Neil Saunders’ Post

1,300 stores are closing across the US, screams the headline (link to article in the comments). Alas, it's true, some stores are closing. The good news is that this isn't unusual. Stores open, stores close. It's the birth and death cycle of retail and it's actually perfectly normal - healthy, even. The better news, that the headline doesn't share, is that across the first half of this year more stores have opened than have closed. In fact, openings are currently outpacing closings by around 20%. There's also a shortage of good retail space, so many outlets that shut up shop are soon leased to other players looking to expand. The way people look at retail is always a case of glass half empty or glass half full. But, objectively, in this case the glass is actually more than half full. #retail #retailnews #stores #shops #realestate #leasing

You might remember from the story Goldilocks that the best porridge was neither too hot, nor was it too cold. It was somewhere in the middle. That lesson can arguably be applied to consumer spending right now. Consumer spending growth that comes in too low is damaging for retailers and for the wider economy. However, consumer spending that comes in too hot will spook the Federal Reserve and delay interest rate cuts. Such cuts would be welcome for retailers. Not only would they relieve some pressure, especially on lower- and middle-income households, they would also help to drive some activity in certain sectors of the consumer economy. The housing market, for example, has been extremely sluggish in terms of the number of transactions. In turn, this has put a dint in demand for home improvement and home furnishings. Categories that traditionally rely on credit or financing to drive purchases – think big ticket electricals, furniture, and autos – also suffer from higher rates. Reducing rates would not resolve all of the issues but it would be a broadly helpful move for retail. Fortunately, consumer spending in the form or retail sales is largely playing ball. For the year-to-date, core retail spending has risen by 3.2%. That’s a comfortable level of growth but is a shade below the average 3.6% annual growth rate produced during normalized (i.e. excluding recessions and the pandemic disruption) periods. These numbers include inflation. Once this is stripped out, underlying volumes increased by a much shallower 0.6%. That’s probably a little low for comfort and is well-below the long-run average of the past ten years. However, the good news is that there are no signals in the retail numbers that the economy is overheating and that lends itself to favoring some modest rate cuts. #retail #retailnews #economy #interestrates #spending #consumers

Here are some interesting stories from the world of retail for Wednesday July 10: 💊 Drug middlemen paid their own mail-order pharmacies as much as 200 times more than rival pharmacies for common cancer medicines, generating at least $1 billion in excess revenue, the FTC has found. 👟 Nike has announced the return of Tom Peddie, a former executive, to serve as its vice president of marketplace partners and rebuild the company's sales through third-party retailers. 👚 After coming under fire for its lack of inclusive sizing, Brandy Melville, the former Gen-Z retail darling known for its affordably-priced staples, looks to be experimenting with a new concept store called St George in Santa Monica. 🛠️ LL Flooring – previously known as Lumber Liquidators – may file for bankruptcy in the next few weeks. It is the latest company to struggle due to persistent inflation and cash-strapped customers. 🖼️ Etsy will allow the sale of artwork derived from the seller's own original prompts or AI tools as long as the artist discloses their use of AI in the item's listing description. 🏬 Kroger has released the locations of the assets they plan to offload to C&S Wholesale Grocers as they look to allay antitrust concerns over their proposed $24.6 billion merger with Albertsons Companies. ⏰ Adding another Alexa-enabled device to its product lineup, Amazon has launched the all-new Echo Spot smart alarm clock. Amazon is discounting the product during its Prime Day sale. 📦 Sam's Club is raising the bar for free shipping, following a trend a new survey reports is impacting retailers and customers nationwide. Plus members will have an $8 shipping fee waived only on orders worth at least $50. 📉 Federal Reserve Chair Jerome Powell said Tuesday that policymakers have been encouraged by recent data that suggests inflation is receding, and that continued progress would strengthen the case for an interest rate cut. ☕️ The price of coffee is set to rise from its current record high as climate change, shipping disruptions and new EU regulations drive up costs for roasters, Italian coffee giant Lavazza has warned. 👜 Luxury handbag maker Mulberry has announced a surprise change in chief executive, with Andrea Baldo taking over from Thierry Andretta. 🌾 Inditex has acquired a share in US-based sustainable agriculture start-up Galy as part of its strategy to invest in the sustainable economy. 🌯 Chipotle Mexican Grill’s longtime chief financial officer, Jack Hartung, is retiring in March, with company veteran Adam Rymer set to succeed him. 👷🏼 RJ Cilley has left his position as Saks Fifth Avenue’s chief operating officer and is now chief executive officer at HVAC and plumbing startup Voomi Supply. 👍🏼 Small business sentiment in the U.S. unexpectedly rose in June and at a faster than expected pace, to reach its highest level so far this year. #retail #retailnews #economy #DailyRetailNews

There are rumors flying around that Big Lots may have to close more stores. Indeed, things at the discount retailer are so bad that the future of the business might even be in doubt. Given the state of the financials, it’s hardly surprising. In its last fiscal year, Big Lots’ sales plunged by 15.8% - and this poor performance was delivered with the benefit of an extra week of trade and off the back of a 12.5% decline in the prior year. Things on the bottom line are little better. Last year, net losses totaled $482 million. In various filings and discissions, management has been keen to blame a pressured consumer for the decline in its fortunes. However, given a lot of other discount formats are seeing strong growth, this excuse seems curious. Indeed, across the categories that Big Lots sells, there is nowhere near this level of decline in the market as a whole. So, something else must be going on. The biggest issue is that despite its strapline of being “America’s Home Discount Store”, Big Lots is not always good value for money. Many of the items it sells are not high end and are not drastically expensive, but equivalents can often be found much cheaper at stores like Target and Walmart. The other issue is that the assortment is very jumbled and muddled, which is partly a function of the way the business operates. However, there is far too much choice and not nearly enough treasure for consumers to be enticed by. This creates an unsatisfactory shopping experience, especially compared to other players operating in the discount space, such as off-price retailers. So, while it is true that the external environment is unhelpful, most of the sales issues are internal. I previously spoke with Retail Dive about some of this - link to article in comments. #retail #retailnews #discount #valueretail #offprice

A quick trip to a relatively new Mother's Market & Kitchen store - the chain's third in LA and its twelfth overall. What's good about this store is how fresh and modern it feels. There are too many grocery stores in the US that feel a bit grotty and old - especially from the legacy players like Kroger, et al. The focus on grab and go - which is a growing area of the market - is good, with a solid selection of foods and beverages. The juice bar is also a nice addition to the store and helps underline the focus on health and quality produce. The beauty aisle is quite dense, but is well organized and nicely lit - which gives it a different feel from the rest of the store. Again, wellness supplements are a fast-growing part of the market, so it is sensible to place emphasis here. All in all, a great little store. And good to see smaller chains expanding and doing well. #retail #retailnews #grocery #supermarkets #food #stores

Here are some interesting stories from the world of retail for Tuesday, July 9: 🌟 Walmart's members-only sales event is in the rearview, and Amazon's Prime Day isn't for another week, the war between the two biggest retailers isn't on pause as Walmart offers membership discounts. 📦 A US judge has dismissed a proposed class action against Amazon accusing it of obscuring product listings for lower-priced items with better delivery times. 🏬 Big Lots’ troubles are mounting. In an SEC filing, the Ohio-based discounter revealed it plans to close between 35 to 40 stores in 2024 - putting the blame on elevated inflation that has put a damper on customers buying power. 🚇 The state of retail in New York City’s vast underground subway system is, in a word, bleak. Nearly 75 percent of shops operated by the Metropolitan Transportation Authority are vacant. 🤖 Ocado's shares rose as the company announced a deal to construct its third robotic warehouse in Japan. The online supermarket and tech group will build the warehouse for Japanese retailer Aeon in Kuki-Miyashiro. 💵 The self-checkout market experienced a new record year in 2023, according to a recent report from RBR Data Services. Over 217,000 terminals were delivered globally, up 12% year over year. 📈 Even as inflation cools, customers are still bristling at higher prices and say inflation is a major concern. Walmart, Chipotle Mexican Grill and Wendy's are among the companies that have felt the ire of customers on social media.. 🚢 US retailers are shrugging off a tripling of spot freight prices, rushing to ship holiday goods earlier than expected as they bet that robust consumer demand will offset higher shipping costs. 🚚 Chinese fast-fashion giant SHEIN is looking to expand its supply chain throughout the United States — and experts warn its plans may pose serious cybersecurity risks. 🍒 Cherry prices are under pressure after cold weather delayed California’s cherry harvest, overlapping its season with Washington’s. The market was flooded with product. 💳 When eBay said it would drop American Express it insisted that it would expand options for its customers. It later provided a clue with a blog post announcing eBay users will soon be able to pay with Venmo. 🔌 Best Buy Canada recently opened its first small-format store in British Columbia in a partnership with Bell Canada. The companies plan to open 167 Best Buy Express-branded stores by the end of this year. 🥛 Meijer doubles milk discount for SNAP participants. Customers who use SNAP can now receive 40% off any brand or size of 1% or fat free milk purchased in-store or online. 🚔 El Salvador’s hardline president has threatened to treat shopkeepers accused of price gouging like the gangsters he rounded up in sweeping reforms at the start of his controversial presidency. #retail #retailnews #economy #DailyRetailNews

Food inflation has been horrific. In May, prices for food bought at grocery stores was up by 26.3% over the same period in 2019. The crumb of comfort is that the rate of increase is now leveling off. On a one year basis, food prices in May rose by only 1.0%. That doesn't unwind all of the previous inflation, but it least it means the trend is headed in the right direction. The power to raise prices is slipping away from many of the big CPG companies as consumers reach a tipping point and double down on money-saving behavior. From our own data we know that even as inflation has moderated, the number of people buying on promotion has increased. So too has brand switching. Making consumable products last longer and stretch further is another coping mechanism on that has shot up. As such, it was interesting to read in the Financial Times (link in comments) that CPG firms are now rolling out more discounts in an attempt to take the edge of price increases and bolster their volumes. It isn't complete relief for the consumer, but it's a step in the right direction. #retail #retailnews #CPG #FMCG #pricing #promotions #inflation

Now that it is out of bankruptcy, the work of rebuilding JOANN Stores has begun. One of the first initiatives is a new brand campaign. The marketing strikes the right notes as Joann needs to push more heavily into the joy of creating and the community it can foster in a bid to capture more customers and drive more interest. The number of people undertaking crafting has declined over recent years since the pandemic, so trying to boost participation is helpful. The decision to aim the campaign at younger consumers and use influencers and social channels is interesting. Crafting is an activity that Gen Z undertakes but they tend to be much more digitally focused in their buying and content consumption. Joann is trying to move onto this turf. While marketing is an important ingredient, there are other things Joann needs to be doing including investing in stores and improving ranges. In my view, only a multi-pronged approach can get Joann back on track. Great to chat with Retail Dive about the move. A link to the article is in the comments. #retail #retailnews #crafting #marketing #campaigns #crafts