Sunday, November 15, 2015

The Impact of On-Line Trade

  • Last week, comments from select business leaders during their quarterly conference calls included Terry J. Lundgren, CEO of Macy - “we had a very tough quarter, and we are clearly disappointed … we believe that the retail industry is going through a tough period that we seem to experience something like this every five years to seven years or so, and this one feels familiar in that regard….this is a management team that has navigated through difficult times in the past and we've done so successfully…we use these times to reset our ambitions and determine how we're going to win and where we're going to play.”
  • Nordstrom co-president Blake Nordstrom -”Beginning in August, we experienced a slowdown across our full-price and off-price businesses…While we haven't seen a meaningful change to our customer growth metrics, we did see a decline in our transaction growth relative to the first half of the year. As this softness continued, we've been able to quickly respond, ending the third quarter with inventory aligned with our expected sales plans. As we head into holiday, we don't anticipate a measurable change in current trends and we've made appropriate adjustments to our operating plans.”
  • Cisco Systems CEO Charles Robbins -” Q1 was a very strong quarter across the board… [but] I recognize that our Q2 guidance … is below what the market had expected. In Q1 we saw lower than expected order growth, driven largely by uncertainty from macro and currency impacts, primarily outside the U.S.”
  • Regarding U.S. retail sales – While U.S. consumer spending may be slowingMacy’sNordstrom and other traditional retailers are likely facing increased competition from on-line retailers.
  • Notably. on Friday, the U.S Commerce Department reported that retail trade sales increased by 1.2% from last year, but nonstore retailers (on-line) increased by 7.1% As traditional retailers increase their on-line presence to compete with Amazon and other on-line retailersoperators of shopping malls will have to continue to adapt to these changing market dynamics as well.
  • Regarding Cisco Systems – The firm has significant global presence and market reach, but it must adapt to: 1) increased foreign competition – including China, 2) consolidation of networked resources into data centers managed by GoogleFacebook, AmazonMicrosoftIBM and others, and 3) the management approaches of its new CEO.   

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