The Weekly Consensus – October 30, 2017 (Volume 9, Number 41)

The Big Story
Halloween: When Things Get Less Scary for Retail
Maeghan Thompson

 

Halloween is a time when many of us like to use spooky decorations, costumes, and horror movies to give ourselves and loved ones a thrilling scare. When it comes to traditional brick and mortar retail, things are scary enough already. Shopping malls and department stores are struggling with declining traffic, many companies are closing underperforming stores, and 19 major retailers have filed for bankruptcy protection this year. However, this year’s Halloween season may offer the retail world a brief respite from the otherwise gloomy environment for a couple of reasons. Ironically, for retail, Halloween may be the least scary time of the year.

Read more

The Weekly Consensus – October 23, 2017 (Volume 9, Number 40)

The Big Story
Will Stitch Fix’s IPO Be as Trendy as Its Clothes?

 

Last week, Stitch Fix, an online personal stylist and subscription apparel business founded in 2011, filed paperwork for its initial public offering. For many, this represents the latest “new consumer” brand to go public – and all that comes with it. While it marks the continued growth and evolution of emerging brands and the new consumer economy, it also opens the space (and the brands within it) to scrutiny.

Read more

The Weekly Consensus – October 16, 2017 (Volume 9, Number 39)

The Big Story
A Public Lesson
Betsy White

Womenswear apparel retailer J.Jill reported some unexpected bad news last Wednesday about its performance in the current quarter ending October 28, 2017.  The update was so awful the Company’s stock price dropped by over 50 percent, causing the company to lose about $230 million in market value.  The negative reaction extended less dramatically to apparel retailers across the board, with many wondering whether the news is a harbinger of more widespread weakness in women’s apparel.

J.Jill’s news is not just a story about brick and mortar retail.  While the majority of the company’s sales are generated through its stores (the good news is that its store locations are primarily in “A” malls), it has a relatively high direct/ecommerce sales penetration of between 40 percent and 45 percent. On a comparable sales basis, J.Jill analyzes its sales performance holistically, only publishing combined store and direct comparable sales, which has been the primary driver of its overall sales increases.

Read more

The Weekly Consensus – October 9, 2017 (Volume 9, Number 38)

The Big Story
2017 Holiday Sales: More Diamonds than Coal?
Billy Busko

 

75 days.  Yes, it’s hard to believe, but there are only 75 shopping days until Christmas.  And it’s that time of the year when prognosticators reveal their holiday sales forecasts based partly on recent back-to-school sales and a myriad of other factors.  For perspective, holiday sales account for roughly 20% of total annual retail sales.

As the second largest shopping season, forecasters have taken note of this year’s back-to-school sales increase of approximately 10% over 2016, totaling a record $84 billion ($30 billion for K through 12 spending and $54 billion for college spending).  The other factors that analysts weigh are typically economic inputs, but, of course, weather can also have an impact.  Weather Trends, a service that predicts weather for retailers, forecasts that Thanksgiving Day will be six degrees cooler in the Northeast and nearly twenty degrees cooler in the Midwest, which retailers will welcome, as an early chill tends to bolster sales.

Read more

The Weekly Consensus – October 2, 2017 (Volume 9, Number 37)

The Big Story
The Cost of Competing Just Went Up
Mark Lenz

Last week, Target jumped into the retail industry’s starting wage wars by announcing that the company will increase its minimum wage to $11 per hour starting this fall and to $15 per hour by 2020.  This move certainly ups the ante relative to both Walmart (which announced starting wage increases to $9 per hour in 2015 and then $10 per hour in 2016) and other retailers that have announced starting wage increases in recent years. However, is Target getting ahead? Or is it making up ground?

Read more

The Weekly Consensus – September 25, 2017 (Volume 9, Number 36)

The Big Story
When Less Is More
Paul Alexander, CFA

We here at Consensus published a short presentation last week called “15 Hot Takes on the Modern Consumer Economy.” The deck contained 15 slides, each with a different aphorism relating to the retail landscape or consumer behavior and a few supporting statements. One slide proclaimed, “We Are on the Road to Recovery from Our Inventory Addiction,” and the accompanying discussion spoke about new methods of improving inventory efficiency, including showroom stores and better systems for buying and planning. This was a theme in our colleague Doug Stebbins’s Big Story entry last week, where he wrote about Nordstrom’s new concept store, which will carry very little inventory, and will instead offer customers the personalized attention of stylists. Both the inventory Hot Take and the Nordstrom story frame the reduction of inventory as either a byproduct of new technology, or an experimental new method of retailing. However, a front-page article in the Wall Street Journal last week exposed that we’ve neglected to write about an infinitely simpler, low-tech method of controlling inventory that may be making a comeback: buying less inventory to begin with.

Read more

The Weekly Consensus – September 18, 2017 (Volume 9, Number 35)

The Big Story
Running on Empty
Doug Stebbins

The economy continues to expand – jobless rates are at historical lows, consumer sentiment is strong, the housing market is hot, and the stock market is at all-time highs.  Then why are so many retailers struggling?  It is simple: the shopping habits of consumers have changed, and it has been hard for traditional retailers to adapt.  As ecommerce takes more and more market share, brick and mortar stores are fighting for a smaller group of shoppers.

Read more

The Weekly Consensus – September 11, 2017 (Volume 9, Number 34)

The Big Story
RetailWire Discussion: ‘Okay Google, I want to order from Home Depot’
George Anderson, RetailWire

Google is on a retail roll. Home Depot announced it will join Google Express this fall, which will enable people to order products from Home Depot’s inventory using Google’s Home speaker device or mobile app. This announcement comes just a couple of weeks after a similar announcement of a Google Home tie in with Walmart.

With two of the largest retail chains in the world moving into voice orders with Google, the question becomes more a matter of “when” than “if” others will begin selling on the platform. Other retailers on Google Express include Bed Bath & Beyond, Costco, Kohl’s, Payless, Pier 1, Toys “R” Us, Ulta, and Walgreens.

Read more

The Weekly Consensus – August 28, 2017 (Volume 9, Number 33)

The Big Story
Not So Strange Bedfellows
Marshall Schleifman

When Alphabet launched Google Express in 2013, it surely expected the service to become bigger and more important than it has.  After all, Alphabet does not undertake initiatives to be a laggard making a small impact.  With over 30 retail partners including stalwarts Costco, Walgreens, Bed Bath & Beyond, Kohl’s and Toys R Us, Google Express is Alphabet’s entry in ecommerce –  Amazon’s domain.  One could reasonably have forecast that world-class brands and products on a world-class Google technology platform would gain momentum and become a competitive force.  Thus far, however, Google Express has unintendedly stayed below everyone’s radar.  This week, that just might change.

At the same time that Amazon takes over Whole Foods to make its big splash into bricks and mortar, Google Express has taken an important step in its effort to earn more of the digital commerce pie.  Last week, Google announced a partnership with Walmart, representing Walmart’s latest strategy to narrow the digital commerce gap between the biggest bricks-and-mortar retailer and the largest digital one.  Starting next month, Walmart’s hundreds of thousands of products will be accessible through Google Express.  However, the value of Google Express to Walmart and vice versa is not about express.google.com or even the mobile app, but the next big channel of digital retailing:  voice shopping.  “When it comes to voice shopping, we want to make it as easy as possible for our customers. That’s why it makes sense for us to team up with Google,” Marc Lore, the president and CEO of Walmart U.S. eCommerce, wrote in his blog post announcing the new relationship.

Read more

The Weekly Consensus – August 21, 2017 (Volume 9, Number 32)

The Big Story
GGP Makes a Play to Bring Real Life to Digital Brands
Michael A. O’Hara

Politely pushing through the crowds of private equity investors, venture capitalists and commercial lenders that clogged the Nasdaq Marketsite’s auditorium, Erin McCarthy made a beeline for the founders of an emerging consumer experience brand who had just descended the stage at Consensus’s Next Great Consumer Brands event.  Unlike the 300 or so other attendees of the May 2017 event, Ms. McCarthy had a different kind of capital to offer to presenters: retail real estate.

One might find it peculiar for a real estate executive to attend a conference dominated by ecommerce companies.  But for Ms. McCarthy, who is VP of Retail Development at GGP (formerly General Growth Properties), these companies are just what she is looking for.  In her role, she is charged with the task of bringing innovative potential users of retail real estate to the high-quality regional shopping centers owned and operated by America’s second largest mall operator.

Read more

Reach Consensus