Good afternoon,
Here’s the headlines for this week: 21 November 2024
- A Paylocity/Harris Poll found that 62% of Americans refuse to tip when ordering while standing, with resistance increasing with age. Even tipped employees largely share this view (68%), and Retail Brew readers showed even stronger opposition (83%).
- Among tipped employees, 83% expressed a preference for higher wages without tips over the current lower-wage, tip-based system, reflecting widespread frustration with "tipflation."
- 65% of Americans report being annoyed by frequent tipping requests, with older generations expressing more frustration than Gen Z. Public figures and policies hint at potential changes, such as tax exemptions on tips, further fueling the debate.
- Meta, Microsoft, and Alphabet plan to significantly increase spending on AI-related infrastructure and data centres next year, despite Wall Street’s concerns over delayed returns. Executives remain confident about AI’s long-term opportunities.
- Companies showcased immediate gains, like AI-generated code (Google), increased social media engagement (Meta), and enhanced enterprise tools (Microsoft), while acknowledging major returns are yet to come.
- Microsoft’s Azure growth is forecasted to decelerate due to capacity limits, and Meta anticipates infrastructure costs to surge in 2025 as they expand their AI capabilities.
- OpenAI plans to launch a new AI tool, codenamed “Operator,” in January 2024. This agent can automate tasks like writing code and booking travel, operating as a general-purpose tool through web browsers and APIs.
- The release aligns with a broader industry shift toward AI agents, with competitors like Anthropic, Microsoft, and Google working on similar tools to automate multi-step tasks.
- OpenAI sees agentic AI as the next breakthrough, potentially offsetting diminishing returns from advancing traditional AI models, as hinted by CEO Sam Altman.
- The EU Commission determined that Meta leveraged its dominance in social networks and online display advertising to restrict competitors' reach and impose unfair trading conditions, citing the scale and integration of Facebook Marketplace as anticompetitive.
- Meta plans to appeal, arguing that local marketplaces thrive alongside Marketplace and that EU regulators are targeting potential, not actual, impacts. The decision could lead to significant changes, including the possible removal of Marketplace from the EU.
- ByteDance, the parent company of TikTok, recently valued itself at approximately $300 billion in a buyback offer, up from $268 billion in December 2023 and $225 billion in October 2023.
- TikTok faces a potential U.S. ban by mid-January unless ByteDance sells it to an American owner, though President-elect Donald Trump’s stance on the ban has softened, potentially improving TikTok’s outlook.
- The valuation highlights ByteDance’s growth despite regulatory challenges, reflecting investor confidence in its global market dominance.
- Diageo is heavily relying on Guinness to offset declining spirits sales, with Guinness 0.0 seeing notable growth. However, price hikes have led some UK publicans to promote rival stouts like Heineken's Murphy's and AB InBev's Camden Stout, creating opportunities for competitors.
- Guinness remains the dominant stout, but rivals are gaining traction as some drinkers and pubs seek alternatives due to frustrations over pricing and support. The UK's stout market, worth $971 million in 2023, has seen steady growth driven by Guinness, yet competition is intensifying.
- Guinness 0.0 is expanding rapidly, accounting for 8% of Guinness sales in Britain by mid-2024, with potential draught rollouts in pubs. Competitors currently lack zero-alcohol stouts but are exploring stout market opportunities as interest grows among younger demographics and women.
- Launched on 13 November, Amazon Haul focuses on ultra-low prices (mostly under $10), with a maximum price cap of $20, sourcing from Chinese sellers to compete with Shein and Temu.
- Available exclusively on Amazon's mobile app and website, Haul adopts a grid-style interface and incentivizes bulk purchases with stacking discounts and free shipping on orders over $25. It also emphasises trust with safety screenings, an A-to-Z Guarantee, and easy returns.
- While rivals Shein and Temu face regulatory scrutiny in the U.S. and Europe, Amazon highlights compliance and consumer protection as key differentiators for Haul.
- For the eighth consecutive year, Amazon topped the Profitero Price Wars study with a 14% average price advantage over 22 leading U.S. retailers, maintaining its position despite competitors narrowing the gap.
- Walmart trails Amazon by only 5%, while Target improved significantly, reducing its price gap to 13% (from 16%) and gaining ground in categories like home furniture and beauty. Best Buy excelled in video games and appliances, while Chewy and Nordstrom showed strong competitiveness in pet supplies and fashion, respectively.
- As inflation stabilises and consumer confidence wavers, retailers offering consistent value, like Amazon and its competitive rivals, are best positioned to attract cost-conscious holiday shoppers.
- Target missed Q3 earnings and revenue estimates, with EPS falling 20% below expectations. The company cut its full-year profit guidance, citing soft discretionary spending and supply chain costs.
- Despite lowering prices on over 10,000 items this year and boosting digital sales (+10.8%), overall comparable sales grew just 0.3%, while in-store sales declined.
- Target's shares dropped over 21%, hitting a 52-week low, as its results contrasted with Walmart's stronger performance, driven by differences in sales mix and consumer preferences.
- Amazon faced questioning by the House Select Committee on China over its partnership with TikTok, as lawmakers expressed concerns about collaborating with the Chinese-owned app amid national security threats and a potential US ban on TikTok in early 2025.
- The collaboration allows TikTok users to buy Amazon products directly within the app, benefiting Amazon by accessing TikTok’s Gen Z userbase and TikTok by strengthening its foothold in the US market.
- Despite the looming ban, major US companies, including Amazon, the NFL, and UnitedMasters, continue to forge new deals with TikTok, suggesting some scepticism about the ban’s likelihood or enforceability.
- A U.S. crackdown on low-cost e-commerce imports ("de minimis" rules) is driving Chinese sellers to partner with these small-scale warehouses to maintain access to the American market.
- These operations attract sellers with their lower costs, small-batch flexibility, and additional services, such as relabeling products for resale or selling excess inventory locally.
- Platforms like Amazon Prime Video, Netflix, and Peacock are embracing shoppable ad formats, enabling viewers to purchase products or services directly from their screens using tools like QR codes or remote controls.
- Experts highlight friction in the user experience, such as limited time to scan QR codes and unfamiliarity with these features, as barriers to broader consumer engagement and ROI.
- For shoppable ads to succeed, consumers need strong reasons, such as significant discounts or exclusive deals, to interrupt their viewing experience and engage with the ads.
- This data-led series serves as a one-stop shop for all you need to know about 2024 holiday campaign planning from consumer behaviour to hybrid selling, we’ve got it covered.
