Swimming Against The Tide

Swimming Against The Tide

Month of August

One of the retail sectors that continues to thrive in the US and Europe is home improvement stores. Companies like The Home Depot operate in a niche market that never stops generating new consumers who are looking for this thing or that to improve their homes or do major remodels. This is quite significant, given that the news of U.S. store closures continues to monopolize the headlines from various local media outlets. Home improvement is an interesting business: companies work with large volumes of products, so logistics hubs are essential to managing inventory, apart from having employees that actually know what they are talking about and understand the needs of each customer, who often don’t even know what they need.

 

“I think that Amazon, although there are certain benefits to it, destroyed the retail industry across the United States. There’s no question they have limited competition”. With those harsh words, Steven Mnuchin, the U.S. Secretary of the Treasury, referred to the Jeff Bezos-founded company.  

 

Investment volume exceeded 550 million euros in the first half of 2019, slightly improving the pace of investment in the first quarter, according to the Retail Snapshot report prepared by the real estate consultancy Knight Frank.

 

Amid the shuttering of many brick-and-mortar stores and slow growth in retail spending overall, there is one bright star: home improvement stores.  Emblematic of this is the continued strong growth in revenue at Home Depot and other stores in the home improvement sector.

 

I sometimes think that if you could look in the safe behind Jeff Bezos’ desk, instead of the sports almanac from Back to the Future you’d find an Encyclopedia of Retail, written in maybe 1985.  There would be Post-It notes on every page, and every one of those notes would have been turned into a team and maybe a product.

 

If the carnage in the retail industry seemed bad last year, it pales in comparison to the damage the sector is suffering in 2019. Already above the pace 2018 set, U.S. store closing could exceed 12,000 this year. That’s according to Coresight Research, which pegs the count of retail outlets that have closed in 2019 at 7,062, versus 3,017 stores opening.

 

Amazon.com Inc., landlords who charge sky-high rents, brands that fail to adapt.  The carnage in the retail industry has been blamed on all of them. Now Wall Street is being blamed too. 

 

J.C. Penney is among the latest additions to Fitch Rating’s “loans of concern” list, indicating a high risk of default on a $1.6 billion loan balance at the department store retailer, according to an emailed report.

 

Global data analytics and advisory firm, Quantzig, that delivers actionable analytics solutions to resolve complex business problems has announced the completion of their latest retail customer segmentation engagement for a leading European retailer.

 

Aritzia Inc., the Canadian chain of boutiques favored by Meghan Markle, appears to have cracked the code to the US retail market. As competitors shut down locations and slash costs, the seller of upscale women’s clothing is pursuing an alternate strategy. It involves opening stores and staffing them with thousands of style advisers.

 

For years, Tesla Inc.’s Elon Musk loved his chain of stores and service centers.  Quarter after quarter, the carmaker kept adding more, even waging legal battles to set up shop in states where dealers tried to block him.

 

All that investment in innovation pays off, so says the National Retail Federation, which found that three out of five “consumers feel retail technologies have improved their shopping experiences.”  Not only that, but those consumers have noticed a particular improvement when shopping online, with eight in 10 saying they’ve had better interactions thanks to retailers’ technology investments.

 

I recently had the opportunity to talk to Deb Gabor from Sol Marketing on a podcast. She focuses on customer experiences, especially customer journeys as ‘hero journeys’ in the literary sense.

Dimas Gimeno

Spanish retail leader with more than 20 years of experience in the sector. A specialist in digital transformation, omnichannel and new business models. From 2014 to 2018, President of El Corte Inglés, one of Spain’s leading companies and a leader in the European retail sector, with a turnover of 16 billion euros, 90 stores in Spain and Portugal, and more than 92,000 employees.


Follow Dimas on Twitter & LinkedIN
No Comments

Post A Comment