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A.T. Kearney: Stores drive most sales, online and off

BY Dan Berthiaume

Chicago – Physical stores continue to be customers’ preferred shopping channel and a place where the most significant consumer and retailer value is created, according to a new report by A.T. Kearney.

The firm’s “Omnichannel Shopping Preferences Study” found that stores play a crucial role in online purchases, as two-thirds of customers purchasing online use a physical store before or after the transaction. The survey covered all age segments — teens, Millennials, generation X, baby boomers, and seniors.

According to the report, most shopping experiences span multiple channels. Consumer channel preference varies by stage in the shopping journey, although the most common preferred shopping journey is exclusively store-based for each stage. Fifty-five percent of consumers in the survey prefer to use both stores and online throughout the entire journey.

“A strategy based on leveraging the appeal of the physical store supported by digital is the best formula for capturing the maximum number of sales, building sustainable customer loyalty, and creating opportunities to cross-sell,” said Michael Brown, A.T. Kearney partner and study co-author.

In addition, 90% of all U.S. retail sales happen within four walls of a physical store, and more than half of all online retail sales are captured by retailers with physical stores. The store makes a significant contribution to converting the sale, even when the transaction is eventually registered online. The source of value creation (brand building, product awareness) is often distinct, or decoupled, from the place of value capture (sales transaction).

"The decoupling of value capture is important for retailers to understand as they consider resource allocation decisions across channels to ensure that the true value the physical store creates is accounted for properly," said Mike Moriarty, A.T. Kearney partner and co-author of the report.

Click here
to read the Omnichannel Shopping Preferences Study Report “On Solid Ground: Brick-and-Mortar is the Foundation of Omnichannel Retailing.”

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Supervalu profit plummets in Q1 on lost tax benefit

BY Dan Berthiaume

Eden Prairie, Minn. – The loss of a large tax benefit caused Supervalu’s net income to plummet 49% in the first quarter of fiscal 2015 to $43 million from $85 million in the year-ago period.

Revenue slipped to $5.23 billion from $5.24 billion.

After-tax charges and costs for employee severance and debt financing activities also impacted net income results. Supervalu still managed to meet Wall Street expectations for net income and beat expectations for revenue, and president/CEO Sam Duncan struck a positive tone in his comments.

"Fiscal 2015 is off to a solid start across our business segments,” said Duncan. “Our first quarter results reflect the investments we are making this year to position the company for future success and I am pleased with our operating performance.”

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Wal-Mart ordered to provide investors bribery files

BY Dan Berthiaume

Bentonville, Ark. – Wal-Mart Stores Inc. has lost its bid to keep files regarding an internal probe of possible bribes paid to Mexican officials to aid real estate deals out of the hands of investors. The Delaware Supreme Court has upheld a 2013 ruling by a lower Delaware state court mandating that Wal-Mart provide the files to several investors.

In 2005, executives in Wal-Mart’s Mexican operation told senior management that at least $24 million in bribes had been paid to Mexican government officials in order to ease the process of building warehouses and stores. The payments were not disclosed in regulatory filings until 2011 and U.S. and Mexican officials are investigating whether the payments can be considered criminal.

Wal-Mart investors including the California State Teachers’ Retirement System, the New York City Employees’ Retirement System and the Indiana Electrical Workers Pension Trust Fund are seeking access to the files. Wal-Mart had appealed the previous ruling to the state’s highest court.

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