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SAP Retail Forum: Retailers must adapt to evolving e-commerce model

BY Dan Berthiaume

Dallas – The e-commerce model is still actively evolving in response to changes in the consumer marketplace and technology. David Llamas, former CIO of British department store Harrod’s and an independent executive advisor, described how e-commerce has changed and is still changing during a session at the SAP Retail Forum on Oct. 8.

“In 2007, new e-commerce models like private sales, deals, and mobile commerce emerged,” said Llamas. “They have five times faster growth than traditional e-commerce models.”

Although mature e-commerce retail operations average 17% profit margins, Llamas said most new e-commerce ventures lose money at first, even if they ultimately prove successful.

“Gilt.com has not turned a profit for a full year yet,” he said. “Amazon.com did not have its first profit until 2003. It launched in 1995.”

To help reach profitability, Llamas said e-commerce retailers should look to emerging global markets like China, Russia and the Middle East.

“China will be the world’s largest online market by 2015,” he stated. “China’s e-commerce sales were $190 billion in 2012. Russia has the largest European online population and will reach $50 billion in e-commerce by 2020.”

In addition, Llamas said e-commerce retailers should use new tools such as omnichannel, precision retailing, CRM/clienteling, and analytics together to maximize their collective benefit. He left off with a few pieces of advice specifically for department store retailers seeking e-commerce success.

“You must lead, not follow,” he said. “Service and product differentiation is key. Technology is a key enabler to differentiation.”

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REAL ESTATE

Ollie’s Bargain Outlet to Boardman Plaza in Youngstown

BY Michael Fickes

Bryn Mawr, Pa. — Ollie’s Bargain Outlet has opened at Boardman Plaza in Youngstown, Ohio, according to WP Realty, the center’s owner.

Boardman Plaza is a 625,000-sq.-ft. center and home to national, regional and local tenants including Burlington Coat Factory, Hobby Lobby, Save A Lot, Planet Fitness, Michaels, giant Eagle and Rite Aid.

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News

Costco comps up for the fourth quarter

BY CSA STAFF

Changes in foreign exchange rates had a negative impact on Costco’s comparable store sales for the fourth quarter ended Sept. 1, but the wholesaler still reported increases in both its U.S. and international markets.

The company’s comparable sales for the quarter increased 5%. U.S. comparable store sales increased 5% for the quarter, while international comparable store sales increased 4%.

Excluding the impact of changes in foreign exchange rates, the company’s comparable sales for the quarter increased 5%. U.S. comparable store sales for the quarter increased 5%, while international comparable store sales increased 7%.

Net sales for the 16-week fourth quarter were $31.77 billion, an increase of one percent from $31.52 billion in the 17-week fourth quarter of fiscal 2012 ended September 2, 2012. Net sales for the 52-week fiscal year 2013 were $102.87 billion, an increase of six percent from $97.06 billion in the prior 53-week fiscal year.

Net income for the quarter was $617 million, or $1.40 per diluted share, compared to $609 million, or $1.39 per diluted share, during the prior-year quarter.

Costco currently operates 638 warehouses, including 454 in the United States and Puerto Rico, 85 in Canada, 34 in Mexico, 25 in the United Kingdom, 18 in Japan, 10 in Taiwan, 9 in Korea and 3 in Australia. The company plans to open an additional 11 new warehouses before the end of calendar year 2013.

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