Friday Five

The Friday Five: Code Red Strategy: Stores Are Now Accepting Competitors’ Returns

April 19, 2019

To Woo Shoppers, Stores Are Accepting Competitors’ Returns - Wall Street Journal

Some retailers believe that getting more directly involved in reverse logistics could then win new customers. Walgreens and Nordstrom will let online shoppers at other brands and retailers pick up or return orders at some stores, which is a sign of how retailers are teaming up in new ways to draw customers as more shopping shifts online. Walgreens will offer package pickup and returns at more than 8,000 U.S. locations to companies including Levi Strauss & Co. and Urban Outfitters. Nordstrom will test the tactic at Los Angeles-area stores with a group of brands. The strategy highlights how e-commerce is pressing retailers to adjust to changing consumer habits and reset relationships between brands and stores. Department store Kohl’s Corp. has helped drive the trend by allowing Amazon products to be returned to over 100 of their stores.

EU proposes tariffs on $20B of US imports - Supply Chain Dive

The European Union on Wednesday released a preliminary list of U.S. imports to be considered for tariffs, in response to a World Trade Organization (WTO) ruling that found the U.S. illegally subsidized Boeing. The list includes products such as seafood, fresh and dried produce, nuts, alcohol, chemicals, adhesives, suitcases, handbags and tractors, representing a total of $20 billion of U.S. exports to the EU. While the lists of tariffs from the EU and U.S. are preliminary, the EU proposal sounds a warning bell for U.S. companies with global supply chains that import from or export to the EU. There's a possibility the WTO could determine the values of goods subject to tariffs must be lower than the proposals, or the EU and U.S. could follow through on a commitment made last year to work toward zero tariffs. Still, it's likely many of these businesses will plan around the worst-case scenario to mitigate potential tariff impact. A similar situation unfolded with tariffs on $200 billion worth of Chinese imports. Although the duty rate remains at 10%, companies such as Dollar Tree and Williams-Sonoma shifted their business plans and sourcing with the assumption tariff rates would rise to 25%.

Amazon is pulling the plug on its domestic business in China after it was soundly beaten by Alibaba - Business Insider

Amazon.com plans to close its domestic marketplace business in China by mid-July, people familiar with the matter told Reuters on Wednesday, focusing efforts on its more lucrative businesses selling overseas goods and cloud services in the world's most populous country. Shoppers in China will no longer be able to buy goods from other third-party merchants in the country, but they still will be able to order from the United States, United Kingdom, Denmark, and Japan via Amazon's global store. Amazon expects to close fulfillment centers and wind down its support for domestic-selling merchants in China in the next 90 days.The company's China marketplace, which has stocked products from Chinese as well as overseas merchants, struggled to gain a foothold in the country's fiercely competitive e-commerce market. The company's operations were first known as Joyo, which Amazon purchased in 2004 for $75 million. Over the next 15 years it rebranded a few times before eventually landing on Amazon China, but it struggled to gain market share in the face of giants like Alibaba and JD.com.

American retailers already announced 6,000 store closures this year. That's more than all of last year - CNN Business

Bankruptcies in the retail sector are piling up and chains have aggressively closed underperforming stores. That has led to an uptick in store closures this year. Online sales make up around 16% of retail sales today, but they will rise to 25% by 2026, UBS analysts estimated in a research report last week. That could force up to 75,000 stores to close by 2026, including more than 20,000 clothing stores and about 10,000 consumer electronics stores, UBS estimates. Thousands of home furnishings and sporting goods stores will also need to close as online shopping grows rapidly. Meanwhile, eccentric discount chains like Ollie's Bargain Outlet and Five Below are expanding. Discount grocers Aldi and Lidl also plan to open hundreds of stores in the United States to reach customers who are shopping for cheap groceries.

New U.S. Policy on Cuba Sanctions Threatens EU Ties - Wall Street Journal

A U.S. move to toughen pressure on Cuba may reach into trade relations with the European Union. The Trump administration plans to allow U.S. nationals to lodge claims against foreign companies that do business in Cuba, which sets up a fresh front in a widening U.S. economic rift with Europe. EU officials have privately warned they could sue in the World Trade Organization if the U.S. proceeds with a plan that would open the way for foreign companies that do business involving confiscated property in Cuba to be sued. The U.S. says there will be no grace period and no exceptions after the May 1 expiration of the latest waiver. Some container lines began operations in Cuba when relations opened up under the Obama administration.

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