This week's retail news 'you may have missed'.....
At mdj2, we’re passionate about retail and always looking to share our news, views, and insights. With so much information out there, we wanted to share just a small selection of retail news headlines from last week that we found interesting…?
?Morrisons installs AI cameras to improve availability.
Morrisons?is racing to employ thousands of AI-powered cameras across its UK stores by the end of the year, after trials showed they significantly improved availability and increased the efficiency of staff.
The supermarket has become the first UK retailer to make use of the US-originated?technology, in a tie-up with Seattle-based AI company Focal Systems. It plans to roll the cameras out across its UK store estate by the end of the year.
CEO Rami Baitiéh has identified improving patchy availability as the key priority for his turnaround at the retailer, with the cameras able to provide real-time on-shelf data and automatically direct staff to where stocks are running low.
But Focal Systems says its technology has the capability to automate all decision-making in store, from merchandising, ordering, and pricing to staffing and task and labour management.
The Grocer understands Morrisons has seen significant increases in availability scores in stores which have been piloting the technology and hopes it will allow staff to spend more time focusing on delivering customer service, another key focus for Baitiéh.
It is also believed to be part of a plan by the former?Carrefour?boss to improve communications with suppliers about where customer priorities lie.
Whilst at Carrefour, Baitiéh developed a so-called ‘555 matrix’, which focused on staff always being available to serve the customer, and which he said hinged on getting availability right.
“The products must be available,” he once said.
Focal Systems announced in 2022 it was working in partnership with the BRC to offer its services to UK supermarkets, having raised more than $40m in VC funding.
It has previously been employed across thousands of?Walmart?stores in Canada.
Jeremy Pugh, VP of sales at Focal Systems, said on launch of the BRC partnership that the company had a “mission to automate retail globally”.
He added: “Given the severity of the current labour and?supply chain?challenges that UK retailers face, there is nobody who needs this technology more.
“Our partnership with the BRC will enable us to best help the UK retail community overcome these challenges and continue to serve their customers.”
Toby Pickard, global insight leader at IGD, said: “This is an interesting technology advancement by Morrisons, that should help enhance the in-store shopping experience and improve its operations.
“Over recent years, IGD has seen many retailers trialling shelf-edge cameras to monitor stock availability. What is most surprising about this initiative is the speed at which they are moving from trial to full rollout.
“It is aiming to have the solution in every store by the end of summer, which implies the trials have been successful.
“Other retailers that have used the same technology have found it helps store staff to respond quicker to out-of-stocks, mitigating potential lost sales, and improves the overall shopping experience. It will also allow Morrisons to manage in-store operations more efficiently.
“To succeed in the future, more retailers must start their digital transformation journey. In an increasingly digitised retail industry, they need to be modernising store operations to stay ahead. This will be a continual process, but those that don’t embrace technology risk being left behind.”
?The Home Depot announces agreement to acquire SRS Distribution.
The Home Depot, the world's largest home improvement retailer, has entered into a definitive agreement to acquire SRS Distribution Inc. (“SRS"), a leading residential specialty trade distribution company across several verticals serving the professional roofer, landscaper and pool contractor.
SRS will accelerate The Home Depot’s growth with the residential professional customer. SRS complements The Home Depot’s capabilities and will enable the company to better serve complex project purchase occasions with the renovator/remodeler, while also establishing The Home Depot as a leading specialty trade distributor across multiple verticals.
With this acquisition, The Home Depot now believes its total addressable market is approximately $1 trillion, an increase of approximately $50 billion.
“SRS is an industry leader with a proven track record of profitable growth across verticals,” said Ted Decker, chair, president, and CEO. “SRS’s ability to build leadership positions in each of its trade verticals while generating significant revenue growth is a testament to its strong vision, leadership, culture and execution. SRS has built a robust and successful platform that will accelerate our growth with the residential professional customer while presenting future opportunities with the specialty trade pro.”
Decker continued, “SRS’s branch network, coupled with The Home Depot’s 2,000+ U.S. stores and distribution centers, comprehensive product offering, and extensive pro brands, provides the residential pro customer with more fulfillment and service options than ever before. I look forward to welcoming the entire SRS team to The Home Depot and capturing the exciting opportunity ahead.”
SRS’s 2,500-plus professional sales force and 760-plus branch network across 47 states, together with its 4,000-plus truck fleet and jobsite delivery capabilities, will enable The Home Depot to extend its offering to residential specialty trade pros while better serving renovator/remodelers. ?
“Our team is thrilled to join The Home Depot,” said Dan Tinker, SRS’s president and CEO. “We are looking forward to combining our differentiated assets and capabilities, including our extensive branch network, experienced sales team, robust trade credit offering, and order management system, geared at serving the complex project purchase occasion, with The Home Depot’s competitive advantages. We believe this will enable us to better serve pros and continue growing in our large and highly fragmented market.”
Tinker, as well as his senior leadership team, will continue to lead SRS. Tinker and team will work closely with The Home Depot to deliver the best value proposition for all pro customers.
Financial Overview
Under the terms of the merger agreement, a subsidiary of The Home Depot will acquire SRS for a total enterprise value (including net debt) of approximately $18.25 billion. The closing of the acquisition is subject to customary closing conditions, including regulatory approvals, and is expected to be completed by the end of fiscal 2024. The transaction is expected to be funded through cash on hand and debt.
"We plan to access the debt capital markets to raise incremental indebtedness in support of this acquisition. We expect the acquisition to create significant shareholder value over the long term," said Richard McPhail, executive vice president and CFO.
This transaction is expected to be dilutive to earnings-per-share (EPS) from a GAAP perspective due to amortization expense, but accretive from a cash EPS perspective in the first year, post-closing, excluding synergies.
The Company intends to maintain its current credit ratings.
?Aldi overtakes Asda to become Britain's third biggest supermarket, analysis shows.
Aldi has overtaken Asda to become Britain's third biggest supermarket, analysis shows.
It is the latest blow for the grocer, which has been losing market share to Aldi and fellow discounter Lidl since a ￡6.8billion takeover led by the Issa brothers saddled it with huge debts.
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Co-owner Mohsin Issa has vowed to restore Asda as the UK's second biggest food retailer ahead of Sainsbury's.
But data from NIQ shows Asda's growth is stalling, with sales up just 0.8 per cent in the past 12 weeks – the weakest performance of any major food retailer.
A closer look at the figures reveals that its market share now lags Aldi's. Asda accounted for 11.7 per cent of the grocery market compared with Aldi's 12.2 per cent in the 12 weeks to March 23.?
The news comes as Asda delays publication of its annual results. They were due last month but are not expected for another few weeks, sources say. No reason has been given.
In two decades, the German-owned discounters have come from nowhere and now take ￡1 of every ￡4.50 spent at British grocery store checkouts.
Former Lidl UK boss Ronny Gottschlich has said he expects the discounters' combined share will surpass that of market leader Tesco 'by 2027 at the latest'. But Tesco has proved resilient – and increased its grocery market share to 26 per cent, according to the NIQ figures.
It is expected to post strong results this week, with analysts pencilling in group profits – which include its international business and cash-and-carry operator Booker – of ￡2.9billion, up from ￡2.6billion the previous year.
Sales are expected to have jumped to around ￡69billion, against ￡57.7billion last time.
Aldi, which has more than 1,000 stores in the UK, is set to open another 35 this year but its pace of expansion has slowed recently.
Clive Black, of Shore Capital, said Aldi's growth was 'unsustainable', while Asda's trading momentum was 'worrying'.
Asda said other industry data, such as from Kantar, show it is still ahead of Aldi. And a source close to the company said: 'Market share data ebbs and flows, with gains and declines for grocery retailers each year.'
An Asda spokesman said: 'Asda's grocery market share was 13.8 per cent – a clear 4 per cent ahead of the current fourth biggest player – for the 12 weeks to 17 March 2024, according to the widely-followed Kantar data.?
'This is not the first time there has been such a wide disparity in the first quarter grocery market share data between Kantar and NIQ – it happened previously over the same period 12 months ago. NIQ have confirmed this is not a new development.'
?Amazon is removing Just Walk Out technology from its Fresh grocery stores in the US.
Amazon is removing Just Walk Out technology from its Amazon Fresh stores as part of an effort to revamp the grocery chain.?
The company’s?well-known technology?lets customers pay for items without standing in line and sends them receipts afterwards. Amazon says it will now be replaced by smart carts that allow customers to skip the checkout line but also see their spending in real time.?
While redesigning Fresh stores in the past year, Amazon spokesperson Carly Golden said the company heard from customers who enjoy skipping the checkout line but also wanted to view their receipts and savings as they shopped. Golden said the smart carts will give customers these benefits as well as the convenience of skipping the checkout line.
Amazon’s decision was first reported by The Information.?
Seattle-based Amazon operates dozens of Fresh grocery stores across the country, most of which are in California, Illinois, Virginia and Washington state. The company also operates cashier-free convenience stores under the Amazon Go brand and owns Whole Foods, which it purchased in 2017 for $13.7 billion.
Despite predictions Amazon’s entry into the grocery sector would disrupt the market, the company has struggled to find what works.
In 2023, Amazon CEO Andy Jassy wrote in his annual letter to shareholders that Amazon was working to find the right formula that will allow it to have a larger impact on physical grocery. The company has shut down some Amazon Fresh and Go stores that weren’t living up to their promise and said early last year that it was pausing expansion on Fresh stores.
In November, the company reopened three Fresh stores in Los Angeles, California. Golden, the Amazon spokesperson, said the company is now focused on “selectively” opening new Fresh stores and remodelling the majority of its existing stores.?
Just Walk Out technology will continue to be offered in Amazon Go stores and some smaller Amazon Fresh stores in the U.K., the company said. It will also continue offering the technology to third-party retailers.
?99 Cents Only discount chain to close all US stores.
The discount chain 99 Cents Only?announced?on Friday that it will close all 371 of its stores in the US as part of an “orderly wind-down” of the business.
In a statement, the company’s interim CEO, Mike Simoncic, said 99 Cents Only had been under economic pressures that had “greatly hindered the company’s ability to operate”.
“Unfortunately, the last several years have presented significant and lasting challenges in the retail environment, including the unprecedented impact of the Covid-19 pandemic, shifting consumer demand, rising levels of shrink, persistent inflationary pressures and other macroeconomic headwinds,” Simoncic said. “This was an extremely difficult decision and is not the outcome we expected or hoped to achieve.”
Last week, Bloomberg?reported?that the company was considering filing for bankruptcy after experiencing a deficit, but the company in a statement said that it worked with financial and legal advisers to determine that closing stores “was necessary and the best way to maximize the value of 99 Cents Only Stores’ assets”.
The company, which was founded in 1982, has locations in California, Arizona, Nevada and Texas. It has about 14,000 employees in its stores, according to the?Los Angeles Times.
The announcement comes less than a month after Dollar Tree, one of the largest dollar-store chains in the country,?said?it would close nearly 1,000 Family Dollar stores, with 600 stores closing this year and another 370 stores over the next few years. Dollar Tree, the parent company of Family Dollar, operates a total of 16,000 stores in the US.
Family Dollar was recently fined $40m for operating a rat-infested warehouse, what the US justice department?said?was the largest food safety fine in history.
“Persistent inflation and reduced government benefits continue to pressure the lower-income consumers that comprise a sizable portion of Family Dollar’s customer base,” the Dollar Tree CEO, Rick Dreiling,?said?in a call with analysts in March. Dreiling said that while the majority of items in Dollar Tree and Family Dollar stores will “remain at our entry-level fixed price point”, the company was also hoping to integrate more products at a higher price point in stores.
Even as 99 Cents Only and Dollar Tree have struggled as dollar-store brands, Dollar General, the largest of the discount-chain companies, has heavily expanded its presence in recent years. The company?announced?in February that it had opened its 20,000th store, with plans to open 800 new stores this year.
Analysts?have said the dollar-store brands have had different strategies over the years, with Dollar Tree focused on more urban populations while Dollar General focusing on more rural areas of the country where there are fewer competitors.
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