Retail Report: Wamart vs. Visa, Dollar Stores and Millennials

Walmart Canada vs. Visa

Back in May, Wal-Mart Stores Inc. decided to sue Visa over how the credit card company manages transactions for chip-based cards. Walmart argued that Visa’s practice of allowing consumers to bypass entering their PIN at store terminals represented a security breach. In addition, this practice often results in larger transaction fees for merchants.

Walmart has now upped the ante by deciding to phase out Visa acceptance in its Canadian stores. According to reports, the plan is to begin the process in Ontario starting in July. Eventually, none of Walmart’s 400 Canadian stores will accept Visa for payment. Visa is obviously unhappy and believes that Walmart’s move will be harmful to the Canadian consumer:

“Walmart has initiated a public flight — something we never wanted — as they are using their own customers as negotiating leverage,” Visa shot back recently in an open letter in the nation’s newspapers. “Walmart is unfairly dragging millions of Canadian consumers into the middle of a business disagreement that can and should be resolved between our companies.”

For Canadians who only have a Visa card, this change could present a serious inconvenience, particularly for those who shop at Walmart because it is the closest retailer to where they live or work. Another concern brought up by some analysts is that Canadian banks may lose millions on transaction fees after the Visa phase out.

Of course, it’s not at all clear that this dispute will ever get that far. There’s a chance that both Visa and Walmart will choose to renegotiate terms in a way that is agreeable to both parties. If that happens, further conflict can be averted, Canadian banks won’t lose money and consumers will be able to shop at Walmart without having to worry about how to pay for their purchases.

Cuban Coffee Comes to the United States

For decades, the U.S. trade embargo against Cuba meant that no Cuban product could be sold here, not even the much-prized Cuban cigar. But times are changing, and relations between the two countries have thawed over the past several years. In April 2016 the State Department removed coffee, as well as other Cuban-made products, from the list of items that can’t be brought into the United States.

This news has many coffee lovers excited. Cubans themselves love their coffee, though the government rationing system only provides four ounces of coffee per person per month. Now, however, Americans will have a chance at trying Cuba’s excellent beans.

The first company to bring Cuban coffee to the U.S. is Nespresso, which will pack ground beans into pods for its machines. Cafecito de Cuba will be sold initially as a limited-edition product and might become a mainstay in the Nespresso range.

USA Today reports on Nespresso’s decision to market Cuban coffee:

“Guillaume Le Cunff, president of Nespresso USA, said it’s good to be the first company to provide Cuban coffee to the U.S. market. He stressed that Nespresso is more interested in developing a long-term arrangement to ensure a steady supply of Cuban coffee for U.S. customers and improved living conditions for Cuba’s farmers.”

This move to sell Cuban products in the U.S. represents opportunities for suppliers and retailers alike. While many Cuban products are not yet available for import, making use of those that are not only provides new options to American consumers but can also improve the fortunes of the Cuban people.

What’s next? It’s hard to say. Cuban-American relations are still evolving, and there are still a number of restrictions on trade and travel. For now, it may be necessary for suppliers to work with non-American importers that have established relationships with Cuban industry. American businesses that are interested in sourcing goods from Cuba should monitor State Department directives with an eye toward possible future partnerships.

Well-Heeled Millennials Love Dollar Stores

Not so long ago, analysts were saying that a shaky economy was responsible for the success of many dollar store chains. Now, however, it appears that dollar stores are attracting an unexpected demographic: affluent millennials.

Dollar stores and millennials are a curious match. It wouldn’t be surprising if cash-strapped recent college graduates were shopping at dollar stores, but according to Reuters, high earners are making their way to Dollar General and Dollar Tree.

“Nielsen data shows that the number of heads of households under the age of 35 years who shop at dollar stores and earn more than $100,000 a year rose 7.1 percent between 2012 and 2015, versus a 3.6 percent increase at all retail stores,” according to the Reuters report.

Why is this happening? Some millennials interviewed pointed out that they can buy products at these stores for a fraction of the prices charged by standard retailers, including Wal-Mart Stores Inc. or Target. This is particularly true of disposable or limited-use items, such as paper plates or plastic cutlery. Millennials who enjoy entertaining find that they can save a lot of money by buying these products at a dollar store.

In addition, some of these younger consumers have found that dollar store brands are of comparable quality to more familiar name-brand products. The savings is important for a generation that finds itself paying down student loans while trying to buy a home and raise a family.

There is also the convenience factor. Dollar stores are compact and often found in high-traffic areas. This is particularly important in urban communities, where many millennials don’t own cars and rely on public transportation. Being able to duck in and out of a store to purchase both household necessities and fun items, such as sunglasses, cell phone chargers and even yoga pants, means a lot to this overscheduled generation.

While it’s true that many millennials enjoy interactive brand experiences and are concerned about a product’s story, there appears to be a time and a place for these concerns. Retailers that can offer convenience, a reliable product mix, and low prices will earn millennial business.