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Ant Financial, an Alibaba subsidiary and the operator of AliPay, is acquiring a UK based money transfer company WorldFirst for more than £500m (US$640m).

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Germany-based Metro has reported its first quarter results saying total sales fell by 0.6% to €8.0bn. Metro said in local currency terms sales had risen by 2.1%, with the fall in sales ‘due to the negative development of the Russian and Turkish currency’. However, the company was able to report that like-for-like sales had risen by 2.3% during the period, with it noting this was ‘mainly driven by Eastern Europe (excluding Russia) and Asia’.

Challenges in Germany and Russia overshadow results

Metro said in its home market total sales fell by 1.3%, which was affected by the closure of a store, while like-for-like sales contracted by 0.2%. In Western Europe (excluding Germany) Metro noted that total sales increased by 1.2%, while like-for-like sales rose by 1.0%, aided by a ‘ strong development in France, Italy and Spain’.

In Eastern Europe (excluding Russia) Metro was able to report that total sales, in local currency terms, grew by 6.3%, while like-for-like sales rose by 6.4%. The company said that in the region ‘almost all countries… contributed to this [result]’.

Metro said in the key country of Russia, total sales declined by 2.8%, in local currency terms, while like-for-like sales decreased by 2.4%. In volume terms, though, Metro said it had enjoyed an increase in sales of 3%. Despite the contractions, Metro said the results were positive and underlined how they had ‘benefited from an attractive pricing model as well as the expansion of the franchise format Fasol’.

In Asia, total sales, in local currency terms, rose by 6.9%, while like-for-like sales rose 5.9%. As part of the results announcement, Metro confirmed it was considering strategic options for its operations in China. It has been previously suggested that it could sell a majority stake in the business to a local company.

Real disposal continues against a weakening backdrop

Metro said its Real hypermarket business saw a slight decrease in like-for-like sales, by 0.6%, while total sales fell by 1.7%, affected by two temporary store closures. It also reported that its online business had shown ‘a dynamic development’, with its gross merchandise value rising by 65% to €171m.

Metro said it expected to complete the disposal of Real as a whole, standalone business within the next two to four months. Metro’s chief executive, Olaf Koch, said the disposal process was being challenged by competition regulations, but non-binding offers were expected soon, with a binding offer to come later.

The ‘last mile’ has become an increasingly competitive place, as the food industry and disruptors continue to create solutions that make online shopping even more convenient. We know that the convenience and ease of online shopping is extremely appealing to shoppers.

We’ve identified several examples of last mile solutions that help online shoppers embrace this convenience.

Increase in unattended in-home delivery

During 2018, we saw numerous leading global retailers trialling unattended in-home delivery services.

The customer grants access to a delivery driver using smart lock technology, by setting a temporary access code for the lock, which is then sent to the delivery driver via a secure app. Refrigerated and frozen goods are put away by the delivery driver, and other groceries as instructed by the customer. A video of the whole delivery is often available.

Edeka, Waitrose & Partners and Albert Heijn all joined Walmart, Amazon, Jet.com and ICA with trials in their respective markets.

There is a significant amount of trust required on the behalf of the shopper to sign up to such trials. However, if the service delivers and meets shopper expectations it is hard to see a more convenient and easy way to shop online.

There are also benefits for retailers. For example, they can optimise delivery routes to save time and fuel costs, as they will not be delivering based on predetermined hourly delivery slots.

There will be no need to compensate for late deliveries, and they may be able to process the order faster at the shopper’s home, as there will be no ‘meet and greet’ of the shopper.

It also enables them to better use delivery vehicle capacity.

Robot deliveries

Delivery by robots is another last-mile solution that retailers and disruptors are trialling, and showcasing.

JD.com’s driverless delivery vehicles have been deployed in the cities of Changsha and Hohhot (inner Mongolia) in China. The unmanned vehicles can carry 30 items and deliver them within a 5km radius.

The vehicles can plan routes, avoid obstacles and recognise traffic lights. Facial recognition technology enables users to easily and securely collect their parcels. Running at full capacity, the delivery stations, operating with a half-half split between robots and couriers, can deliver up to 2,000 packages a day. See JD.com's robot in action >>

Tesco customers in Milton Keynes, UK, can now have their groceries delivered by robot.

The service from robotics company Starship Technologies, is available via a Tesco Extra in the Kingston Centre.

This follows Tesco’s trial in London with Starship during 2017, in which it tested robot delivery as part of a wider ‘Tesco Now’ one-hour delivery trial.

Starship Technologies currently also delivers hundreds of orders a week for a Co-op branch in Milton Keynes. Local customers have reacted positively. See Starship Technology's robot in action >>

Autonomous vehicles

Walmart is partnering with Udelv to test its autonomous delivery vans in Surprise, Arizona.

The pilot will see a cargo van customised to support Walmart’s grocery delivery operation.

The trial will begin in February 2019, and will initially involve human backup drivers until both companies and regulators believe it’s safe to remove the driver.

The test will build on Walmart’s existing self-driving vehicle pilots. These include a program with Ford and its delivery partner Postmates, and a similar initiative with Waymo, Google’s self-driving project.

The company behind Walmart’s ecommerce pickup towers has developed a self-driving vehicle that could revolutionise last-mile delivery.

The vehicle, called Lotte, is a robotic courier.

It can autonomously transport goods to a predesignated location, and using a robotic arm it can allegedly place goods in a pickup locker. It claims to be one of the only self-driving delivery vehicles that can complete deliveries without any human intervention. See Lotte the robot courier in action >>

Delivery by drone

JD.com, China’s largest retailer, has completed Indonesia’s first government-approved drone flight – a breakthrough for drone delivery in Southeast Asia.

The successful pilot opens the door for commercial drone use in Indonesia and the Southeast Asia region, subject to further regulatory approvals.

Indonesia is a challenging country for ecommerce deliveries, given the fact it’s spread out across many islands. JD.com will be able to provide more efficient, reliable services by regularly using drones. And it will help the retailer realise its goal of delivering 85% of orders on the same or next day.

JD.com plans to build 150 drone launch sites in southwestern Sichuan province of China for unmanned aerial vehicle parcel deliveries. JD.com has been developing its drone capabilities since October 2015, and claims that drone deliveries would reduce the cost of shipping freight by 70%, compared to conventional truck delivery. See JD.com's drone in action >>

Wing, a drone delivery company that is part of Alphabet (Google), will start a pilot initiative around Helsinki, Finland, in the spring of 2019.

In September 2016, Wing delivered burritos to students at Virginia Tech in what was, at the time, the largest and longest drone delivery test in the US.

Food is a great test case for drone delivery technology because it can be fragile and temperature sensitive and therefore needs to be delivered quickly and carefully.

Where next?

Shoppers’ expectations are continuously increasing when it comes to getting the goods they want in a quick and easy way. So far, retailers have been able to meet and often reset these expectations with innovative delivery solutions.

We expect to see more competition amongst retailers to get goods to shoppers in more innovative and creative ways. The online channel and technological advances have created most of the solutions to meet shoppers’ desire for increased convenience. However, many retailers still face a challenge of delivering fresh produce to customers at a reasonable cost.

These pilots will help retailers to better understand the future of delivery and the role of these vehicles in a broader mix of fulfilment options.

Do you need an insight report, presentation or workshop on global trends and innovations in retail?

Toby Pickard, Head of Insight – Innovation and Futures

I head up IGD’s insights research on innovations and futures, and analyse the impact they could have on retailers, suppliers and shoppers. I regularly work with leading retailers and manufacturers to create content and insights focusing on the future of retail.

Please contact me: [email protected]

Toby Pickard

Toby Pickard

Head of Insight – Innovation and Futures

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Alibaba Group Holding Limited announced its financial results for the quarter ended 31st December 2018.

Growth driven by technology

The company had another strong quarter. In the press release, Daniel Zhang, CEO of Alibaba, commented that “Our resilient operating and financial performance is a direct reflection of our persistent focus on better serving our growing base of nearly 700 million consumers across retail, digital entertainment and local consumer services. Our growth is also driven by the power of Alibaba’s cloud and data technology that helps expedite the digital transformation of millions of enterprises.

Highlights of the group’s third-quarter performance are summarised below.

Strong top line figures

  • Turnover for the three months reached RMB117.3bn (US$17.1bn), up by +41YoY
  • Core commerce (Taobao & Tmall) revenue grew +40% YoY to RMB102.8bn (US$15.0bn), with 28% YoY growth for customer management revenue
  • Digital media and entertainment revenue up by +20%YoY, reaching RMB6.5bn (US$944mn)
  • Cloud computing revenue up by +84%YoY to RMB6.6bn (US$962mn), driven by increased spending from enterprise customers

Growing consumer engagement

  • Annual active consumers reached 636 million, up 35 million over the prior quarter, driven by successful user acquisition program such as referrals through the Alipay app. Notably over 70% of annual active consumer growth was from third and lower tier cities
  • Mobile monthly active users (MAUs) increased by 33 million from the previous quarter, reaching 699 million

Other business highlights

  • Consumption growth remains strong:
    • Tmall physical goods paid gross merchandise value (GMV) up by + 29%YoY, exceeding forecast by China’s National Bureau of Statistics
    • The growth was driven by fast-moving consumer goods (FMCG), apparel and home furnishing categories
  • New retail redefines the future of physical stores:
    • Freshippo (formerly Hema) now has 109 stores, with strong same-store growth
    • Around 470 Sun Art stores enabled with New Retail technology
  • Logistics keep driving engagement:
    • Ele.me (on-demand food delivery platform) and Koubei (online restaurant and local service guide) are combined to provide better service and better value for local customers
    • Cainiao processed over 1 billion delivery orders during 11.11
  • Encouraging Lazada performance
    • Alibaba’s Southeast Asia ecommerce platform Lazada also showed good growth in GMV. The upgraded Lazada’s technology resulted in increased number of active users and better engagement of Lazada’s mobile app

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