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Tag: asia

  • Itochu, CP Group team up with Chinese companies to set up e-commerce venture in Shanghai FTZ

    Itochu, CP Group team up with Chinese companies to set up e-commerce venture in Shanghai FTZ

    Five companies from three nations are banding together to sell imported popular household products like diapers and milk powder in China.

    The partners are Itochu, Japan’s third-largest trading house; Charoen Pokphand Group, Thailand’s biggest conglomerate; and Chinese companies CITIC, China Mobile and Shanghai Information Investment Inc.

    An agreement forming the venture, which will operate through a cross-border e-commerce website out of the Shanghai Free Trade Zone, was signed yesterday.

    The venture, which is named Face to Face Co., aims to tap a growing market in China for premium foreign products. Until now, most consumers accessed such products mainly through gray market channels, expensive offshore orders, overseas trips or limited online retailers in China.

    The new system will end long waiting times for deliveries, lower prices by up to 30 percent and ensure that products meet quality standards.

    The five partners are investing US$500 million, and the company will benefit from preferential policies offered by the Free Trade Zone.

    “We predict the scale of cross-border e-commerce in China will jump from nearly 76.7 billion yuan (US$12.4 billion) in 2013 to about 1 trillion yuan by 2018, Itochu said in a statement yesterday. “We see huge demand for premium products in the country.”

    The new company plans to buy an e-platform to run its operations. It will take over online shopping mall Kuajingtong, which was formerly run by state-owned Shanghai Orient Electronic Payment Co. The partnership will take advantage of China Mobile’s vast user base in promoting online orders for goods.

    Japan’s Nikkei Newspaper reported that the new company plans to accrue sales of US$666.7 billion by 2019 and plans to list in China in 2020. The report could not be immediately verified.

    Itochu said the platform will begin operation later this year, offering nearly 100,000 Japanese-made items, including household appliances, food, diapers milk powder and possibly clothing. Charoen Pokphand said it plans to sell Thai food products on the site.

    The Free Trade Zone, launched in 2013, is China’s pilot project for freer trade between the mainland and overseas. Flexible regulations will allow access for both Chinese and overseas companies to import and sell foreign goods domestically.

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  • India’s Worst-to-First Phone Stocks Show $18 Billion Well Spent

    India’s Worst-to-First Phone Stocks Show $18 Billion Well Spent

    India’s mobile-phone companies are paying a record 1.1 trillion rupees ($18 billion) to keep their networks running. It’s money well spent, if the stock market is any guide.

    The MSCI India Telecom Services Index has rallied 14 percent from this year’s low on March 9, the only gain among 10 industries, after losing 67 percent in the preceding decade. Local funds have increased holdings to the highest in 11 months, while BNP Paribas Asset Management’s top-performing Indian stock fund is bullish on the industry.

    Bharti Airtel and Idea Cellular are rallying on optimism the expense of securing spectrum for 20 years will pay off as the world’s second-largest wireless market grows. Net incomes at the two companies have climbed at least seven times faster than the broader market over the past six quarters as smartphones costing less than $200 spur a jump in mobile-data use.

    “In this desert of no earnings growth, telecom companies are the only ones whose profits are growing,” Anand Shah, the chief investment officer at BNP Paribas Asset Management India, which has $2.1 billion under management and advisory, said in an interview in Mumbai on April 29. “We’ve just scratched the surface as far as data is concerned.”

    Sensex retreat

    Money managers have been piling into telecom companies amid a weakening outlook for other industries. The S&P BSE Sensex, one of Asia’s best performing stock indexes in 2014, tumbled to a six-month low on Thursday amid growing concern about Prime Minister Narendra Modi’s ability to push through economic reforms.

    Spending on the wireless spectrum was 68 percent higher than the base price set by the government, according to auction results released March 26. Bharti, Idea and the UK’s Vodafone Group Plc retained airwaves that were up for renewal while also gaining spectrum that enables them to boost fourth-generation offerings.

    “Your costs are fixed for the next 20 years even as the market continues to grow,’” Ajay Srivastava, a managing director at Dimensions Consulting, said by phone from Gurgaon, near New Delhi. “The industry is an oligopoly and the players have realized the Indian market is big enough to be shared among the three or four players.”

    Reliance Jio

    Competition from billionaire Mukesh Ambani’s upstart operator Reliance Jio Infocomm may complicate the ability of carriers to raise rates in a market where calls cost less than one cent a minute, according to Birla Sun Life Asset Management.

    Reliance Jio, set to start service later this year, has been buying airwaves since 2010.

    “We’re not positive on the sector,” Mahesh Patil, the co-chief investment officer at Birla Sun Life, which has $17.5 billion in assets, said in an interview in Mumbai.

    Smartphone apps that allow free messaging and voice calls also threaten to eat into carriers’ revenue from traditional calls and texts, according to Kotak Institutional Equities.

    “We have no clue of the distraction that could come in the form of technology,” Sanjeev Prasad, the Singapore-based co-head and senior executive director at Kotak, said in an interview with Bloomberg TV on April 15.

    The BNP Paribas Equity Fund, which held 16 percent of its assets in Bharti and Idea on March 31, has beaten 87 percent of its peers since Jan. 1, with a 3.2 percent gain, data compiled by Bloomberg show. The fund has returned 44 percent in the past 12 months. Local funds held 1.8 percent of their assets in phone companies at the end of March, the most since April 2014, data from the market regulator show.

    Greater Internet access and rising smartphone ownership make the carriers a proxy for India’s consumer market, Dimensions’ Srivastava said. Data revenue for Bharti and Idea will grow at least 40 percent annually through March 2017, Mumbai-based brokerage ICICIdirect said in a April 30 report.

    “The telecom industry has a terrific matrix emerging,” Srivastava said. “Buy, close your eyes and just keep it.”

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  • Alfaria to Raise Rp 2.5t From Bonds, Private Placement

    Alfaria to Raise Rp 2.5t From Bonds, Private Placement

    Sumber Alfaria Trijaya — the operator of Alfamart, Alfamidi, Alfa Express, and Lawson minimarkets — plans to raise Rp 2.5 trillion ($193 million) from selling bonds to the public and from the sale of new shares to affiliated companies, in order to pay back bank loans.

    The company will sell 3-year and 5-year bonds on May 4 and May 5, eying to raise Rp 1 trillion from the proceeds, Alfa said in a statement on Thursday. BCA Sekuritas, HSBC Securities Indonesia, and Mandiri Sekuritas act as the underwriter for the bonds, which rated AA- by global rating agency Fitch Ratings.

    Alfaria will also sell 2.91 billion new shares, or 7.5 percent of paid-up capital, at Rp 510 apiece to Sigmantara Alfindo, currently the largest Alfaria shareholder, and to an affiliate Amanda Cipta Persada.

    The company will use proceeds from the bond sales and private placement to pay back loans, including those from private lender Bank Central Asia and state-owned lender Bank Mandiri, Indonesia’s largest lender. Alfaria has Rp 1.45 trillion in debt outstanding to BCA, and Rp 1 trillion debt to Bank Mandiri, according to the company’s latest financial statement. Both loans have a 10 percent annual interest.

    “[The proceeds are] expected to reduce the company’s liability and risks against third-party creditors. In turn, the company can expand its business,” Alfaria said.

     

  • Burger giant McDonald’s to end deforestation in supply chain

    Burger giant McDonald’s to end deforestation in supply chain

    Global fast food giant McDonald’s Corporation has pledged to end deforestation caused by production of commodities in its supply chain, focusing on beef, coffee, palm oil, poultry and packaging.

    A US-based scientific advocacy group welcomed the pledge, saying it was the first by a global fast food chain covering its whole supply chain and would push the industry to set new environmental standards.

    McDonald’s promised on Tuesday not to buy from suppliers that clear primary forest and other areas with high conservation value, as well as peatlands.

    It also said human rights must be respected and conflicts over land use resolved through a balanced and transparent process.

    The multinational company said it would begin developing specific time-bound targets for the raw materials it sources this year and would help smallholders, farmers, plantation owners and suppliers to comply with its commitment.

    “Making this pledge is the right thing to do for our company, the planet and the communities in which our supply chain operates,” said Francesca DeBiase, senior vice president of McDonald’s worldwide supply chain and sustainability.

    Like many other international food, cosmetics and commodity giants, the company — famous for its burger restaurants — has come under pressure from activists to make its business environmentally and socially sustainable.

    The Union of Concerned Scientists (UCS), a US-based advocacy group, said the pledge made McDonald’s the first global fast food chain to promise to eliminate deforestation from its worldwide supply chain, going well beyond the palm oil commitments made by competitors.

    “The sheer scale of McDonald’s commitment includes significant potential for change, pushing the industry to implement new environmental standards across the board and ultimately reducing climate emissions,” said UCS analyst Lael Goodman. “However, the commitment is still a work in progress.”

    UCS urged McDonald’s to set strong, time-bound goals for individual commodities, and to follow through on the ground.

    David McLaughlin, WWF’s vice president of sustainable food, said success would require the expansion of monitoring and compliance efforts by McDonald’s and its suppliers.

    “We hope that this commitment will inspire other companies to take action,” he added in a statement.

    A 2015 scorecard produced by UCS, ranking pledges by top US brands on deforestation-free palm oil, shows that fast food firms have lagged behind packaged food and personal care companies.

    UCS’s Goodman said the McDonald’s commitment had the potential to create a “new normal” whereby fast food brands demand deforestation-free commodities from their suppliers.

    McDonald’s said it had begun addressing deforestation in 1989 when it stopped sourcing beef from the Amazon rainforest.

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  • Omni-channel fulfilment critical for retailers to make financial returns on investments

    Omni-channel fulfilment critical for retailers to make financial returns on investments

    Despite increasing investments in omni-channel sales capabilities, many retailers and consumer goods manufacturers find it hard to fulfill omni-channel demand profitably, a new report says.

    The new report The Omni-Channel Fulfillment Imperative prepared for JDA Software Group, Inc. by PwC reveals that an enormous amount of money, energy and time retailers and consumer goods manufacturers are spending to improve their omni-channel sales capabilities. However, only 16 percent of companies say they can fulfill omni-channel demand profitably.

    This study is based on a global survey of more than 400 retail and consumer goods CEOs from around the world, conducted in late 2014.

    It finds that the high cost of fulfilling orders is eroding retailers’ margins as they sell and deliver products across multiple channels. A full 67 percent of respondents reported that these costs are growing as they increase their focus on selling across channels. Survey respondents reported their highest costs associated with omni-channel selling as:

    Handling returns from online and store orders (cited by 71 percent of respondents)
    Shipping directly to the customer (67 percent)
    Shipping to the store for customer pick-up (59 percent)

    The CEOs in the JDA study recognize that they need to continue investing in business improvements to enhance their omni-channel performance. However, reducing the associated logistics costs is not their primary focus. When asked to rank their top initiatives for improving business operations, CEOs’ number-one choice (57 percent) was spending capital on creating new customer experiences. Similarly, when asked to rank strategic growth enablers for the year, reducing/reformatting physical store footprints to focus on expanding the ecommerce business was the top choice at 53 percent.

    “Every time retailers receive an online order, they have a number of options to fulfill that demand. They can pull the product from a local store, send it from a centralized warehouse or ship it directly from the supplier. JDA’s new study demonstrates that most retailers lack the insight to make these decisions in a profitable manner – and are not sufficiently focused on this critical capability gap,” said Kevin Iaquinto, chief marketing officer at JDA. “They need intelligent logistics and fulfillment solutions that can reveal the hidden costs, and the customer service trade-offs, associated with every delivery option. In addition, to truly win in the omni-channel marketplace, retailers need the upfront demand forecasting tools to make sure products are already distributed across all locations in a manner that supports profitable delivery.”

    While they might not be focused on actions today to create profitable fulfillment and delivery schemes, the study shows that CEOs are aware of the importance of profitable omni-channel fulfillment to their future survival.

    Seventy-one percent of respondents said omni-channel fulfillment is either a high or a top priority. And these CEOs are planning to invest an average of 29 percent of their total capital expenditures for 2015 on improving their omni-channel fulfillment performance.

    The fulfillment capability most cited as needing attention was transportation and logistics, named by 88 percent of CEOs as a priority for the future. The second capability CEOs will focus on is improving inventory availability to fill orders, cited by 85 percent.

    “Having products available, then finding the most profitable way to deliver them – are critical activities that lie at the heart of supply chain excellence,” noted Iaquinto. “The CEOs in the JDA survey clearly understand the challenges they have ahead of them with regard to fulfillment, and they know they will have to innovate if they are to be profitable while meeting customer expectations across channels. The good news is that advanced technology can help retailers and consumer goods manufacturers master omni-channel fulfillment. However, until companies fully leverage these solutions, they will fail to realize positive financial returns on their omni-channel investments.”

  • Lenders’ Struggle for Funding to Continue: S&P

    Lenders’ Struggle for Funding to Continue: S&P

    Funding strains among Indonesian banks is likely to persist this year, undermining the industry’s profitability and growth ahead, according to credit rating agency Standard & Poor’s.

    In a report released last Thursday, S&P estimates lending growth in Indonesia to reach between 13 percent and 15 percent in 2015, higher than last year’s pace of 11.4 percent. That level of growth is projected to keep funding costs high, despite the regulatory caps implemented by the Financial Services Authority (OJK) last October.

    “Indonesian banks that struggle to attract sufficient deposits will face a tough choice of reining in credit growth or paying the penalty for breaching regulatory liquidity ratios,” said Standard & Poor’s credit analyst Ivan Tan, referring to Bank Indonesia’s mandate that maintained loan-to-deposit ratio (LDR), an indicator for liquidity, at 92 percent.

    LDR among commercial banks in Indonesia stood at 88.26 percent in February, an improvement from 90.47 percent in the same period last year, OJK data showed. That lower ratio indicated more money available for lending.

    Tan added that tighter competition for funding will eat into banks’ profitability in the next 12 to 18 months, forecasting net interest margin ­— a measure of a bank’s profitability — to reach around 4 percent this year. This would be a 20 basis-point decline from 4.2 percent last year.

    Under the current conditions, S&P expects Indonesian lenders will see “a new normal” in lending growth as banks work on preserving their liquidity instead. This could mean slower lending growth, greater efforts to expand branch networks for new sources of funding and regulatory changes for short-term relief. Before 2014, lending growth was above 20 percent for several years.

    Tan noted that the impact will likely be “asymmetric,” depending on each bank’s financial performance and operational presence, saying: “Banks with a strong domestic deposit franchises and extensive branch networks should weather the conditions better than peers with less-robust deposit franchises.”

     

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  • Croma to open around a dozen stores in India this year

    Croma to open around a dozen stores in India this year

    Croma, consumer durables and electronics chain of the Tata Group, is looking to open a dozen more stores this financial year.

    In April, the first month of 2015-16, it launched three stores. Two more are being readied for launch in a month or so. “We have budgeted for around 10 new stores in FY16 but might exceed that, depending on the quality of location and store layout, if we get the right rental. We continue to focus sharply on calibrated growth in our chosen markets,” said a spokesperson.

    Croma’s first chief executive and managing director, Ajit Joshi, quit the chain recently after eight years at the helm. Its chief financial officer, Avijit Mitra, is interim CE. Croma runs about 100 stores. It is also looking to launch new products in home appliances, the spokesperson said.

    About six per cent of overall revenue comes from its private labels; in home appliances, the share of revenue is 25 per cent.

    Croma’s rival, Reliance Digital, which entered the fray later than the former, has become the biggest durables chain in the country, with about 1,100 stores. Its Digital Mini Express has also become largest mobile phone retailer.

    “Croma continues to lead the consumer durables & information technology (CDIT) organised retail market in store throughput. In the immediate future, Croma will penetrate deeper into the top CDIT markets of India,” the chain had said earlier.

    The chain is yet to break even. Asked to comment, the spokesperson said: “Financial information is internal to the company. We are progressing toward our financial goals as per plan.” Croma entered e-commerce in 2012 and tied up with Snapdeal last year to sell its products.

    “We are already a step ahead in terms of omni-channel retailing and are in the process of rolling out some exciting customer-facing services this financial year, which will be announced once the pilots stabilise,” the spokesperson said.

  • Globe Telecom partners with Lazada for mWallet service

    Globe Telecom partners with Lazada for mWallet service

    Globe Telecom recently partnered with online retailer and marketplace Lazada to bring its GCASH mobile wallet to the e-commerce space in Southeast Asia.

    Under the agreement signed by Globe Telecom President and CEO Ernest Cu and Lazada Founder and CEO Maximilian Bittner in Seoul, Korea, GCASH will be used as a mode of payment in Lazada’s eCommerce website through an open integrated mWallet platform.

    “By increasing transactions through mWallet, we will expand the online ecosystem of Globe and provide our customers with a full digital lifestyle experience,” said Cu. GCASH is a product of Globe Telecom’s wholly-owned subsidiary G-Xchange, Inc. (GXI) and is among the pioneers of telco-led mWallet.

    GXI’s partners today include government agencies, utility companies, cooperatives, insurance companies, remittance companies, universities, banks, and commercial establishments which accept GCASH as a means of payment for products and services via mobile phone or the Internet.

    Through mWallet, Globe customers no longer need to own a credit card or even have a bank account to shop online. Instead, they can turn their mobile phone into a virtual wallet to shop at the speed of a text message.

    Lazada has over 15,000 merchants in Southeast Asia, and 1.4 million active customers. In the Philippines, mobile traffic constitutes more than 50 percent of its daily traffic. According to Inanc Balci, CEO of Lazada Philippines, the Lazada Mobile App downloads have grown 18 percent month-on-month since its launch in early 2014.

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  • Tesco Gives More Detail on Supplier Deals After Scandal

    Tesco Gives More Detail on Supplier Deals After Scandal

    Tesco provided more information about how it accounts for relationships with suppliers on Wednesday after an accounting scandal that contributed to an annual loss of 6.4 billion pounds ($9.5 billion).

    Britain’s biggest retailer announced last year it had overstated profits by 263 million pounds due to booking deals with suppliers too early, prompting a criminal investigation by Britain’s Serious Fraud Office.

    As it announced the biggest loss in its 96-year-history on Wednesday, Tesco said it was increasing transparency and seeking to build “longer-term, mutually beneficial partnerships” with its suppliers as it tries to rebuild trust in the market.

    It is seeking to simplify the deals it negotiates with suppliers, noting it was currently using over 20 different kinds of payment terms, including multiple offers and rebates when agreed sales volume targets are met.

    It also gave more details on how it accounts for supplier deals and the impact on its balance sheet and said it had launched new guidelines for staff in this area.

    UK consumer watchdog Which? demanded an investigation on Tuesday into “misleading and confusing” pricing tactics over seven years in areas such as multi-buy offers at British grocers.

    Led since September by Dave Lewis, a former executive at major Tesco supplier Unilever, the retailer said it had met with over 100 suppliers to draw up new business plans to focus ranges and improve efficiency in its supply chain.

    Suppliers are feeling the squeeze due to a fierce price battle between Tesco and its main rivals, Sainsbury’s, Asda and Morrison’s, with 146 food producers entering insolvency in 2014, up from 114 in 2013, according to accountants Moore Stephens.

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  • Gap matches employees’ donations to aid group for Nepal Earthquake

    Gap matches employees’ donations to aid group for Nepal Earthquake

    Gap is matching funds of any eligible Gap employee who donates to the aid group Mercy Corps in response to the devastating earthquake that recently hit Nepal and the surrounding area, the US fashion giant said on Saturday. The disaster has injured over 8,000 people and killed more than 4,400 by Tuesday.

    “Gap Inc. and our employees extend our deepest sympathies to the victims and the families of all those affected by the devastating earthquake in Nepal, and those impacted across South Asia,” the company said in a statement.

    In respond to the concerns about whether the earthquake may have resulted in structural damage in some Bangladesh garment factories, the company said it’s working with the Alliance for Bangladesh Worker Safety (AFBWS) on the ground, the Bangladesh Garment Manufacturers and Exporters Association, the Accord on Fire and Building Safety in Bangladesh, and the Government of Bangladesh to ensure that all workers are safe.

    AFBWS is a group of 26 major global retailers formed to develop and launch the Bangladesh Worker Safety Initiative, a binding, five-year undertaking with the intent of improving safety in Bangladeshi ready-made garment factories after the 2013 Rana Plaza building collapse. Gap is a founding member of the group.

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  • 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.

     

  • McDonald’s supplier fined for pollution in China

    McDonald’s supplier fined for pollution in China

    A Chinese joint venture of U.S.-based J.R. Simplot, which supplies frozen french fries to McDonald’s, was fined 3.92 million yuan ($632,370) on Wednesday by the Beijing city government for water pollution, the official Xinhua news agency reported.

    The Beijing government found the venture had been discharging contaminated waste water that exceeded stipulated levels, according to Xinhua.

    Xinhua said the business was a joint venture between Simplot, a unit of McDonald’s, and a local firm. Reuters could not independently verify the relationship.

    Phone calls to Simplot in China were left unanswered.

    Simplot, headquartered in Idaho, is a global potato supplier for McDonald’s.

    “Simplot has assured us that they have implemented a corrective action plan, and we will continue to hold them accountable for implementation and enhanced procedures for compliance,” McDonald’s said in an emailed statement to Reuters, adding it took the infraction “very seriously.”The fine comes as China is strengthening its environmental regulations as public anger builds over worsening pollution.

    China will ban water-polluting paper mills, oil refineries, pesticide producers and other industrial plants by the end of 2016, as it moves to tackle severe pollution of the water supply which has left one-third of China’s major river basins and 60 percent of its underground water contaminated.

    Chinese sales at McDonald’s and Yum Brands’s KFC slumped last year after one of their suppliers, Shanghai Husi Food, was forced to suspend operations after an undercover Chinese media report showed workers using out-of-date meat and doctoring production dates.

    U.S-based meat supplier OSI Group is the parent company of Shanghai Husi.

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  • 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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