Latest Retail News - Retail TouchPoints - Retail TouchPoints Wed, 21 Feb 2018 02:25:09 -0500 RTP en-gb Walmart’s Online Growth Slows During Holiday 2017 Walmart’s Online Growth Slows During Holiday 2017

Walmart has been used to generating enormous e-Commerce growth rates since purchasing in August 2016, but the 2017 holiday season saw some cooldown. While Walmart had 60% and 50% online growth in Q2 and Q3, respectively, the retailer saw e-Commerce sales increase only 23% in Q4 2018.

Walmart’s total Q4 revenue was $136.3 billion, an increase of $5.3 billion or 4.1% over Q4 2017, while U.S. comparable-store sales increased 2.6%, marking the 14th straight quarter same-store sales remained positive. Shopper visits rose 1.6%, indicating that Walmart’s efforts to integrate physical stores and e-Commerce are paying off. Gross margins fell 60 basis points to 24.1%.

Walmart stock dipped 9% in the wake of the news, but Moody’s Lead Retail Analyst Charlie O’Shea still saw the online sales growth as “impressive,” in commentary provided to Retail TouchPoints. O’Shea attributed the lower gross margin to holiday promotional activity, as well as the impact of an “ongoing price-driven market share battle with Amazon.”

Doug McMillon, CEO of Walmart, indicated in an earnings call that the “majority of this slowdown was expected.” But McMillon noted that e-Commerce sales were depressed due to some operational issues.

“During the seasonal spikes, seasonal inventory — think electronics, toys, gifts — came into our fulfillment centers and there was enough cube that it harmed our basic in-stock on more everyday items, and our basic in-stock for e-Commerce suffered as a result,” McMillon said during the call. So we're learning how to deal with higher volumes and learning how to deal with a higher peak than what we had previously.”

For the full fiscal year, Walmart brought in revenues of $500.3 billion, a 3% year-over-year increase, and e-Commerce sales grew 44% to $11.5 billion. McMillon said in a statement that Walmart is still maintaining an expectation of 40% e-Commerce growth in calendar 2018.

Separately, Walmart is revamping its store-brand labels in low-price apparel, according to Bloomberg News. The new clothing lines will include Time and Tru for women, Terra & Sky for plus sizes and Wonder Nation for kids, and Faded Glory, White Stag and Just My Size will be phased out.

The apparel changes come as Walmart plans to unveil a new web site in early 2018. Lord & Taylor will launch a flagship store on the updated in spring 2018, as part of the retail giant’s push to serve as a more upscale online destination for fashion and apparel.

]]> (Glenn Taylor) News Briefs Tue, 20 Feb 2018 16:39:34 -0500
NACS Survey: Consumer Optimism Dips In February NACS Survey: Consumer Optimism Dips In February

Even though the percentage of gasoline consumers expressing optimism about the economy fell in February 2018 compared to January, the numbers remain ahead of those for February 2017. According to new survey data from the convenience and fuel retailing association NACS, 60% of gas consumers reported being somewhat or very optimistic about the overall economy in February 2018, down from 65% in January.

Back in February 2017, only 57% expressed this level of economic optimism, but the percentage had risen to 61% by Q4 2017.

NACS attributed February’s confidence decline to a turbulent stock market compounded by a 9-cent increase in the median price of gas, which rose from $2.50 to $2.59. The association conducts monthly surveys related to economic issues and consumer sentiment to learn how consumers shop for fuel, what affects their buying decisions and what it means in a broader economic context.

Almost one-quarter of consumers (24%) reported that they are likely to drive more in the coming 30 days, up five percentage points compared to February 2017, and 70% will drive about the same amount.

“Consumers are still very optimistic in general, but there are some early warning signs for retailers,” said Jeff Lenard, NACS VP of Strategic Industry Initiatives in a statement. “The question on the minds of most c-store operators today is whether increased traffic will lead to increased sales inside the store.”

In a new question designed to estimate how gas prices would affect future consumer spending, NACS found that the majority of gas consumers (59%) expected to spend about the same amount on typical non-gas household purchases such as groceries and clothing, while 22% anticipated spending more and 19% predicting they would spend less.

In another new question, more than half of gas consumers (56%) expected to eat out “about the same” as last month, but almost one-third (32%) anticipated they would dine out less often.

]]> (Marie Griffin) News Briefs Tue, 20 Feb 2018 13:22:32 -0500 Boosts AOV After Generating 35% Click Share Of Valentine’s Day Search Ads Boosts AOV After Generating 35% Click Share Of Valentine’s Day Search Ads

Valentine’s Day spend hit a record $19.6 billion this year, according to the National Retail Federation (NRF). leveraged both popular and niche search terms to outperform its floral retail rivals, beating competitors in both search ad volume and click share in the month leading up to the holiday.

Improving these metrics likely led to an increase in average order value (AOV) at The retailer increased AOV from $78 in 2017 to $82 in 2018, according to Edison Trends. By comparison, AOV actually decreased for competitors FTD and in that time frame (FTD dropped from $79 to $76; decreased from $73 to $69). enjoyed a 331% order increase between Feb. 11 and Feb. 13, 2018, well ahead of competitors. saw a significant 154% increase in order volume between Feb. 11 and its peak on the Feb. 12, while FTD experienced a 181% increase on those dates. But unlike, and FTD saw order volumes decline from Feb. 12 to Feb. 13. was the top advertiser by text ad volume from Jan. 15 and Feb. 14, 2018. The top five advertisers by volume were:

  1. 890 ads;
  2. 830 ads;
  3. 710 ads;
  4. 690 ads; and
  5. 650 ads.

But while was first among roughly equal competition in ad volume, the online retailer completely dominated when it came to generating clicks, garnering more than one third of the total. In terms of click share, the top five advertisers were:

  1. 35.32%;
  2. 14.81%;
  3. 13.50%;
  4. 13.46%; and
  5. 9.39%.

“Our analysis reveals that 1-800-FLOWERS had an all-encompassing search strategy,” said Ashley Fletcher, VP of Marketing at Adthena. “They bid consistently on all high-volume generic keywords like ‘flowers,’ which are expensive, to more niche, Valentine's Day-specific terms. It was a full court press.”’

However, 1-800-FLOWERS didn’t sweep all the advertising awards: ProFlowers drove the most search impressions leading up to the holiday. The top-five Valentine’s advertisers by search impressions were:

  1. 18.19%;
  2. 17.09%;
  3. 16.52%;
  4. 14.62; and
  5. 11.92%.

For the study, Adthena analyzed more than 2,700 text search ads, totaling more than 590 search terms and 17.4 million impressions, from 276 U.S.-based floral and gourmet foods gift retailers. The study was conducted between January 15 and February 14, 2018.

]]> (Glenn Taylor) News Briefs Tue, 20 Feb 2018 12:10:00 -0500
Albertsons-Rite Aid Merger Shakes Up Both Grocery And Pharmacy Sectors Albertsons-Rite Aid Merger Shakes Up Both Grocery And Pharmacy Sectors

Albertsons Cos., parent company of supermarkets Albertsons, Safeway, Jewel-Osco and Acme, has reached a definitive merger agreement with Rite Aid to create a combined company that could generate as much as $83 billion in 2018 revenue.

The merger would bring privately-backed Albertsons onto the New York Stock Exchange, finally taking the company public after years of speculation. Albertsons reportedly put its IPO filing plans on hold in July 2017 after the Amazon-Whole Foods merger, two years after initially postponing such a listing.

But with the help of Rite Aid and recent investments in online grocery, including a partnership with Instacart and the acquisition of meal kit provider Plated, the grocery giant appears to have itself well situated for a public push. Albertsons even has launched a digital platform designed to give CPG brands access to shopper data to help them deliver targeted ad campaigns, showing that it is very serious about engaging consumers at all points of the shopper journey.

“Albertsons has been contemplating going public for over two years and this cash-and-stock deal will finally allow Albertsons to do so after more than a decade of ownership by private equity firm Cerberus Capital,” said Mickey Chadha, VP of Moody’s in commentary for Retail TouchPoints. “However, drug retailing has had its own challenges, with reimbursement pressure and weak front-end sales as evidenced in Rite Aid’s weak profits over the last couple of years. Competing with much larger and more diversified drug retailers like CVS and Walgreens will be a formidable challenge."

Deal Highlights New Modes Of Retail Expansion

The Albertsons-Rite Aid deal underlines that retail expansion is no longer defined just by adding more stores, but also by incorporating new functionalities. Retailers are looking to pharmacies to take advantage of the frequency with which people buy OTC and prescription drugs. These combinations also create opportunities to use physical stores as a base for prescription drug delivery and pickup.

Retail pharmacy also has seen its fair share of changes over the past few months, with CVS Health acquiring health care insurer Aetna for $69 billion and Rite Aid already selling off 1,900+ pharmacies to Walgreens for $4.4 billion. In the case of CVS, the pharmacy seeks to deliver more transparency to the relationship between pharmacy benefit managers (PBMs) and drug manufacturers, providing cheaper prices and improved shopper experiences. Even Amazon has made a move to shake up the health care industry, partnering with Berkshire Hathaway and JPMorgan Chase to create an independent health care company for employees.

Upon the deal’s closing, Albertsons-Rite Aid will have approximately 4,900 locations (with 4,300 of them including pharmacy counters). The combined company is expected to generate 2018 revenues of $83 billion and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $3.7 billion. Additionally, the company expects to deliver annual run-rate cost synergies of $375 million in approximately three years.

Rite Aid Chairman and CEO John Standley would become CEO of the combined company, and Albertsons Chairman and CEO Bob Miller will be Chairman. The Board of Directors will be comprised of nine directors, four of whom will be named by Albertsons (including Miller and Lenard Tessler, Vice Chairman and Senior Managing Director at Cerberus), four of whom will be named by Rite Aid (including Standley) and one of whom will be a jointly selected director.

The combined company is expected to include leadership from both companies and maintain dual headquarters, in Boise, Idaho, and Camp Hill, Pa. The name of the combined company will be determined by transaction’s close, according to a company statement.

]]> (Glenn Taylor) Mergers & Acquisitions Tue, 20 Feb 2018 11:36:42 -0500
HuHot Mongolian Grill Delivers Promotional Offers For ‘Least Likely’ Visitors

1huhotHuHot Mongolian Grill has deployed Paytronix Predictive Scoring to deliver relevant offers to customers based on their likelihood to visit the restaurant. The new capability is designed to help increase incremental revenue, by sending loyalty and promotional offers to customers who would not otherwise visit without the campaign offer.

The Paytronix scoring solution is designed to analyze visit and purchase behavior to predict customers’ future actions. The solution helps ensure that HuHot does not waste marketing dollars sending offers to people who would visit the restaurant anyway without a promotion to lure them in.

Headquartered in Montana, HuHot Mongolian Grill is a restaurant chain that specializes in create-your-own stir fry cuisine. The company operates more than 70 Grills in 18 states, mostly in the Midwest and Mountain West states.

“With Paytronix scoring I have more confidence in my campaigns,” said Monica Minford, Digital Marketing Director for HuHot Mongolian Grill in a statement. “Paytronix has the knowledge and resources for accurate predictive analytics, so I trust the scoring and its ability to help us create impactful campaigns. We’ve also gained a clear understanding of how our emailed promotions are performing, so we can repeat or refine the ones that drive incremental visits and spending.”

]]> (Klaudia Tirico) News Briefs Fri, 16 Feb 2018 12:16:56 -0500
Warby Parker’s Vision: 100 Stores By End Of 2018 Warby Parker’s Vision: 100 Stores By End Of 2018

Eyewear retailer Warby Parker, which began operating online in 2010 and opened its first store in 2013, plans to operate nearly 100 stores across the U.S. by the end of 2018, CEO Neil Blumenthal told CNBC.

Warby Parker currently has 64 stores, with nearly all of them located in major U.S. markets. The retailer also has tested different channels such as ‘pop-in’ shops to gain exposure by aligning with other brands.

The eyewear retailer’s deliberate, data-driven expansion has been a model for the way other online retailers should approach brick-and-mortar growth. Online-first retailers such as Bonobos and Indochino have expanded their brick-and-mortar showrooms in a similar manner to Warby Parker, using online customer data to understand purchasing habits and determine where to open stores next. Other up-and-coming brands have followed suit, including Everlane, Casper and UNTUCKit.

By starting with a small physical-world footprint, e-Commerce companies can be nimbler in their decision-making processes. Additionally, they can be more creative in building unique stores to fit each individual locale. When these brands feel prepared to finally make a significant jump into brick-and-mortar, they can scale their operations slowly to fit with business growth and available financing.

The success of Warby and other online-first contemporaries has encouraged real estate developers, including Simon Property Group, Macerich, General Growth Properties and Taubman, to offer these retailers more flexible lease terms, help designing their spaces and other benefits designed to entice them to move into their properties.

]]> (Glenn Taylor) News Briefs Fri, 16 Feb 2018 12:08:45 -0500
Alibaba Goes On $1.3B Buying Spree; iFresh Accepts Alipay Alibaba Goes On $1.3B Buying Spree; iFresh Accepts Alipay

Asian families celebrate the lunar New Year, which this year falls on Feb. 16, by giving gifts of red envelopes stuffed with cash. Chinese e-Commerce giant Alibaba would have needed envelopes the size of football fields to pay for its pre-New Year purchases: a 15% stake in Beijing Easyhome Furnishing for approximately $867 million, and $486 million for a 38% stake in big data retail firm Shiji Retail Information Technology.

The investments are part of the Alibaba “New Retail” strategy, which includes a stronger focus on data and an acquisition plan to expand the company’s brick-and-mortar footprint. Alibaba purchased a 36% stake in Chinese hypermarket operator Sun Art Retail Group in November 2017, adding to a portfolio that includes a stake in the Suning Commerce Group consumer electronics chain and Intime Retail department stores. Additionally, Alibaba operates the Hema supermarket chain and has invested in Home Times furniture stores in its headquarters city of Hangzhou.

It’s possible Alibaba has other retailers on its shopping list. The retailer had preliminary development talks with U.S. supermarket giant Kroger, according to Reuters. A recent Forbes article speculated that Alibaba may put in a bid for Kroger, noting that recently rejected an acquisition offer from Kroger.

Asian American Supermarket Adds Payment Option

Alibaba also is extending its physical reach via Alipay, the digital payment platform operated by its Ant Financial Services Group. Asian American supermarket iFresh will soon allow shoppers to use Alipay in its nine stores as well as for online purchases. The retailer, which also operates wholesale businesses in cities with highly concentrated Asian populations, will work with CITCON, a cross-border mobile payment and marketing solutions provider that helps connect merchants with Chinese mobile wallet users.

Alipay has steadily been adding retail and financial partners to help facilitate purchases by an increasing flow of Chinese tourists. As many as four million Chinese tourists were expected to visit North America in 2017. Since January 2017, Alipay has:

Partnered with JPMorgan Chase to allow Alipay users to pay with its mobile app at many Chase Merchant Services clients;

• Partnered with Verifone to enable payments in taxis in New York and Las Vegas; and

• Enabled in-store and online payments at Rebecca Minkoff.

Happy New Year of the Dog!

]]> (Adam Blair) News Briefs Thu, 15 Feb 2018 12:49:23 -0500
JCPenney Distribution Center Shutdown Will Cut 670 Jobs JCPenney Distribution Center Shutdown Will Cut 670 Jobs

JCPenney will lay off 670 employees this summer as it plans to close and sell its Wauwatosa, Wisc. distribution center, according to the Milwaukee Business Journal. The retailer will shut down the two-million-square-foot warehouse on July 1 and close its customer care center on Sept. 1.

The retailer will give eligible associates separation benefits, including outplacement support and career training classes.

The move is designed to reduce the JCPenney supply chain network, which the company indicated in a statement "is oversized relative to its national store footprint." The retailer has been shrinking that footprint as it looks to rebound from years of declining sales and profits, closing nearly 140 stores in 2017 with plans to shutter eight more in 2018.

The eight store closures are estimated to result in approximately 480 more job cuts. Operations at those locations should be completely wound down by May, according to CNBC.

The job cuts resulting from both the DC and store closures are certainly bad news in the short term, but they are probably a necessary step in JCPenney’s attempted turnaround. Retail sales losses at department stores are expected to slow to 1.3% in 2018, but getting to that point is going to require more strategic handling of store inventory and supply chain spending.

Macy’s is in a similar situation: the retailer announced 5,000 job cuts earlier this year and is closing seven more stores in 2018.

JCPenney will shift the responsibilities of the Wauwatosa distribution center to facilities in Lenexa, Kan., and Columbus, Ohio.

Although JCPenney is cutting down its footprint, it is betting big on its well-performing beauty department, pouring more resources into its makeup and hair services. Earlier this week, the retailer announced it would be hiring 6,500 stylists for its hair salons across the country, which are branded as “The Salon by InStyle.”

]]> (Glenn Taylor) News Briefs Thu, 15 Feb 2018 11:37:03 -0500
Will Walmart’s Cloud Network Take Aim At AWS? Will Walmart’s Cloud Network Take Aim At AWS?

Walmart vs. Amazon has been the biggest retail cage match to watch over the past few years, with both companies seeking to outpace the other through pricing, store innovation and major acquisitions. It appears the stakes of the rivalry have been ramped up yet again, from an unlikely corner — cloud storage.

In an interview with Reuters, two Walmart execs revealed that the retail behemoth operates six giant server farms — each larger than ten football fields in size — and 75 micro clouds.The cloud initiative took Walmart close to five years to build and cost “millions” of dollars, according to the report. Walmart’s cloud network doesn’t rent capacity to third-party businesses like AWS, but investment signals that the retailer is prioritizing the collection of customer data.

With the cloud system, Walmart can make up to 170,000 adjustments to its web site software each month, compared to a mere 100 changes per month in the past. Approximately 80% of Walmart’s cloud network is now in-house.

Using data gleaned from millions of transactions, Walmart sped up the process by which customers can return online purchases to their local stores by 60%. The retailer uses the cloud data to stock items frequently ordered by customers via voice shopping devices such as Google Home. Additionally, Walmart can adjust prices at its physical stores almost instantly across entire regions.

Walmart’s online renaissance has often been tied to its acquisition spree and the installation of CEO Marc Lore as head of U.S. E-Commerce, but it’s apparent the cloud systems also are paying dividends for the retailer. The retailer, which has sought to understand newer types of shoppers, particularly more niche audiences, gains the opportunity to collect more customer data, all while keeping this information off of external servers.

Walmart still only accounts for 3.6% of U.S. e-Commerce sales, according to eMarketer, while Amazon has a dominant 43.5% share.

Whether Walmart opens up its cloud network to third parties in the future is up in the air, but if it did so, the move would add another revenue stream and further diversify the Walmart brand. AWS generated $18.34 billion in revenue in 2017 and has garnered 26% of the cloud market, according to estimates from the Jefferies Group.

]]> (Glenn Taylor) News Briefs Wed, 14 Feb 2018 17:56:52 -0500
Brick-And-Mortar Financial Index Dips 4.54% Year-To-Date Brick-And-Mortar Financial Index Dips 4.54% Year-To-Date

The rise of e-Commerce has had a major impact on more than just retailers. It has reshaped how investors, businesses and policymakers view the industry. Simply put, as brick-and-mortar retailers shrink in square footage and lose share to online sales, it becomes more difficult to quantify their performance.

Solactive, a developer of financial indices, and ProShares, a provider of exchange-traded funds (ETF), sought to change that by creating an index to benchmark the modern brick-and-mortar landscape. The Solactive-ProShares Bricks and Mortar Retail Store Index, developed in November 2017, is designed to provide a snapshot of how the market views the health of the sector.

As of market close on Feb. 12, the Solactive-ProShares Bricks and Mortar Retail Store Index (SOEMTYTR) has experienced Net Asset Value (NAV) returns of 12.67% since inception (11/14/17) and -4.54% year-to-date (YTD). The YTD drop coincides with the U.S. Commerce Department’s report that January 2018 retail sales decreased 0.3%, the largest such dip in 11 months.

Retailers in the index derive 75% or more of retail revenue from in-store sales. Qualifying retailers have a market capitalization of more than $500 million and an Average Daily Traded Value of more than $1 million during the six-month period prior to the selection date.

The brick-and-mortar index includes major retailers such as: Walmart, Barnes & Noble, Gap, Office Depot, Sears, Macy's, Nordstrom, AutoZone, Costco, Dollar General, Best Buy, JCPenney, Home Depot, Tiffany and Target.

ProShares has not ignored the digital side of retail. The company developed an online retail index to track both U.S. and non-U.S. retailers that primarily sell online or through other non-store channels. Companies need a minimum market capitalization of $500 million to be listed. The online retail index includes brands such as Amazon, Alibaba, eBay, Etsy, HSN and Wayfair

Unsurprisingly, The ProShares Online Retail Index (PSONLINE) saw bigger returns than its brick-and-mortar counterpart, experiencing NAV returns of 18.20% since inception and 10.24% YTD.

A third index, the ProShares Long Online/Short Stores Index, combines both of those specialty retail indices into one. The ProShares Long Online / Short Stores Index (PSCLIXTR) has experienced NAV returns of 12.6% since inception and 12.89% YTD.

]]> (Glenn Taylor) Financial News Wed, 14 Feb 2018 13:58:28 -0500