Martha and Meredith in 10-year tie-up
Martha Stewart Living Omnimedia and leading publisher Meredith Corporation have entered into a decade-long partnership that is being described as transformative.
Under terms of the deal, The Martha Stewart team will continue to create all content for properties such as Martha Stewart Living and Martha Stewart Weddings and manage social media channels while Meredith will assume ad sales, circulation and production and marketing of the properties.
“We are very excited to partner with a great company like Meredith, which has an excellent track record in advertising sales, operations and production of a library of some of our country's most popular magazines. Our editorial team can focus entirely on what we do best: the creation of inspirational, original, practical, useful, and trusted content for our superb publications and digital properties – content that continually enhances and improves consumers' lives," said founder and non-executive chairman, Martha Stewart.
Martha Stewart Living is published 10 times annually with a readership of more than 10 million. Martha Stewart's digital properties average eight million monthly unique visitors and 60 million views.
"This is a winning arrangement for both companies and their respective shareholders, as well as advertising clients and consumers alike," said Meredith chairman and CEO Stephen M. Lacy. "We will leverage Meredith's tremendous expertise and scale in the magazine and digital fields with the award-winning multi-platform content created by the Martha Stewart team. The change will be invisible to the consumer, and strengthen the Martha Stewart brand in the advertising marketplace."
Meredith will market Martha Stewart Living, Martha Stewart Weddings and the digital assets with its own leading brands, including Better Homes and Gardens, Parents, Allrecipes andTraditional Home, according to Meredith National Media Group President Tom Harty. The agreement will enable Meredith to go to market with a reach of more than 100 million unduplicated American women, and a digital reach of more than 65 million unduplicated monthly unique visitors.
Wal-Mart cuts back U.S. supercenter growth; ups e-commerce spending
Bentonville, Ark.—Wal-Mart Stores Inc. is planning to sharply cut back the growth of its U.S. supercenters in favor of smaller-format stores and acccelerated e-commerce and digital investments.
The discounter told investors at its annual analysts meeting that it plans to open 60 to 70 supercenters during its next fiscal year, down from the planned 120 this year, and 200 to 220 smaller format stores. In all, it will add between 26 and 30 million net retail sq.ft. worldwide next year, down from an estimated 32 to 34 million sq. ft. this year, due to a moderation of large format store growth and accelerated e-commerce investments.
The world’s largest retailer cut guidance for 2015, saying that it expected growth of 2-3% compared with previous estimates of 3-5%.
"There is no excuse for us not to be doing better," Wal-Mart Stores CEO Doug McMillon said during the meeting with investors. "We recognize our situation has changed and we're responding accordingly."
Wal-Mart’s total capital spending for fiscal year 2016 (which starts Feb. 1, 2015) is projected to range between $11.6 and $12.9 billion, including approximately $1.2 to $1.5 billion for e-commerce and digital initiatives, up from some $1.0 billion this year.
“Our business and customers continue to evolve and so will the way we deploy capital,” said Wal-Mart CFO Charles Holley. “We will invest more heavily in e-commerce initiatives, while temporarily moderating our global physical growth, particularly larger stores. We are focused on creating an endless aisle and appealing to our customers’ changing needs.”
The chain expects to finish this year with approximately $12.5 billion in global e-commerce sales.
“Looking forward we expect an increase in global e-commerce sales of around 25% in fiscal year 2016, and we anticipate growth over the three-year period from fiscal years 2016 through 2018 to average 30 to 40%,” Holley said. “The greatest investment of capital and in operating loss for our e-commerce operations will come over the next 18 to 24 months, and then we would expect to see that investment start to moderate in fiscal 2018.”
In line with its increased online emphasis, Wal-Mart next year will build new online fulfillment centers in Georgia and Pennsylvania, each over 1 million square feet. The centers will be part of the company’s next generation fulfillment network that includes dedicated online fulfillment centers, shared distribution centers, and ship-from-store locations that are all tied together its transportation networks in the country. Wal-Mart will also add new fulfillment centers in Brazil and China.
The company expects net sales to increase by 2 to 4% next year, which translates into approximately $10 to $20 billion of net sales growth, according to Holley.
“Operating expenses will grow at a rate somewhat faster than sales growth and operating income will be flat to slightly down, given our investments in technology, e-commerce and digital,” he said.
In other meeting highlights:
•Walmart U.S. now expects to open approximately 240 small format units in fiscal 2015, and carry over approximately 20 units into fiscal 2016.
•The company confirmed rumors that it is rebranding Walmart Express as Neighborhood Market, which will serve as its brand for all small format stores, regardless of square footage.
•During fiscal year 2016, Sam’s Club will open approximately 9 to 12 clubs, including relocations and expansions. Remodeling is slated for between 60 and 65 clubs.“We are reducing the number of new club openings for next year and accelerating technology initiatives that integrate our physical locations with our digital capabilities,” said Sam’s Club president and CEO Rosalind Brewer.
• Globally, Wal-Mart International will continue to invest in organic growth across its markets next year. Capital expenditures are expected to range between $3.7 and $4.2 billion. New store openings in fiscal 2016 are expected to add between 10 and 13 million square feet.
• The company also expects fiscal year 2016 net sales growth to range between 2 and 4%, which translates into approximately $10 to $20 billion in net sales.
"There's no excuse for us not to be doing better," Doug McMillon, the company's new CEO and president who took over the reins from Mike Duke in February. Under his stewardship, he's been accelerating the company's push to redefine its role in a fast-changing retailing environment.
In the short term, perking up sales at its U.S. Wal-Mart business means keeping items that shoppers want in stock and speeding up checkout lines. This holiday shopping season, Wal-Mart says it will open more cash registers than ever. It also needs to get better with its prices.
In the long term, the company is dissecting every part of its business as it continues to test and learn what works. One big change: Wal-Mart has ended its program of tethering its small stores with its supercenters. The purpose was to use the big stores as distribution hubs to supply goods for the smaller locations. But Wal-Mart said the model wasn't sustainable.
"I really believe our future is bright," McMillon said. "There are so many ideas percolating around."
Greg Foran, the former Wal-Mart Asia chief who recently became head of the U.S. Wal-Mart division, told investors that when he first started his new job he asked managers to send him three ideas for how it could improve business. He received 3,000 emails and noted that he's been taking action. One area is improving the freshness of its produce.
But the big change is how Wal-Mart is taking a hard look at its fleet of more than 4,000 stores in the U.S.
Foran told investors that supercenters, which average about 180,000 square feet and carry general merchandise, food and pharmacy items, are still important. But Wal-Mart needs to think about how they should look.
As for its smaller stores, the company also plans to add 180 to 200 Neighborhood Markets next year, from 170 stores scheduled for this year. It's reducing growth of its smaller Wal-Mart Express stores. It plans to open 20 stores next year, down from the expected 70 this year. Wal-Mart Express stores are about 12,000 square feet, while the Neighborhood Markets average about 40,000 square feet.
It's also rebranding Wal-Mart Express stores to Neighborhood Markets while reducing its offerings in seldom-purchased items such as shower curtains and stocking more items that shoppers want every day such as diapers.
The company plans to add nine to 12 Sam's Clubs in its next fiscal year, down from the planned 20 new clubs for this fiscal year.
Report: Only 5% of retailers have fully executed omnichannel strategy
Minneapolis —Few companies (5%) believe they are “advanced” when it comes to omnichannel capabilities, and between 35% and 40% believe they are lagging, according to a report by SPS Commerce, a provider of enterprise retail cloud services. The company’s third annual “Retail Insight” report confirms the cross-functional challenges retailers, suppliers and logistics firms face as they build omnichannel capabilities into their operations.
“The report underscores the complex challenge of developing omnichannel retail success, while also affirming the future direction of the retail industry,” said Peter Zaballos, VP of marketing and product at SPS Commerce.
The benchmark study revealed the following about the retail industry:
• Both retailers and suppliers feel significant pressure from rising consumer expectations, with 75% of retailers experiencing increased demand for more rapid fulfillment and 44% of suppliers reporting greater demand for more robust item information.
• Very few companies (11%) are ready for cross-channel fulfillment, but retailers are more likely (18%) to report mobile commerce readiness.
• Forty-three percent of retailers report their legacy systems hold them back from omnichannel progress.
• Fully a quarter of retailers have made the transition to store-based fulfillment of online orders but expect this to decline over the next three years to balance shipping costs.
“Omnichannel is about profitably building the next generation of consumer experience, and execution is apparently harder than the ecosystem expected it to be,” said Paula Rosenblum, managing partner at Retail Systems Research (RSR). “Retailers, suppliers and logistics providers need to move quickly to satisfy a consumer who has a seemingly endless array of choices and not a lot of patience. While everyone is heads-down, particularly in figuring out the supply chain side of the omnichannel equation, no one should lose sight of the consumer.”