Retailers, especially grocery retailers such as Wal-Mart, are investing heavily in new technology that will simplify transactions and increase customer service. A host of gadgets, such as touch-screen information monitors, hand-held scanners, RFID tagging and fingerprint identification, are now in place at many stores across the U.S. and in Europe, according to Plunkett Research.
The biggest technology breakthrough in inventory management is RFID (radio frequency identification)—the placement of microchips in product containers, cartons and packaging, combined with the use of special sensors in warehouses or on store shelves that alert a central inventory management system as to shipment arrivals, product purchases and the need to restock inventory, communicating via wireless means. From loading docks to store shelves to cash registers to parking
lots, RFID readers have the potential to wirelessly track the movement of each and every item of inventory.
Checkout stations will be equipped with receivers that automatically calculate purchases a of an entire cart of merchandise at a time, rather than each individual item. These systems can lead to great reductions in shoplifting and the elimination of costly manual inventory counts.
Leading suppliers of RFID tags include Intermec Technologies Corp. (IM) and Symbol Technologies, which is a unit of Motorola (MOT).
Another potential advantage of RFID is that manufacturers and distributors will be able to reduce overall inventory thanks to greater supply chain efficiency. Marks & Spencer (MKS), a major retailer in the U.K., is replacing bar codes with an RFID system, including tags for the millions of containers that hold food being shipped from suppliers to its stores. It takes a mere five seconds to receive data from 50 containers, an 85% improvement in the time it takes to scan bar codes. The savings of time as well as reduced cost of spoiled food are expected to make the system’s $3-million price tag feasible.
Wal-Mart (WMT) is also heavily invested in this new technology. The firm requires most of its top suppliers to have RFID tags on every pallet and case coming to its distribution centers and stores. One industry estimate calculates that the coded cases and pallets will save the retail giant $407 million per year. Should RFID tags be placed on every item in every store, Wal-Mart has the potential to save immense sums yearly through full implementation of RFID systems.
Imagine using a cellphone camera to scan an RFID embedded in the packaging of a steak. The data encrypted in that code links to a web site showing pictures of the ranch from which the meat came and medical and feed records pertaining to the specific cow. Science fiction you say? Software is already on the market that enables camera-enabled phones to read barcodes. Supermarkets in Japan currently provide the technology via meat counter computers that display information relating to specific codes on each package.
The greatest advantage of RFID implementation in stores such as Wal-Mart may be reduction of out-of-stock situations. Proctor & Gamble (PG) a major supplier to Wal-Mart and other mass merchandisers, theorizes it could increase annual sales by $1.2 billion via RFID technology by reducing incidences of out-of-stock items in stores.
In Germany, the grocer Metro AG (MEO) operates an entire store equipped with RFID, as well as several other technologies, called the Future Store (www.future-store.org). Not only is every item equipped with a tag, but a tag reader is also installed in each shelf. Customers are given touch-screen computers that also have readers, which can assist them in finding products in the store by a keyword search as well as ring up each item as it is placed in the cart. Metro recently launched the Mobile Shopping Assistant cellphone application that allows customers to use their phones instead of a store-issued touch screen. Customers can even prepare shopping lists in advance through their phones.
More details on technology use by food companies can be found in this complimentary download of excerpts from Plunkett Research’s Food Industry Almanac.
Technorati Tags: (IM), (MEO), (MKS), (MOT), (WMT), food retailers, Intermec, Marks & Spencer, Metro AG, Motorola, P&G, Procter & Gamble, PulseCheck, RFID, Wal-Mart
“Financial genius” Lenny Dykstra sues JPMorgan for lending him too much (Reuters)
Comparative Effectiveness Research Could Pose Barriers to Medical Development (Stanford)
Free white paper from Catherine Sherwood on FINRA Guidance on Use of Social Media by Financial Services
Revealing chart of the makeup of US federal spending in David Leonhardt’s Economic Scene column (NYTimes)
EU fails to agree on fresh restrictions on American hedge funds doing business in Europe (Washington Post)
Private credit demands are poised to rebound (Morgan Stanley)
Technorati Tags: financial-regulation, government spending, Hedge-Funds, medical research, pharma, private-equity, social-media
As McDonald’s Corporation (MCD)continues to deliver impressive results in a difficult economy we are pleased to offer a complimentary download of relevant excerpts from Plunkett Research’s Food Industry Almanac. The Almanac also features a spotlight on Wal-Mart (WMT) and covers topics such as organic and “functional” foods, ethanol and the growing use of RFID technology.
The Almanac includes a spotlight on McDonald’s, highlighting the company’s impressive resurgence after posting losses for 13 consecutive months in 2002-2003.
Selected Excerpts:
Growth continues, with $2.1 billion invested in 2009 to further remodel existing locations and build approximately 1,000 new restaurants around the world. 240 of those were in Europe, 165 in the U.S. and 600 in Asia. This is while most restaurant chains are fighting to keep the doors of their existing locations open. McDonald’s has opened large numbers of locations in China’s major cities with good success, but it has not caught up with China’s fast food leader, KFC.
Perhaps the most lucrative focus adopted by McDonald’s is the extension of operating hours, in many cases staying open around-the-clock. Breakfast has become the biggest moneymaker, comprising 30% of a typical day’s sales.
The market for fast food breakfast in the U.S. reached $25 billion in 2008 annual sales, of which McDonald’s claims one-fourth. The company hopes to expand on its breakfast bonanza by extending hours in which breakfast items are available from seven hours in most all-night locations to 24/7.
The 39-page report has been made available free of charge to Research Recap users for 30 days by special arrangement with Plunkett Research, an Alacra content partner. After 30 days, the report will revert to its regular Alacra Store price of $149.99)
For additional free research reports from the Alacra Store click here
Related Research on McDonald’s from Alacra:
Zacks ( Mar 9 ) “We think McDonald’s provides relative safety for the investor, with moderate growth prospects, being exposed to faster-growing international markets. However, the economic headwind, which has affected consumers’ disposable income, is impeding growth”
David Palmer, UBS ( Mar 8 ) “We view McDonald’s results as one of the most impressive we have seen in a while.” Buy, target $72.
Joseph T. Buckley, BofA Merrill Lynch ( Mar 8 ) “We continue to rate MCD shares Buy as a Sales Leader.” Target $71.
Paul Westra, Cowen & Co (Mar 8 ) We continue to believe shares of MCD will outperform the market by over +15% over the next 12 months.”
Jeffrey A. Bernstein, Barclays Capital ( Mar 8 ) “Our price target for McDonald’s remains $71, or ~16x our calendar 2010 EPS estimate of $4.40.” Overweight.
John Glass, Morgan Stanley ( Mar 8 ) “While MCD faces more difficult compares in the months ahead, we remain confident the company will continue to gain share in the US as the McCafé program expands with frappes hitting mid-to-late Spring & smoothies due out this summer. ” Base Case $67.
Gregory R Badishkanian, Citigroup ( Mar 8 ) “We rate McDonald’s Hold/Low Risk (2L), with a target price of $67.”
Matthew DiFrisco, Oppenheimer ( Mar 8 ) “…we maintain our Perform rating and would become more constructive on the shares below $60.”
John Ivankoe, JP Morgan ( Mar 8 ) “We maintain our Dec 2010 price target of $68 with our target reflecting a 15.5x multiple on our C10 estimates.” Overweight.
Fitch Ratings ( Feb 25 US Restaurant/Foodservice Outlook ) “McDonald’s Corporation Ratings (A/Stable) reflect the company’s geographically diverse revenue base, substantial cash flow generation, and stable royalty stream. Industry leading margins and SSS performance further strengthen the company’s credit profile. Fitch believes operating performance will continue to guide the company’s financial strategy. McDonald’s credit statistics are projected to remain relatively stable in 2010.”
Technorati Tags: (MCD), complimentary, ethanol, food industry, mcdonald's, organic food, Plunkett, PulseCheck, restaurants, RFID
Led by China, foreign governments/central banks sold record amount of US financial assets in January (FT Alphaville)
US Bank Failures Threaten Small-Business Lending (WSJ)
Global harmony on financial regulation a distant prospect despite Lehman outrage( FT’s Gillian Tett) Sad but true
Junk Bond Avalanche Looms for Credit Markets (NY Times)
Traders Tapping Social Media to Gauge Market Sentiment using Alacra Pulse (WSJ)
Technorati Tags: bank lending, china, financial-regulation, junk bond, small business, Twitter
Paul Weiss on the SEC’s short sale price restrictions (via @alacra1)
New round of foreclosures threatens US housing market (Washington Post)
S&P warns over America’s top-tier debt rating (via @FTAlphaville)
Local Merchants More Optimistic on Revenues, Hiring Than they Were in November (MerchantCircle confidence index)
Where The ‘Top 50 US Venture-Backed Companies’ Reside: two thirds in CA (via DJ)
European REIT Rollout Seems at Hand, led by German property group Hamborner (via WSJ)
Paris is now 50% more expensive than New York and is the priciest city in the world (The Economist)
Technorati Tags: foreclosures, REIT, short-selling, Twitter, venture-capital
Big banks, except those in emerging markets, will probably destroy value over the next four years (McKinsey)
MGI: New sectors such as cleantech are too small to make a difference to economy-wide job growth.
Excellent microcosm in 7 minutes of how American homeowners got overleveraged (podcast by NPR’s Tamara Keith)
Audit Integrity Updates Investor Watchlist for Western Europe
Credit Suisse scorecard of OECD countries most likely to face government debt funding problems (via @FTAlphaville)
Social spending is up to 24% of GDP in OECD countries, driven by healthcare and elderly costs (OECD)
Technorati Tags: big banks, home-equity-loans, social spending, sovereign-debt, unemployment, western europe
Apparel sales are expected to increase their lead over computer equipment and consumer electronics in coming years.
Excerpts from US Online Retail Forecast, 2009 To 2014 (Premium)
- Online retail managed a noteworthy 11% year-over-year growth in 2009. Topping out at $155.2 billion in sales in 2009, 154 million individuals bought online, representing 67% of the online population and a 4% increase in the number of Web buyers over the previous year.
- This year will be a mixed bag for retailers, as consumer spending will lag growth in gross domestic product (GDP)and advances in market indexes, with an expected increase in retail container traffic. The National Retail Federation (NRF) forecasts a conservative 2.5% growth in total retail sales this year.
Online retail will stabilize at a healthy 10% CAGR over the next five years.
Excerpts from Western European Online Retail Forecast, 2009 To 2014 (Premium)
- Online retail sales in Western Europe reached €68 billion in 2009 and are projected to grow to €114 billion by 2014.
- The European online retail market, which includes the EU-17 — Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the UK — will increase at a growth rate of 11% over the five-year forecast period.
- These business-to-consumer (B2C) online sales are continuing to rise at this double-digit growth rate because most Western European countries’ online retail sales are still relatively
immature. Meanwhile, those that are more mature like the UK are seeing continued growth due to the strong online value proposition.
- Europeans spent an annual average of €483 per person in 2009, and this amount will grow to €601 in 2014.
Technorati Tags: apparel, computers, consumer electronics, eCommerce, online-retail, retail sales, retailers
Intelligent home energy management systems should be able to reduce energy bills by up to 28%. (The Economist)
Kauffman Foundation launches Energy Innovation Network so entrepreneurs can accelerate the clean energy revolution
SWFs’ investments rose from $10bn in first half of 2009 to $50bn in second half, but still down 3% for year (IFSL)
It’s Time for Swaps to Lose Their Swagger (NY Times Gretchen Morgenson)
Very poor people in emerging economies surprisingly interested in mobile financial services (McKinsey)
Book Excerpt from ‘The Responsibility Revolution’ – Don’t Ignore the Transparency Imperative (via strategy+business)
Credit Suisse Annual Survey Finds Hedge Fund Managers Moderately Optimistic About Inflow Growth, Fees
Technorati Tags: credit-default-swaps, energy-efficiency, Hedge-Funds, mobile, Sovereign-Wealth-Funds, SWF, transparency, Twitter
Half of US online adults are “Joiners,” people who interact with social networks at least once a month, according to Forrester Research.
Very few are decreasing the amount of time they spend on these networks, Forrester says in The Rising Potential Of Social Network Sites (Premium). Among this
group, 78% are on Facebook, 51% are on MySpace, and 16% are on LinkedIn.
Based on consumers’ level of participation in social networks and the persuasiveness of those engaged, nearly every brand should develop a social network strategy.
- More than three-quarters of Joiners visit Facebook regularly, but LinkedIn members are the most affluent.
- Social networks are an ideal way to spark word of mouth, since Joiners are more likely to spread product opinions and counsel friends and family before they make a purchase.
- While Facebook dominates this space, MySpace is still effective for entertainment brands, and LinkedIn can help you reach high-income professionals.
- Interactive marketers should check out and connect with existing fan pages and groups before launching their own.
Technorati Tags: Facebook, LinkedIn, MySpace, social-media, social-networks
Ten Wall Street Blogs you need to bookmark now (WSJ)
News moves stock prices shock (Academic study analyzing press release market impact) FT Alphaville
Recent price moves in bond market are a reminder of how entrenched the credit rating agencies are (WSJ)
The Euro’s Next Battleground: Spain (WSJ)
Obama may compromise on consumer agency to pass financial regulation (WashPost)
A cellphone-based cash transfer system has changed the way Kenyans handle their finances (MIT)
Wall Street shifting political contributions to Republicans (WashPost)
‘Volcker Rule‘ Stalls in Senate (WSJ)
Technorati Tags: blogs, credit-rating-agencies, financial-regulation, mobile, Spain, Volcker Rule
