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Three retailers step up shopper engagement with bots

BY Deena M. Amato-McCoy

FreshDirect, Subway and The Cheesecake Factory have added a new item to their menus — conversational commerce.

Through a partnership with MasterCard, the three brands are now using artificial intelligence (AI)-based bots to enable consumers to browse menus, build orders and securely checkout via Masterpass — all without leaving the Messenger chat-based platform.

For example, on online fresh food grocer FreshDirect, the bots enables customers to browse, shop and purchase groceries directly within Messenger. Meanwhile, Subway customers can use the bot to order their sandwich or salad order, and even add sides, toppings, snacks and drinks, and then pay for their meal through the chat app. The bot is currently available in more than 26,500 Subway restaurants in the United States.

The Cheesecake Factory is taking a different approach. By merging CashStar’s real-time gifting capability, which instantly approves and activates gift cards, the chain’s bot assists consumers as they purchase personalized gift cards directly through Messenger.

“Through this commerce-enabled bot we are able to leverage a new engagement channel with our guests,” said David Gordon, president of The Cheesecake Factory. “The bot experience delivers the convenience of customizing a gift card through Messenger integrated with Masterpass payment functionality to enable a simplified checkout experience.”

The bots support all Masterpass-enabled wallets from banks including Citi and Capital One.

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Luxury department store retailer takes on more debt

BY Marianne Wilson

Neiman Marcus’ debt burden just got heavier.

The luxury retailer will make interest payments over the next six months with new debt to preserve its cash and bank line of credit.

Instead of making a current $29 million cash interest payment on $600 million notes due in 2021, Neiman Marcus will issue more bonds to holders to cover the 9.5% interest, the Dallas News reported.

Neiman Marcus is struggling under $4.8 billion in debt, with the load primarily resulting from the company’s $6 billion leveraged buyout in 2013, when current owners Ares Management LP and CPPIB, acquired it from other private equity firms. In March, the retailer announced it was exploring strategic alternatives, which could include a sale of the company or other assets.

Neiman Marcus had $105.8 million in cash on hand as of April 1, and $423.3 million of unused borrowing available to it under its $900 million asset-based revolving credit facility, according to the Dallas News.

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GNC’s Q1 income takes a dive

BY Marianne Wilson

GNC Holdings’ income and revenue declined in the first quarter, but the company said it is encouraged by the results of its marketing and pricing revamp.

Net income totaled $23.9 million, or 35 cents per share during the quarter, compared with $50.8 million, or 69 cents per share, in the year-ago period year. Adjusted earnings were 37 cents per share, which was above estimates.

Revenue totaled $644.8 million during the quarter from $668.9 million last year, but still above estimates.

Same store sales decreased 3.9% in domestic company-owned stores.

GNC shut down all of its U.S. stores for one day in December to switch its pricing to a new simplified system. It also debuted a new rewards program. The retailer said 5 million consumers had joined the myGNC Rewards program by the end of its first quarter. It said it will begin leveraging information from the program to "better reach and more cost effectively speak to its customers."

"The One New GNC, represents a fundamental change in our business model and in the first quarter of 2017, we saw those transformational changes begin to bear fruit," said Bob Moran, interim CEO, GNC. "We're encouraged by positive trends in transactions, and by the early performance of our new loyalty programs, which are demonstrating their power to increase consumer frequency and spending."

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