Thursday, December 16, 2004




SUPERMARKET - USA

Unions Collaborate on Anti-Wal-Mart Campaign
The United Food and Commercial Workers union here is partnering with several other unions, including the AFL-CIO and Teamsters, to launch a large-scale, multi-media campaign claiming that Wal-Mart Stores, Bentonville, Ark., is forcing competing companies to lower their pay and benefit rates. Jill Cashen, a UFCW spokeswoman, yesterday confirmed reports that the unions planned to spend about $25 million per year on the effort. “We have an ongoing Wal-Mart program,” she said. “The difference is that we’re coordinating more with the [other trade unions].” She said she did not have detailed information about the campaign, noting it was still in the organizational stages.
Author: Mark Hamstra. December 2004



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E-COMMERCE - STATISTICS

E-Commerce Up At Brick-And-Mortar Retailers
Online spending at retailers who have both an Internet and a brick-and-mortar presence is up by more than 50 percent for this holiday season compared to last year's, according to new figures released Friday by comScore Networks. That increase, covering the period Nov. 1 through Dec. 5, is more than twice the 23 percent jump in spending during the same time frame at exclusively online retail sites.

Wal-Mart's online store, which saw 11.5 million visitors last week and 25.8 million in November, continues to lead all multi-channel retails online. eBay, which saw 31 million visits last week, and Amazon, 19.9 million, were the only exclusively-online retailers to draw more traffic than leader Wal-Mart.
Author: Gavin O'Malley. December 2004



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E-BUSINESS - E-RETAIL

Apple's online iTunes music store now accepts PayPal for purchases
Apple Computer Inc.'s online music store, iTunes, will now accept PayPal for purchases of music downloads, audiobooks and gift certificates.
PayPal, which is owned by eBay Inc., allows any individual or business with an email address to send and receive payments online.
Apple's vice president of applications, Eddy Cue, said Friday the deal with PayPal would bring more customers to iTunes. "PayPal already has millions of customers who are used to buying online," he said.
Apple hopes to get these customers to buy music at iTunes and in the process draw some new users to the online music store.
PayPal would receive fees from Apple for facilitating payments on iTunes, but the companies didn't disclose specific financial terms.
PayPal's general manager for merchant services, Todd Pearson, said the importance of the deal to PayPal was less about the specific economics of the pact and more about the value of working with a customer with the market importance of Apple.
ITunes Music Store purchases can be funded through PayPal starting Friday, allowing customers to pay using a credit card, bank account or stored account balance.
ITunes users weren't previously able to pay through bank and checking accounts, something they will now be able to do through PayPal, Cue said.
Source: Associated Press. December 2004



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RETAIL - UK

Sainsbury's aims for better delivery times with Smartnav
UK supermarket chain Sainsbury's is fitting 400 of its home delivery vehicles with Trafficmaster's advanced satellite navigation system, Smartnav, in order to improve delivery times.
Sainsbury’s signed a contract with Trafficmaster partner Cybit that also includes Cybit's Fleetstar-Online fleet management solution.

The use of Smartnav, a navigation system that uses Trafficmaster's traffic data to calculate the best route around traffic jams, is aimed at enabling delivery vehicles to maximise the number of drops and deliver on time.

"Operational efficiencies in Sainsbury's home delivery fleet are critical to the success of the venture. Smartnav and Cybit's telematics technology is an important part of achieving this and we look forward to developing a successful partnership over the next three years," said Sainsbury's delivery operations manager, Jason Soar
Source: Food Retail. December 2004



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BEVERAGE SECTOR - EUROPE/USA

PepsiCo to buy General Mills' stake in JV
US snacks and soft drinks giant PepsiCo has announced that it has signed an agreement with General Mills to buy the US food company’s 40.5% stake in their Snack Ventures Europe (SVE) joint venture for US$750m.
After the transaction, which is expected to be completed in early 2005, the SVE joint venture and its operations will be wholly owned by PepsiCo.
Snack Ventures Europe was established in July 1992 by combining General Mills' savoury snack and sweet biscuit businesses in Belgium, France and The Netherlands with PepsiCo's salty and sweet snack businesses in Greece, Portugal and Spain. The venture is continental Europe's largest snack food company, with annual sales of more than US$1bn. Products marketed by SVE include: 3-Ds, Bugles, Doritos, Fritos, Hamka's, Lay's, Ruffles and Dippas.
General Mills said it intends to use the proceeds from the transaction to reduce debt. The company also said that it expects its 2005 net earnings per share to include a gain from the transaction. Excluding this one-time gain, General Mills reaffirmed its 2005 earnings target of $2.75 to $2.80 per share.
Author: LuisB. December 2004



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RETAIL - MARKET

Wal-Mart vs. Target
Christmas is usually a bountiful time of year for Wal-Mart, America's No. 1 discount retailer. But this holiday season, analysts are delivering lumps of coal in the form of stock downgrades.
Joining a chorus of disapproval, Goldman Sachs cut its rating to "in-line" from "outperform," saying Wal-Mart's decision to position super stores closer together will cannibalize same-store sales growth. First Global lowered its rating to "market perform" from "moderate outperform," also citing falling sales growth. The bad news comes atop Wal-Mart's disappointing November sales growth of just 0.7% and a December same-store sales forecast of up 1% to 3 %, below the usual forecast of 4% to 6%.
Meanwhile, rival retailer Target said November same-store sales rose 3.2%, which was in-line with estimates. The company sees December same-store sales running on plan, up 3% to 5%. "Given that Target is a more seasonal store, we would expect it to easily out-comp Wal-Mart," Banc of America said in a November research note. Target is considered a top pick in the retail industry by Prudential and Piper Jaffray.

All of this may not mean much to the U.S. consumer. Wal-Mart Stores still dominates the retail landscape, with 1,362 traditional discount stores and 1,626 super stores versus Target's 1,177 traditional discount stores and 136 super stores. They both compete with Kmart Stores which is acquiring Sears Roebuck and Costco.

In addition, 2004 sales for Wal-Mart, through the third-quarter, were slightly over $200 billion, more than six times Target's sales of $30.81 billion over the same period.

But, Target has the upper hand in terms of a wealthier consumer base. "Target tends to have more upscale customers who don't feel the effects of gasoline prices and other economic factors as much as Wal-Mart's core customers might," says retail analyst Ken Perkins of Research Connect.

Perkins says Target has successfully siphoned off Wal-Mart's top-tier customers through more aesthetically attractive stores. "Target stores are a lot lighter, aisles tend to be wider and merchandise is displayed better," he says. Moreover, Target is appealing to younger shoppers through snazzy TV commercials featuring sexy models, as well as partnerships with high-end designers such as Isaac Mizrahi and Liz Lange.

Though Target is the presumed champion in terms of December same-store sales-Perkins says the company may even reach 6% growth-the outlook for 2005 favours Wal-Mart. Banc of America recommends investors buy Wal-Mart stock for the year ahead, saying the sales environment is likely to be far better with gains of 5% to 6% as energy costs become less burdensome.
Furthermore, Wal-Mart has a retail presence in nine foreign countries, whereas Target only operates in the U.S. This will inevitably contribute to Wal-Mart's top-line growth, analysts say, especially in markets such as China. "Target won't approach Wal-Mart's level of sales any time soon," Perkins says.
Author: David Ng. December 2004



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FASHION - ITALY

Fila Merges Italian Subsidiaries
Sportswear brand Fila, which is owned by New York based Sport Brands International, is to merge its Italian subsidiaries Fila Italia SpA and Fila Sport SpA in the spring of 2005. In the merger, Fila Italia will be incorporated into Fila Sport.The shareholders of the two companies will choose a new name for the company, which will have legal headquarters in Biella, northern Italy, and operational headquarters in Assago, in the northern Italian region of Lombardy. The new company will be Fila's European headquarters.
Author: LuisB. December 2004



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BEVERAGE - NEW PRODUCTS

Coke may try another diet cola
Coca-Cola is tinkering with a host of new drinks for next year, including another diet cola and a possible rival to Pepsi's popular Mountain Dew.
Coke might launch a Mountain Dew-like drink called Vault, the newsletter Beverage Digest reported Friday. Vault would be a successor to Coke's failed Surge, a Mountain Dew wannabe that debuted in 1997 only to virtually disappear by the fall of 2002.
Coke also is pondering a new diet drink, possibly using the name Coke Zero. The company already uses a similar name for Diet Sprite Zero.
Coca-Cola declined to comment on the company's plans, but it clearly is looking for ways to stoke its North American soft drink sales.
Overall, sales are growing slowly in the industry, and many non-diet brands are losing ground.
Mountain Dew, however, has been a bright spot. Over the first nine months of 2004, it was the only major non-diet brand that grew in sales, according to Beverage Digest. In 2003, Americans bought 638.7 million cases of Mountain Dew, making it the fourth-most-popular brand in the country.
Pepsi expressed little concern about the possibility of another Mountain Dew-ish product from Coke. "We've seen this movie before, and it's a horror show," declared spokesman Dave DeCecco. "No one else can do the Dew."
Getting a new product to catch on is a tough task, even without an entrenched competitor. This year, Coke spent millions of dollars in a largely disappointing bid to sell a new midcalorie drink called Coca-Cola C2. Another diet cola, however, could find success.
Coke has had reasonable success with its Sprite Remix. In 2005, the company might replace the berry flavor it now sells with a new Sprite Remix called Aruba Jam, Beverage Digest reported. The flavor might be orange, similar to Pepsi's Mountain Dew LiveWire.
Author: LUisB. December 2004



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FAST FOOD RETAIL - MARKET

McDonald's top female executive resigns
Turmoil rocked the upper management ranks at McDonald's Corp. again Monday, as chief restaurant operations officer Claire Babrowski abruptly resigned after 31 years at the company.

Many observers saw Babrowski, 47, as a future chief executive of the Oak Brook-based hamburger giant. She joined McDonald's at 16, when she got a job as a crew member in an Ottawa, Ill., restaurant. Rising through the ranks, she earned respect from franchisees and Wall Street analysts.

Babrowski's sudden exit caps a tumultuous year in the McDonald's executive suite. In April, Chairman and CEO Jim Cantalupo died of a heart attack while attending a convention for franchisees. Two weeks after Charlie Bell was tapped to succeed Cantalupo, the new CEO revealed he had colorectal cancer. Bell, 44, resigned last month because of his continuing battle with the illness. The company named Vice Chairman Jim Skinner to be the new chief executive.

At the time of Skinner's appointment, the McDonald's board of directors also named Mike Roberts, 53, president and chief operating officer. Roberts had been president of McDonald's USA.
Babrowski ranked among the handful of executives with the background and skills to succeed Skinner and Bell. As head of restaurant operations, she has overseen site development, equipment systems and research and development. She has also supervised operations in Australia, New Zealand and Canada. Babrowski was the company's highest-ranking woman executive.

In a press release issued Monday afternoon, Babrowski said she was leaving to pursue "business opportunities beyond McDonald's." She did not elaborate, and was not available for comment.

But McDonald's spokesman Walt Riker said, "This was a personal decision to look at other business opportunities."

The company said it would name her successor after Jan.1. In the meantime, Adams said, "the management ranks in this company have been really decimated."
McDonald's shares rose 33 cents, or 1 percent, to close at $31.98. Shares rose two cents in after-hours trading.

Comment
One of the things we've always thought about McDonald's is that they have very deep bench. This kind of weakens the bench; some voices speculated that Babrowski bristled at having to work under Roberts, Skinner's No. 2 and the current heir-apparent to the CEO job. Babrowski might have thought she deserved to be named president and chief operating officer. In my opinion Claire's got vast experience around the world. She'll be a real asset to some competitor.
Author: LuisB: December 2004



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BEVERAGE - GERMANY

Germany insists new law on can deposits meets E.U. court doubts
Upcoming amendments to Germany's law mandating deposits on beverage containers will satisfy all the provisions of a European Court of Justice ruling, a Berlin spokesman said Tuesday. The court in Luxembourg issued its verdict earlier in the day on the issue, which has divided German industry and political parties. It said refundable deposits could be compulsory, but rapid introduction of the rule had discriminated against foreign bottlers.

To prevent unsightly throwaways and encourage reusables, Germany made deposits mandatory from January last year on cans and bottles. Retailers have grumbled at having to take back the empties and on Tuesday again demanded abolition of the law.

After the court ruling, European Commissioner Guenter Verheugen, in charge of trade issues, offered to counsel Germany on how to bring the legislation into line with E.U. law. He said Brussels did not oppose the system in itself, but it must not restrain trade.

The court also ruled that there must be a nationwide agency to handle the recycling, since vendors of table water from Budapest, Bilbao or Belfast could not be expected to haul the empties home.

An Environment Ministry spokesman in Berlin said amendments already approved in November met the court conditions. He rejected opposition calls to delay their planned passage this Friday through the Bundesrat upper chamber awaiting fresh consultations.

Hubertus Pellengahr, spokesman for the retail federation HDE, disagreed. He said the new legislation also broke E.U. law.
The amendment standardizes the deposit at 25 euro cents (33 U.S. cents) for all mineral-water, soft-drink and beer containers and completely exempts milk, wine and juice containers as well as drink cartons and sachets.
Source: Deutsche Presse-Agentur GmbH. December 2004



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BEVERAGE - JAPAN

Suntory to buy stake in Lejay-Lagoute
Japanese spirits maker Suntory Ltd. said Tuesday it will buy a 35 percent stake in the French company Lejay-Lagoute S.A.S. in January 2005 to obtain long-term sales rights to Lejay-brand liquor. Suntory has been selling Lejay liquor in Japan since 1982. It wants to sell it in other countries where it has sales networks, such as China and Australia, it said. Lejay liquor is currently available in about 50 countries. Sales in Japan have been growing steadily, Suntory said.
Source: Suntory. December 2004
Author: LuisB



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E-SHOPPING - UK

United Kingdom survey shows man leave Christmas shopping to last minute
This Christmas, as the race to gain share of the Christmas pound among retailers has resulted in a large number of pre-Christmas sales and promotions, research from consumer review and comparison shopping website, Ciao (www.ciao.co.uk) shows that a third of men claim they plan to leave their Christmas shopping until the week before Christmas.

Ciao’s survey of 1,000 UK adults shows that 33% of men are planning to do their Christmas shopping the week before Christmas, compared to only 8% of women. In fact, seven times as many men (15%) as women (2%) say they are planning to do their Christmas shopping in the last couple of days.

When planning to do Christmas shopping?

% Men Women
Last couple of days 15 2
One week in advance 18 6
Two weeks in advance 23 16
Three weeks or more in advance 45 77

Our research confirms that those Christmas Eve shoppers really are men,’ says Ciao’s co-CEO Max Cartellieri. ‘With so many men saying they are planning to leave their Christmas shopping to the last minute, it’s no wonder men have the reputation of being disorganized about Christmas.’
Ciao’s survey shows that while women dream of receiving weekends away, spa breaks and perfume from their partners, they predict they are much more likely to actually be given books, DVDs and CDs.

Women are also more likely than men to say they intend to buy, and to research their Christmas shopping online.

% UK internet users Women Men
Intend to buy online 87 85
Intend to research online 84 83

Women are perhaps going to be more important for online retailers this Christmas than they ever have been before,’ says Max Cartellieri. ‘Online shopping is going to increasingly challenge and complement the High Street as more consumers are prepared to research and buy an increasing range of products online.’
Source: Ciao.uk. December 2004



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APPAREL SECTOR - SWEDEN

ICA moves into apparel market
ICA will expand the non-food product segment at its stores and will start importing and selling Levi's and Nike products. The ICA Maxi hypermarket stores start selling Levi's jeans at 37 stores across the country as of 10 December. The jeans prices will range from 199 Swedish crowns (E22.2) to 299 crowns (E33.4). In comparison, these jeans cost some 700 crowns (E78.1) at specialised clothing stores.
Author: LuisB. December 2004



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FASHION RETAIL - SWEDEN

Zara to open two stores in Stockholm
Spanish fashion chain Zara, owned by clothing retailer Inditex, and has announced plans to open 2 stores in the central part of Stockholm. Zara opened its second store in Sweden in downtown Malmo in the southern part of the country in October 2004. Inditex currently has stores in over 50 countries. The company closed 2003/04 with E447m net attributable profit, up 2% year-on-year. The company's turnover rose by 16% year-on-year in 2003/04 to E4.6bn.
Author: LuisB. December 2004



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DRUG RETAIL - ROMANIA

Pharmafarm returns to profit
Romanian drug distributor PharmaFarm said that rising sales earned it 4.6bn lei (E116,600) in net profits through September, reversing a loss of 8.4bn lei over the same nine-month period last year. "Our turnover rose by 34% compared to the same period of last year and this was the main reason for the positive result," Chief Executive Officer Marius Chereches said in a statement. PharmaFarm's turnover reached 619.3bn lei through the third-quarter, up from last year's 463.4bn. The company attributes the rise due to a wider client portfolio, aggressive sales strategy and further development of its sales team, he added.
Author: LuisB. December 2004



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RETAIL - MOLDOVA

Metro enters Moldovan market
Metro Cash & Carry Romania has opened a E15m cash & carry store in Chisinau, its first in Moldova. The new store spans more than 5.500 sq.m. and offers some 17,500 products. Metro estimates some 90% of the companies shipping goods to the new store will be local. "Metro is an example of investments that will work for our economy and will develop retail trade in the country," Moldovan President Vladimir Voronin said during a press conference. The outlet is the first for the tiny and impoverished country.
Author: LuisB. December 2004