tube every single day and I see everybody buried in apps and games.” These same vending machines have also been installed in locations across France, in Hong Kong and the US.

“The written word provides a depth that is extremely difficult to replicate on other media platforms,” says Buys. “The Publisher Research Council has made great strides in conducting research that promotes the value of reading versus listening, viewing or glancing.”

Many global studies reaffirm this with statistics proving time and time again that time spent with print media is more focused. A Newsworks survey, conducted by PwC discovered that for 60% and 58% of the time spent reading newspapers and magazines respectively, readers are focussed solely on that medium, concluding that a trusted medium, that people choose to pay attention to is more important than ever. *

Insights from the South African Establishment Survey (ES) show that people who read earn more than their non-reading counterparts, across the entire spectrum of society. According to the ES only half of South Africans read newspapers and magazines monthly. However, this percentage grows the higher one moves up the SEM (Socio-Economic Measure) scale. In SEM SuperGroup (SG) 5, the top 10% of the population, 77% read. This same SG also has the highest household income, demonstrating that reading is the key to success and a better life. **

Anyone who has ever studied for an exam or test, knows that reading is the best way to learn, and that the longer one studies the more familiar one becomes with the course material. Reading media, whether newspapers, magazines or online provides a depth of information unlike any other media. The ability to put it down, pick it up and assimilate information at your own pace is all too often overlooked.

“The PRC’s online library is a rich repository of information that marketers, advertisers and media agencies can draw from,” concludes Buys.

Zimbabwe begins loadshedding

By Crecey Kuyedzwa for Fin24

Zimbabwe has started to institute planned rotational power cuts to reduce stress on its national grid, following low water levels at Kariba Dam, generation constraints at Hwange Power Station and limited imports from Eskom in South Africa and Mozambique.

Power utility Zimbabwe Electricity Transmission & Distribution Company on Sunday published load shedding schedules for the whole of the country.

“The power shortfall is being managed through load shedding in order to balance the power supply available and the demand,” it said in a weekend statement.

While Eskom in South Africa has eight stages of load shedding, Zimbabwe has announced only two stages for now.

The power supplier divided the country into seven regions, and then further into districts or suburbs. It has given each district or suburb a numerical code.

This code is then checked against a regional table which has two time periods: Morning peak – between 05:00 and 10:00, and evening peak, between 17:00 and 22:00.

When power is cut, suburbs that fall within the time period lose power.

The same suburbs or districts will not generally have power cuts over the same day’s morning and evening peaks. When load shedding moves to Stage 2 and “increases beyond the planned limit” power to additional suburbs will be cut. The power cuts will be in five or eight hour blocks in different areas of the region or district.

Zimbabwe has had to implement power cuts, in part, due to poor rainfall in 2018 and 2019 that led to reduced inflows into Kariba Dam. The dam’s hydroelectric power stations supply electricity to both Zimbabwe and Zambia

Over the years Zimbabwe has been topping up its power supply by importing an average 100MW of power from Eskom and Mozambique, but will be forced to look for more given the current crisis.

Power imports from South Africa’s Eskom also cannot be guaranteed, with the power utility facing a fair share of its own challenges.

Analysts say the impact of the power cuts will be significant to industry, which cannot easily turn to the use of generators amid limited availability of fuel.

Death by Amazon

By Rebecca Ungarino for Market Insider

A new “Death by Amazon” index released by the investment-research firm CFRA tracks the stocks its analysts believe could be short-seller targets given their vulnerabilities to competition from Amazon.

The index is full of home goods and electronics retailers like Party City and Bed Bath & Beyond, some of which have seen their entire market value wiped out in recent years.

Investors are familiar with the Amazon effect by now.

The e-commerce juggernaut announces that it is preparing to enter into an industry – be it medication, brick-and-mortar grocery, entertainment, or others – and the stocks of companies in the new target market fall as jittery investors are struck with the fear that irreversible disruption is coming.

So the investment-research firm CFRA created a new index, “Death By Amazon,” that tracks the stocks its analysts think are particularly vulnerable to Amazon’s expansion and offerings.

“The equally weighted index serves as a retail performance benchmark and short-selling idea generation tool for our clients,” CFRA analysts Camilla Yanushevsky and Todd Rosenbluth wrote in a report to clients earlier this month.

To pinpoint the 20 constituents the analysts believe are poorly positioned to compete against Amazon’s efforts in various industries, they evaluated the companies’ “Share of Voice” data that comes from web-traffic analytics company Alexa Internet (which is owned by Amazon as its other Alexa-named product).

That measure shows the percentage of searches for a keyword across major search engines in the past six months “that sent organic traffic to the respective site.”

For example, the analysts compared how much traffic was going to a national jewelry retailer’s website when consumers search for the term “jewelry” versus how much traffic was going to Amazon for the same search term.
With this kind of analysis, you get an index full of brick-and-mortar retailers whose products are available on Amazon – and apparently less popular through online searches – from floor tiles to party supplies.

To be fair, it’s not the first Death by Amazon index. Bespoke Investment Group had already created its Death by Amazon index, tracking the same theme.

Here are all the stocks listed, in alphabetical order, with how their “Share of Voice” scores for various products stack up against Amazon:

  1. At Home Group
    1-year performance: -40%
    % below all-time high: -46%
    Share of Voice score for “seasonal decor”: 4.2%
    Amazon’s Share of Voice score for “seasonal decor: 19.6%
  2. Barnes & Noble Education
    1-year performance: -38%
    % below all-time high: -74%
    Share of Voice score for “textbook”: 1.3%
    Amazon’s Share of Voice score for “textbook”: 6.9%
  3. Barnes & Noble
    1-year performance: -0.1%
    % below all-time high: -84%
    Share of Voice score for “books”: 23.2%
    Amazon’s Share of Voice score for “books”: 12.2%
  4. Bed Bath & Beyond
    1-year performance: -16%
    % below all-time high: -80%
    Share of Voice score for “cookware”: 2.4%
    Amazon’s Share of Voice score for “cookware”: 23.3%
  5. Best Buy
    1-year performance: -14%
    % below all-time high: -19%
    Share of Voice score for “electronics”: 1%
    Amazon’s Share of Voice score for “electronics”: 8.1%
  6. Big 5 Sporting Goods
    1-year performance: -71%
    % below all-time high: -88%
    Share of Voice score for “fitness equipment”: 0%
    Amazon’s Share of Voice score for “fitness equipment”: 11%
  7. Big Lots
    1-year performance: -6.5%
    % below all-time high: -41%
    Share of Voice score for “cookware”: 0%
    Amazon’s Share of Voice score for “cookware”: 23.3%
  8. Dick’s Sporting Goods
    1-year performance: +15%
    % below all-time high: -43%
    Share of Voice score for “sports deals”: 18.7%
    Amazon’s Share of Voice score for “sports deals”: 24.5%
  9. GameStop
    1-year performance: -31%
    % below all-time high: -87%
    Share of Voice score for “video games”: 7%
    Amazon’s Share of Voice score for “video games”: 17.1%
  10. Kirkland’s
    1-year performance: -49%
    % below all-time high: -81%
    Share of Voice score for “home decor”: 5.4%
    Amazon’s Share of Voice score for “home decor”: 10.8%
  11. Office Depot
    1-year performance: -19%
    % below all-time high: -95%
    Share of Voice score for “office supplies”: 33.1%
    Amazon’s Share of Voice score for “office supplies”: 9.8%
  12. Overstock.com
    1-year performance: -67%
    % below all-time high: -86%
    Share of Voice score for “dresser”: 1.3%
    Amazon’s Share of Voice score for “dresser”: 9.9%
  13. Party City
    1-year performance: -49%
    % below all-time high: -65%
    Share of Voice score for “party supplies”: 22.5%
    Amazon’s Share of Voice score for “party supplies”: 13.2%
  14. PetMed Express
    1-year performance: -40%
    % below all-time high: -60%
    Share of Voice score for “pet supplies”: 5.1%
    Amazon’s Share of Voice score for “pet supplies”: 13.7%
  15. Pier 1 Imports
    1-year performance: -65%
    % below all-time high: -97%
    Share of Voice score for “home decor”: 8.3%
    Amazon’s Share of Voice score for “home decor”: 10.8%
  16. Signet Jewelers
    1-year performance: -49%
    % below all-time high: -87%
    Share of Voice score for “jewelry”: 3.8% for kay.com, 2.9% for jared.com, and 0.12% for zales.com
    Amazon’s Share of Voice score for “jewelry”: 10.7%
  17. The Michael’s Companies
    1-year performance: -43%
    % below all-time high: -67%
    Share of Voice score for “drawing supplies”: 13.1%
    Amazon’s Share of Voice score for “drawing supplies”: 24.5%
  18. Tiffany & Co.
    1-year performance: -5%
    % below all-time high: -31%
    Share of Voice score for “jewelry”: 6%
    Amazon’s Share of Voice score for “jewelry”: 10.7%
  19. Tile Shop Holdings
    1-year performance: -36%
    % below all-time high: -85%
    Share of Voice score for “tile”: 2.1%
    Amazon’s Share of Voice score for “tile”: 22%
  20. Williams Sonoma
    1-year performance: +7%
    % below all-time high: -42%
    Share of Voice score for “cookware”: 16.7%
    Amazon’s Share of Voice score for “cookware”: 23.3%

3M to cut 2 000 jobs

By Nathaniel Meyersohn for CNN

3M, which makes Post-It notes and Scotch tape, is cutting 2 000 jobs around the world.

The industrial manufacturer made the announcement Thursday as it reported weak sales during its most recent quarter and darkened its outlook for the year ahead.

Sales slid 5% to $7.9 billion last quarter compared to the same time period a year ago. Although sales ticked up in the United States, 3M’s largest region, sales dropped more than 9% in Europe, the Middle East and Africa. Those areas make up 3M’s second largest region. Sales in Asia also fell more than 7% compared to a year ago.

“The first quarter was a disappointing start to the year for 3M,” said Mike Roman, 3M chief executive officer, in a statement. “We continued to face slowing conditions in key end markets.”

In addition, 3M slashed its full-year guidance.

3M said the job cuts, which represent around 2% of its global workforce, will save the company up to $250 million annually. 3M will spread out the cuts across different business divisions and geographies “with emphasis on corporate structure and underperforming areas.”

The stock sank more than 10% in early trading Thursday, which drove down the Dow.

Weak pen, lighter sales knock Bic

By Myles McCormick for Financial Times

Flagging sales of pens in India and lighters in North America knocked revenues at French stationery maker Bic at the beginning of 2019.

The company, known for its ubiquitous biros and razors, said sales had fallen 2 per cent on a comparative basis to €415m in the first quarter of the year as its overall trading environment remained “challenging”.

Pre tax income dropped 18 per cent to €55m as South American exchange rates and rising raw material costs weighed on its margins.

Shares in Bic fell as much as 10 per cent in early Thursday trading, making it one of the worst performers on the Stoxx 600 index — second only to Finnish electronics group Nokia, whose shares plunged after an unexpected first-quarter loss.

“After a strong 2018 fourth quarter, and while the overall trading environment remains challenging, 2019 started with soft results impacted by stationery in India and lighters in the US,” said Gonzalve Bich, Bic chief executive.

“However, we maintained or grew market share in our three categories, and regained momentum in shavers,” he added.

In India, Cello Pens, which Bic bought in 2015, saw a double digit drop off in sales as it sought to reduce shipments to so-called “superstockists”. Global stationery sales fell 6 per cent on a comparative basis, stripping out the impact of acquisitions and divestments.

Lighter sales fell 10 per cent in North America on the back of inventory adjustments by wholesalers and a declining market. Globally, lighter sales were down 6 per cent on a comparative basis.

Its shaver business did better, with strong eastern European and Russian performance driving a 10 per cent rise on a comparative basis.

The company expects first quarter “headwinds” to lessen over the year and retained its full year financial outlook of a slight growth in sales.

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