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Category: General

Retail News Asia is committed to providing both local and global retailers with the latest General Retail news throughout the Asian market. This on a daily base.

  • Growing prospensity among Malaysian consumers to shop online

    Growing prospensity among Malaysian consumers to shop online

    Malaysians are joining other South-East Asian consumers in a growing propensity to shop online, particularly for personal care items.

    In a statement today, Nielsen said based on its Global Survey on The Future of Grocery, at least one third of the 518 respondents intended to buy items such as body wash, shampoo and conditioner online within the next six months.

    Other top 10 grocery items which Malaysian consumers would purchase online in the next six months included laundry detergent, dish soap and hand or body lotion, it said.

    It said 16% of the Malaysia consumers would remain vigilant with their online orders for home delivery or using online/mobile coupons for their online shopping (16%).

    Nielsen said only 9% of Malaysian consumers were willing to use a virtual supermarket for their grocery shopping.

    It said the survey also revealed the growth in modern retailing channels such as hypermarkets and supermarkets, putting open-air/wet markets at their expense.

    “Malaysian consumers prefer the modern channel with only 18% keen to patronise open-air or wet markets when buying food and groceries in the next 12 months.

    “A quarter of Malaysians feel that grocery shopping in the retail store is a fun way of spending time with one-self or the family where 24% find grocery shopping to be an enjoyable and engaging experience,” it said.

    Nielsen’s executive director of client service in South-East Asia, North Asia and Pacific, Kaushal Upadhyay, said savvy retailers would look to provide digital strategy that included interaction at each point along the path to purchase.

    “The connected commerce era has arrived where the most successful retailers and manufacturers will be at the intersection of the physical and virtual worlds, leveraging technology to satisfy shoppers however, wherever and whenever they want to shop,” he said.

     

  • Wesfarmers says independent, specialty retailers will lose more market share

    Wesfarmers says independent, specialty retailers will lose more market share

    “For some but not all, lower interest costs, and then, in Sydney and Melbourne particularly, there’s the wealth effect of higher house prices. And [share]markets have generally been OK so people’s superannuation balances are probably looking OK.”

    Mr Goyder said the main threat to the resurgence in sentiment was unemployment.

    “The thing that we always worry about is unemployment because we think that’s the thing that can knock consumer confidence. That’s the one thing I’d be watchful of,” he said.

    “But at the moment, you know, I think these numbers in some way belie a sense of negativity on the Australian economy.”

    Excluding new store openings, Wesfarmers on Wednesday posted 3.8 per cent growth in Coles  food and liquor sales in the three months to March 31, 2015. This was its weakest growth rate for a year, as deflation took a toll across its 775 supermarkets, with food and liquor prices falling 1 per cent.

    Including new stores, total food and liquor sales posted 5.4 per cent year-on-year quarterly growth to $7.1 billion.

    Wesfarmers says its “strongest set of numbers for some time” demonstrate the health of the Australian economy, but unemployment remains the biggest risk to consumer confidence.

    Wesfarmers, Australia’s largest private sector employer, on Wednesday reported a 3.3 per cent increase in retail sales to $13.12 billion for the March quarter compared with the same quarter last year.

    The result was boosted by stellar sales at its Bunnings hardware chain and market-share gains by supermarket chain Coles, but dampened by weakness in liquor and at its discount department store Target.

    “I think consumers right now have got the benefit of lower fuel prices, probably lower energy prices,” managing director  Richard Goyder said.

    Meanwhile, Bunnings exceeded expectations with quarterly same-store growth of 9.4 per cent, and discount department stores Kmart and Target reported disparate results: Target same-store fell by 1.9 per cent, while Kmart’s rose by 6.3 per cent.

    Bruce Smith, portfolio manager at Alphinity Investment Management, said the results were pretty much in line with expectations. “Bunnings is a brilliant business and going strongly, the Kmart recovery continues and Target’s still pretty ordinary,” he said.

    Deutsche Bank analyst Michael Simotas said the third-quarter results were solid, with all divisions stronger than expected except Target. “We expect this result to be well received by the market but it is too early to judge the impact of Woolworths’ planned price investment,” he said, referring to supermarket rival Woolworths’ announcement in February that it would spend at least $500 million on cutting its prices and improving its stores.

    Mr Goyder said Wesfarmers “changed nothing based on what any competitor has done in the past few months”.

    And finance director Terry Bowen said Coles had plenty of opportunity to steal market share in fresh food, such as meat, from independent and specialty retailers. “In broad terms, independents have lost market share [over the past five years] and if you look … more holistically at the market, Aldi and Costco … have gained market share and Coles and Woolworths have basically maintained and moved their market share around a bit.

    “But the big movements have been Aldi and Costco growing – bearing in mind they are the largest retailers in the world, multinationals. And the independents have lost market share.”

    Wesfarmers estimated Coles had about 25 per cent of the Australian food market, about 20 per cent of liquor and less than 20 per cent of the home improvement and office supply markets.

    Shares in Wesfarmers defied a 1.85 per cent fall in the broader market to close down 15¢, to $43.

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  • Aldi under fire on disclosure of credit card, tap-and-go fees

    Aldi under fire on disclosure of credit card, tap-and-go fees

    The corporate regulator is expected to grill Aldi over its failure to consistently notify customers of fees for using credit cards and ‘tap and go’ cards, six months after the discount supermarket promised it had done so.

    Aldi told the Australian Securities and Investments Commission it would improve its disclosure of the 0.5 per cent surcharge by October last year, it is understood. It said it would do so through signs at the entrance of the stores and the registers, and by ensuring its cashiers notified shoppers before payments were made.

    But Aldi supermarkets visited by Fairfax Media have not consistently disclosed the surcharge, leaving customers disappointed and irritated. Fairfax Media spoke to Aldi customers outside Melbourne stores on Wednesday and none knew about the fee or were informed by their cashier.

    The store in Prahran does not have signs at the entrance. Instead, like many stores, it displayed the warning in tiny print on a sticker at the register.

    The Aldi store in Box Hill South put up signs in recent weeks, while the Balaclava store had none as at February.

    Aldi customer and German citizen Claudia Scent said, “I didn’t know before now, lucky I paid in cash. I come from Germany and there’s no surcharge at Aldi there.”

    St Kilda East resident Claire had just paid for some groceries with her credit card. “It would be nice to know. I’d like a bigger sign or for them to tell you,” she said.

    Aliska Angyal-Kvalic, of Greensborough, said, “They should probably let people know.  If you had a sign people could read you wouldn’t need to tell people.”

    A spokeswoman for Aldi said the supermarket had conducted an audit last year to ensure its stores had appropriate signs and stickers.

    “If for any reason an Aldi store does not have the required signage, we will ensure that this is corrected immediately,” she said.

    Aldi is the only supermarket chain to apply the surcharge on credit card and tap-and-go purchases. Woolworths, Coles, Costco and IGA supermarkets do not.

    Under the ASIC Act, a failure to adequately disclose surcharges, or creating the impression that surcharges do not apply, may be misleading or deceptive.

    But because Aldi’s was a voluntary undertaking, it’s understood there was no deadline for ensuring the signs were in stores, and there are no real consequences for failing to comply. ASIC can resume talks with Aldi, however, if it believes Aldi has not complied with its commitment.

    Aldi has 367 supermarkets throughout Australia and is eyeing 15 per cent market share through expansion into Western Australia and South Australia, and double-digit store openings each year on the east coast.

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  • China brands favoured by domestic consumers in marketing, experts say

    China brands favoured by domestic consumers in marketing, experts say

    CHINESE brands are generally outperforming their multinational counterparts in terms of consumer preference as they’re quicker to catch up with latest media trends and bold with new marketing campaign formats, industry experts noted.

    “Chinese entrepreneurs and marketers have a better understanding of local consumers and are quick to adapt to new marketing trends and Chinese brands will enjoy a golden age in the next 10 years,” Tian Tao, deputy general manager of market research firm CTR China, told the China Insight Summit in Shanghai today.

    “Domestic brands are quicker to spot popular entertainment shows and they have a shorter decision making process than most multinational players, which gives them more opportunities to impress picky consumers,” general manager of CTR’s Media Intelligence unit Zhao Mei told Shanghai Daily.

    In the first quarter, almost all of the popular TV program sponsorship was dominated by domestic brands, according to CTR’s media monitoring data.

    Among the top 50 most frequently purchased consumer products of Chinese urban households, more than 30 of them are made by home grown manufacturers, according to data tracked by Kantar Worldpanel, CTR’s consumer research service.

    In the first quarter this year, total advertising expenditure calculated by published rate cards in China shrank 1.9 percent, with TV ad spending declining 2.9 percent from a year ago.

    Internet ad expenditure was the fastest growing segment, rising 33 percent from a year ago, while office building digital screen advertising added 16 percent and movie theaters’ video ads were up 31 percent.

    TV will stay play a major role in helping build a brand name and popular TV programs as well as some better performing regional TV stations are expected to enjoy a higher premium in the coming year, according to Zhao.

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  • Woolworths ads not so cheap, but Coles ads down, down

    Woolworths ads not so cheap, but Coles ads down, down

    The supermarket wars have pushed two of Australia’s big advertisers in different directions, with No. 1 supermarket Woolworths revving up its spending while Coles winds its down.

    Woolworths is estimated to have spent $18.8 million on traditional advertising from January to March this year. This was an 8 per cent increase on its $17.4 million supermarket spending in the first three months of last year.

    By contrast, Coles is estimated to have slashed its ad spend to $13.7 million from January to March. This is down 17 per cent from $16.5 million in the same period last year.

    The Nielsen advertising expenditure estimates cover the bulk of the supermarkets’ ad spend, across television, radio, print, outdoor, cinema and some online. It doesn’t cover advertising booked through exchanges, specialist press and social media.

    Credit Suisse analyst Grant Saligari said Woolworths had “increased advertising frequency [on TV] and has been running more promotions in the third quarter [from January 5] than in prior periods.”

    Woolworths and Coles declined to comment.

    Coles’s long-running “Down, Down” campaign, featuring rockers Status Quo, has been widely described as successful but annoying. Woolworths responded last year with a less lauded campaign featuring a “Cheap, Cheap” slogan, animated birds and singer Samantha Jade. Its ‘BrandZAC’ campaign for Anzac Day last month was widely panned.

    Sources have suggested Coles’s lower ad figures this year could be because it was working out its response to Woolworths’ campaign, or because its existing campaign was successful.

    Ben Willee of Spinach Advertising said: “Just because you spend more doesn’t necessarily mean your campaign is more effective. The hardest part is getting your creative right.”

    Woolworths – owner of major retailers including alcohol business Dan Murphy’s and discount department store Big W – and Wesfarmers – owner of Coles and hardware chain Bunnings – are two of Australia’s biggest advertisers.

    Responding to disappointing grocery sales and an improving Coles, Woolworths in February said it would spend at least $500 million on cutting its prices and improving its stores.

    Coles this week reported a marginal increase in market share in the third quarter and tipped independent and specialty retailers would continue to lose market share at the hands of foreign supermarkets Aldi and Costco. Coles has about 25 per cent of the Australian food market, Wesfarmers said.

    Excluding new store openings, Coles food and liquor sales grew by 3.8 per cent in the three months to March 31. Including new stores, Coles food and liquor grew by 5.4 per cent, to $7.1 billion.

    Woolworths is set to hold a strategy briefing day and store visits next week, and is tipped to post third-quarter sales growth of about 0.9 per cent.

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  • Okamura, Chitose Join Forces to Set Up Furniture Production in Indonesia

    Okamura, Chitose Join Forces to Set Up Furniture Production in Indonesia

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  • China to cut consumer good tariffs

    China to cut consumer good tariffs

    China’s government says it will cut tariffs on consumer goods in a bid to get local Chinese to spend more in the mainland.

    The  move may well prove an additional blow to Hong Kong’s retail sector already reeling from reduced spending by mainland visitors.

    Reports from China’s mainland say tariffs on imported consumer goods will be cut “in parts of China” by the end of June. The move is aimed at increasing domestic consumption, shoring up economic growth and reducing the amount of money spent by mainlanders overseas.

    The decision was made last week at an executive meeting of the State Council, presided over by Premier Li Keqiang, who is concerned that mainlanders are now not only buying luxury goods overseas, but everyday items as well.

    The China Daily reports more duty-free stores will open at China’s borders and the individual allowances will be raised. The process of obtaining tax refunds will be eased – in tandem with a greater focus on catching smugglers.

    Chinese now account for an estimated 40 per cent of luxury good sales in France and for 35 per cent of luxury sales in Italy, according to data from the HSBC.

    Mainland retailers and travel specialists say it is difficult to predict the effect of the government’s move until a more detailed tariff schedule is released, along with duty free allowances and clarification on which product categories will be affected.

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  • Future Group merger creates Indian giant

    Future Group merger creates Indian giant

    Future Group, one of India’s highest profile retailers, has agreed to merge its operations with Bharti Retail to create a retail powerhouse with more than 570 stores.

    Bharti Retail currently runs more than 200 Easyday branded stores of multiple formats across 114 Indian cities, traversing Punjab, Haryana, National Capital Region, Western Uttar Pradesh, Uttarakhand and Bangalore.

    Future Group has more than 17 million sqft of retail space in a variety of formats and categories in 166 Indian cities.

    Post merger, the combined group will comprise two organisations, both listed. One, named Future Retail will run the combined store network. The other, Future Enterprises, will manage the assets, and infrastructure of the two companies.

    Post-merger, Future Retail will run stores in 243 cities with 18.5 million sqft of floor space. The network will include 203 Big Bazaar and Easyday hypermarkets, 197 Food Bazaars and Easyday supermarkets and 171 other retail shops including eZone, Foodhall, Home Town and FBB.

    Kishore Biyani, founder and CEO of Future Group said the Bharti operations and network “complement perfectly” with Future Retail’s.

    “It will bring us closer to millions of consumers and provide new opportunities for our supply partners. The operational efficiencies that can be derived from the merger will create significant value for our shareholders,” he said.

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  • Golden Eagle suspends Hefei stores trading

    Golden Eagle suspends Hefei stores trading

    Chinese retailer Golden Eagle says its Hefei Baihuajing Store and Dadongmen Store will  suspend operations from Sunday May 10, due to a lease dispute and subway renovation.

    Golden Eagle Retail Group said in a statement that the dispute relates to property rights and constraints in operational conditions.

    “Our Baihuajing Store is located at a leased property, which is owned by a third party. A property rights dispute has led to insurmountable difficulty in carrying out our normal operation in Baihuajing Store.

    “Meanwhile, the operation of our Dadongmen Store, which has long been affected by subway construction, is unable to meet Golden Eagle’s consistent standards for customer service. Upon serious consideration, the group has decided to suspend the operation of the two stores”

    Golden Eagle said the suspension of operations would have little material impact on the group’s overall operations and sales.

    “The total gross floor area of the group’s retail chain stores is 1,534,387 sqm, while that of Baihuajing Store and Dadongmen Store are 12,294 sqm and 10,356 square meters, respectively.”

    “Despite the suspension of operation of Baihuajing Store and Dadongmen Store, Golden Eagle will continue to provide customers in Hefei with outstanding and thoughtful services. VIP customers and holders of Golden Eagle’s other membership cards can enjoy the same services in our Hefei Suzhou Road Store (4 Suzhou Rd, Luyang District, Hefei City) or any other Golden Eagle stores all over the country.

    “In addition, our Hefei Suzhou Rd Store will continue to offer one-stop aftersales service to customers for products return or exchange to ensure satisfactory shopping experience,” Golden Eagle said.

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  • Lippo Cikarang Holds Fourth Sakura Matsuri Festival

    Lippo Cikarang Holds Fourth Sakura Matsuri Festival

    Lippo Cikarang, an industrial estate developer, held the fourth annual Japanese culture festival Sakura Matsuri, in Maxx Boxx Orange County, an integrated area of commercial and residential development in Cikarang
    industrial park in West Java.

    The two-day event, held on April 25 and 26, was attended by Kenichi Tomiyoshi, the president director of Japan External Trade Organization (Jetro), Yukio Takebe, chairman of Jakarta Japan Club, and Katsuhisa Ishizaki, executive director of Japan’s National Trade Organization.

    Lippo Cikarang’s president director Meow Chong Low attended the event.

    “We present the Sakura Matsuri to the Japanese community in Cikarang industrial estate as part of our appreciation to them, so they can celebrate the ‘Golden Time’ when they usually welcome the flourishing of the Sakura flower [in Japan],” said Low.

    The event was held in conjunction with the Community of Japanese Alumni (KAJI).

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  • Japan retail sales plunge

    Japan retail sales plunge

    Japan retail sales plunged nearly 10 per cent in March compared with a year ago.

    The sales slump – 9.7 per cent – was worse than expected, but despite the shock, analysts urged caution in the interpretation of the data. In March 2014, sales were artificially high as Japanese brought forward spending to avoid a sales tax increase that took effect on April 1.

    Analysts had expected a fall of close to seven per cent. February’s fall was just 1.8 per cent. Retail sales have been subdued since Japan raised the consumption tax to eight per cent last April.

    Marcel Thieliant, an economist at Capital Economics, said in a research note that the spending decline suggests private consumption may have fallen for the first time since the sales tax rose.

    “It was widely expected that consumption would benefit from the plunge in energy prices. However, households have chosen to save rather than spend the windfall from cheaper oil.”

    The decrease was the worst March fall since 1998.

  • Siam Paragon names and shames bad taxis

    Siam Paragon names and shames bad taxis

    The unprofessionality of Bangkok’s taxi drivers is notorious internationally.

    Now a Bangkok shopping centre has teamed with the Department of Land Transport to name and shame bad drivers, in the hope they’ll reform or find fares elsewhere.

    Most residents of, or visitors to, Bangkok relying on taxis to transport them home or to their hotel after a day’s retail therapy have endured frustrating delays due to taxi drivers illegally refusing fares.

    Despite fines and threats of being reported to the hotline – itself overloaded, such is the extent of the problem – drivers try to pick and choose passengers which give them the best profits, leaving others stranded on the pavement.

    DLT has fined 31 of 54 drivers caught refusing fares at the Siam Paragon taxi rank and is hunting down a further 23, according to website Thai Rath Online.

    Meanwhile, the drivers’ taxi registration numbers, taxi co-ops and rental agents have been listed on a sign at the rank so potential passengers are warned, according to DLT director-general Teerapong Rodprasert. The drivers’ names were not listed because drivers often share cars.

    In a crackdown at the rank, DLT officials suspended the licences of two drivers for seven days because it was their second offence.

    Last week, Thai police conducted a blitz on Sukhumvit Rd, catching 34 drivers who refused fares late one night.

    Both locals and tourists report an epidemic of Thai taxi drivers refusing fares or refusing to use the meter and setting flat fees for hires, both illegal.

    A 24 hour hotline – 1584 – allows passengers to lodge complaints, by providing the taxi’s or driver’s registration numbers. There is also a free DLT Check smartphone app available.

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  • Tesco Lotus confirms expansion plans

    Tesco Lotus confirms expansion plans

    Tesco Lotus remains committed to Thailand and will continue to invest in expanding its retail and online channels, according to a report in the Bangkok Post newspaper.

    Tesco Lotus has previously announced plans to open five large stores and 50 express stores over the coming year.

    But a cloud descended over the company’s future in the wake of parent Tesco UK’s financial turmoil, with talk the Thai division may be sold off to pay off debt in the UK.

    However, in an interview with the Bangkok Post, CEO John Christie said Tesco will also increase investment in programs to help reduce the prices of fresh food, groceries and household items.

    It would appear that any plan to liquidate Tesco’s Asian assets are at least on ice.

    In its annual result announced last week Tesco said its combined Asian operations posted a profit of £565 million, down 18.4 per cent largely on falling sales in China, where the brand is being phased out. That’s considerably more than the £467 million profit in the UK and £164 million in Europe.

    Christie also said Tesco Lotus has so far invested over 4 billion baht (US$30.6 million) under its Roll Back price campaign to help cut product prices, and another 600 million baht ($18.37 million)to help slash the price of fresh food.

    “Tesco Lotus has made huge investments over the years to help Thais save on their cost of living. We are confident that our investment plan will strengthen our leadership in the modern retail sector, while we continue to work with Thai suppliers and business partners to grow together with us and help Thai people cut the cost of living,” Christie said.

    “Thailand is a strategic market for the Tesco Group. Growth opportunities here remain promising and we will continue to invest to grow our business”.

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  • China ‘still the land of opportunity’

    China ‘still the land of opportunity’

    China deserves to remain on retailers’ radar says a new report from JLL.

    “China remains a compelling market for global retailers and continues to offer a plethora of untapped opportunities, despite a recent moderation of its GDP growth says Tom Gaffney, regional director, head of retail for JLL in Hong Kong.

    “However, the China market remains complex and diverse. We advise brands to carefully assess their strategic mix of corporate stores and franchises, and to define a strategy that allows them to present a multichannel brand capable of seamlessly merging the worlds of online and offline.”

    His comments come a day after Inside Retail Asia published an analysis of China’s economic growth, largely masked by the single GDP figure which many business leaders and economists focus on.

    JLL’S report, China’s Retail Market: within Reach, offers international food and beverage and fashion retailers’ latest insights on China market expansion strategies. It’s the latest in a series of reports from JLL on China retailing and it comes at a time when many retailers are reconsidering their China strategies to enable the most profitable growth over the long-term.

    At the same time, many foreign brands are planning their first foray into the increasingly maturing Chinese markets.

    Derek Chen, director of retail tenant representation in China, says brands are well advised to make Shanghai and Beijing their starting point and opt for a corporate structure in these markets.

    “Consumers in China’s alpha cities, Shanghai and Beijing, which are among the world’s top five dynamic cities according to JLL’s City Momentum Index, are much more retail-savvy and have high expectations towards customer service. Most importantly, you retain absolute brand protection, which is essential in the China market as you build your brand initially.

    “Due to misalignment of incentives between a franchise partner and the retailer, franchisees are less inclined to focus on building brand longevity even if this adversely impacts the brand’s future. For brands new brand to the market, a corporate structure makes a lot of sense and has many advantages.”

    However, in tier 1.5 markets, such as Tianjin and Nanjing, brands best develop these in a mixed strategy, if corporate control is not an option. These markets offer a level of demand depth and sales productivity potential that can justify corporate control within a few short years, argues JLL.

    “Retailers should only franchise these cities by applying a strategy that would enable them to incrementally regain control over the medium-term. Buying back the top-performing stores prevents the biggest revenue gains from being diluted, and gives the retailer more control over brand marketing in these markets,” the report advises.

    Discussing strategies for third-tier cities and beyond, Chen says third and fourth-tier cities are a new frontier for most international retail brands.

    “We suggest brands use franchises to penetrate these markets quickly over the short and medium term. As these markets lack the degree of sophistication found in major markets and consumers are less discerning, more forgiving and easier to please. [So] the risks of franchising are more contained and manageable, and are usually more cost-effective. In addition, local partners offer valuable local know-how and have a better sense of the psyche of local consumers.”

    Gaffney summarises: “Retailers should fix their China expansion strategy before entering the markets, which will greatly reduce risks down the road. Corporate ownership is advisable for key markets and to build their brands. However, franchises remain irreplaceable when it comes to simultaneously achieving both fast and vast penetration of markets, and to hedge risks.”

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  • Indonesia’s Manufacturing Activity Shrinks for 7th Straight Month in April

    Indonesia’s Manufacturing Activity Shrinks for 7th Straight Month in April

    Indonesia’s manufacturing activity shrank for the seventh straight month in April as export orders continued to decline and domestic demand remained weak, an HSBC Markit survey showed on Monday.

    The purchasing manager’s index (PMI) rose slightly to 46.7 in April from 46.4 in March — the lowest reading since surveys began in April 2011 — but remained well below 50, the level separating contraction from expansion.

    “April’s PMI survey highlights the current fragility of the Indonesian manufacturing sector, with both the domestic and export markets sources of weakness,” said Pollyanna De Lima, economist at Markit.

    “Despite the weaker rupiah, businesses struggled to price competitively at a global level as the cost of imported raw materials increased.”

    Output continued to fall as incoming new work slowed, and poor weather hampered activity. As a result, employers shed staff for the ninth straight month.

    “Companies continued to trim employment, buying levels and pre-production inventories, highlighting an expectation that conditions will remain tough in the near future,” De Lima added.

    Producers also reported increasing inventories in April. The seasonally adjusted stocks of finished goods index rose to the highest reading since the first month of data collection.

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