Monday, February 25, 2019

online business

online business

Why it makes no business sense for Primark to move online - Proactive Investors UK

Posted: 25 Feb 2019 05:30 AM PST

Associated British Foods plc (LON:ABF) has taken some flack from some in the past for not having an online store for Primark – its value fashion chain and the group's star business.

The UK high street has struggled over the past year or two as stagnant wage growth and above-target inflation have hit consumers' pockets hard, while the few quid that they do have to spend is increasingly being spent over the internet.

Data last week from the Confederation of British Industry showed that those trends are unlikely to change any time soon.

READ: AB Foods says Primark first half profit to be "well ahead" of last year

So it's no surprise then that shops are clamouring to build their presence online – a strategy that the likes of Asos PLC (LON:ASC) and Boohoo Group PLC (LON:BOO) have been handsomely rewarded for adopting.

But Primark isn't one of those following the herd: it hasn't looked to move online, nor does it have any intention of doing so.

"Primark does look at alternative business models from time to time, but there are no current plans to trade online," said a spokesperson.

"Customers enjoy looking online at the latest offers, and then come to stores on the high street to buy. The in-store design and experience is part of Primark's attraction to customers."

Some in the City have dismissed the refusal to move online as a sign of naivety or stubbornness, but Liberum analyst Robert Waldschmidt thinks there's a very good reason why it hasn't happened yet and why it is unlikely to in the future.

Return costs 'would eat Primark alive'

"The rationale behind them not selling online now is the fact that as much as three-quarters of the basket purchased online is returned," Waldschmidt told Proactive.

"Given Primark's price points per item, that doesn't make for a very profitable model. As it stands now, if they sold online, they'd probably be losing money on the online sales."

It's not just the cost of returning goods, sending them can often cost the same amount, if not more, than the price of the goods themselves.

"As you can imagine, the margins are so small that it can be difficult to sell a £3 t-shirt when you're spending the same amount just to ship it," said AB Foods chief executive George Weston back in 2013 after the end of a trial with online fast fashion giant Asos.

"The shipping costs for an online business it the key reason why online-only retailers can't compete with us."

No need to chase sales

Liberum number cruncher Waldschmidt also believes that not only does it not make sense financially but that Primark has no need to chase online sales.

"In contrast to a large number of retailers, Primark is actually growing absolute sales…and is still taking [market] share," he said.

"I'd prefer that they do that on a profitable basis as opposed to growing the top line and destroying the profits. I do not see right now how they have a viable pureplay online-only option; the returns would eat them alive."

Click and collect could work though

The analyst does acknowledge that there is still an online option available to Primark bosses that have proved popular with its bricks-and-mortar retail peers: click and collect.

"If you look at what makes the Primark model work, it's the sales densities within the stores.

"And how do you drive more density in your existing estate? Well, it would be having more people click and collect.

"You buy online, you go to the store, you pick it up and potentially pick up some more stuff. It also addresses that issue of returns quite easily."

AB Foods shares were down 1.8% to 2,272p on Monday afternoon.

Online sales jump at SuperValu -

Posted: 25 Feb 2019 03:00 AM PST

Pictured at SuperValu Kinsale are (from left): Ian Allen, Sales Director, SuperValu; Martin Kelleher, Managing Director, SuperValu and Michael Smith, SuperValu Kinsale and SuperValu Retail Chair.
Pictured at SuperValu Kinsale are (from left): Ian Allen, Sales Director, SuperValu; Martin Kelleher, Managing Director, SuperValu and Michael Smith, SuperValu Kinsale and SuperValu Retail Chair.
Ellie Donnelly

Online sales have jumped 25pc year-on-year at SuperValu.

There is a now an additional 26,000 customers using its online shopping service.

The news comes as the group recorded a new milestone of €2.7bn in sales in 2018.

Sales of SuperValu's Signature Taste premium range grew by over 10pc last year.

The Musgrave-owned business said one of the key sales trends from 2018 was increasing consumer demand for health and wellness-related products.

In response to this SuperValu now has a health and wellness aisle in all stores with a range of over 1,000 products.

It also introduced a range of over 340 vegan products to meet consumer demand, and has begun rolling out dedicated vegetarian/vegan zones across stores as part of its ongoing strategy to differentiate the brand from its competition.

Elsewhere, and SuperValu is to create 210 jobs this year with the opening of three new stores.

In addition, the business plans to revamp 30 stores as part of a €30m investment programme.

SuperValu MD Martin Kelleher said: "We continue to build on our food leadership credentials and further establish SuperValu as a destination shop by responding to consumer trends and shopping requirements both in-store and online."

"We plan to build our momentum in 2019 with a €30m investment programme, which will see three new stores opened and an existing 30 stores revamped as we continue to rollout new shopping concepts such as Vegetarian and Vegan zones, new salad bars and health and wellness aisles, adding both theatre and on trend ranges for the new shoppers evolving tastes."

Online Editors

Dubai's Emaar Malls fully acquires online fashion retailer Namshi - Gulf Business

Posted: 25 Feb 2019 04:46 AM PST

Emaar Malls, the retail business arm of Dubai's Emaar Properties, has fully acquired online fashion retailer Namshi, it announced on Monday.

Emaar – which had the majority stake in Namshi – acquired the remaining stake of Global Fashion Group (GFG) in an all-cash deal worth Dhs475.5m ($129.5m).

The Dubai firm bought a 51 per cent stake in Namshi for $151m in May 2017, with GFG – a company backed by Germany's Rocket Internet – retaining the 49 per cent stake.

Read: Emaar Malls to acquire 51% stake in Gulf e-commerce site Namshi

The full acquisition "reinforces the position of Emaar Malls in the rapidly growing online market in the Middle East, complementing its physical retail assets portfolio", a statement said.

Namshi – founded in 2011 – has an active customer base of 1.2 million and recorded sales Dhs849m ($231.3m) across the UAE and Saudi Arabia in 2018, an increase of 16 per cent compared to the previous year.

It features 700 brands includes global names, exclusive in-house labels, sports collaborations, beauty, activewear and kidswear.

Mohamed Alabbar, chairman of Emaar Properties said: "The remarkable growth achieved by Namshi underlines the potential for fashion e-commerce in the region, where, every day, a larger number of people shop online to meet their fashion aspirations.

"With the consolidation of our stake in Namshi, we are highlighting our commitment to position Emaar Malls for growth over the next decade and to create outstanding value for all our shareholders through our omnichannel strategy."

Dubai businessman Alabbar has invested heavily in the e-commerce space in the last few years.

Noon, the site launched by him in partnership with Saudi investors, announced plans last week to expand to Egypt following its launch in the UAE and Saudi Arabia.

The GCC's e-commerce market is forecast to be worth $20bn by 2020, according to an AT Kearney report.

Another report commissioned by Gulf Pinnacle Logistics (GPL) last year found that the the Gulf's e-commerce industry is growing at a rate of 7.2 per cent per annum and will reach $23.7bn by 2022.

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