Month of June
The traditional retail sector is getting in shape: there is a race ahead and it will not be an easy one at all. The key is to get ready to compete with e-commerce and its marketplace. It is no surprise that in 2019 retailers will spend over $203 billion in technology, betting on digital an innovation plans in AI, robotics and everything relating to electronic payment – an increasingly important element for banking in developed countries, but especially in those considered emerging economies. Is it a contest of equals? I don’t think so, it’s just that traditional retailers need to get fit, go through the necessary transformations and bet on new experiences to attract more buyers.
Global retail technology spending will near $203.6 billion in 2019 as stores continue to bet on digital, and AI, robotics and payment innovation plans move ahead. That’s according to new research conducted by Tech. (with a dot), a collaboration between Retail Week and World Retail Congress.
The fast-changing dynamics of the food retailing environment are challenging companies to keep pace with shoppers’ unrelenting and to continuously elevate expectations. The latest shift involves the use of digital platforms and it has created an imperative for grocers to compete across familiar and emerging touchpoints.
To paraphrase Mark Twain, the death of traditional retail has been greatly exaggerated. According to all available analysis, a majority of goods transacted in the U.S. in 2018 were sold in brick-and-mortar stores. But, of course, traditional retailers cannot ignore the constant disruption occurring in their industry. Digital’s share of retail has nearly tripled in a decade.
When Payless Shoesource exited Chapter 11 in August 2017, it had shed $435 million in debt and hundreds of stores. At the time, executives told Retail Dive that the footwear retailer was working to build out omnichannel capabilities such as ship-to-home and pickup-in-store to bring it in line with peers. But the optimism didn’t last long.
From rut to rally. The ETF that tracks retail’s biggest names, the XRT, is up almost 4% for June, putting it on course for its best month since February. On Monday the XRT gained about 1%, lifted by names like Walmart, Dollar General and Costco, all of which hit multiyear highs.
Retail shrink had an estimated $50.6 billion impact on the industry in 2018, according to the National Retail Security Survey release last week by the National Retail Federation and the University of Florida. The prior year’s total was $46.8 billion, according to a press release emailed to Retail Dive.
Poshmark started eight years ago as a way for women to offload their extra clothes and make money, like a more social eBay where people could comment and share the clothes they liked. It has since become a retail empire that racked up an estimated $140 million in revenue in 2018, thanks to its 20% cut of every sale.
A broad selection of retail stocks got pounded last month as the sector reacted to trade tensions between the U.S. and both China and Mexico. Retailers had previously warned about the potential effects of tariffs. The sector is highly sensitive to import taxes, especially from goods made in China since so many everyday products U.S. retailers sell come from there.
Despite mounting pressures on the retail sector, Spanish fashion giant Inditex has reported a 10% rise in first-quarter profit, as foreign currency effects moved back into its favour. And, as David Pollard reports, British online fashion group Boohoo defied a tough market with robust sales growth.
Luxury home furnishings retailer RH (NYSE: RH) has gone through a lot over the course of its history. After exploding onto the scene and generating huge demand, the company went to the brink of failure before successfully reinventing itself and transforming its business model. That’s helped RH to survive and thrive, but it hasn’t kept it from being vulnerable to changing conditions in the luxury retail business.
For most of the history of retail, the physical market structure drove sales volume. Top retailers were easy to identify by the number of locations and the retail was managed largely at the store level. Inventory selection was important over time, but not readily visible. “Location, location, location” was the rallying cry.
The Inditex Group, which this week released its earnings report, has reported 43 store closures during the period, and now has 7,447 remaining locations. Stradivarius, which reported 15 store closures between February and April, is the retail chain that has shrunk the most.
E-commerce fans in Spain are growing by the minute, thanks to the convenience of not having to physically go to the store, buying with a single click, selecting a delivery date, being able to access a wider market or exclusive collections from home, etc. In fact, e-commerce climbed to 40 billion euros in 2018, 27.6% more than in 2017.
Retail sales rose 0.5% in May, the Commerce Department reported Friday, worse than expected. Excluding autos, sales also climbed 0.5%, but topping forecasts. May’s mixed results don’t fully alleviate doubts about the strength of the consumer, but upward revisions to April data helped.