SUPPLY CHAIN

RSR Research: Retailers must adapt supply chain to omni-channel model

BY Dan Berthiaume

Walnut Creek, Calif. – Most retailers have yet to adapt their supply chains to the emerging omni-channel retail model. According to a new report from RSR Research, “Supply Chain Execution 2014: Making Omni-channel Profitable,” although most retail supply chains are only designed to fulfill the store channel, store is the third-most-common channel slated for retailer investment in the next three years (67%), with online/e-commerce (82%) and mobile commerce (70%) ahead.

However, when asked to name their top three supply chain execution challenges, retailers recognized the importance of omni-channel. The most popular challenges were consumers expect a more seamless omni-channel experience (73%), the pattern of consumer demand and how retailers fulfill it has changed (67%), and competitive pressures create shorter order cycles (58%).

In addition, the report finds that mid-tier retailers with annual revenue of $250 million to $1 billion are much more likely than retailers with $1 billion or more in annual revenue to cite omni-channel supply chain inhibitors such as supply chain not designed to support omni-channel fulfillment (86% mid-tier 68% large), lack of coordination between supply chain, merchandising and marketing (57% mid-tier 42% large) and lack of inventory accuracy (43% mid-tier 40% large).

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FINANCE

Report: Gift card sales in 2013 to top $118 billion

BY Dan Berthiaume

Arlington, Va. — Sales of gift cards in 2013 are expected to surpass $118 billion in sales, an 8% increase from 2012. CEB Tower Report research suggests that the widespread adoption of e-gifting, which experienced rapid growth from $300 million in 2012 to a predicted $3 billion in 2013, will provide scale for continued industry gains through 2016.

In addition, open network branded cards grew from $41 billion to $44 billion, retailer card volume grew from $36 billion to $39 billion, and restaurant and miscellaneous segments held flat at $19 billion and $13 billion, respectively.

CEB predicts the e-gifting trend will help propel continued growth in the gift card market in excess of $140 billion in sales by 2016. E-gifting is expected to top $10 billion during the same period, filling a niche for customers seeking to simultaneously buy and send their gifts to recipients they may not see in person over the holidays. Analysis suggests little overlap between e-gifting and traditional gift card segments though, as the latter rely on the physical presentation of a gift as a primary selling point.

However, CEB says new P2P services from banks and non-traditional financial players such as PayPal, which can be utilized for gifts and may begin to cut into gift card volume, should be of greater concern to traditional card issuers. The new services offer the ability to send gifts in real time through proprietary networks, circumventing the traditional card issuer’s spheres.

Innovations related to e-gifting and P2P services are expected to contribute to the decline of unused gift card value, or "spillage." The spillage figure now stands at an estimated 1% of total gift card value spend, down from a high of nearly 10% when CEB began studying gift card trends in 2006.

"The gift card experience continues to get better for consumers," said CEB TowerGroup senior research director Brian Riley. "E-gifting and P2P innovations add a new dimension to the market, which means more flexibility for buyers and recipients. Those same innovations may pose a threat to the growth of traditional card volume, and issuers should remain nimble in adjusting their strategies as digital competitors continue to enter the market.”

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REAL ESTATE

Report: Houston retail real estate market looks strong in 2014

BY Dan Berthiaume

Houston – Growth in the Houston retail estate market is expected to follow strong residential real estate growth in 2014. According to a report from NewQuest Properties delivered at the recent BoyarMiller Real Estate Forum, there are about 15 new shopping centers planned or under way in Houston.

In addition, the Houston retail sector is struggling to keep up with growth in the city and experiencing very low vacancy and default rates

"The Grand Parkway is a game-changer and the Katy area is now the fasting growing community in the U.S.," said Jay Sears, managing partner of NewQuest Properties. "New development in that community is driving retail with grocers leading the way. We are seeing new grocers coming to the market and some that are moving to the suburbs for the first time."

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