Archive for April, 2017

Cloud Computing Asserts Itself

April 28, 2017 Leave a comment



The New York Times
The New York Times

Friday, April 28, 2017

The Amazon headquarters in Seattle. Amazon Web Services is the leader in cloud computing services, but Microsoft and Alphabet are investing heavily to close the gap.
The Amazon headquarters in Seattle. Amazon Web Services is the leader in cloud computing services, but Microsoft and Alphabet are investing heavily to close the gap. Elaine Thompson/Associated Press
Look to the Cloud
It’s been said before but it bears repeating: If it were not for its cloud-computing business, would have difficulty reaching profitability.
On Thursday, we were reminded how important Amazon Web Services, or A.W.S., has become to the company’s finances. For the first quarter, which ended March 31, Amazon’s total net income was $724 million. The company said the $890 million in operating income from A.W.S. accounted for most of its overall profits.
Can that last?
A.W.S. is far and away the leader in cloud computing services, but Microsoft and Alphabet, the parent of Google, are both investing heavily to close the gap, and both are willing to undercut Amazon on price. Other big tech companies like IBM and Oracle are also aggressively investing to get a piece of the cloud action.
Amazon’s biggest business is still retail, of course. But the razor-thin margins in retailing could never generate the kinds of profits generated by a computing business.
That’s one area where Microsoft and Google have a big advantage: Microsoft’s traditional software business is still one of the most profitable enterprises on the planet, with only a few rivals. One of those rivals is the Google ad business.
Few would be surprised if the two companies cut prices even further to draw away A.W.S. customers.
Jim Kerstetter

Cloud Produces Sunny Earnings at Amazon, Microsoft and Alphabet


The impact on quarterly results announced Thursday was particularly acute at Amazon, far and away the leader in online computing services.

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Amazon Results: More Evidence that Retailers Can’t Rest Easy

April 28, 2017 Leave a comment


The Achilles heel that wasn’t

Author: Andria Cheng

April 26, 2017

Amazon’s relentless rise has made it a source of fear and a topic of conversation in retail boardrooms. Based on the results Amazon reported on Thursday, those retail conversations are only going to grow more pressing.

The online retail giant reported a better-than-expected 23% jump in sales, thanks to the 24% gain in North America, nearly 60% of Amazon’s total sales, and a 16% increase in international markets and a 43% surge in Amazon Web Services cloud-computing unit.


Amazon.comSales data broken out by region, segment and category

By themselves, the gains are impressive, but it’s the fact that sales moved sharply higher in tandem with strong profit growth that should grab retailers’ attention.

For years, Amazon was criticized for boosting sales at the cost of profit, potentially a long-term vulnerability that could threaten its spending flow. It has proved skeptics wrong. Amazon on Thursday posted its eighth straight quarter of profit, as a 47% surge in AWS’s operating profit helps offset loss overseas, where Amazon has expanded and provided more services in countries from India to Mexico. Free cash flow, one of CEO Jeff Bezos’s favorite financial measures, rose 52% to $10.2 billion for the trailing twelve months.

“Amazon is putting a lot of pressure on everyone to raise the game,” said Marc-Alexandre Risch, chief retail officer for beauty giant L’Oréal USA, at a WWD Retail 20/20 conference in late March. In fact, at the event, pretty much all of the speakers mentioned the disruptive force of Amazon.

It’s not just Amazon’s disruptive impact on their business that’s being felt. One speaker asked the roomful of about 200 mostly beauty and fashion industry attendees to raise their hands if their household has a Prime membership. All but a few put their hands up.

Amazon said Thursday that its retail subscription services, which include Prime membership fees, jumped 52%, excluding the impact of currency translations.

Amazon doesn’t disclose the size of its Prime membership, but Consumer Intelligence Research Partners, or CIRP, in a report earlier this week, estimated Amazon Prime, a key feature for keeping users engaged in its ecosystem, had 80 million US members as of March 31, up from 58 million a year earlier. CIRP estimated that Prime customers spend on average $1,300 a year, compared to about $700 for non-member customers.


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Prime member growth “has been very strong,” Amazon’s Chief Financial Officer Brian Olsavsky said in the earnings call Thursday evening, without providing details. “Q4 strength has continued into Q1.”

It’s not just online front Amazon is innovating. The retailer is planning to open six more bookstores, bringing the total to 12. Its Amazon Go grocery store, a test that allows consumers to grab items without a checkout, also has “a lot of potential,” Olsavsky said. He said Amazon also is looking at popup stores.

“It’s a way for us to connect with consumers and see where they are,” he said.

The company also continues to show that its disruptive force extends beyond books and electronics to categories like fashion. A Cowen & Co. study published in January showed that Amazon’s apparel purchase growth is well above its peers. For instance, between Q1 2014 and 4Q 2016, Amazon apparel sales rose an average of 27%, compared to declines at both Walmart and Target.

Photo credit: Gerard Ferry/Alamy Stock Photo

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How to Use Facebook Live 360 Video for Marketing…and more

April 10, 2017 Leave a comment


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The Enterprise Guide to Omni-Channel Marketingfrom eMarketer Daily Newsletter.

April 10, 2017 Leave a comment


There’s been a big shift in marketing, and the linear conversion process is gone. These days, your users call the shots when it comes to how they interact with your brand, and it’s your job to keep up.

That’s where omni-channel marketing comes in. You’re creating an aligned experience for your users across every touch-point, from your apps and website, to ads and real world interactions like your in-store experience.

This raises an important question: what makes an omni-channel strategy effective, and how do you build it from the ground up? We’ve got your answer right here, in our
latest FREE eBook: The Enterprise Guide to Omni-Channel Marketing.

In this guide, you’ll learn about:

● The data behind why omni-channel marketing works
Features of a successful omni-channel strategy, & how mobile comes into play
Key statistics to convince your executive team to get on board
Real-life inspiration from brands who are seeing results


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From cotton fields to high street racks, fashion bids to be 100% sustainable

April 10, 2017 Leave a comment


Conservation charity WWF and online brand AwayToMars aim to make desirable clothes that have zero impact on the environment
For AWAYTOMARS’s spring-summer collection both the process for making the fabric and the cotton fabric itself were sustainable, as a prelude to the WWF project.
For AWAYTOMARS’s spring-summer collection both the process for making the fabric and the cotton fabric itself were sustainable, as a prelude to the WWF project. Photograph: Gleeson Paulino

It is not a brand synonymous with style, but WWF, the world’s biggest conservation organisation, is teaming up with a London-based online fashion community to produce what it claims will be the world’s first 100% sustainable clothing range.

Big-name stores including Selfridges and Harrods are being lined up to sell the range in the UK, but WWF wants to make this a global project. It is determined to prove to the fashion industry that it is possible to design and produce clothes with zero impact on the environment.

“It’s hugely challenging,” says Alfredo Orobio, founder of the online community AwaytoMars that is working with WWF. “Everything from the buttons, zippers, labels, tags and packaging to the fabric and production process itself – all of it has to be sustainable.”


Orobio says WWF approached him at the end of last year, attracted by the way his crowdsourcing platform allows anyone, from anywhere in the world, to have a hand in making clothes. Participants in the community upload their design ideas and the best ones will be chosen for the final collection. All profits from the venture will go to WWF.

The clothes will use a newly designed cotton fibre, from a German startup called Infinited Fiber, that can be recycled an infinite number of times and which won’t, in theory, wear out. But this project goes way beyond the fabric, Orobio says. In a detailed 150-page document, WWF has stipulated “all the things we can’t do”.

“So it’s about finding the right suppliers, for example, and not using any pigments, only natural colour,” he says. “The whole of the production process has to be sustainable, even the lights and energy. The seamstresses must be paid a living wage, all the packaging will be recyclable, the trimmings, the labels, the tags.”

All of that is expensive, perhaps prohibitively so, which is one of the main reasons that sustainable fashion has yet to take off. But Orobio believes the bigger barrier is the lack of consumer buy-in and the fact that most shoppers are unaware of how polluting the industry is – fashion and textiles, says bestselling US designer Eileen Fisher, are second only to the oil industry as the biggest polluters on the planet.

Tom Cridland’s unique selling point is the 30-year guarantee he attaches to his T-shirts, jackets and trousers.
Tom Cridland’s unique selling point is the 30-year guarantee he attaches to his T-shirts, jackets and trousers.

It is not just the energy-intensive process of making the garments, the reality is that most of the clothes we wear end up in landfill. According to a recent Greenpeace report, the average European consumer now buys 60% more clothing items a year and keeps them for half as long as 15 years ago.

Synthetic fibres are one of the biggest problems. Manufacturing polyester, for example, which is already present in 60% of clothing, produces almost three times more carbon dioxide than organic cotton, and it can take decades to degrade – as well as polluting marine environments with plastic microfibres. And around 21 million tons of polyester was used in clothing last year, up 157% from 2000.

“Cheap fast fashion is a huge obstacle to a more sustainable industry,” says Tom Cridland, who started his own green fashion brand three years ago with a £6,000 government startup loan. “Theoretically, a 100% sustainable fashion collection is not impossible but we need more brands to promote buying less but buying better.”

Cridland’s unique selling point is the 30-year guarantee he attaches to his T-shirts, jackets and trousers. The notion that we can buy an item of clothing and keep it for much longer is taking off, he says, with sales now over £1m a year.

Karinna Nobbs, a lecturer at London college of fashion, thinks WWF’s involvement could make some difference, but ultimately sustainable fashion needs big-name front-runners to make it more of an industry norm.

“If that doesn’t happen, I think we’re truly in danger of ruining the planet,” she says.

Stella McCartney’s latest collection is 53% sustainable.
Stella McCartney’s latest collection is 53% sustainable. Photograph: Peter White/Getty Images

Some big-name designers are already putting sustainability at the forefront of their brands. At a recent speech on sustainability at London college of fashion Stella McCartney declared that her industry was “getting away with murder” yet even her latest collection is only 53% sustainable.

One of the key barriers to consumer take-up is that the expense involved in turning every part of the life cycle of a garment green means the cost of sustainable clothing is out of the reach of most. Current prices at AwayToMars, for example, range from £50 for a T-shirt to £390 for a wool jacket. Cridland’s signature 30-year jacket costs £190 while a T-shirt is £35.

Of course Cridland and the sustainable fashion movement argue that you end up spending more in the long term with a fast-fashion route, but others say that is part of the attraction – the ability to buy clothes and discard them when fashions or fancies change.

Fashion lecturer Nobbs believes the industry is close to a tipping point. “Prices will normalise – they will have to as more brands get involved in sustainable clothing,” she says.

Orobio agrees that price is an issue but says he is undaunted. “My main goal is to be affordable – I don’t want to exclude the people who design for us,” he says. He believes that people will want WWF collection pieces because they will be “buying a piece with a huge story. It’s very different form buying something from Zara that was just copied”.

His online community will start having their say on the new WWF project from next month, and the aim will be to come up with six to 10 different looks. The prototype of the collection will be shown at the Helsinki fashion show in July.

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Huge Wave of Store Closings Still to Come, Study Finds

April 7, 2017 Leave a comment

 eMarketer Retail

Macy’s, JC Penney, and Gap among retailers that may need to lose more stores

Author: Andria Cheng

April 5, 2017

Daily headlines about store closings and bankruptcies may seem like a death knell for American retail. It’s not the final chapter, but there are a lot more store and mall closings still to come.

As many as 2,000 stores combined may still need to be closed from retailers including JC Penney, Macy’s, Gap, Ascena Retail Group and others, Cowen & Co. said in a study released Thursday. It added that retailers including Macy’s and Penney may need to accelerate their store-closing targets.

For instance, while Macy’s has said it would close 100 stores, or about 14% of its store fleet as of the end of Q2 2016, Cowen analyst Oliver Chen said the retailer may need to shut about 21% of its doors instead. Meanwhile, for Penney, the analyst said the mid-priced chain may need to shutter as many as 26% of its store locations, compared to management’s announcement that it would close about 14%.

Too Many Stores, not Enough People

The issue is not just that retailers have failed to entice customers with must-have fashions and other hot items. Neither is it only about Amazon and other online retailers stealing consumers’ wallet share—Cowen’s consumer tracker and studies showed that customers still prefer to shop in physical locations 75% of the time.

Nor is it simply that evolving millennial-driven consumer spending has shifted in favor of shelling out for entertainment and experiences over buying material things.

Mainly, it’s just a sign that the retail sector as a whole is finally coming to terms with supply and demand.

UP TO 20% OF MALLS WILL HAVE TO BE REPURPOSED OR CLOSED.The US is “overstored” compared to other markets, Chen said in a video presentation to clients. “Up to 20% of malls will have to be repurposed or closed.”

In the US, Cowen found, there is the equivalent of about 23.5 square feet of shopping center space per person. By comparison, the figure is 16.4 square feet per capita in Canada. And in the UK, France, Spain and Italy, it’s less than 5 square feet per capita.

US mall growth has significantly outpaced population growth over the past 50 years The number of US malls increased roughly 4X, from 306 in 1970 to 1,220 in 2016, the Cowen study said. The US population, in the meantime, has increased by only about 1.6X.


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“We believe 2016 was likely the high water mark in terms of number of malls in the US,” the Cowen report said. It added that up to 240 malls, or about 20% of the total, could be on the chopping block or “repurposed” in various ways.

As dramatic as the closings are, it’s not like malls are breathing their last gasp. Most of the troubled malls are so-called C and D malls, which generally are in less-coveted locations, are more run down and have less-desirable brands. They represent a third of malls in the US and generate less than $350 sales per square foot, compared to A malls, which occupy prime locations and have coveted tenants like Apple.

In fact, those A malls, while only about 28% of U.S. malls, generate sales square foot of at least $530 (with trophy malls getting more than $825) and represent about 70% of total US mall value, Cowen said, citing Green Street Advisors data.

The Cowen study also showed that malls actually represent only about 15% of US shopping center square footage. Measured by the number of shopping centers, malls only represent about 1.1% of US total of nearly 116,000 shopping centers. Strip malls and convenience stores make up 60% all shopping center count, according to the Cowen study.

“Despite significant concerns regarding the end of malls and traditional brick & mortar retail, malls are only a small percentage of total retail in the US,” the report said.

And while store closings may be necessary for some retailers, there are others that are outperforming and winning share in the shifting consumer spending climate, or those that Chen called “un-Amazonable.”

TJ Maxx and Marshalls parent TJX and rival Ross Stores, for instance, could increase their store count by 50% to 60% while beauty product chain Ulta Beauty can increase store number by 60%, he said. Costco, which Cowen’s study showed is increasing membership among the coveted millennial group, can open about 90 stores over the next five years from 500-plus currently, Chen said.

Photo credit: Flickr

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