REAL ESTATE

Battle of the distribution centers

BY Michael Fickes

Toward the end of January, the Wall Street Journal reported that Wal-Mart has given itself two years to match the online service and delivery speed of Amazon.com.

In an interview at the World Economic forum in Davos, Switzerland, Neil Ashe, Wal-Mart’s global e-commerce CEO told Journal reporter Dennis Berman was building new warehouses across the country dedicated to handling online orders.

One facility opened recently in Fort Worth, Texas, and another will soon go up in eastern Pennsylvania’s Lehigh Valley. More will follow, said Ashe.

The new distribution centers will expand Wal-Mart’s current fulfillment capability being handled now by store inventory and distribution centers providing inventory for stores and fulfilling online orders.

Perhaps the most interesting part of the Journal article is the tone with which Ashe spoke. He said: “This is not a side project. This is how we will be serving customers going forward. With the wave of capacity we are building, we will not be at a disadvantage.”

That’s how business giants trash-talk each other.

This is going to be fun to watch. All retailers, big and small, have been trying for years to figure out how to compete with Amazon and Wal-Mart. Now it looks like Wal-Mart is going to challenge Amazon online. How will Amazon respond?


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FINANCE

BDO survey: Retail CFOs forecast 5% sales growth for 2014

BY Marianne Wilson

Chicago — Retail CFOs are feeling more confident about the state of the consumer, forecast a 5.1% increase in total sales and a 4.8% increase in same-store sales this year, according to a new BDO USA survey. The finding marks a significant increase from the number expressing similar sentiments last year.

In the study, a majority (63%) of CFOs indicate that they include online sales in their comparable sales projections, suggesting that some of this expected growth and optimism may be linked to the exploding popularity of e-commerce.

Underlying these projections, a majority of retailers (56%) say that they expect consumer confidence will increase in 2014. Though plunging briefly in fall 2013 as a result of the government shutdown, confidence levels have recovered to 80.7, their highest point since August 2013, according to the Conference Board.

However, CFOs remain wary of impediments to confidence, particularly a weak jobs outlook, and 39% cite unemployment as the top factor influencing consumer confidence in 2014.

Personal credit availability and debt levels (18%) also continue to place pressure on consumers, and are collectively the second most-frequently cited factor by CFOs. These numbers remain consistent with last year’s survey.

However, with the political climate surrounding the Federal budget stabilizing after a contentious 2013, CFOs are less concerned about tax changes: This year, only 12% say that tax increases will be the top influencer of consumer confidence, a 50% decrease from 2013.

“With consumer confidence gaining momentum, retail CFOs are relatively bullish about 2014 retail sales,” said Doug Hart, partner in the retail and consumer products practice at BDO. “While concerns remain about unemployment and financial market volatility due to the Fed’s pullback, they appear to be offset by the housing market recovery and less concern over Washington gridlock. Retailers are hoping that those factors will help boost consumer confidence in the coming year.”

These findings are from the eighth annual BDO Retail Compass Survey of CFOs, which examined the opinions of 100 CFOs at leading retailers located throughout the country. The retailers in the study were among the largest in the country.

In other report findings:

• A majority (55%) of CFOs say that the number of employees at their firm will stay about the same this year, but 40% say they will increase headcount, despite reports of staff layoffs and a shrinking of retailers’ brick-and-mortar presences. This suggests that where retailers may not be hiring to support their in-store operations, they may be looking to bolster their e-commerce capabilities, such as online customer support and shipment fulfillment capacity.

• Forty-six percent of CFOs expect average compensation per employee will increase and 54% say it will stay about the same. With 37% citing Federal, state and local regulations as a top risk in the coming year, it appears that retailers are trying to strike a balance between creating an employee base to support their growth while managing increased regulatory burdens. Actual and potential regulatory changes, such as the implementation of the Affordable Care Act and debates around minimum wage, may continue to impact retailers and their hiring plans in the coming year.

• When asked about which promotion strategies worked well this past holiday season, CFOs indicate that online promotions that added convenience for shoppers were the top performers. Retailers cite free shipping (28%) and email and social media promotions (24%) as the most successful promotions. Extended hours (40%) and price-matching (20%) were noted as the least successful tactics.

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A.Howard says:
Feb-12-2014 08:15 am

Great to hear that. The
Great to hear that. The remarkable increase of sales means there is an increase with the economy. The income would be a great help.

A.Howard says:
Feb-12-2014 08:15 am

Great to hear that. The remarkable increase of sales means there is an increase with the economy. The income would be a great help.

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FINANCE

Kroger ventures into Silicon Valley, purchases digital coupon leader YOU Tech

BY Marianne Wilson

Cincinnati — The Kroger Co. announced it has purchased the assets of YOU Technology Brand Services, the Silicon Valley-based provider of digital coupons and promotions. Financial terms of the transaction were not disclosed.

Founded in 2008, YOU Tech’s retailer-centric, cloud-based platform bridges the gap between online engagement and in-store purchases, creating a measurable way for retailers and brands to drive consumer purchase decisions online, in-store, and on-the-go. Its network, which includes Kroger.com/digitalcoupons, includes over 10,000 retail stores representing over $100 billion in retail sales and 100 million U.S. households. YOU Tech will continue to serve existing and future retail customers

"YOU Tech’s nimble and innovative digital coupon platform has enabled Kroger to deliver hundreds of millions of digital coupons to Kroger customers," said Jeff Talbot, Kroger’s VP of customer loyalty. "This transaction is consistent with our digital customer growth plan and provides Kroger a significant opportunity to expand its presence in Silicon Valley, enhancing our exposure to new technologies. YOU Tech will benefit from Kroger’s strong balance sheet as it continues to expand its digital platform to many other retailers and CPG partners."

Kroger’s accelerated growth strategy includes targeted capital investments to increase its store base and square footage in both new and existing markets, and to strengthen its connection with customers through the growing digital and mobile channels.

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