Hey Friends,
What a week in Retail it has been. In May, total retail sales (excluding automobiles and gasoline but including restaurants) increased by 1.35% from the previous month and were up 3.03% compared to the same month the previous year, as reported by the National Retail Federation (NRF) via the CNBC/Retail Monitor. This is an improvement from April, which saw a 0.26% month-over-month increase and a 0.6% year-over-year decrease.
Core retail sales (excluding automobiles, gasoline, and restaurants) rose by 1.2% month-over-month in May and were 2.88% higher than the previous year. This also shows growth compared to April, which experienced a 0.4% month-over-month increase and a 0.05% year-over-year decrease.
Value retail is still seeing it’s moment in the sun….TJX, the parent company of TJ Maxx, Marshalls, HomeGoods, and Sierra, has formed a joint venture with Grupo Axo to expand its off-price retail business into Mexico. Grupo Axo, a major retailer in South America, operates over 970 boutiques and 6,900 points of sale across Mexico, Chile, Peru, and Uruguay. In this partnership, TJX will own 49% and Axo 51% of the joint venture, which will include Axo's current off-price physical store business in Mexico, encompassing over 200 stores under the Promoda, Reduced, and Urban Store brands.
In some technology updates……Michael Kors has introduced a new AI-powered 'Shopping Muse' on its US website, described as a "next-generation" retail assistant. Developed in partnership with Mastercard-owned Dynamic Yield, the Shopping Muse aims to replicate the in-store experience online by translating customers' everyday language into personalized product recommendations based on their behavior. Initial tests by Dynamic Yield indicated that the Shopping Muse achieved a 15 to 20 percent higher conversion rate than traditional search queries. Launched in late 2023, the Shopping Muse was initially available to fashion retailers through early access and has since expanded to include furniture retailers.
OpenAI announced the hiring of two top executives and a new partnership with Apple, which includes integrating ChatGPT with Siri. Sarah Friar, former CEO of Nextdoor and finance chief at Square, will join as chief financial officer. Friar also co-chairs the Stanford Digital Economy Lab.
Walmart is hoping its new technology investment will help make its operations more efficient. Walmart is investing heavily in digital shelf labels (DSLs) and plans to implement the technology at 2,300 of its stores nationwide by 2026. Walmart said the change is a “significant shift” in how it plans to manage pricing, inventory, order fulfillment, and customer interactions. It had been pilot testing the technology at a store in Grapevine, Texas. With the tool, Walmart said it will be able to update prices on its shelves through a mobile app, reducing the need for employees to walk around and individually adjust tag prices for the more than 120,000 items. That task typically took an employee about two days to complete, it added.
HomeGoods, Marshalls and other NJ retailers are equipping staff with body cams to reduce theft. A spokesperson at TJX — which owns HomeGoods, HomeSense, Marshalls, Sierra and TJ Maxx — said in a statement to NorthJersey.com affiliate USA TODAY that the body cameras have been used in various stores over the past year. Not every store employee will have a body camera, the spokesperson said, but they will be worn by loss prevention associates trained to use them.
According to a recent study, fast food restaurants in California have cut 10,000 jobs since passing the $20 minimum wage requirement last September. Several major chains – including McDonald’s, Burger King, and even low-cost favorite In-N-Out Burger – jacked up prices to offset the higher wages and have expedited thier investment in automation. In March, a McDonald’s in Fort Worth, Texas, became the first to primarily use robotics. The automated restaurant functioned without cashiers, relying on kiosks and apps for order placement. Robots prepared and delivered food via a conveyor belt, with minimal human supervision to manage operations and prepare online orders.
Other fast-food chains are also investing in technology. Chipotle uses robots for food preparation, while Chick-fil-A has autonomous delivery in Georgia and Texas. Golden Corral is testing serving robots for food delivery and dish handling, and Wendy’s is trialing autonomous robots for quick meal transport to car-side pickup points.
In some transactional news……Authentic Brands Group is set to acquire the Champion brand from HanesBrands for $1.2 billion, potentially increasing to $1.5 billion with performance-based earnouts. The deal, approved by HanesBrands' board, follows an evaluation of the brand's options started in September 2023. Authentic plans to transform Champion into a licensed model and is negotiating with current and new operators, with G-III Apparel Group already handling some North American operations.
The acquisition is expected to finalize in the latter half of 2024. HanesBrands will classify Champion as discontinued operations in Q2 and will revise its full-year guidance accordingly. Champion has negatively impacted HanesBrands' earnings, with recent reports showing significant sales declines: 26% globally, 17% internationally, and 35% in the U.S.
WHP Global, in collaboration with Simon Property Group, Brookfield Properties, and Centennial Real Estate, has announced the formation of PHOENIX, a new retail operating platform approved by the court to acquire most of Express, Inc.'s operations. PHOENIX will manage direct-to-consumer commerce in the U.S. for both Express and Bonobos, focusing on enhancing their core operations. This initiative will maintain over 450 physical stores, e-commerce operations, and nearly 7,000 jobs.
Yehuda Shmidman, Chairman & CEO of WHP Global, highlighted the significance of this transaction, noting that it marks a critical step in revitalizing Express Inc. and serving its customers. The restructuring under Chapter 11 positions Express for future growth, benefiting all stakeholders involved.. The sale is set to close by June 21.