Our annual Top 100 Housewares Retailers report (September 12, 2016, issue) presents a vivid look at shifting market share in a demanding retail economy. It follows a flurry of second quarter retail sales reports that further underscore today’s judicious consumer shopping patterns.
In The News
Consider this sample of HomeWorld headlines in August: “Amazon Surges In Second Quarter;” “Kohl’s Q2 Sales Down 2%;” “Macy’s To Close 100 Stores;” “Wayfair Sales Jump, Loss Widens;” “Dillard’s Q2 Earnings Fall;” “Home Boosts J.C. Penney Q2;” “Home Depot Delivers Solid Q2;” “HomeGoods Drives Strong Q2 For TJX;” “Target Sales Slip In Q2;” “Walmart Maintains Momentum In Q2;” “Lowe’s Sales, Earnings Rise In Q2;” “Ross Stores Boosts Q2 Earnings, Comps;” “Sears Slides In Q2;” “Dollar Tree Gains But Q2 Falls Short;” “Big Lots Q2 Comp Sales Rise Slightly;” and “Dollar General Comps Sluggish In Q2.”
There are myriad conclusions to draw from these headlines, including the mounting challenges of department stores; the continuing surge of off-price outlets; the improving stake for home improvement retailers; and the profit pressure on e-commerce players despite rising sales.
The Q2 results on the whole, though, reveal a sturdier overall retail market than today’s cautious business climate otherwise indicates. It’s more a matter of who is winning and who is losing the battle for traffic and dollars.
Stop Whining
Jim Cramer of CNBC’s “Mad Money” recently proclaimed rumors of the death of shopping malls at the hands of Amazon were premature. “Business is just too strong to keep whining,” Cramer declared, noting among several encouraging retail developments the progress at J.C. Penney and Bed Bath & Beyond.
Cramer singled out Walmart as the biggest comeback newsmaker. He credited Walmart’s reenergized workforce, stronger supply chain and improved online mix for renewing the positive momentum ahead of its landmark acquisition of Jet.com.
Jet.com would advance Walmart’s online infrastructure virtually overnight while widening its access to younger shoppers attracted by Jet’s buy-more-save-more market basket strategy that syncs well with Walmart’s value play.
Next Wave
Expect the Walmart-Jet deal to stoke the next retail acquisition wave of Amazon-challenged brick-and-mortar leaders buying profit-challenged e-commerce pure-players as a more efficient way to catch up digitally.
Bed Bath & Beyond’s One Kings Lane buy fits this bill on a moderate scale. There are lots of smaller e-commerce operators that could be in play. And don’t be surprised by growing competition among brick-and-mortar leaders to make aggressive moves on such digital big-timers as Wayfair and Overstock.
That presents the best options for both sides in the escalating fight to win share in a more demanding retail marketplace that might not be as weak overall as it sometimes seems.
And it should make for some fascinating retail headlines.
