🛍️Inflation Outrage

Even as prices stabilize

July 12, 2024

Hello, Retailist Roundup readers! As we wrap up another exciting week, the energy in the retail and e-commerce world is electrifying. This past week has been filled with groundbreaking updates, emerging trends, and innovative developments that are revolutionizing our industry. Ready to dive into the top stories? Join us as we explore these updates and their implications!

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In the news: Top headlines this week

Macy’s hires new CIO from within. Macy's has promoted Keith Credendino to Chief Information Officer, succeeding the retiring Laura Miller. Credendino is credited with launching Macy's marketplace and modernizing the company's checkout system. This leadership change occurs amidst significant company challenges, including a $6.6 billion takeover bid, board changes, and plans to close 150 locations over the next three years. [Retail Dive]

Walmart Faces a Class-Action Lawsuit Due to Inaccurate Price Labels. Walmart is facing a class-action lawsuit for using inaccurate price labels, leading to higher checkout prices than advertised on shelves. Ohio resident Yoram Kahn initiated the lawsuit, which the 7th U.S. Circuit Court of Appeals in Chicago allowed to proceed under consumer protection laws. This decision reverses a previous dismissal and highlights past violations, including a $2 million fine in California for unresolved pricing errors and fines in North Carolina for price-scanner errors resulting in overcharges. [Retail Wire]

Costco Wholesale to hike annual membership fees after seven years. Costco Wholesale announced it will increase annual membership fees for the first time in seven years, effective September 1, for U.S. and Canada customers. The fee for "gold star" and business members will rise by $5 to $65, and for executive members, it will increase from $120 to $130. The maximum annual 2% reward for executive members will also increase from $1,000 to $1,250. This hike will impact approximately 52 million members, over half of whom are executive members. Costco memberships offer various incentives, including discounts on food, gas, insurance, travel, and groceries, along with free sample testing. [Reuters]

PepsiCo earnings beat estimates, but U.S. demand weakens. PepsiCo reported mixed quarterly results, with declining demand for its drinks and snacks in North America impacting its performance. The company narrowed its revenue outlook for the full year, now expecting organic revenue growth of approximately 4%, down from its previous forecast of at least 4%, while maintaining its guidance for core constant currency earnings growth of at least 8%. Shares fell more than 2% in premarket trading. For the quarter ending June 15, PepsiCo reported earnings per share of $2.28 adjusted (vs. $2.16 expected) and revenue of $22.5 billion (vs. $22.57 billion expected). [CNBC]

Why Amazon wants you to pick up your Prime Day orders this year. Amazon is encouraging Prime members to pick up their Prime Day orders from lockers and other pick-up points rather than opting for home delivery. Despite emphasizing free one-day shipping as a key benefit of its $139-a-year Prime membership, this year’s promotions highlight the convenience and flexibility of collecting packages from Amazon’s expanding network of lockers and pick-up locations. Amazon's statement last month promoted the option for customers to choose where their items are delivered, whether at home, work, or frequently visited places, ahead of the Prime Day event scheduled for July 16 and 17.  [Business Insider]

Nike taps former executive Tom Peddie to return as vice president of marketplace partners. Nike has brought back former executive Tom Peddie as Vice President of Marketplace Partners amid criticism and litigation over its direct-to-consumer strategy. Peddie, a 30-year veteran of Nike, previously led Global Sales and headed North America and Emerging Markets. This move comes as Nike's strategy faces challenges, potentially benefiting competitors like Adidas. [Retail Dive]

Kroger-Albertsons Merger Threatens Hundreds of Stores Nationwide. The proposed merger between Kroger and Albertsons poses a threat to hundreds of stores nationwide. Initially announced in April, the $2.9 billion deal involves selling 579 locations in overlapping markets to C&S Wholesale Grocers, an increase from the original plan of 413 outlets for $1.9 billion. As part of the revised agreement, Kroger will also transfer its Haggen banner to C&S and license the Albertsons banner in California and Wyoming, and the Safeway banner in Arizona and Colorado. Despite promises to keep stores open and honor labor agreements, the divestiture affects a significant number of stores. [Retail Wire]

Inflation outrage: Even as prices stabilize, Walmart, Chipotle and others feel the heat from skeptical customers. Despite inflation cooling, consumer outrage over high prices remains strong, affecting brands like Walmart, Wendy’s, and Chipotle. Walmart faced backlash on TikTok for digital shelf labels enabling quick price changes. Wendy’s retracted after its CEO suggested dynamic pricing, and Chipotle customers recorded workers to ensure they didn't skimp on portions. These brands join others grappling with consumer frustration and skepticism about future price increases, leading to reduced spending. To counter this, businesses are emphasizing discounts, promotions, and value meals. Jean-Pierre Dubé from the University of Chicago notes that consumers are weary of deceptive pricing, smaller product sizes, added fees, and new tipping pressures. [CNBC]

AI is quietly being used to pick your pocket. In today's algorithmic age, retailers and businesses are increasingly using AI to set prices based on personal data such as age, mood, and even sexual orientation. This practice, known as dynamic pricing, adjusts costs in real-time based on a multitude of factors specific to each consumer. For example, airlines have long used complex pricing strategies, making it difficult for customers to know if they’re getting the best deal. Now, this approach is being adopted by various sectors, including ride-sharing, online shopping, and supermarkets, where AI algorithms determine the maximum price an individual is willing to pay at any given moment, effectively using personal data to extract more money from consumers. [Business Insider]

Saks COO is out. R.J. Cilley, COO of Saks, has left the company to become CEO of HVAC startup Voomi Supply, following HBC's $2.65 billion acquisition of Neiman Marcus to form "Saks Global." This departure is likely part of the shakeup resulting from the merger, which will include Saks Fifth Avenue, Saks Off 5th, Neiman Marcus, and Bergdorf Goodman, with investment from Amazon. The future structure of these brands' store and e-commerce operations remains uncertain. [Retail Dive]

Over 1,300 US Stores Are Set To Close This Year. Over 1,330 stores across the U.S. are set to close in 2024, according to Business Insider reports from nine retail chains. This marks a decrease from the over 2,800 closures last year, which were largely influenced by the collapse of Bed Bath & Beyond. UBS analysts predict that up to 45,000 retail stores in the U.S. could close over the next five years, with smaller businesses being the most affected, while major retailers like Walmart, Costco, Target, and Home Depot continue to grow. [Retail Wire]

Adidas set to benefit as Nike struggles. Adidas is set to benefit from the success of its low-rise, multi-colored Samba and Gazelle sneakers, coupled with weaker sales at rival Nike. This is expected to lead to strong second-quarter sales and the highest profit margin in three years for the German sportswear brand. Nike's forecasted drop in annual sales caused its shares to fall by up to 20%, while Adidas shares remained stable, indicating investor confidence in Adidas. Analysts suggest that Nike's lack of innovation and increased competition are contributing to its struggles, providing Adidas with an opportunity to gain market share. [Reuters]

Etsy addresses anxiety over AI, mass manufacturing with new brand mission. Etsy is addressing concerns about AI and mass manufacturing with a new ad campaign and updated platform guidelines emphasizing human involvement. The campaign, featuring commercials and billboards in New York and London, promotes real sellers and critiques automation. Etsy aims to return to its artisan roots and differentiate itself from competitors like Amazon and Temu, ensuring that products sold on the platform have a significant human touch and allowing merchants to provide detailed labels about their creative processes. [Retail Dive]

Dollar General Teams Up With Dolly Parton. Dollar General has partnered with Dolly Parton to launch a new kitchen and housewares collection, featuring around 50 items priced between $1 and $10. Emily Taylor, Dollar General's executive VP and chief merchandising officer, emphasized the significance of their shared humble beginnings with Dolly Parton. The collection, inspired by Parton's life and career, includes home decor, kitchen, and tableware items. It will be available in Dollar General's 20,000 stores across 48 states starting mid-July 2024. [Retail Wire]

Shein pledges to invest in UK and Europe ahead of potential IPO. Fast fashion retailer Shein has pledged to invest €250 million ($271 million) over five years in the UK and Europe as it prepares for a potential IPO in London. The investment comes amidst criticism of Shein's model, which involves shipping low-cost clothes and accessories from Chinese factories directly to global shoppers. Despite sourcing some products from Turkey, most of Shein's items are produced by around 5,400 suppliers in Guangzhou, China. European textile associations and politicians accuse Shein of undermining local industries by exploiting a tax break for parcels valued under €150 entering the EU. The EU is considering abolishing this limit as part of proposed customs reforms. [Reuters]

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