Tuesday, May 25, 2004

HIGHLIGHTS


RETAIL – EUROPE

Netherlands; SPAR turnover up 4%
Spar has announced turnover of E27bn for 2003, an increase of 4% on the previous year. The group presently operates around 15,000 stores in 34 countries.
International Spar, the Dutch-based head office of the group, stressed the importance of its multi-format strategy in allowing the banner to adapt to different markets. Spar also pointed to its continued growth in key markets such as Austria, South Africa and the UK, as well as its entry into Croatia, Cyprus, India and Singapore.
Date; May 04

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HUNGARY – RETAIL

Tommy Hilfiger to open 15-20 Hungarian stores
U.S. clothing company Tommy Hilfiger Corp is likely to open between 15-20 stores in Hungary, it was announced today.
Hungarian fashion house Roland Divathaz, the exclusive Hungarian distributor of Tommy Hilfiger brand products will establish the U.S. company's local store network with investments of several billion of Hungarian forints. Roland Divathaz will open three brand stores in the autumn of 2004, of which two will be located in Budapest and the third one in Szeged, southeastern Hungary. Later, the plan is for each Hungarian city to havea Tommy Hilfiger brand store.
Date; May 04
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TECHNOLOGY – SHOPPING ONLINE

Online sales on rise, but problems also increasing
Shopping online has become a serious business as more Web retailers turn profits and improve their operating margins, according to a study to be published today.
Online retail sales totaled $114 billion in 2003, a 51 percent jump from the year before, with online travel, home furnishings and computer hardware and software spurring the biggest gains.
Although online retailers halved their marketing expenses, they still struggle with holding down the costs of helping customers and fulfilling orders, according to the study of 150 retailers that sell goods online by Forrester Research for Shop.org, a division of the National Retail Federation, based in Washington, D.C.
The increased costs reflect a broader population of online shoppers, the report concluded.
"As more mainstream shoppers begin to shop online, they need more help with the ordering process and are more likely to pick up the phone when they need service, raising costs for retailers," the report stated.
Customer service costs increased to $2.30 per order in 2003 from $1.90 in 2002, with store-based retailers ringing up the highest costs of $2.70 per order.
Retailers' online fulfillment costs jumped to $9.80 per order from $6.30 in 2002. That cost, too, could result from shoppers new to the Web, who require extra incentives before they hit the "buy" button, the study concluded. Retailers often lure newbies to buy by offering free shipping.
Another trend that might raise retailers' fulfillment costs is the growth in online sales of jewellery, clothing and furniture - items more expensive to ship than books and electronics, according to the study.
Retailers also had a harder time convincing their broader audience to close sales online, the study found.
As more consumers get broadband access, they're able to comparison-shop more easily across more Web sites. So retailers focused more on helping shoppers research products than on pushing them to close a sale, the report concluded.
Also, brick-and-mortar retailers are using their Web sites to drive traffic into their stores, which mean the Web sites don't record those sales, said Scott Silverman, executive director of Shop.org.
Nevertheless, more retailers are making a profit - 79 percent of all online retailers in 2003 vs. 70 percent in 2002.
"Retailers online have found the right balance between selling a product, acquiring and retaining customers and earning a profit, which is powerful news for consumers and retail investors," said Elaine Rubin, chairman of Shop.org.
Online retailing accounted for 5.4 percent of all retail sales in 2003.
Source; Sun Times, May 04
Write; by Sandra Guy

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FOCUS

ECONOMY – EUROPE - GERMANY

German business confidence dips
German business confidence dipped slightly in May, reinforcing the view that growth in the eurozone's biggest economy is likely to remain subdued for some time to come.
The Munich based Ifo institute said its closely watched business climate index fell to 96.1 in May from 96.3 in April. The fall, slightly less than expected, took the index back to its November level.
Ifo president Hans-Werner Sinn said the data, based on a survey of 7,000 companies, pointed to "a continuation of the ongoing, moderate recovery in Germany over coming months."
He attributed the slight fall in the index to "gloom in the eastern states, whereas in western Germany it rose slightly."
The institute said companies' assessment of current conditions worsened slightly while future expectations was little changed.
Howard Archer of Global Insight said the survey results showed firms remained cautious in their investment and employment plans.
"Continuing softness in the labour market is likely to weigh on the consumer " making it difficult for the German economy to grow "by much more than 1.5 per cent," he added.
The broad based weakness of German domestic demand was highlighted by final first quarter gross domestic product figures which confirmed earlier estimates of 0.4 per cent growth.
The data showed that Germany's economic revival continued to be export led, with exports rising 4.6 per cent in the quarter. Imports rose 2.9 per cent.
The federal statistics office said net exports contributed 0.8 percentage points to GDP growth while domestic consumption declined 0.4 per cent from the final quarter of last year.
Government consumption fell 1.2 per cent while private consumption was unchanged on the quarter. Spending on machinery and investment fell 0.4 per cent. Construction spending was down 3.1 per cent.
Economists said there was little sign that booming external demand was sparking an upturn in private consumption and investment, both seen as vital if Germany's modest economic recovery is to prove sustainable.
Gernot Nerb, Ifo economist, said the trend in German employment was still downwards although it should stabilise by the end of the year. He said there was also sign of modest improvement in the retail sector.
Given the current state of the German economy, Mr Nerb, who has in the past advocated an interest rate cut to stimulate activity, said he now saw little need for the European Central Bank to ease its stance.
The ECB meets next week to consider its stance on interest rates.
Many analysts fear growth in Germany and the rest of the euro-zone could start to slow in the second half of the year as the pace of global expansion eases in the face of surging oil prices.
Source; FT, May 04
Write; by Tony Major in Frankfurt

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RETAIL – EUROPE – MARKET

French Supermarkets Gain Share as Wal-Mart Sets Sights on Europe
Shares in French supermarket groups rose today after Wal-Mart, the world's biggest retailer, announced it wanted to open stores in every European country and would reach this goal through acquisitions and internal growth.

Shares in Casino, France's second-largest listed retailer, soared 3.4 percent, besting a slightly weaker DJ Stoxx index of European retailers. Carrefour, the world's second-largest retailer, went up 1.3 percent, and Dutch Ahold increased 1.4 percent.

Those rises followed a Financial Times report that Wal-Mart c.e.o. H. Lee Scott was interested in opening Wal-Marts across Europe, and that the retailer's international growth would come from a combination of strategic acquisitions and greenfield expansion.

According to analysts, Wal-Mart's interest in European growth is nothing new. "It's an issue that has come up frequently ever since Wal-Mart acquired [British retailer] Asda, and they have not made any secret about their ambition to be a pan-European player," one London-based retail analyst said. "The added wrinkle this time seems to be that Wal-Mart is approaching Brussels."

Right now Scott is in the Belgian capital, where he is scheduled to meet European officials, including competition commissioner Mario Monti, according to the Financial Times. Analysts believe Lee will confer with EU authorities, as Wal-Mart did in the United Kingdom before purchasing Asda, about possible EU obstacles to takeovers and greenfield expansion.

As well as Asda in the United Kingdom, Wal-Mart has two money-losing acquisitions in the difficult German retail market. That leaves France and Italy as the big European markets most likely to appeal to Wal-Mart, but with few retailers of any size to purchase in Italy, analysts think France will be the company's first choice.

Carrefour merged with Promodes in 1999 in part to counter Wal-Mart's anticipated European invasion, but the current weak share prices of both French retailers - which this year have trailed behind European rivals by 18 percent and 15 percent, respectively - make both more vulnerable currently.

According to one investment banker, "There is no doubt [Wal-Mart wants] Carrefour. It makes the most sense for them. They can't do anything big in the U.K., and Carrefour gives you not only France, but southern Europe and emerging markets. Both in size and format, Carrefour works better for them than Casino."

But purchasing Carrefour, with its sales base in France and Spain, would make Wal-Mart by far the largest retailer in Europe - a potential concern for the EU on competition grounds. A bid would also have to be hostile, making a management exit more likely and cultural issues more delicate.

Analysts say France's second-largest retailer, Auchan, might also beof interest to Wal-Mart, but Auchan's capital is privately held by an independent-minded family, so a takeover would be harder.
Date; May 04

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