Loss Prevention Research Council Weekly Series - Episode 112 - Inflation impact on Amazon Prime Day / June Retail Sales and Top 10 Countries at Default Risk
With Dr. Read Hayes, Tony D'Onofrio, and Tom Meehan
LPRC Supply Chain Summit Agenda is Out! Safety Issues Cause Starbucks Store Closures! In this week’s episode, our co-hosts discuss a quick look at 2022 IMPACT Conference, how inflation affected June USA retail sales, Microsoft Outlook global outage and its effects, the 10 highest global countries at risk of default, a new person on the FBI’s top 10, and a look at LPRC Research initiatives.
These are the 16 US stores that Starbucks is set to close because of safety concerns
https://www.cnbc.com/2022/07/14/starbucks-is-set-to-close-these-16-us-stores-over-safety-concerns.html
Let me start this week with some news from Starbucks as reported in CNBC.
Starbucks said it will close 16 U.S. stores, mostly on the West Coast, by the end of July because of safety concerns, according to the company. Most of the stores set to close are in the Los Angeles and Seattle metro areas.
The coffee chain will also close two stores in Portland, Oregon, one store in Philadelphia and another in Washington, D.C., also for safety.
Concern about store safety was central to a letter to employees published on Monday from two senior vice presidents of Starbucks U.S. operations at the coffee chain. The letter cites several societal safety concerns, including increased violence and drug use in the area of the stores.
And according the CNBC article, crime data from Seattle and Los Angeles seems to the back up those concerns. In Seattle, property crimes, which include car theft, larceny theft and burglary, and violent robberies are up nearly 20% for the first five months 2022 from the year-earlier period, according to the Seattle Police Department.
In Los Angeles, those types of crimes are up citywide more than 14% for the first six months of 2022 compared to the same period last year, according to the Los Angeles Police Department.
Disturbing news from Starbucks and this is another reason to engage with LPRC as we work together to combat these crime trends.
Countries with the highest risk of default in 2022
https://www.visualcapitalist.com/countries-with-the-highest-default-risk-in-2022/
With economic risk of a recession increasing thought this week it would be a good time to visit an infographic from Visual Capitalist which summarized the top 10 countries with the highest risk of defaulting in 2022.
In order of highest risk, the top 10 are El Salvador, Ghana, Tunisia, Pakistan, Egypt, Kenya, Argentina, Ukraine, Bahrain, and Namibia.
Recent events in Sri Lanka highlight this increased risk. In May 2022, the South Asian nation of Sri Lanka defaulted on its debt for the first time. The country’s government was given a 30-day grace period to cover $78 million in unpaid interest, but ultimately failed to pay.
Inflation Reshapes Amazon Prime Day
https://www.retaildive.com/news/inflation-impacts-amazon-prime-day-sales/627262/
From Retail Dive, some insights on how inflation is impacting shopping holidays such as Amazon Prime Day which just completed.
With its 2022 Prime Day event over, Amazon on Thursday said that, globally, Prime members (the only ones allowed to shop the deals) bought more than 300 million items, surpassing other years. The e-retailer declined to provide the event’s revenue.
Still, at a time of peak inflation, consumers kept much of their Prime Day shopping to essentials and smaller purchases, according to Numerator, which found that just 5% of items sold for over $100, while 58% sold for under $20.
As in previous years, Prime Day lifted other U.S. retailers as well, according to the Adobe Digital Economy Index. U.S. online spending nearly reached $12 billion ($6 billion on Tuesday, $5.9 billion on Wednesday), an 8.5% increase over last year. Stores played a role, with conversion for retailers offering curbside pickup and BOPIS up 20% compared to an average day in June, Adobe said by email.
Speculation continues over whether Amazon would schedule a second Prime Day this year, something it has never done and declines to comment on.
Consumers are pulling back their online spending and plan to spend less in the next six months, according to research from Attest.
Monthly retail sales from the US Commerce Department
https://www.retaildive.com/news/monthly-retail-sales-from-the-us-commerce-department/574252/
Same inflation store and impact on retail is reflected in the USA June Retail Sales.
As reported again in Retail Dive, retail sales in June rose 7.7% year over year among the segments tracked by Retail Dive, according to monthly numbers released Friday by the U.S. Commerce Department. The growth is not adjusted for the record inflation also reported this week, however. And sales in some segments declined as household budgets went toward filling up gas tanks and other essential items.
“[T]his feels like an inflation story to me,” said one analyst, noting the government this week clocked a 9.1% year-over-year rise in consumer prices, the highest in four decades. “Adjusted for inflation, retail sales actually fell over the past year.”
E-commerce sales were a standout, climbing 2.7% month over month and 20.6% year over year, which another analyst said reflects a consumer strategy to save on gas.
Electronics sales took the biggest tumble, down 9.8% from last year, an indication that consumers are avoiding bigger-ticket purchases, according to Rossman. Apparel sales fell 2.5%, department store sales fell 4.9%, sporting goods sales fell 0.3% and general merchandise sales fell 0.6%. At apparel retailers, “in volume terms, sales were strongly negative,” GlobalData Managing Director Neil Saunders said in emailed comments.
Uncertainty for retail prevails for the time being as the inflation story unfolds.
Keep listening to this podcast every week and you too will be up to date on the latest in retail news and to leverage it and the research from the LPRC to stay ahead of the trends.
