Written by Stephanie Chan, Sept 10, 2020
As Covid-19 continues to affect the retail industry in the US, we feel the need to consolidate data and information to highlight current retail performance and trends during the pandemic. In this article we uncover the categories and companies thriving as they follow their strategy to success, so that retailers and suppliers can follow up closely with the latest market movement.
Key Retail Performance
Under the effect of Covid-19, US brick and mortar retailers have suffered tremendously due to lock downs and store closing. It did however give rise to eCommerce as well as various types of shopping trends, including but not limited to mobile shopping, curbside pickup, one day delivery, and subscription service etc. We will talk about how the retailers who deployed these strategies have bounced back and increased their revenue despite the difficult circumstance. From the data released by the Department of Commerce, we looked at key retail performance year over year sales percentage from July 2019. The growth of online shopping is off the charts, while home, tech, sporting goods and general merchandise enjoyed large increases, other areas like clothing and accessories suffered.
Key Online Sale Growth
With brick and mortar stores closing as well as safety concerns, online sales were boosted a lot by the consumers looking for alternative options. Ecommerce trends were already on a rising trajectory, but the pandemic pushed it to the next level. Companies who have previously invested in E-commerce infrastructure enjoyed high traffic and sales to their platforms. Companies that saw dramatic increases including BestBuy with a 242% boost, Target and Dick’s Sporting Goods with a respective 196% and 194% increase, and others like Walmart, Lowe’s and Home Depot also saw improvement to their online sales. It is important to note that not every retailer with an e-commerce platform saw an increase in their sales, as the increased sales are also correlated to certain retail categories that thrived during Covid-19.
Key Retail Categories
The four retail categories that performed well were home tech, sporting goods, and general merchandise. With lockdowns and travel restrictions, people are spending more time at home, which increases spending on furniture, home furnishings, and home improvement products. The companies that benefited from this trend are Home Depot, Tractor Supply, and Lowe’s.
Home Depot reported second quarter net sales were up 23.4% to $38 billion, and comparable sales were up 23.4%. In the U.S., comp sales surged about 25%. Out of the total sales, online sales grew 100%, and the mobile apps saw a surge in number of downloads. By expanding its delivery and pick up options, the company made it easy for customers to shop at the store. In fact, more than 60% of them were fulfilled at the store. In order to accommodate the inconvenience of traveling during the pandemic, Home Depot also extended their return policies to make it easier for the shoppers.
With the company slogan “The Stuff You Need Out Here”, Tractor Supply takes a prominent position in the niche market of agriculture, home improvement, lawn and garden maintenance, livestock, equine and pet care. Even before the pandemic, Tractor Supply has already rolled out several initiatives to keep the brand competitive in the market, including e-commerce platform, mobile shopping, and expanded delivery options. Many trending moves such as BOPIS (buy online pick up in-store) and curbside pickup were already adapted by the company long before it was popular. Tractor Supply has a 35% increased net sales, and a 30.5% increased store sales. Despite store closings due to COVID, Tractor Supply emphasizes the importance of physical touch points, and they are planning to open 75-80 new brick and mortar stores across the US.
Lowes also enjoyed a 30% increase in sales, with total comps rose 34.2% and 35% in the US respectively, the total amount slightly ahead of Home Depot. Consumer focus on home improvement, repair, and maintenance really helped the retailer regain their sales. Lowes also initiated many efforts during the pandemic, including employee bonus pay and COVID community donations. To innovate itself even further, the brand recently worked with New York Fashion Week on a home decor theme for the runway backdrop.
Given the need for increased virtual learning and work from home policies adopted by companies, consumers continue to increase their spending on in-home technology, electronics, and appliances. BestBuy benefited the most, with its domestic revenue rising 3.5% and online revenue rose to 53.1% of domestic revenue, in comparison to last year’s 16.1%.
During stay at home orders more people became conscious about their health and wellbeing, leading to increased sales of home gym equipment as well as outdoor activities gear. Dick’s Sporting Goods saw more than 20% increase in net sales and online sales ballooned by 194%.
Things that sold well included fishing & basketball equipment, bikes, workout apparel and other exercise equipment, as well as camping and outdoor gear. The company’s data reflected an increased number of traditionally less-active customers engaging in fitness activities over the last few months.
With more consumers staying home or consolidating their shopping trips, and avoiding malls all together, ecommerce general merchandise giants like Amazon are seeing a boost in general merchandise products like electronics, tools, stationary and in-home consumables. Retailers such as Dollar General, Target, and Walmart benefited from this trend as well.
Dollar General comparable sales increased in consumables, home, apparel and seasonal categories. Overall its net sales increased 24.4% while comps increased 18.8%. With its pickup and fresh and non-consumables initiative as well as the convenience of 17,000 locations across US, Dollar General edged out its competitors.
As the 8th largest general merchandise retailer in the US, Target had an excellent sales growth of 24.3% in Q2 2020. Its store comp grew 10.9% and digital comp grew 195%. Its same-day services were up an extraordinary amount of 273%. Target focused on its omni-channel initiatives to reach customers from all aspects. Besides curbside pickup, it emphasized on its stores being the center of fulfillment to maximize the potential of physical stores being physically located closer to customers than warehouses. This way it allowed products to get to customers faster.
While US retail has been hit hard during the pandemic, in this article we have highlighted the bright spots in retail and the strategies deployed by different retailers to stay ahead of the curve. As we closely monitor the changes in customer behavior and technology trends during COVID, it may be helpful to reference what has already worked for others.
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Written by Stephanie Chan, Sept 10, 2020