FINANCE

Costco ends year on an upbeat note

BY Marianne Wilson

Costco Wholesale Club reported better-than-expected profit and revenue for its fourth quarter.

Net sales for the 17-week fourth quarter ended Sept. 3 rose 15.8% to $41.36 billion from $35.73 billion in year-ago period, which had 16 weeks. Total same-store sales rose 6.1%, with a 6.5% increase in the U.S. and a 4.9% increase in Canada. International same-store sales rose 5.6%

E-commerce sales in the quarter were up 21%. Membership fees rose 13% to $943 million.

Costco's net income for the quarter was $919 million, or $2.08 per diluted share, compared to $779 million, or $1.77 per diluted share, last year.

Net sales for the 53-week fiscal year rose 8.7% to $126.17 billion. Net income was $2.68 billion, or $6.08 per diluted share, compared to $2.35 billion, or $5.33 per diluted share, last year.

Costco ended its fiscal year with 741 warehouses in operation, including 514 in the United States and Puerto Rico, 97 in Canada, 37 in Mexico, 28 in the United Kingdom, 26 in Japan, 13 in Korea, 13 in Taiwan, nine in Australia, two in Spain, one in France and one in Iceland. The company also operates e-commerce websites in the U.S., Canada, the United Kingdom, Mexico, Korea and Taiwan.

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ECOMMERCE

Report: Amazon tries its hand at a different kind of pop-up

BY CSA STAFF

Amazon is preparing for its newest physical store — and promoting its alcoholic products at the same time.

The online giant is opening a pop-up bar in Tokyo’s Ginza district. The location, which will be open for 10 days, will sell beer, wine, sake and cocktails sold on its Japanese website, as well as exclusive products and samples not yet for sale, according to Bloomberg.

An ordering system will suggest drinks, while sommeliers will offer wine advice. The pop-up bar will open on Oct. 20, the report said.

The pop-up concept coincides with Amazon’s efforts to boost its physical presence, especially in the United States. With the recent acquisition of Whole Foods, the e-retailer added more than 400 grocery stores to its physical retailing network. It also operates a growing chain of brick-and-mortar bookstores, AmazonFresh pickup stations, and cashier-free Amazon Go convenience stores operating in Seattle.

Click here to read more.

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MOBILITY

Study: More than half of retailers ready for AI

BY Deena M. Amato-McCoy

In a move to step up their customer experiences, more retailers are embracing artificial intelligence (AI).

This was according to the third quarterly “2017 E-commerce Performance Index,” a report from SLI Systems.

According to the data, 54% of companies reported they are using or plan to add AI in the future. The largest group of these respondents (20%) expect to add AI within the next 12 months.

The most popular applications for AI — among both existing retail users and those that plan to use AI within the next 12 months — are personalized product recommendations (56%), customer service requests (41%) and chatbots (35%). Very few e-commerce professionals currently use AI for virtual reality, voice-activated apps, augmented reality or virtual buying assistants, or plan to in the next year, the study said.

Of those planning to implement AI, 13% plan to build their own technology, 60% will buy existing technology, and 27% expect to blend "build and buy.”

Beyond AI, replatforming operating infrastructures is the top initiative for 17% of respondents this quarter, followed by customer experience (CX) (16%). Inventory, logistics and fulfillment (15%) follow behind.

"This quarter replatforming edged out CX as the top priority for e-commerce,” said Carter Perez, VP sales, Americas and Australia, SLI Systems. “We're seeing retailers working to ensure their platform and search strategies are in peak shape for driving holiday site traffic and optimizing merchandising and conversion.”

The holiday season may be right around the corner, but retailers remain focused on sales for this quarter. For example, 92% of retailers are confident they will grow revenue in Q3, closely aligning with results from Q1 and Q2. A majority of retailers (87%) also expect their online revenues to increase in Q3 compared to Q3 2016.

Meanwhile, 80% expect revenue from mobile sites and apps to increase compared to the same quarter in 2016. All retailers (100%) in the hardware/home-improvement segment, and 93% in apparel, anticipate an increase.

Selling to new geographic markets experienced the largest drop, moving to 20% in Q3 from a stable 30% in the first and second quarters.

As the holiday season approaches, retailers have high hopes for brick-and-mortar. In fact, 45% estimate a rise in Q3 in-store revenue/profits compared to the same quarter last year — an improvement of 6% points from Q2.

Of the retailers that participate in holiday sales, nearly a third (31%) said the 2017 holiday shopping season will begin earlier in 2016, with 31% also citing October as the official start of the season.

Meanwhile, 77% expect an increase in holiday season revenue this year. Most forecast modest rises of up to 10%, and only 4% of anticipate aggressive increases over 30%, the study reported.

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