Western Gold Rush: Lowe’s Acquires Orchard Supply Hardware to Spur Growth

Analyst Insight by Jared Koerten, Senior Analyst, Euromonitor International

Yesterday, Lowe's Companies Inc agreed to buy Orchard Supply Hardware Stores Corp for US$205 million. This agreement brings 60 of Orchard’s 91 stores under Lowe’s control and provides an option for the company to buy the remaining outlets. With an average selling area of only 4,100 sq m, Orchard Supply Hardware outlets are significantly smaller than Lowe’s traditional stores and – save two newly-opened stores in the Portland, Oregon area – are all located in California. 

Lowe’s hopes that the addition of Orchard Supply Hardware can help reverse its relatively disappointing performance in recent years. From fiscal 2010-2012, Lowe’s net sales climbed only 3.5% while its chief rival, The Home Depot Inc, grew its net sales by more than 9.9% during the same period. As the housing market in the US continues to recover after its recessionary collapse, consumers are once again looking to invest in their homes. In this environment, Lowe’s realises that it is vital to remain competitive with its larger rival in order to fully capitalise on the recovery of the US housing market. 

Fast Food Delivery Reigns in Emerging Markets—Could the US be Next?

Analyst Insight by Elizabeth Friend, Analyst - Consumer Foodservice, Euromonitor International

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Delivery is popular around the world in a range of categories, but nowhere is it as much a part of the chained fast food model as in key emerging markets in Asia Pacific, Latin America and the Middle East. In both of the former regions, home delivery value as a percent of total fast food value climbs as high as 5%, as compared to fast food hub North America, where it’s less than 1% despite a much larger overall category.

Selling Models in Retail Hygiene

The patterns of how consumers purchase hygiene products are changing as technology progresses. For instance, internet retailing of nappies / diapers has risen sharply in recent years. In fact, 40 percent of all diapers sold in South Korea are via online transactions. Ian Bell, Head of Tissue and Hygiene Research at Euromonitor, explains future opportunities for selling models, including thoughts on a contract based diaper service.

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Payment Networks Should Worry About Retailer-Led MCX Platform

Analyst Insight by Michelle Evans, Analyst - Consumer Finance, Euromonitor International

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The biggest hurdle to a retailer-led mobile payments platform, such as the Merchant Customer Exchange, is bringing competing brands together to agree on a single mobile platform that will serve both their consumers, as well as those of their competitors. If the retailer-led mobile payment platform is able to set aside differing interests to finally launch its products for consumers, the four major payment networks in the US will have plenty of reasons to be concerned. 

US retailers come together on m-commerce platform

Nearly 40 American retailers and restaurant chains are involved in a new US-based mobile payments platform, dubbed the Merchant Customer Exchange. It already includes retailers like CVS Corp, Target Corp, Darden Restaurants Inc, Meijer Inc, Hobby Lobby Stores Inc, Gap Inc, Dunkin’ Brands Inc, 7-Eleven, Bed Bath & Beyond and Dillard’s Inc. MCX started with just a dozen brands, but now it seems like every other week new retailers join the effort with the most recent including Southwest Airlines and Brinker International Restaurants, the parent for Chili’s Grill & Bar and Maggiano’s Little Italy. The retail partners seemingly cross nearly all verticals, including quick-service restaurants, convenience stores, department stores, petrol stations and travel companies. MCX reports that its partners combined have 80,000 stores and conduct more than $1 trillion in annual sales. There’s no doubt that such a mobile platform has a potential wide consumer base.

The Environment: High on the Apparel Agenda, but Low on the List for Consumers

Analyst Insight by Emily Potts, Contributing Analyst, Euromonitor International

There are very few consumers that can say environmental concerns cross their minds when they are browsing the rails of their favourite store; nevertheless, high street retailers are coming under increasing scrutiny to ensure their environmental credentials are up to scratch.

Uniqlo signs up to Greenpeace campaign

In 2013, Uniqlo’s parent company Fast Retailing Group announced that it had signed up to environmental campaign group Greenpeace’s Detox campaign. In putting its name to the campaign, Fast Retailing Group has committed to eliminating all releases of hazardous chemicals through its global supply chain and products by 2020. Uniqlo’s announcement comes just a month after Zara, Mango, Esprit and Levi’s announced similar individual commitments, joining Nike, adidas, Puma, H&M, Marks & Spencer, C&A and Li-Ning in signing up to the campaign.

Understanding Australia's Business and Consumer Environment: A Guide for Successful Business Down Under

Understanding Australia's Business and Consumer Environment

How will Australia's economy, business environment and consumer trends impact the success of your business? This e-book examines the fundamentals businesses must understand to successfully expand or operate in Australia.

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Heralded as the success story among advanced economies for weathering the global economic downturn of 2008-2009, Australia’s high income levels and steady growth offer good opportunities for consumer goods and services in a wide range of sectors.

Key Findings:

• At the height of the global slowdown, advanced economies as a whole contracted by 3.5% - contrasting with Australia’s 1.4% growth.
• Whereas incomes and consumer expenditure have stagnated across many advanced economies, Australia’s per capita disposable income and expenditure have expanded by 9.8% and 3.5% respectively in real terms since 2008.
• In 2012, Australia was ranked 15 out of 183 economies on the World Bank’s Ease of Doing Business Index, meaning it is the fifteenth easiest place in the world to start and operate a local firm.
• Australia has an educated population: 99.9% of adults (those aged 15+) were literate in 2011, but suffers from skills shortages.
• In 2011, the population aged 45-49 in Australia had the highest average gross income: A$77,810 (US$80,259).

Topics include:

• Ease of doing business rating
• Corruption index
• Literacy rate
• Future challenges
• Natural resources
• Media consumption
• Consumer trends
• More

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Belarusian Grocer 'Fresh Market' to Enter Lithuania

Fresh Market, a grocery store owned by Ipsun in Belarus, is set to expand to Lithuania in 2013, expanding into residential areas and offering fresh items such as fruit, meat and fish. The grocery market in Lithuania is already highly concentrated, but Fresh Market hopes to gain a competitive advantage by tapping into a smaller, convenience store-type format. Fresh Market's long term performance will likely depend on product diversity.

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Go Big or Go Home: How Menards is Bucking the Trend of Store Downsizing in the US

Analyst Insight by Jared Koerten, Senior Research Analyst, Euromonitor International

In April 2013, Home Improvement retailer Menards Inc plans to open new stores in St. Peters, Missouri and O’Fallon, Illinois – both of which are in the St. Louis area. The unique feature of these new stores is their incredible size, with each outlet expected to surpass more than 18,500 square metres of shopping space.  For reference, the average outlet size of leading Home Improvement retailers Home Depot and Lowe's were only 10,500 and 9,800 square metres, respectively, in 2012. In fact, even Walmart Supercenter – the hypermarket viewed as the epitome of a large-format retailer – averaged an outlet size of only 17,000 square metres in 2012.

These are not the first mega-stores that Menards Inc has opened. In 2011, the company reopened a store in Eden Prairie, Minnesota that measured over 21,800 square metres and stocked a range of grocery, healthcare, jewellery, toys, and apparel products. The company followed in 2012 by introducing a mammoth store in Golden Valley, Minnesota that topped 23,200 square metres.

Webinar Recording: The Retailing Environment in 2013: Successes and Challenges

Retailing remains a highly challenging environment, particularly for store-based retailers who face constrained consumer spending and very strong competition from online retailers. Euromonitor International explores which retailers face the most pressure and what can be learned from recent high profile retail closures.

Curated Retailing Part 2: Curation on the Internet

Curated retailing is not only found in brick and mortar stores, but also is prevalent on the internet. For example, online retail Net-a-Porter has created "The Edit", a list of premium beauty products hand-selected by the site. This is a prime example of curation: The retailer, already offering premium products, is picking out quintessential items. The future of online curation will most likely put curation in the hands of the users. Pinterest is a prime example of user-based curation. The site allows users to 'pin' different clothes, recipes, or designs to name a few things, and share their findings with other users.

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