Apple to double size of Fifth Avenue flagship
Apple is going really big in Manhattan.
The retailer is expanding its flagship at the General Motors building on Fifth Avenue from its current 32,000-sq.-ft. to over 77,000 sq. ft. The Apple space is renowned for the glass cube located on the street level.
While the store is undergoing the expansion, Apple has temporarily moved into a space in the building that was formerly occupied by FAO Schwarz.
Apple spokesman Nick Leahy told the company anticipates an “incredible” new Fifth Avenue store, “where our customers will enjoy new services and experiences in a much larger space.”
Once the expansion is over and Apple moves back into its expanded space, the former FAO Schwarz store is due to be transformed into an Under Armour flagship.
Analysis: Amazon Q4 — Prime is the big story
While it missed some analysts’ aggressive $44.7 billion quarterly revenue estimate, Amazon continues to record solid growth. Fourth-quarter sales were up 22% year over year to $43.7 billion. The retailer also maintained profitability throughout 2016, indicating that the flywheel continues to accelerate, especially in North America.
What is even more impressive is how Amazon’s Prime membership continues to scale. According to Kantar Retail’s 2016 ShopperScape data, 37% of all U.S. households now belong to Prime, up from 31% a year ago. This membership expansion underlies the retailer’s strengthening shopper connection and potential to maintain strong sales growth in the year ahead. Our research indicates that once shoppers become Prime members, their shopping behavior changes. Amazon’s results show continued investment to elevate and evolve the Prime proposition in a way that will change the retailer’s relationship with shoppers.
Prime Content Gives More Reason for Renewal
Throughout 2016, Amazon added a variety of new digital benefits to Prime — including Prime Reading, Audible Channels, and Twitch Prime — to expand its appeal and deepen its member reach. As a result, Prime members more than doubled the number of video, music, and reading activities they streamed in 2016 compared with the previous year. The breadth of entertainment options available through Prime helps attract new members and support renewals. Also in Q4, Amazon featured more exclusive private label brands, including Presto! and Wickedly Prime, to further increase the value appeal of Prime membership.
Fulfillment Investments Support Prime Immediacy
Prime’s membership scale also reinforces Fulfillment by Amazon (FBA) and vice versa, which explains Amazon’s aggressive investment in fulfillment in the second half of 2016. The number of active FBA sellers on Amazon reportedly grew 70% year over year in 2016, increasing the availability of Prime-eligible products significantly. To accommodate FBA and overall growth in Amazon Fulfilled Network units, Amazon added 26 fulfillment centers (mostly in North America) in 2016, 23 of which were built in the latter half of the year. Not only does this additional fulfillment capacity position Amazon for future growth, but it also allows the retailer to elevate shipping immediacy and Prime-exclusive services like Prime Now, Prime Fresh, and Free Same-Day Shipping. The experimental brick-and-mortar Amazon Go format is another way the retailer is seeking to offer shoppers more flexible fulfillment options.
Devices Move Prime Further Into the Home
Amazon leveraged the 2016 holiday season to drive device adoption. Alexa in particular received notable emphasis with Alexa-exclusive promotions for Prime members; as a result, unit sales of the Echo grew nine-fold year over year during the holiday period. With more devices in circulation after the holiday, we expect voice shopping to move into the mainstream in 2017, opening up an entirely new way to capture and convert shoppers in the home. As Amazon underscored in its earnings call, Alexa fuels the flywheel by enhancing shoppers’ interaction with devices, which has a ripple effect on shoppers’ engagement with Amazon.
With these investments at the forefront heading into 2017, Amazon is keenly focused on driving Prime as its vehicle to reset the bar for both functional and experiential elements of online shopping. Thus far, we have seen Amazon add more subscription options to help automate online grocery shopping for Prime members; going forward, we anticipate continued innovation in this area to ease the Amazon experience even further.
Meaghan Werle is E-Commerce Analyst at Kantar Retail.
Why controversy is good for Starbucks
Starbucks Corp.’s plan to hire 10,000 refugees over the next five years (in its stores in 75 countries around the globe) has proved to be one of the socially progressive retailer’s most controversial moves to date.
The initiative, a response to President Trump’s executive order barring refugees from seven Muslim-majority countries, has many conservatives and Trump supporters calling for a boycott of the coffee chain.
Starbucks doesn’t seem particularly worried about the controversy. And some experts say that by tying its brand to certain values and political beliefs, Starbucks has found a way to differentiate itself, establishing a higher-end image that persuades customers (at least those that have the same values) to pay more for beverages than they would at another outlet, according to Business Insider.
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