OPERATIONS

Report: Retail employment slumps most in a year

BY Katherine Boccaccio

Washington, D.C. — A report on Friday by the Labor Department showed that retail employment declined by 24,000 in March, the biggest slide since February 2012. The largest hiring slump occurred among clothing and accessories stores, which dropped 15,000, followed by a 10,000 decrease among building-material and garden suppliers.

Retailers have been slow to hire largely because of the concern over the 2% increase in payroll taxes and how the bump is impacting consumer spending.

The National Retail Federation previously forecasted that U.S. retail sales will increase 3.4% this year, compared to a 4.2% gain in 2012.

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ECOtality and Kroger expand car-charging program

BY Katherine Boccaccio

Cincinnati — ECOtality and The Kroger Co. announced Monday an expanded partnership including over 200 level 2 (quick charge) charging stations, and 25 DC Fast Chargers, to be installed across key markets through the EV Project.

The multimillion-dollar expansion will bring the total number of Blink chargers in the Kroger system to almost 300.

"As plug-in electric and hybrid cars are becoming more popular with our customers, we are pleased to offer the convenience of electric vehicle charging stations at more of our stores in markets with the highest demand," said Keith Dailey, Kroger spokesperson.

Kroger will invest $1.5 million to install over 200 Blink charging stations at 125 locations in several key markets including Phoenix, San Diego and Los Angeles. These stations are in addition to 60 already installed in Oregon and Washington, and 14 in Texas.

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Report: Amazon will cement its position as major retail price setter

BY Marianne Wilson

New York — Amazon will cement its position as major retail price setter for years to come by exploiting its logistics opportunity, according to a new ResearchFarm report.

The report predicts that that Amazon will focus on logistics in the future and become a major 3PL provider by increasing the fulfillment center footprint, linking up the various international marketplaces and adding front-end capacity such as the locker roll-out. Once Amazon has a handle on delivery costs and has completed the transition towards making shipping a fixed cost by leveraging its FBA service for its marketplace sellers, the pureplay will reinforce its outsized influence on pricing levels going forward.

According to ResearchFarm, Amazon always invests first in its own operations and then, once the infrastructure has been established, it charges others rents for using the platform. The marketplace was the first manifestation of its business strategy in action, and it is still the main profit contributor and growing faster than Amazon itself. Other examples of providing infrastructure to 3P include the Kindle platform and Amazon publishing, the server business AWS and the advertising platform, Adzinia.

“Looking ahead, we believe the next stage of this process will be on the logistic side,” the ResearchFarm report stated. “Again Amazon will build the infrastructure up for its own purposes first. At the moment the opportunity clearly lies at the back end, in building of a lot more fulfillment centers and warehouses across the globe to be nearer to customers (which drives down delivery costs) and to be able to extend ranges even more, even though Amazon has to watch inventory costs, when doing so.”

Ramping up logistics will enable the company to offer more same day delivery and to link up the various fulfillment centers, even across borders. If the link up between fulfillment centers is efficient, this could lead to Amazon having to stock less inventory as a percentage of sales in total. As soon as the infrastructure is up and running, it will be opened up to 3P, through Amazon’s fulfillment service FBA. Indeed it is Amazon’s strategy to push as many of its 3P sellers into FBA as possible, so it can charge higher fees. We think that FBA will become a profit driver in its own right in future, as Amazon can bundle orders from both 3P and 1P and achieve much better load utilization factors — this will lead to huge synergies and cost savings by in effect subsidizing 1P shipping through 3P fees.

ResearchFarm believes that lockers will also play an integral part in the logistics strategy. The report notes that Amazon has installed the lockers for four reasons:

1. Convenience — so customers don’t have to wait at home for delivery, but can pick their orders up at a time and place convenient to them;

2. To cut costs — multiple deliveries can be bundled into one trip;

3. Security and loss prevention reasons; and

4. To be able to offer more targeted time slots, which is easier for Amazon to do itself, rather than having to rely on a logistics provider such as DHL or UPS.

“We believe that Amazon is basically all about logistics going forward because, to slightly exaggerate the point, in the past price was ‘cost of product (and tax, insurance, salaries and rents etc)’ + ‘margin’; whereas in future price will be the same ‘cost of product’ (- all store based costs) + ‘margin’ + ‘delivery cost,’” said Daniel Lucht, research director of ResearchFarm, London.

If Amazon manages to control delivery costs cost through its logistics operation by leveraging marketplace and FBA, the widening fulfillment center footprint and the locker roll out, then the company’s effect on pricing level overall, will become much greater than it is today, when the main threats are Amazon price matching and the showrooming app, advised ResearchFarm.

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