Retail News CRM

Author: Mei Ling Tan

  • Alibaba to thank New Retail for Its record sales

    Alibaba to thank New Retail for Its record sales

    Continuing momentum in Alibaba Group’s New Retail business helped drive a 56 per cent year-on-year growth in sales for the quarter to December 31.

    The performance of the New Retail category – which combines its online (non-marketplace) and fast-growing offline retail businesses, including investments in Sun Art Retail and other established businesses – was a core highlight of the quarter, according to CEO Daniel Zhang.

    “Alibaba had another great quarter driven by the continued strength of the Chinese consumer and the wide and innovative range of services we provide for merchants and consumers,” he said.

    “We are excited by the continued momentum in New Retail, which came to life during another record-breaking 11.11 Global Shopping Festival. We expanded the scale and footprint of our New Retail initiatives with the vision of delivering true convergence of the online and offline consumer experience through mobile and enterprise technology.”

    Maggie Wu, CFO, said the group’s core business generated significant free cash flow of US$7.1 billion during the quarter, “enabling us to invest in New Retail, cloud computing, digital entertainment and globalisation”.

    Revenue from core online commerce (marketplace) activities rose 57 per cent to US$11.257 billion and from cloud computing by 104 per cent to $553 million. Digital media and entertainment sales rose 33 per cent to $832 million.

    The number of annual active consumers on Alibaba Group’s China retail marketplaces reached 515 million, an increase of 27 million from the year to September 30.

    Net income was $3.586 billion with operating margin was 31 per cent and adjusted EBITA margin for the core e-commerce business 53 per cent.

    Group highlights

    Alibaba summarised group highlights in its earnings statement, including:

    Taobao: Artificial Intelligence (AI) drove user engagement, with the Taobao app’s intelligent personal recommendations and innovative content formats continuing to drive strong growth in user engagement, conversion and annual active consumers. “We continue to invest in machine learning technologies which we apply to use cases that match consumer intent and product selection to deliver the best consumer experience.”

    Tmall: Tmall recorded 43 per cent year-on-year growth in physical goods GMV during the quarter, reflecting robust growth across all major categories including apparel and accessories, consumer electronics (mobile phones) and FMCG. “Tmall continues to be the platform of choice for the world’s top brands, with Givenchy, Giorgio Armani Beauty and Volvo establishing Tmall flagship stores and Longines, Hennessy, Dom Perignon and Baccarat joining our Luxury Pavilion in this quarter.”

    11.11: Last year’s annual November 11 Global Shopping Festival exceeded the previous year’s records, with GMV settled through Alipay on Alibaba’s marketplaces up 39 per cent year-on-year to $25.9 billion. “The continuous success of this record-breaking event is enabled by our resilient and scalable technology, as well as payments and logistics infrastructure that is capable of operating at massive scale.”

    New Retail: Rapid expansion through partnerships and innovative technologies included the opening of five new Hema fresh grocery stores in Shanghai, Beijing, Ningbo and Suzhou, taking the network to 25 at year end. “Hema exemplifies the convergence of online and offline retail by leveraging our in-store proprietary technology, digitised supply chain system, consumer insights and mobile ecosystem to provide a seamless experience for consumers.”

    In November, Alibaba formed a strategic alliance with Sun Art Group, the leading hypermarket and supermarket chain by revenue in China with over 440 stores nationwide. “Through this partnership, we aim to equip traditional retailers with our proprietary technology and know-how in online offline convergence to implement their digital transformation. In addition, the partnership with Sun Art will also enable us to accelerate the expansion of our New Retail offerings with national scale.

    International:  Alibaba’s cross-border and international retail businesses continue to show strong growth. Revenue from international commerce retail business reached $727 million in the, representing 93 per cent year-on-year growth, driven by its Southeast Asian platform Lazada and its global retail marketplace AliExpress. “While the markets for Southeast Asia and cross-border commerce remain very competitive, they are in the early innings of the game. We are optimistic about the long-term secular growth prospects of our international markets and will therefore continue to make significant investments for market share growth and focusing on the best customer experience.”

    Cainiao Network: Alibaba’s logistics division, Cainiao Network, processed 812 million orders during the 11.11 event. Cainiao Network operates an electronic shipping label system that standardises shipping data into structured formats, which enables efficient pick-and-pack operations for merchants and sorting and routing operations for delivery partners. “The advantages of this system have resulted in broad adoption by merchants and logistics service providers, both on and off our platforms, putting us in position to serve the growing consumption economy in China and roll out our New Retail strategy.”

    Cloud Computing:  Cloud computing revenue grew 104 per cent year-over-year to $553 million, driven by both robust growth in paying customers and revenue mix toward higher value-add product.  “In the December quarter, Alibaba Cloud launched 396 new products and features and continued to introduce proprietary AI technologies to tackle real-world challenges, such as traffic planning and optimising efficiency in manufacturing and airport operations. Alibaba Cloud continues to expand its customer base across a variety of industries.”

    Alibaba Cloud customers include Watsons China, carmaker Geely, and Beijing Capital International Airport.

    Digital Media and Entertainment: During the quarter, Youku video’s daily average subscribers more than doubled year-on-year, driven by several original drama series and shows that became popular hits with users.

    AI and innovation: Alibaba says its AI-powered voice assistant, Tmall Genie, surpassed 1 million unit sales since its official launch in July and the end of the year. “Tmall Genie is supported by a growing collection of sales and services and is an effective vehicle for offering a comprehensive set of every-day living applications within the Alibaba ecosystem,” the company said.

    In January, Alibaba’s Institute of Data Science Technologies (iDST), its AI research arm, developed a deep-learning neural network for natural language processing that scored higher than humans on a Stanford reading-comprehension test, the first time a machine has outperformed humans on such a test. “This development underscores Alibaba’s commitment to technology research which we believe builds the foundation for our growth in the long run.”

    Ant Financial: Alibaba Group agreed to take a 33 per cent equity stake in Ant Financial that will strengthen its strategic relationship pursuant to the series of agreements reached with Ant Financial in 2014. “We believe deepening our relationship through an equity stake in Ant Financial will bring key strategic benefits to us, including advancing our New Retail strategy with mobile payments, increasing user acquisition and retention through collaboration with the Alipay digital wallet (Alipay Wallet), and enhancing the execution of our international expansion.”

    The number of Alipay Wallet’s daily active users more than doubled during the quarter on a year-on-year basis.

  • AEON Mini Marathon #2 will be held in March

    AEON Mini Marathon #2 will be held in March

    AEON Thailand Foundation together with Ramathibodi Foundation invites all runners and health lovers to take part in “AEON Mini Marathon #2”, to raise funds for the Ramathibodi Foundation in “New innovation to beat cancer”. The AEON run is divided into 2 types which are – the 10.5km mini marathon, and the 5km walk-run for health. The winner will get a trophy cup and medals for all participants.

    For everyone who interested to join the charity event on Sunday, March 18, 2018 from 04.00 am. – 07.30 am at Rama 8 Park, registration costs 500 baht for 10.5 km run and 400 baht for 5 km walk-run. You can also register for the event online, pr for more information, please call 02-689-7188 Thailand number.

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  • Vietjet IPO wins prestigious award for “Best Vietnam Deal” in 2017

    Vietjet IPO wins prestigious award for “Best Vietnam Deal” in 2017

    Vietjet Aviation Joint Stock Company (HOSE: VJC) has received the “Best Vietnam Deal” award from Asia’s leading publication, FinanceAsia, for its IPO held early 2017.

    The prestigious award not only highlighted Vietjet’s highly successful IPO but also the airline’s subsequent performance for the rest of the year, which boosted the position of Vietjet in particular but also Vietnam-based companies on the global capital market in general.

    The presentation ceremony for the FinanceAsia Awards, one of the world’s leading awards for the regional finance industry, took place at the Grand Hyatt Hong Kong on January 31, 2018. Mr. Chu Viet Cuong from the Vietjet Board of Directors represented the airline to receive the coveted award.

    Leading “a series of successful deals” in 2017, Vietjet’s US$164 million IPO was professionally conducted, involving the consultation of world-renowned law firms and financial institutions for a period of nearly 800 days (due on the listing date, February 28, 2017), and following all the international IPO standards Regulation S.

    Earlier, Vietjet was also awarded for “The IPO Deal of the Year 2017” and named “The Company with Best M&A Information Disclosure” at the M&A Awards 2016-2017 Vietnam as part of the Vietnam M&A Forum 2017 in Vietnam.

    The airline’s 2016 annual report also received a Platinum Award in early 2017 at the Vision Awards 2016 organized by the League of American Communications Professionals (LACP) which ranked Vietjet fourth out of all awardees from the Asia Pacific region and 11th out of 100 worldwide participating businesses. Themed as “the flight to the future”, the 150-paged annual report received top scores for sub-categories, including First Impression, Letter to Shareholders, Report Financials and sustainable development programs.

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  • Ogilvy rearranges creative leadership across Asia

    Ogilvy rearranges creative leadership across Asia

    Ogilvy & Mather has unveiled another raft of changes to its leadership across Asia as Ajab Samrai moves from the agency in Tokyo to take up the new position of chief creative officer for ASEAN.

    Samrai has held the same role at Ogilvy in Tokyo for the past five years. He will be replaced by Doug Schiff, who was previously the executive creative director at DigitasLBi in Boston and Detroit.

    Meanwhile, Reed Collins has been promoted from Hong Kong creative lead to CCO of North Asia.

    Reed Collins

    His markets include Hong Kong, Japan, Korea and Taiwan and China. This latest comes just days after Ogilvy China announced the departure of creative heavyweight Graham Fink and the CCO role in the country. Now,Ogilvy China’s creative leadership is formed of three ECDs who report to Cheong.

    Together with Sonal Dabral, Collins and Samrai will form a regional leadership team reporting to Eugene Cheong, Ogilvy’s chief creative officer for Asia Pacific.

    Kent Wertime, co-CEO of Ogilvy Asia, said: “Ajab and Doug are true Ogilvy giants. Ogilvy Japan saw exception growth under Ajab’s leadership and he has been one of our most awarded creative leaders in recent years.

    “I am excited to see what he will do next. For Doug, we are delighted to have him return. He’s exactly the kind of transformative thinker that will continue Ajab’s extraordinary work for that office.”

    Meanwhile, Ogilvy Singapore has been on a winning streak lately, having won major local accounts with Changi Airport and Pizza Hut.

  • Apple sales report doesn’t look good

    Apple sales report doesn’t look good

    Apple has been quick to point out the record-breaking revenue numbers for its first quarter.

    The Cupertino-based company reported first-quarter sales of US$88.3 billion and a record quarterly profit for the final three months of last year of $20.1 billion.

    As much as this is praiseworthy, it also masks some more worrying trends.

    First is the 1 per cent fall in unit sales of the iPhone. Although revenue for phones increased by 13 per cent, this was a function of higher prices rather than increased volume. On the surface, this may not seem like a problem, but in our view, it indicates that Apple is, once again, struggling to persuade consumers to upgrade or switch to new devices. This slowing of the upgrade cycle will likely have an impact on phone revenue in future quarters.

    Moreover, the slowdown in iPhone sales is emblematic of Apple’s inability to come up with meaningful and valuable innovations that wow consumers. Even the iPhone X is an incremental product that lacks the excitement and newness earlier models brought to market. Apple is fortunate in having a strong base of fans and many consumers who are bought into its ecosystem of services; but without device innovation, even this may prove insufficient to maintain market share in the face of rising competition.

    Mac sales disappoint

    The second area of disappointment comes from Mac sales where both volume and revenue slipped over the prior year. Admittedly, Apple is up against a comparative from last year when its new MacBooks Pros were gaining ground, but even so, this also underlines a dearth of serious innovation in the home and professional computing segments.

    We also believe that lower volumes, and the fact that Apple’s products were not at the top of everyone’s Christmas lists, put a dampener on service growth. Last quarter this segment grew by 34 per cent and by 22 per cent in the quarter before that. Over this period, the increase was a much more modest 18 per cent. Arguably, the holiday period should be a bumper time for Apple subscriptions; that it wasn’t is concerning – not least because Apple needs income from services to make up for softness in product sales.

    That Apple’s HomePod wasn’t available in time for the holidays was a misstep, not least because it could have helped boost service revenue. Our data show smart speakers and smart home devices were popular gifting and self-purchase items over November and December – with both Amazon and Google growing their market shares. Although Apple will point out its product is superior to rivals’ efforts, it is a latecomer to the party, and we believe its potential sales will be crimped as a result.

    For all of these challenges, Apple remains a solid and financially successful company. Indeed, its profits increased over the period. However, a lack of serious and significant innovation means it runs the risk of diluting future earnings. Apple thrives off serving a mass market; a move to providing more expensive items to fewer people will ultimately prove harmful to the bottom line.

    In essence, we believe that the clear blue water that once existed between Apple and rivals is much diminished. The company has time to reopen the gap, but to do so, it needs to pull something new and unique out of its hat sooner, rather than later.

    -Neil Saunders-

  • Boostcom acquires all customer and technology related assets in Mall-Connect.

    Boostcom acquires all customer and technology related assets in Mall-Connect.

    Boostcom, the globally leading “proptech” provider for shopping malls, has signed an agreement to acquire all customer and technology related assets in Mall-Connect based in the Netherlands.
    Mall-Connect has been helping shopping malls in EMEA, Latin America, and Asia on the digital side since 2011.

    Mall-Connect customers, prospects, and industry relations will now be introduced to the complete Boostcom offering of data-driven marketing and automation capabilities.

    The CEO and founder of Mall-Connect, Ilia Riaskoff, will join Boostcom as Sales Director for Europe and Latin America.

    “We are very excited about adding the Mall-Connect business to the growing global Boostcom operations. There are not many digital companies specialising on digital for shopping malls, and Mall-Connect is one of these few. We are always looking for possible acquisitions or partnerships to speed up or complete our global positioning and offering for the mall industry. Future trend analysis of the mall industry gives great support for the Boostcom strategy of bridging physical malls with online to the benefit of both mall owner and their tenants. Getting Ilia Riaskoff on board in our management team is a huge win. He has all the industry experience and know how that we could possibly wish for”, says Peter Tonstad, CEO of Boostcom Group.

    “I am very happy that we will now be able to offer Mall-Connect’s clients a broader range of quality digital marketing services. Boostcom has developed a solid platform and client base for many years, and is backed by some of Europe’s largest tech investors which gives us an exciting perspective for the future.“, says Ilia Riaskoff, CEO and founder of Mall-Connect. “Our visions are well aligned both on product strategy and geographical focus. I am confident that this is the right step for Mall-Connect and its clients and I look forward to becoming part of Boostcom Group.”

     

     

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  • Many Korean goods to receive Vietnam tax exemption

    Many Korean goods to receive Vietnam tax exemption

    Many goods imported from the Republic of Korea (RoK) into Việt Nam will be exempted from import taxes in 2018, due to the Việt Nam-Korea Free Trade Agreement (VKFTA).

    The Government recently issued Decree No149/2017/NĐ-CP, which regulates a new special preferential import tariff, as agreed upon in the VKFTA, and to be put in place between 2018 and 2022.

    Under the decree, import taxes imposed on 704 types of products imported from the RoK to Việt Nam, will be eliminated in 2018. The groups of commodities that will enjoy tax exemptions this year are mainly in seafood, wheat flour, confectionery, diesel fuel, jet fuel, paint, laundry detergent, plastic, iron and steel products, power machinery and equipment, and electronic products.

    In 2018, an additional 653 products imported from the RoK will also have their tax rates lowered from last year.

    The preferential tax rates will be applied to commodities directly transported from the RoK to Việt Nam. The goods must also meet origin regulations, as stated in the agreement, and exporters must provide certificates of origin in a form stipulated by the Vietnamese Ministry of Industry and Trade.

    This year, Việt Nam has set several new preferential import tariffs to implement bilateral and multilateral FTAs with partner countries and territories, such as mainland China, Hong Kong, Japan and RoK.

    Under the Việt Nam-Japan Economic Partnership Agreement (VJEPA) and the ASEAN-Japan Comprehensive Economic Partnership Agreement (AJCEP) for 2016-19, nearly 4,000 import tariff lines for many groups of commodities imported from Japan will be also eliminated this year.

     

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  • Chengdu’s first unmanned supermarket closed down

    Chengdu’s first unmanned supermarket closed down

    After just four months, Chengdu’s first unmanned supermarket, Gogo Nobody, has reportedly shut down.

    This follows the unmanned shelf project Gogo Small, run by the same Chengdu-based startup Xiao Mang Guo Technology, closing down in November.

    It is reported that at least 30 employees have not been paid on time, one claiming they had not received payment since November.

    A Xiao Mang Guo spokesman says the unmanned supermarket is only “temporarily closed” and will be re-opened after its facial-recognition system has been upgraded.

    However, he did admit the company had misjudged the market, forcing it to terminate the unmanned shelf project. “In hindsight, the project expanded way too fast.”

    He also acknowledged the issue of backpay, saying the company is sorting out its financial problems and will handle the unpaid wages by April or May. “We did violate the regulations, and we apologise … We will not avoid any responsibilities.”

    Originally the company planned to open 500 Gogo supermarkets in commercial complexes across China, and establish 500 unmanned shelves near business districts and office buildings.

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  • Singapore lags Japan and China with e-commerce use

    Singapore lags Japan and China with e-commerce use

    In contrast with data about digital transformation and government’s engagement in promoting digital solutions for retail, Singaporeans have not fully embraced e-commerce.

    Credit Suisse data show that Singapore falls behind China, US, and Japan in terms of e-commerce usage.

    In 2017, Singapore e-commerce comprised 5% of the country’s total retail.

    Meanwhile, e-commerce comprised 23% of total retail in China and 8% of retail in the US.

    Singapore still beat other ASEAN countries, however. The proportion of e-commerce in total retail in Indonesia is at 3%, nearly 2% in Malaysia and Thailand, and 1% in Vietnam and the Philippines.

    Those data also do not match with marketers’ opinions that frame those markets as a huge opportunity given the slow development of retail physical infrastructure. The fact that most brands are present in the main cities only, and cannot reach the remote areas yet, places e-commerce  as a complementary service to compensate the offline retail.

    However, those data show that there is still a long way to go. Definitely, millennials in those areas are tech-savvy, but the lack of sophisticated infrastructure slow down the process.

    Credit Suisse said with 158 million middle class consumers, ASEAN is often seen as the next frontier for the e-commerce market, but e-tailing — online retailing — is still at China’s levels in 2010.

    The firm said the entry of Chinese tech giants could change the ASEAN e-commerce scene significantly.

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  • Finland becomes the first country to offer Chinese travelers a completely cashless experience

    Finland becomes the first country to offer Chinese travelers a completely cashless experience

    Alipay, the world’s largest mobile payment and lifestyle platform, operated by Ant Financial Services Group, today announced that a group of Chinese travelers have concluded the first ever cashless journey to Finland, with all transactions throughout their trip made via their Alipay accounts. From booking flights, making local retail purchases in Helsinki, and dining out, to visiting museums, experiencing recreational activities, and managing transportation, as well as receiving an instant tax refund at the airport, Finland becomes the first country outside China where Alipay users can make all payments with their smartphones, and enjoy their trip without worrying about cash and language barriers, just as they would at home in China.

    To encourage future seamless, cashless journeys, Alipay has also teamed up with Lähitaksi, one of Finland’s major taxi companies. Alipay will be made available on all 1,250 Lähitaksi taxis in Helsinki and the city’s surrounding towns before the Chinese Lunar New Year holidays later this month.

    “More and more Chinese travelers have been asking whether our taxis accept Alipay, which is why we decided to launch this payment method and provide our Chinese passengers a better experience during their time in Helsinki,” said Heidi Säynäjoki, Marketing Manager of LähiTaksi. Since 2017, Alipay has also been made available at the Airport Taxi in Helsinki and in taxis and buses operated by local taxi company Santa Line across Finland’s northernmost region, Lapland.

    The group of eight Chinese tourists who visited Finland were selected from an online social media campaign initiated by Alipay at the end of 2017. The selected group commenced on a 6-day trip, visiting the cities of Rovaniemi and Helsinki in mid-January to experience the cashless journey, flying Finnair and staying in Nova Skyland Hotel in Rovaniemi and IHG’s Holiday Inn Helsinki’s City Centre, leveraging Alipay’s in-app outbound tourism service platform to find nearby merchants, collect coupons and enjoy exclusive offers. All the merchants accept Alipay for online reservation and onsite spending. Finnair became the first airline in the world to accept mobile payments for in-flight purchases when it began accepting Alipay on flights between Helsinki and Shanghai in January 2017.

    Zoe Cai, 28, a housewife and frequent overseas tourist from Guangdong Province, said, “I didn’t expect us to be able to use Alipay almost everywhere in Finland. I brought some cash with me, but the only place I got to use it was in a supermarket in Rovaniemi. At first, we were surprised when so many merchants accepted Alipay, but after this experience, we may be surprised if a merchant doesn’t accept Alipay when we travel next time.”

    Retail shops in popular overseas destinations have benefited from the rise of China’s middle-class over the last decade. An increase in disposal income has led to a greater interest to travel abroad, where Chinese tourists enjoy experiencing different cultures, exotic cuisines and new adventures. Alipay has now become a must-have tool for overseas merchants to provide Chinese tourists with a seamless traveling experience.

    Paavo Virkkunen, Executive Vice President of Finland’s national tourism board Visit Finland, said, “Alipay was first made available in Finland in December 2016. I am glad to see it is widely accepted among Finnish merchants today, and it demonstrates Finland’s commitment to ensure that Chinese visitors leave our country with an unforgettable experience.” Official statistics of Visit Finland show that China is Finland’s fifth largest source of tourist arrivals. ePassi is Alipay’s local partner in providing tailor-made solutions for various types of Finnish merchants to accept Alipay across the country.

    Alipay is focused on upgrading the overseas Chinese travelers’ experience throughout their visit, enabling a cashless journey via mobile payment, thus omitting language and currency barriers. It offers Chinese consumers their most preferred payment method and offers greater convenience during their travels, particularly when making transactions with overseas bricks-and-mortar merchants. Alipay is now accepted by merchants across 38 countries and regions who connect with travelers via the Alipay marketing platform and accept payments in stores and online.

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  • SM scraps Goldilocks acquisition deal

    SM scraps Goldilocks acquisition deal

    SM Retail, a subsidiary of SM Investment Corporation (SMIC), has called off a planned acquisition of Goldilocks Bakeshop chain in the Philippines.

    This follows the Philippine Competition Commission (PCC) approving the takeover just last month.

    Citing changes in the business environment, SMIC corporate secretary Elmer Serrano has confirmed that SM Retail has backed out of the deal, saying it was a joint agreement.

    SMIC, through SM Prime Holdings (SMPHI), runs nearly 70 SM Malls in the Philippines, while Goldilocks has a network of more than 500 stores, some of which are in SM Malls. The acquisition would have made Goldilocks a subsidiary of SM Retail.

    Both parties had committed to address potential competition issues when submitting details of the proposal to the PCC. Concerns included the possibility of limited retail space in SM Malls for Goldilocks’ competitors. There were also concerns SM Retail might gain access to competitors’ sales information.

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  • US subscription rental service Le Tote expands with China debut

    US subscription rental service Le Tote expands with China debut

    American subscription fashion rental service Le Tote is making its international debut with Le Tote China.

    The San Francisco-based company said the launch is still in beta phase with a full roll out expected to the China public in spring 2018.

    Le Tote is the first US subscription service to launch in China, according to the company, in a press release.

    “To be the first US subscription service in China, the largest e-commerce market in the world, is an opportunity that is both humbling and exhilarating,” said Rakesh Tondon, Le Tote Co-Founder and CEO.

    “Regulatory restrictions are particularly tough and our partnership with Clement allows us to enter a market that so few venture-backed companies have been able to penetrate. With the launch of Le Tote China, we’re now able to reach a target demographic of over 400 million women – and we’re still in the early days of the country’s middle-class boom.”

    Le Tote has partnered with Chinese retail veteran, Clement Tang, to facilitate the Asian move, naming Tang Le Tote China CEO. Tang also invested in the subsidiary, leading the investment for Le Tote China.

    Tang worked for almost twenty years at Belle International, the largest shoe retailer in China, having most recently served as Executive Director and President, until the firm was acquired for $6.8 million.

    Providing women with the ability to rent unlimited clothing and accessories for a flat monthly fee, Le Tote China will provide the same service as its US operator. Tote has leveraged its domestic business model, proprietary technology and in-house talent to transpose the service for the international market. Starting small, some 3,000 ‘Founding Members’ have been selected to participate in the launch, with others placed on a waiting list.

    “China is a nuanced market with its own cultural norms, standards and expectations. We can’t simply cut and paste the Le Tote experience,” said Clement Tang, Le Tote China CEO.

    “We are eager to work with the Founding Members to deeply understand the market and deliver a service that truly resonates. We know that the average per capita income in China is growing 10% year over year and 60% of disposable income is spent on fashion. The Chinese consumer is primed and ready for the future of retail, but has not yet had access to a solution like ours.”

    Le Tote China is headquartered in Shenzhen with satellite offices in Beijing and Hong Kong. The distribution centre is in Dongguan, with plans to expand to Beijing and Shanghai as well.

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  • Who’s travelling to Japan?

    Who’s travelling to Japan?

    Japan’s tourism bonanza shows no signs of abating. The country welcomed a record 28.6 million visitors from abroad in 2017, an increase of 19.3% on the year. Travelers also spent significantly more: 4.4 trillion yen ($39.68 billion), up 17.8%.

    So, where are all of these people coming from? Where are they going? And what are they spending their money on?

    The numbers clearly show geographical proximity is a major factor. Mainland China was the No. 1 source of visitors to Japan last year, accounting for 7.35 million, or 25.6% of the total. South Koreans were close behind at 7.14 million, or 24.8%.

    Back in 2007, only 942,439 Chinese tourists came to Japan. But over the next decade, the figure soared by 680.5%.

    Traffic from Taiwan and Hong Kong was also brisk in 2017: the former accounted for 4.56 million visitors, or 15.9%, while the tally from the latter came to 2.23 million, or 7.7%.

    Although China has played a big role in the tourism boom, it is only part of the story.

    Japan has seen exponential growth in the number of tourists from South East Asia. In terms of sheer growth rate from 2007 to 2017, Vietnam actually led the pack, with an 868% increase over 10 years. Arrivals from Thailand surged 489.3%, while those from Indonesia jumped 448.7%.

    What is interesting is also to see where do they go. As for where international travelers stayed in 2017, the usual destinations came out on top: Tokyo, Osaka, Hokkaido and Kyoto. But in terms of growth from the previous year, Tokyo ranked only 33rd out of the country’s 47 prefectures, with Osaka placing 22nd, Hokkaido 26th and Kyoto 19th.

    Oita Prefecture, in the Kyushu region, logged the biggest rise in overseas visitors. Known for its popular hot springs, Beppu Onsen and Yufuin, the prefecture appears to be capitalizing on tourists’ growing tendency to favor uniquely Japanese experiences over shopping.

    Next up was Saga Prefecture, which is now served by more direct, budget flights from Asian cities. Saga is adjacent to another popular destination, Fukuoka Prefecture, making the area a convenient option with ample accommodations.

    At No. 3 was Aomori Prefecture, in the northeastern Tohoku region. This was partly thanks to international carriers: China’s Okay Airways opened a direct flight from Tianjin to Aomori in May, and Korean Air also increased its flights. “Overseas tourists are going to places like open air hot springs by the seaside or hotels with no electricity for visitors — destinations even Japanese people don’t visit that much,” said Akihiko Tamura, commissioner of the Japan Tourism Agency.

    Few will be surprised to find that Chinese tourists topped the spending ranking, forking out an average of 230,382 yen per person in 2017. The bulk of that money went toward shopping.

    Visitors from the U.K. and Australia, meanwhile, spent the most on food and drinks as well as hotels. Visitors from Spain, France and Italy shelled out the most on transportation.

    South Koreans, on the other hand, placed at the bottom of the rankings for hotels, food and drinks, transport and shopping — and, naturally, overall spending. Yet this does not mean they are frugal travelers: since Japan is only a brief flight away, they tend to stay for shorter periods than tourists from other countries, limiting their spending.

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  • Ralph Lauren sales mix figures

    Ralph Lauren sales mix figures

    The latest Ralph Lauren sales figures come with a mixed dose of both optimism and pessimism.

    The pessimism is from the continued slide in sales, which tumbled on both a total and comparable basis. More optimistically, the drop in sales is now flattening out, with some of the decline deliberately engineered as the company looks to rebuild its brand.

    According to the apparel brand, US sales fell 10 per cent in the last quarter of last year, although this was mitigated a little by a 28 per cent increase in Mainland China. The company reported a net loss of $81.8 million, largely due to a taxation issue.

    Starting on the bright side, it is clear that the long run decline in sales is easing. Admittedly there are some factors – such as very soft prior year comparatives – that have aided this trend, but even so, performance is improving. It is particularly encouraging that much of the decline is now deliberately engineered rather than just a function of Ralph Lauren being out of step with consumer demand. The pullback from department stores and a reduction in shipments to off-price channels have both taken their toll on the revenue line, but they are essential steps on the path to rebuilding brand equity.

    A reduction in discounting is also to be applauded, even if this dampened sales numbers over the holiday period. The impact on margins has been good, and we believe that a reduction in promotional activity is helping to strengthen Ralph Lauren’s brand image. That said, as has been seen from other luxury brands that have pulled back from the discounting drug, there is pain before recovery. In our view, Ralph Lauren remains in the painful phase, and it is unlikely to see improvements until well into this calendar year.

    The margin gains, along with some action on costs, has resulted in a much better bottom line performance. At operating level, profits rose by 47.5 per cent this quarter. Its net loss for the period was down to increased tax provisions rather than operational issues, we are not unduly alarmed by the slip.

    For all the good news, Ralph Lauren still has much more work to do before it is back to full health. Our data shows that while there has been a moderate improvement in brand perception, Ralph Lauren has not regained all of the ground it lost over the past ten years and is a long way from where a luxury brand of its kind should be.

    The main brand issues are still clarity and relevance. Many consumers are unclear about what Ralph Lauren stands for or what it has to offer; therefore, they do not see the brand as being entirely relevant to them. In a sense, Ralph Lauren has simply slipped off the radar of many shoppers. Much of this is down to the lack of coherence across the various parts of Ralph Lauren’s business. There are still too many parts to the offer, and they are disjointed and confusing. Steps are being taken to correct this, but it is clear that much more work needs to be done.

    North America challenge

    The problem is most acute in North America, where the brand is arguably at its most ubiquitous. With comparables in the region down by 10 per cent, the scale of the problem is evident. Of particular concern is the 27 per cent slide in retail e-commerce sales. Given the strength of the channel over the holiday period, this is a terrible result and underlines the fact that Ralph Lauren has a great deal more work to do in streamlining and strengthening this part of the operation.

    We note that it has recently taken on new hires in this area, including talent from Burberry.

    However, the lack of progress on e-commerce is as much a function of brand issues as it is to do with online execution. Both need to be corrected before growth can come.

    Overall, we are encouraged that Ralph Lauren is now on the right path. However, we are also cognisant that the road to recovery is long, and winding.

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  • Thailand Central Group to pursue online growth

    Thailand Central Group to pursue online growth

    The company with the biggest grip on Thailand’s brick-and-mortar retail market is expecting a partnership with China’s JD.com Inc. to pursue online growth.

    Central Group, which controls Thailand’s biggest operator of shopping malls and department stores, expects online sales to account for as much as 15 percent of its revenue in five years, from 2 percent now. The partnership with JD will help it compete in South East Asia’s booming e-commerce market and also open up businesses opportunities in China, Chief Executive Officer Tos Chirathivat said in an interview.

    With an empire that also includes hotels, supermarkets and restaurants, Central Group is counting on online growth to help drive sales. The company first announced its $500 million joint venture with JD in September 2017, teaming up with China’s second-largest e-commerce operator. Tos estimates that online retail in Thailand could rise fivefold to 10 percent of the market as the country of nearly 70 million develops and access to the web spreads through smartphones.

    “We obviously want to be the leading player in the 10 percent so it doesn’t really matter what kind of percent of the group it is,” Tos said in the Jan. 3 interview at his Bangkok office. “The important thing is to be the leader in the market itself.”

    Central Group and JD are competing in an increasingly crowded market, with Alibaba Group Holding Ltd. expanding in South East Asia through Lazada while Amazon.com Inc. kicked off with a beachhead in Singapore last year.

    Southeast Asia is home to more than 600 million people and the region’s internet economy, which includes e-commerce, online travel and ride-hailing, may grow fourfold by 2025 from an estimate of $50 billion in 2017, according to a joint research report by Google and Temasek Holdings Pte.

    While Central Group is a privately-held investment arm of the Chirathivat family, the company controls a number of publicly traded businesses. Central Pattana Pcl is a mall developer, Central Plaza Hotel Pcl operates resorts and restaurants, Robinson Pcl has a chain of department stores and COL Pcl does office supplies.

    All four gained in 2017, with Central Pattana surging 50 percent in 2017, Central Plaza jumping 47 percent and COL more than doubling, all outperforming Thailand’s benchmark SET Index.

    Outside the country, Central Group owns Italian luxury department store La Rinascente, Danish retailer Illum and in 2016 acquired the Big C hypermarket chain in Vietnam.

    Central Group is targeting annual revenue growth of 13 percent in 2018 based on the company’s five-year strategy plan, said Tos. That number may be higher with mergers and acquisitions, and the company could consider deals in the billions of dollars if the opportunity is right, he said.

    Local sentiment is helping the company, with consumer spending in Thailand picking up after the October cremation of late King Bhumibol Adulyadej ended the nation’s yearlong mourning period.

    “If the trend continues like this then this year should be good,” said Tos.

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