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Subject:
RETAIL BUSINESS
Period: March 15, 2014 to April 1, 2014
Geographies:
Worldwide
Categories:
Comment & Opinion or Companies, Organizations or Consumers or Controversies & Disputes or Deals, M&A, JVs, Licensing or Earnings Release or Finance, Economics, Tax or Innovation & New Ideas or Legal, Legislation, Regulation, Policy or Market News or Marketing & Advertising or Other or People & Personalities or Press Release or Products & Brands or Research, Studies, Advice or Supply Chain or Trends
Contents
 

German Discount Supermarket Chain Lidl Fires Its Chairman

Karl-Heinz Holland was fired as chairman of German discount supermarket chain Lidl because of undisclosed “unbridgeable” differences over strategic direction. Holland, a former head of buying,  was chairman for five years. Also leaving the company for the same reasons is head of buying and marketing chief Dawid Jaschok. Lidl has 10,000 stores in Europe employing 180,000 people. The company is Europe's third-biggest retailer behind Carrefour and Tesco in terms of annual turnover. Like arch-competitor Aldi, Lidl is considering expanding into the United States in 2015 with 100 stores.

"Lidl chairman steps down over strategy differences", Reuters, March 20, 2014

Tesco Experiments With 3D Virtual Shopping Technology

British retail grocery chain Tesco is using technology developed by London-based Future Digital to give shoppers a 3D virtual look at a Tesco supermarket. Wearing Oculus Rift virtual reality eye gear, shoppers find themselves in simulated store aisles, moving their heads 360 degrees to explore shelves and products, then ending up at a huge football stadium. While in the virtual store users can only look, not pick up or study what’s on the shelves. Application of the technology to a real at-home shopping experience is probably years away, mainly because of the expense, developers say.

"Tesco’s VR Store Lets Shoppers Explore The Aisles Without Leaving Their Seat ", PSFK, March 20, 2014

Online Retailers In China Close Stores Selling Brand-Name Cosmetic Knockoffs

In response to customer complaints and a Chinese television report, Amazon China and online retailer China Dangdang have closed online stores purportedly selling fake brand-name skincare products. Dangdang shut two stores and refunded customer payments unconditionally.  Amazon said it had closed the stores in February after receiving complaints from customers. The fake products were knockoffs of L'Oréal and Estée Lauder cosmetics that were priced far lower than the real things. A representative of one of the closed stores admitted that the knockoffs came from a wholesale market in Beijing.

"Amazon, Dangdang shut down online stores selling fake skincare products", Global Times, March 20, 2014

China’s Lax Food Safety Enforcement Drives Western Retailers To Take Action

Inadequate government oversight of the food processing industry in China has forced Western food retailers like Walmart and Carrefour to take inspection matters into their own hands.  Walmart, for example, is boosting supplier inspections after a recent donkey meat recall – the meat turned out to contain fox DNA – and now conducts more DNA tests of meat in China than it does anywhere else in the world. The company expects to spend $16 million over three years to increase food safety in China after being stung by previous scandals there. The FDA is beefing up its inspection presence in China as well. The best solution, however, would be for the Chinese food processing industry to take more responsibility in food safety and for the government to strengthen its enforcement of standards.

"Keeping the Mystery Out of China's Meat", Bloomberg Businessweek, March 20, 2014

Carrefour Introduces Virtual Clothes Shopping Experience

French retailer Carrefour, in partnership with technology innovator Clear Channel, is introducing “My Virtual Look by Tex”, an imaging experience that allows customers to use a screen to "try on" Tex brand clothes. Shoppers stand in front of the screen and select clothes by swiping through the collection with their fingers. They are then scanned and filmed in the clothes and appear on the screen “wearing” the items they have selected. The clothes are viewable from all angles. Customers can then snap a photo and share it with social media friends. According to Carrefour, the innovation “saves time and makes shopping for clothes easier”.

"Carrefour is breaking new ground with the first virtual fitting rooms created in partnership with Clear Channel", Carrefour, March 19, 2014

Researcher Figures Out How To Gather Grocery Checkout Data To Target Public Health Interventions

A researcher in Canada has devised a way to gather consumer purchase data from grocery store checkouts that public health agencies can use to determine where people tend to eat unhealthy foods and perhaps focus diet improvement interventions. It’s a public health issue because the direct health costs of diseases associated with obesity total $1.8 billion – a “huge toll both on lives and public finances”. Data gathered from store scanners in Montreal in 2008 and 2010 showed, for example, that for each $10,000 decrease in median personal income, there was a fivefold increase in estimated monthly sales of soft drinks.

"What you buy at grocery store now a clue for food researchers", Montreal Gazette, March 16, 2014

 
Companies, Organizations  

Wal-Mart Aims To Recover $3 Billion In Sales Lost Due To Empty Shelves

Wal-Mart Stores Inc. executives said improving its shelf-stocking management and the “in-stocks” status of its merchandise can help the retail giant increase its revenue by as much as $3 billion. Currently the world’s largest retailer, Wal-Mart U.S. has found it difficult to keep its shelves stocked during the past year, according to workers and customers. Unsurprisingly, the sight of empty shelves caused frustration among shoppers, driving them to competitors’ shopping aisles. During the company’s latest Year Beginning Meeting, Wal-Mart executives also said the retailer plans to increase labor hours to help employees in restocking shelves. Such a move will help undo the effects of Wal-Mart’s massive layoffs when it cut jobs by about 20,000 from 2008 to January 2014.

"Wal-Mart Sees $3 Billion Opportunity Refilling Empty Shelves", Bloomberg, March 29, 2014

ASA Upholds Asda's Misleading Ad Complaint Against Rival Aldi

UK’s Advertising Standards Authority ruled in favor of retailer Asda’s complaint of misleading advertising against rival Aldi’s Swap and Save advertising campaign. Aldi’s TV advertisement presented a woman claiming she had cut her grocery expenses by switching from her favorite supermarket to shop at Aldi. Asda claimed the products, as well as the price promotions and product size, included in the price comparison could not be verified and that the data period highlighted in the ad was not up-to-date and invalid.

"Asda wins ASA complaint against rival Aldi's Swap and Save ad campaign", Retail Week, March 26, 2014

Wal-Mart Sets Renovation Plans For China Stores

After opening stores in 28 shopping centers and two Sam’s Club stores in China in 2013, Wal-Mart plans to upgrade 55 existing retail stores in the country in 2014. In Anhui, a market the company entered in 2005 and where it operates 17 stores at present, Wal-Mart plans to invest 18 million yuan in renovating the nine-year-old Shuguang Hefei store. Also, Wal-Mart’s corporate social responsibility efforts in the region have helped it win many government honors and become the internship partner for both the West Anhui Institute and the Science and Technology of Defense Institute.

"Wal-Mart invests in renovation of Chinese stores", FreshPlaza, March 25, 2014

Target revamps beauty department

Minnesota Daily, March 27, 2014

Walgreen Co. to close 76 unprofitable stores

Chicago Tribune, March 25, 2014

Innovation & New Ideas  

Walmart Begins Testing Its WAVE Environment-Friendly Trucks

Walmart began testing its Walmart Advanced Vehicle Experience, or WAVE, cargo truck whichs is built from carbon fiber and is 20 percent more aerodynamic than existing trucks. Part of the retailer’s sustainability efforts, the truck will also feature a micro-turbine hybrid engine that can run on many types of fuel. WAVE trucks will also have an electric motor and a battery system for storing electric power. With its emissions reportedly still growing, Walmart aims to double the fuel efficiency of its trucks by 2015.

"Walmart rolls out testing of radical carbon fiber truck", GreenBiz, March 13, 2014

Restaurants Hope Esoteric Grains Will Draw Diners, Boost Sales

Sprouted grains are making their way onto restaurant menus, partly as a response to adverse market trends, but also to a growing consumer interest in esoteric ingredients. After a successful test, Panera Bread Co., is rolling out a sprouted-grain bagel made with rye, spelt and oat groats. Though it may seem like “hippie” food to older patrons, Panera and other chains see sprouted grains as an answer to a prayer. Competition has been stiffer recently, consumer spending has slowed. Restaurants have had to innovate to attract customers and energize sales. A market researcher calls sprouted grains a “good direction” for chain eateries because “grains have a very positive halo to consumers”.

"‘Hippie’ Grains Thrive as Panera Looks Beyond Whole Wheat", Bloomberg, March 10, 2014

Market News  

Asda Plans To Dismiss 200 Workers, Expand Retail Space In UK

Walmart’s UK operations Asda said it plans to lay off some 200 employees as part of its efforts to deal with increasing competition in the retail market. With competition from high-end rivals, such as Waitrose, and discount chains, such as Aldi, Walmart had no choice but to implement the recommendations made by consulting firm McKinsey, which also included expanding the discount retailer’s product ranges. Other retailers, such as Tesco and Morrisons, also saw their market shares decline; however, unlike their moves to scale down operations, Asda announced plans to expand its operations by adding 500,000sq ft of new retail space.

"Asda to axe around 200 jobs", Guardian, March 24, 2014

Sales At Big U.S. Restaurant Chains Slide In 2013

Though overall sales among America’s 500 biggest restaurant chains rose 3.5 percent last year, the growth rate was less than in 2012, according to researcher Technomic. Total sales for the Top 500 grew $8.8 billion to $264 billion in 2013. The biggest sales growth in limited-service restaurants was seen in Asian, bakery café and coffee café establishments. Panda Express, Panera Bread and Starbucks all posted sales growth rates greater than ten percent. The biggest American restaurant chain, McDonald’s, reported a feeble 0.7 percent gain in sales. Chick-fil-A’s 2013 sales of $5.1 billion – a 9.3 percent growth rate – put it in the No. 1 spot ahead of KFC among chicken chains.

"Restaurant sales off for the largest chains, finds Technomic", Technomic, March 24, 2014

New Trend In QSR Service: The Digital Menu

Digital menu boards (DMBs) have become a major strategic growth tool for Canadian foodservice giant Tim Hortons as it expands its presence in the U.S. According to the company’s chief operating officer, DMBs give local operators the ability to introduce new products and promotions quickly, and have made the customer ordering process simpler. DMBs made it possible to create  express beverage lines, mobile payment options and additional drive-thru lanes, all of which speed up service. Other companies jumping on the DMB bandwagon include KFC South Africa,  Dunkin' Donuts in the U.S., and McDonald's in the U.K. All have been testing and deploying customer-facing digital signage solutions.

"QSRs driving digital menu boards 'like the Ferrari they are'", Digital Signage Today, March 20, 2014

Supermarkets In China Lose Market Share To Online Retailers

Supermarkets in China are facing growing competition from online retailers for their business, according to a report by the Communist Party-managed “Beijing Youth Daily” newspaper. According to the report, e-commerce has changed Chinese consumers’ buying behavior, adversely affecting traditional retailers’ business, with at least 80 percent of supermarkets and other retailers reporting higher management costs and declining gross margins. Since 2012, foreign-owned retailers, such as Wal-Mart, Carrefour, and Tesco, have seen sales slowdown, forcing them to close some of their stores. These companies have focused on selling refrigerated and frozen products, which attract customers and offer higher gross margins; however, online retailers are also seeking to expand their presence in this segment.

"Supermarkets fighting losing battle with China's e-commerce", WantChinaTimes.com, March 18, 2014

Filipino Yam Makes Incursions Into California’s Pastry Industry

The deep purple-colored yam known as ube is taking California by storm, first in the form of pancakes and now as doughnuts. Widely used in the Philippines in desserts and pastries, ube attracted doughnut lovers who lined up outside family-run Friendly Donuts in Orange County on a recent Saturday to try the new twist on an old treat. By Sunday night the shop sold nearly 170 dozen. Made from a proprietary cake batter blended with an ube pancake batter, the doughnuts, crunchy on the outside and dense and moist on the inside, feature either the standard or a blueberry glaze. Former snack truck Buttermilk sells the ube cake and pancake mixes through restaurant supply stores in California.

"Ube: Exotic purple velvet doughnut lands in O.C.", Orange County Register, March 12, 2014

Data Show Americans Love Eating Breakfast At Quick Service Restaurants

Americans are eating more of their breakfasts in restaurants, but increasingly avoiding them for lunch and dinner, according to data collected by NPD Group. This is the fourth year in a row that U.S. consumers have increased their breakfast restaurant visits, about four out of five of which occur at fast-food outlets. Breakfast visits increased three percent to 12.5 billion, though midscale/family restaurants saw a three percent decline. The upward trend will continue: overall restaurant breakfast visits are forecast to grow by seven percent over the next nine years, with fast-food traffic expected to rise nine percent.

"Breakfast Restaurant Visits Grow While Lunch and Dinner Visits Decline, Reports NPD", Report, NPD Group, March 11, 2014

McDonald’s Hopes Mini-Pastries Will Give A Jolt To Its Breakfast Business

McDonald’s is testing a small pastry that it hopes will give its breakfast and snack time business a badly-needed shot in the arm. McCafé Petite Pastries are freshly baked layers of dough made with butter and either raspberry (110 calories) or cinnamon (160 calories) cream cheese filling. The pastries are priced at $1.99 for two, or $1.29 with a drink. They “fit nicely’ in the breakfast and snack time “dayparts”, growing time slots for fast-food chains. McDonald’s and other companies have felt competitive pressure from Starbucks and others that serve their own breakfast and snack foods. The result is a need to expand the menu and be more creative to boost sales.

"Can pastries boost McDonald's breakfast sales?", The San Diego Union-Tribune , March 10, 2014

Cronut Inventor’s New Creation Is Inspired By The Venerable Oreo

Apparently not content with having created the monster pastry hit Cronut – a trademarked croissant-cum-donut that last year took the baking world by storm – New York City pastry chef Dominique Ansel Ansel has fabricated a chocolate chip cookie that you can drink and eat at the same time. Inspired by his first taste of the iconic Oreo cookie, and noticing that people often eat them with milk, Ansel decided to offer a combination. The result? Chocolate-Chip Cookie Milk Shots, introduced at the South By Southwest conference in Austin, Texas. They are available at Ansel's New York shop for $3 a “shot”, limited to two per person. The cookie is shaped like a shot glass and is filled with cold organic milk infused for 24 hours with vanilla beans.

"He's done it again! Inventor of the Cronut comes up with new delicious must-have dessert – Chocolate Chip Cookie Milk Shots", Daily Mail Online, March 06, 2014

Aldi Australia doubles up on its management structure

Sydney Morning Herald, March 31, 2014

Marketing & Advertising  

Walmart Announces Plans To Expand Local Sourcing Initiative To Include General Merchandise

Walmart said it plans to expand its local sourcing initiative for general merchandise in the United States. In this connection, the retailer announced its intention to spend $250 billion on products manufactured in the country during the next 10 years. As part of the initiative, Walmart launched a website highlighting the locally made products that it sells.

"Walmart: Proud to be an American", Supermarket News, March 26, 2014

Consumer Goods Marketers Need To Get Serious About Online Commerce

Unilever’s online commerce chief told a recent shopper marketing seminar that consumer packaged goods companies need to build an e-commerce presence to keep their brick-and-mortar business successful. But he acknowledges creating an e-commerce team can be a tough sell to executives when online sales represent only one percent of revenues. According to Doug Straton, it can be done as long as you outline key drivers and the effect of e-commerce on the broader landscape; define profit and loss over the long term; and identify competitive gaps.

"Unilever: Ecommerce a must", Supermarket News, March 26, 2014

Sprinkles Cupcakes Expands Its Dispenser Installations Nationwide

Automated cupcake dispensers are appearing all over the U.S., thanks to the expansion strategy of Sprinkles Cupcakes bakeries. One of the most recent machine installations appeared on the Upper East Side of Manhattan, outside of the Sprinkles bakery. Other dispensers have been installed in Chicago, Dallas, Atlanta, and Beverly Hills. The machines dispense cupcakes at $3.75 each and are stocked regularly until 2 a.m., then restocked again at 9 a.m. The dispenser seems to be a hit in Manhattan, where customers can buy cupcakes at the same price as the ones in the bakery while avoiding lines at the cash register.

"Photos: The Sprinkles Cupcake ATM Has Landed On UES", Gothamist, March 25, 2014

Walmart Seeks To Compete With Non-Traditional Retail Rivals

Walmart began implementing its five-step strategy to further expand its share of the retail market, posing a significant threat to rival retailers, such as GameStop, 7-Eleven, and Dollar General. Videogame specialist stores should be wary of Walmart’s plan to allow customers to trade in their used video games for Walmart gift cards, market analysts said. Walmart also intensified its price-matching program by launching the online tool Savings Catcher on its website, allowing customers to compare prices in real time. Also, the world’s largest retailer opened its first Kwik-E-Mart convenience store, which is set to compete directly with 7-Eleven and other convenience store operators, and announced plans to expand its Walmart Express and Walmart Neighborhood Market community-based stores, which are similar in size to the usual dollar store.

"This Is Walmart’s 5-Step Plan to Conquer Absolutely Everything", Time, March 24, 2014

Walmart Celebrates 20 Years Of Business, Growth In Canada

Walmart Canada is celebrating its 20th year of doing business in the country on March 17, 2014. On March 17, 1994, Walmart purchased retailer Woolco and its 122 retail stores and 16,000 employees. Since then, Walmart has grown its Canadian operations to 389 stores and more than 95,000 employees across the country. As part of the anniversary celebrations, Walmart Canada will host The Lowering the Cost of Living Summit, an event aimed at finding new ways to improve the financial status of Canadians. Results of a survey conducted by Research Management Group for the retailer revealed 36 percent of Canadians said “they can only afford to pay for the basic necessities,” while 43 percent said they tend to live from paycheck to paycheck. Some of Walmart Canada’s achievements during the previous 20 years include making payments of more than $100 billion to Canadian suppliers and paying out almost $1 billion in bonuses to local associates.

"Walmart marks 20 years in Canada; Retailer to host Lowering the Cost of Living Summit", CNW, March 17, 2014

Press Release  

Walmart Reports Strong Revenue Performance For FY 2013

In fiscal year 2013, Walmart reported net sales of $22 billion, making the retailer a $466 billion company. Operating income rose 4.7 percent to $27.8 billion from previous year level. Also, free cash flow grew 18.1 percent to $12.7 billion, enabling the company to return $13 billion in dividends and share to its shareholders. During the period, operating expenses and sales rose 4.2 percent and 5.0 percent, respectively, from 2012.

"Walmart 2013 Annual Report", Walmart, March 28, 2014

Walgreen Sales Up In Second Quarter, But Profits Slide

Pharmacy chain Walgreen posted second-quarter earnings of $880 million, or $0.91 a share, slightly lower (by about three cents) than analysts expected. Sales increased 5.1 percent from the prior-year quarter to a record $19.6 billion, while first half sales increased 5.5 percent to $37.9 billion. Profit was off five percent from a year ago, because of slower generic drug introductions and fewer consumers coming in for flu shots in the quarter. The company expects the “generic drug headwind” that affected the first half of the fiscal year will ease and turn around by the end of the year. CEO Greg Wasson said the company continues to gain prescription market share while keeping costs under control.

"Walgreen Co. Reports Fiscal 2014 Second Quarter Results", Earnings release,Walgreen Co., March 25, 2014

Products & Brands  

Plain Old Toast Gets A Makeover

Toast as an entrée and appetizer is a food trend born in a coffee shop in San Francisco that spread rapidly throughout the city and across the U.S. It has caught on, for example, in Chattanooga, Tenn, according to food writer Anne Braly. The owner of local shop Niedlov’s Breadworks says restaurants in town buy his bread fresh daily and use it for appetizers and for meals like sourdough toast topped with pimento cheese, and toasted baguettes with beef tartare. A Minneapolis restaurant has a separate toast menu that features toppings like warmed camembert, grilled savoy cabbage and kale, salmon, mustard sauce and pickled cucumbers, and beef tartare.

"Side Orders: Toast becomes trendy", Times Free Press, March 12, 2014

Food Trend In The Making? Welsh Treat Piques Boston Appetites

A Welsh immigrant, laid off after many years as a project manager here, decided to pursue a lifelong dream shared by her late mother. The two obsessed about selling Welsh cakes, a currant-dotted baked treat about the size of an English muffin served at teatime in South Wales. They dreamed of starting a shop, to be called the Copper Kettle Bakery. With unemployment as an incentive, Helen Coates launched her Welsh cake wholesale bakery in 2013, benefiting perhaps from some recent fortuitous publicity: Welsh descendant Ann Romney showed off her Welsh cakes during the recent presidential campaign. For now, Coates and her partner do all the baking at home, but her popular cakes – made with currants, dried cranberries, apricots, cherries and pecans – can be found in Boston-area shops and online.

"When you get laid off, start baking Welsh cakes", Boston Globe , March 04, 2014

Remember The Ho Ho! Classic (But Not-So-Fresh) Snack Cakes Rise Again In Texas

Texans who -- according to food writer David Kaplan -- eat more ”sugary goodies” than the average American, now have access to some iconic, though not 100 percent fresh,  baked snacks on a regular basis. The new incarnation of Hostess sells less-than-fresh (but not-yet-stale) Twinkies, Ho Hos, etc. at a discount in 1,500 Big Lots discount stores in the state. Meanwhile, discount shops are selling a popular East Coast brand of baked treat – Tastykake – also at or near their sell-by dates at a substantial discount. The cheaper snack cakes make them affordable by lower-income consumers, but that raises issues of unhealthy eating, obesity and diabetes.

"Snack industry adapts as cravings shift", The Houston Chronicle, February 28, 2014

Walmart China loses customer confidence

WantChinaTimes.com, March 16, 2014

Trends  

“Slow Food” Movement Expands Its Horizons As It Grows Locally

The “slow food” movement, which began with the idea of revitalizing food varieties and flavors in an era of industrialized food, has broadened its focus in recent years. The Slow Food organization itself, with chapters in 100 countries, is now about sustainability, local community and connecting. The 13-year-old Austin, Texas, chapter, for example, comprises artisans, farmers markets, urban farms and locally-driven cafes. It advises the city council on getting city government, nonprofit organizations, and food and farming businesses talking about sustainable growing, sourcing and eating. The end result is that “people become more connected with local food sources that align with our values”, according to Slow Food Austin’s communications director.

"Slow food movement speeds up sustainable eating", USA Today, March 25, 2014

Snacking Trend Presents A Growth Opportunity For Restaurants

The term “snack” is getting harder to define these days, according to researcher Technomic, mainly because consumers, who are snacking more than ever before, are selecting from a broader range of food items. Convenience stores and other food retailers are already taking advantage of a key trend: nearly half of consumers (49 percent) eat snacks between meals and 45 percent replace one or two daily meals with a snack. Technomic advises restaurants to view the upsurge in snacking as a potential growth channel by providing a wide variety of innovative, healthy and easily portable snacks. The move would boost incremental traffic and sales, especially among younger customers.

"Snacking On The Rise Among Consumers", Nutraceuticals World, March 24, 2014

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