Retailers see staffing challenges as omicron rages, gross sales taking a success

A sign saying “Now Hiring” is posted in an Urban Outfitters store in San Francisco.

David Paul Morris | Bloomberg | Getty Images

Retail executives presenting at the ICR virtual conference this week explain how the highly contagious Omicron variant drives sales and leaves stores and distribution centers understaffed.

But investors seem to be shrugging the bad news as they see it as a short-term challenge. For many retailers, the silver lining is that consumer demand appears to be well intact.

Lululemon said sales will be in the November-January quarter are at the lower end of their previous expectations because working hours had to be reduced at some locations due to a lack of labor. Lands’ End said it had been a difficult time hiring. Abercrombie & Fitch lowers its sales estimate for the fourth quarter because it didn’t have enough goods in stock to meet consumer demand. While Urban Outfitters said shoppers’ visits to its stores had not increased as planned in December, and were instead purchased on its websites.

Still, Abercrombie shares rose nearly 8% on Tuesday lunchtime, while its rival American Eagle Outfitter increased by about 3%. Urban Outfitters ‘stock rose nearly 2% and Lands’ End rose a little over 2%.

And these are just a few examples of how the recent surge in Covid cases in the US is sure to continue to rock the retail sector in the coming weeks. On Monday, around 1.5 million new cases of Covid-19 have been reported, according to data from Johns Hopkins University, bringing the seven-day average of new cases to 754,000 daily. While many vaccinated people infected with the virus say symptoms are mild, hospital admissions are on the rise, especially for those who get sick and are not fully vaccinated.

While these retailers may be weeks away from releasing full Christmas quarter results, the revised forecasts and comments provide analysts and investors with a preview of what’s to come. Companies from Lululemon to American Eagle are also shedding light on how to deal with the effects of omicron.

Work overtime

Lands’ End chief financial officer Jim Gooch said Tuesday that some employees had been working overtime in the past few weeks.

“We know that the work will be a big problem. … We hope this will normalize in the future, but this year has been a challenge,” he said during an ICR presentation. “And that’s why the teams are doing what they can to try to come out on top this year.”

Abercrombie & Fitch said Tuesday it was able to drag workers from one of its brands into stores of another brand in order to keep the doors open when workers call in sick. The company also owns Hollister and Gilly Hicks.

“In a mall where we have multiple brands and we have a staffing problem because we have a store that might come into contact with Covid, we can borrow staff from the other stores and that has helped us tremendously,” said Abercrombie Chief Executive Fran Horowitz, during an ICR presentation.

As a result, Horowitz said, Abercrombie has not had to close any stores entirely due to Covid outbreaks. However, it has temporarily reduced opening hours in some locations, she said. That’s an approach that companies take off Macys to gap to Nike also recently took.

“A little déjà vu”

“The first day of ICR 2022 was a little déjà-vu where we all sat in front of our computers and went from meeting to meeting with one click,” said Dana Telsey, CEO and Chief Research Officer at Telsey Advisory Group.

“Unfortunately, the Omicron variant of Covid-19 appears to have the negative impact we all feared on sales and staffing levels in January,” she said in a statement to customers.

Urban Outfitters reported Tuesday that sales for the two-month period ended December 31st were up 14.6% compared to 2019. Digital sales grew double-digit during this period, while in-store sales declined a low double-digit percentage on a two-year basis, the company said.

“We believe omicron affects our store sales … It’s hard to say how much,” said CFO Melanie Marein-Efron during an ICR presentation. “As soon as your stores start restricting their hours of operation, you are clearly limiting the ability of consumers to get into your store.”

American Eagle, which also owns lingerie brand Aerie, predicts fourth-quarter sales will increase a medium-to-high percentage of teenagers year over year. According to refinitive data, this is less than the 21.5% increase forecast by analysts.

However, American Eagle raised its expectations for sales in 2023 from $ 5.5 billion to $ 5.8 billion, suggesting the effects of Covid will be temporary.

“We think it will be short-term if there is any impact, and more isolated in January … maybe into February,” said Mike Mathias, CFO of American Eagle, when asked about omicron. “We share resources as needed between tips in specific stores.”

Omicron compounds employee scarcity, provide chain woes for retailers

One shelf stands empty while customers shop in Columbus, Ohio.

Matthew Hatcher | Getty Images News | Getty Images

Shorten store opening hours, temporarily close locations, and send letters of apology to customers for long lines and late appointments.

These are some of the unusual steps retailers and restaurants are taking when Covid cases rise across the country, fueled by the fast-spreading variant of Omicron.

Corporations no longer worry about state and local governments shutting down stores.

Instead, companies struggle with labor shortages as people call in sick, become exposed to the virus, or seek childcare. And there is a risk of further supply chain problems as the highly contagious variant spreads around the world.

“There’s no question that staffing is definitely a big issue this time around,” said Stephanie Martz, chief administrative officer and general counsel for the National Retail Federation. “It was perhaps less measurable when we were at one point in the pandemic when so much was closed and everything so scaled down.”

“I don’t know if I would go as far as to say that we have an unprecedented number that can’t work, but it’s high,” she said. “It’s really high.”

Covid cases have increased. According to a CNBC analysis of data compiled by Johns Hopkins University through Thursday, the US reports a seven-day average of about 600,000 new cases each day, an all-time high, and up 72% from the previous week.

Source: Lauren Thomas, CNBC

An increasing number of sick, exposed or overworked workers has caused retailers and restaurants to take unusual steps as their existing work problems worsen. Macys Shortening hours of operation in locations across the country for the remainder of this month. Walmart almost 60 stores in coronavirus hotspots temporarily closed in December. And other employers, including Starbucks, Chipotle and Nike have been forced to close some of their doors as they simply don’t have enough people to keep them open.

Walgreens Sent an apology email to customers this week noting customer complaints about long lines, out of stock items, and delays in Covid vaccines or test appointments. In the note, the company’s executives mentioned the many tasks that pharmacy staff juggle – namely dispensing over 55 million Covid vaccines and more than 23 million Covid tests while filling out over a billion prescriptions annually.

“The system has been under heavy load,” said James Kehoe, chief financial officer of Walgreens, on a conference call on Thursday on the company’s results. He said the company will spend around $ 120 million more on workers to help its elongated, thin workforce.

Morgan Harris is the shop owner of the Green Bambino in Oklahoma City. She said the store, which sells baby items from toys to strollers, is facing staff shortages and she feared it could get worse.

Morgan Harris

Regular opening times go ‘out of the window’

For understaffed retailers, reducing working hours is one of the first logical steps, said Craig Rowley, senior client partner at Korn Ferry and director of the company’s retail division. Some stores will be scaled back on weekdays when only a small percentage of sales are happening compared to busier weekends, he said.

He said pandemic-related changes could lead retailers to permanently rethink store opening hours, especially as more sales go online.

“The labor shortage of [Covid] goes to almost any customer-facing business, “said Rowley.

Morgan Harris owns Green Bambino, an Oklahoma City store that sells baby items such as onesies, diapers, and toys. She said she had to ditch one of the most important retail rules as it operates with four employees – less than half of the 10-15 people she would have expected. The store had to change its schedule. It is now open five days a week instead of seven.

Now she sees some corporate giants doing the same when they are hit by the “Great Resignation” and further squeezed by the wave of omicrones.

“In the past, you never changed your opening times in retail,” she said. “That’s out the window.”

Some companies have gotten better at using technology to notify customers of staff shortages or store closures. For example, a understaffed Chipotle location can turn off digital orders through their app and instead focus on in-store transactions while nearby restaurants take delivery and online orders.

Rowley said the good news is that retailers and restaurant chains at least survived the vacation rush. “The workforce is no longer what it was before Christmas, so companies have that advantage,” he said.

Retailers could even ask temporary vacationers to stay in the New Year and work extra hours, he added.

However, Harris said she feared Green Bambino may have to deal with leaner staff even if sales skyrocket. Annual sales rose to nearly $ 900,000 last year – 23% more than in 2020 and 14% more than before the pandemic in 2019.

Applications have slowed down to a trickle despite seeking the help of a recruiter. And she said the omicron wave hasn’t reached the region yet – which could mean more employees calling in sick.

“I assume that our staff will continue to shrink and not get bigger,” she said. “I have very little hope that all of a sudden we will find all these great people and attract them.”

In addition, the recent wave of the pandemic could further delay the return to continuous deliveries of popular baby items such as car seats and strollers. The business is pulling out of the furniture business due to delivery delays and higher freight costs. It stopped accepting deposits for many items because it couldn’t predict if – or when – those large items would be back in stock.

“I don’t feel like I’m reinventing business every two weeks like I was in 2020, but we have no idea what business to do after the pandemic,” she said. “The uncertainty will linger for a few more months, if not longer.”

A customer waits for a contactless roadside pickup at the Recreational Equipment Inc. (REI) flagship store in Seattle, Washington, USA on Thursday, May 14, 2020.

Chona Kasinger | Bloomberg | Getty Images

Muscle memory

Shoppers, on the other hand, have continued to spend money – even with some browsing online rather than down aisles or switching to roadside pickup or home delivery, which have become part of their muscle memory.

According to a survey by Coresight Research of more than 500 US consumers on December 27, compared to the previous weeks, avoiding some public places has crept in again slightly. An increasing number of consumers said they were withdrawing from activities such as international travel and using public transport. Almost 66% of respondents said they avoid any public place – up from 62% when the survey was conducted on December 13th.

About 38% of respondents said they avoided shopping malls and shopping malls and about 33% said they avoided restaurants, bars and cafes, up from 32% and 30% two weeks ago.

However, the company’s survey showed no significant changes in what consumers were buying or how much they were spending.

The hospitality industry may find itself in another downturn. Restaurant analyst Black Box Intelligence found that restaurant sales declined for the first time since mid-March in the week ending December 26, but the reversal was largely due to Christmas, which fell on a weekend that year, and the rise in omicrones .

OpenTable data shows that in the United States, fewer seats were reserved with online, phone, and walk-in reservations in the first week of 2022 compared to pre-pandemic levels, but consumers could have take-away switch or try to stick to New Year’s resolutions.

If that happens, it could mean Americans are spending on things rather than services. Christmas sales were well on their way to hitting a record high of up to 11.5%, according to the National Retail Federation. (The final numbers won’t be released until the end of next week.)

The retail company’s chief economist, Jack Kleinhenz, said: Increased consumer appetites for goods and reluctance to spend on travel, restaurants and other expenses could fuel inflation.

John Mercer, research director at Coresight Research, said that for the most part, shoppers “roll their eyes, take a deep breath, and sigh, and then move on as much as possible.”

“It’s very different this time,” he said. “Consumers were jabbed twice, three times. You have seen this before. It’s really obvious that Omicron is generally much weaker in other countries. “

Almost three in four Americans are fully vaccinated as of Thursday, according to the Centers for Disease Control and Prevention. To date, 73 million people have received a booster vaccination – that’s roughly 22% of the US population. And on Wednesday the CDC gave the go-ahead Pfizer and BioNTech‘s Covid Booster Shots for children from 12 to 15 years.

And there is some evidence suggests that Omicron is milder than previous variants, according to World Health Organization officials.

That could begin to change the outlook for Americans who get sick. The country reports an average of around 1,250 deaths per day, Hopkins data shows, well below the record highs after last year’s Christmas season, when the daily average was above 3,000 for about a month from January 2021. The death toll tends to fall, but the number of cases and hospital admissions increases.

Martz of NRF said both retailers and consumers understand the coronavirus better. That has led to a greater emphasis on tools like booster shots, home Covid tests, and better masks, rather than wiping down counters or installing Plexiglas panels.

One way the industry is moving forward is to host their annual conference in person. NRF’s Big Show is next week in New York City at the Javits Center – previously a mega-center for Covid vaccines and possibly the source of the first known case of omicron spread in the United States.

Martz admitted the conference will look different than it did before the pandemic. All participants must wear a mask and present a vaccination card. The booths in the showroom may have fewer staff. And the trading group will distribute Covid tests at home and host a mobile testing unit.

Up to 20,000 visitors are expected – around half of the visitors in 2019.

Still, she said, it feels right to move forward as the frontline retail workers go to work in person, day in and day out.

“We believe this is a reasonable time to somehow get back together,” she said, although “it won’t look like our shows have done in the past.”

CNBCs Nate Rattner, Lauren Thomas, and Amelia Lucas contributed to this report.

What it means for retailers and consumers

A cotton field

Scott Olson | Getty Images

The last time cotton prices were this high was in July 2011.

“In 2011 we needed a prayer meeting”, Levi Strauss Chief Executive Chip Bergh told investors on a conference call Wednesday.

Bergh remembered just going to a denim dealer and finding his way around Levi’s store. But he was also staring down a historic rise in cotton prices. Cotton had skyrocketed to over $ 2 a pound as textile demand recovered from a global financial crisis, while India – a major cotton exporter – curtailed supplies to help its domestic partners.

The price of a cotton T-shirt rose an average of $ 1.50 to $ 2, said Jack Kleinhenz, chief economist for the National Retail Federation. Consumers felt the effects. And it also eats away at companies’ profits.

Bergh sits in the camp with analysts and experts who say current cotton price inflation will be less damaging to the industry. Manufacturers and dealers have pricing power. Businesses can pass the higher costs on without destroying consumer demand.

“It’s a completely different situation today,” said Bergh. “We have been able to accept the pricing for the past 12 months and it remains.

cotton Prices rose to a 10-year high on Friday, hitting $ 1.16 a pound, reaching levels not seen since July 7, 2011. The price of the commodity rose about 6% this week and is up 47% since the start of the year. Analysts note that profits are further boosted by traders rushing to cover their short positions.

The start-up results from a number of factors. Last December, the Trump administration did blocked companies in the United States from importing cotton and other cotton products which originated in the western Xinjiang region of China, as it was feared that it was made with forced labor by the Uyghur ethnic group. The ruling, which remained in effect during the Biden administration, has now forced Chinese companies to buy cotton from the US, manufacture goods with that cotton in China, and then sell it back to the US

Extreme weather, including droughts and heat waves, has also wiped out cotton crops in the United States, the world’s largest exporter of this commodity. In India, poor monsoon rains threaten to affect the country’s cotton production.

The momentum already has shares of Hanes brands, a clothing manufacturer known for its underwear and cotton t-shirts. Historically, HanesBrands stocks fall when cotton prices rise. The stock is down 7% over the past week. On Friday alone, stocks lost 5% to close at $ 16.23.

“Real pricing power”

Credit Suisse analyst Michael Binetti said he felt any worries or setbacks in retail stocks due to soaring cotton prices were exaggerated.

He said only 2% of HanesBrands’ cost of goods comes from buying cotton directly. In 2012 this value was higher at 6%.

After the rise in cotton prices in 2011, HanesBrands had raised the prices of various cotton goods three times by a double-digit percentage by 2012 to offset inflation, Binetti said. HanesBrands’ profits were still shrinking from all of the costs that faced them. But ultimately, the company sustained some of those price increases. Today the company is in a healthier position with higher profit margins, said the Credit Suisse analyst.

“We believe stocks are underestimating the strongest momentum this sector has not had in over a decade. Real pricing power,” said Binetti.

Retailers have achieved this pricing power by proactively deviating from discount channels and reducing excess inventory. The Covid pandemic acted as “cover” for companies to accelerate this change. Persistent bottlenecks in the supply chain have also played a role in the depletion of inventory. This dynamic has driven costs so high that companies are raising prices and consumers are still buying.

“We believe inventory will remain rational, margins will remain strong, and retailers will be able to enforce bigger and more consistent price increases than they have been in over a decade,” said Binetti. He expects cotton inflation to be temporary.

UBS analyst Robert Samuels said the retailers he believes will be hardest hit by soaring commodity prices are those who specialize in denim. Cotton makes up more than 90% of the raw materials used to make jeans and other denim items.

“As if retailers don’t have to worry enough about supply chain constraints and labor shortages,” Samuels said in a message to customers.

A stronger tip

But Levi has already tried to allay fears about his denim business.

In his earnings call, Levi said the majority of its product costs were already being negotiated by the first half of next year amid very low single-digit inflation. A mid-single-digit increase is expected for the second half of the year. And Levi said it plans to offset that increase with the pricing measures it has already taken.

Levi has shifted its business from predominantly wholesale to a mixed base that has a growing share of direct sales to consumers. And with strong consumer demand and tighter inventory, the company was able to sell more products at full price.

Cotton accounts for about 20% of the cost of making a pair of Levi’s jeans, said CFO Harmit Singh, with each pair of jeans containing about two pounds of cotton.

Given the timing of his conference call, Levi was one of the first clothing retailers to speak out publicly about rising cotton prices. Others will publish their third quarter results in the coming weeks.

According to analysts at Goldman Sachs, given the timing of the contracted cotton purchases, it will be a while before rising cotton costs even show up in retailers’ profit and loss accounts. And it’s worth noting that cotton prices rose to more than $ 2 a pound in 2011, which is well above where the commodity is traded today.

Still, apparel stocks could come under pressure as higher prices persist. As examples, analysts cited companies such as Ralph Lauren, Gap Inc., Office brands, and Calvin Klein owners PVH. Shares in Kontoor Brands, which owns Wrangler and Lee jeans, fell nearly 6% over the past week, while PVH, Gap and Ralph Lauren were each down less than 2% for the week.

—CNBCs Michael Bloom contributed to this reporting.

Why retailers are embracing purchase now, pay later financing companies

Supply chains are jumbled and production is limited. For weeks, headlines have been telegraphing a clear message to buyers: This Christmas season shop early.

In recent years, early risers may have made holiday gift plans to reserve Christmas gifts and pay for their purchases over time. But many retailers – including the largest in the country, Walmart – have abolished or reduced these programs. One reason for this is that there are new tools available to buyers to distribute payments.

A popular option for consumers is to buy now, pay later. Dealers are big fans too. The point of sale loans are easy for retailers to manage, and research shows that these options translate into bigger shopping carts and greater customer loyalty. RBC Capital Markets estimates that a BNPL option increases retail conversion rates by 20% to 30% and increases the average ticket size between 30% and 50%.

Add incremental sales

“It’s about incrementality,” said Russell Isaacson, director of retail and automotive lending at Ally Lending, “to reach that incremental sale or incremental consumer.”

Installment payments offer consumers options and convenience when it comes to managing budgets and shopping, according to Hemal Nagarsheth, associate partner in Kearney’s Financial Services Practice. He said the option also builds trust between retailers and consumers, resulting in “incremental sales, higher average purchase sizes and higher frequency of purchases.”

Buy Now, Pay Later Payment plans offered by companies like Confirm, based in Australia additional payment and Klarna from Sweden, are particularly attractive to younger buyers, such as the coveted Generation Z and millennial consumers. While every plan has differences – from the number of payments to the specific terms and conditions – the most important thing they have in common is the promise of a handful of equal payments over a relatively short period of time with no hidden fees. Often the plans are interest-free.

Installment payments are more popular with consumers who either do not have access to credit or who do not want to shop with credit cards for various reasons. According to Hans Zandhuis, President of Ally Lending, the option also makes a lot of sense for buyers who don’t have the money to cover the entire purchase but who can survive the next paychecks.

The average transaction value is around $ 200 for a purchase that is paid for later, Zandhuis said. Often times, if the option to pay later had not been available, the checkout value for the retailer would have been around $ 100, he said. This allows the same consumer to spend $ 175 to $ 200, with 4 monthly payments of $ 50. Payments should match the paycheck cycles.

Take the clothing retailer Rue21, for example. The most important target group is an 18 to 25 year old shopper who often does not use credit cards. With lots of cheap items on the website and decreasing traffic in the malls, increasing the average order volume is a top priority.

When the pandemic closed stores, Rue21 had to figure out how to sell to its buyers online with no credit. Since Rue21 added Klarna as a payment option in-store and online, the average order volume is 73% higher than other payment methods published a case study by Klarna. Rue21 shoppers doing business with Klarna have the highest sales per customer with a 6% higher purchase frequency. In May, Klarna purchases made up more than a quarter of rue21’s e-commerce sales.

A logo sign outside of a retail store on rue21 in Chambersburg, Pennsylvania on January 25, 2019.

Kristoffer Tripplaar | Sipa over AP pictures

Affirm boasts that its merchant customers report an 85% increase in average order value when consumers choose to use its BNPL plan over other payment methods. Affirm approves installment payments for purchases up to $ 17,500, which has been proven to be very important to Pelotons expensive exercise equipment and services. FT Partners, an investment bank focused on the fintech space, estimated that 30% of Affirm’s revenue in the first quarter of 2021 came from sales on the Peloton website.

Klarna’s merchant base reports a 45% increase in average order value when a buyer pays more than four payments. Buyers can also choose to pay interest-free within 30 days or, for larger purchases, get financing with monthly payments of 6 to 36 months with an APR between 0% and 29.9%.

New customers

Attracting a customer whom a retailer might otherwise not have influenced is another benefit of offering a buy-it-now option.

Earlier this year Macys CEO Jeff Gennette told investors that his partnership with Klarna will help attract new customers.

“We launched Klarna on the Macy’s website in October [2020] and since then we have scaled it to Macy’s, Bloomingdale’s and Bluemercury both online and in stores, “he said.” With Klarna we continue to see higher spend per visit and increased acquisition of new younger customers, 45% are under 40 years old. Our goal is to turn all of these new customers into loyal Macy’s customers who will come back for future purchases. “

Around 93% of Afterpay’s gross goods value in the last financial year came from repeat users of the installment payment service, with the longest-serving consumer making 30 additional transactions per year.

Higher conversion

Installment payments allow the retailer to “a [consumer’s] Desire into a sale, “said Chris Ventry, vice president of global advisory group SS&A.” It removes the payment block, “said Ventry through BNPL is enticing, ultimately enticing enough to drive conversion, which is the primary goal of all digital commerce websites . “

An analysis by Similarweb of the top 100 US fashion and retail websites compared 50 retailers who offer a buy-it-now option at checkout and 50 who don’t. On average, sites with a BNPL option had a conversion rate of 6% compared to 4% for those who didn’t.

Afterpay said it increases a retailer’s conversion rate and additional sales by 20 to 30% more than other payment options.

The incremental sales and increased conversion also make the additional transaction costs that the retailer pays to the fintech companies worthwhile. Zandhuis said that while the retailer pays the BNPL company an additional 2% higher transaction fees compared to the transaction fees charged by a traditional credit card company, “the math speaks for itself. The additional revenue is greater than the cost.”

Afterpay and Klarna charge merchants a 3% to 5% transaction fee, Affirm declined to disclose its transaction fees.

The programs also have advantages over the traditional layaway, which requires retailers to store items purchased locally while customers make installment payments over time. More and more retailers are using stores as mini-fulfillment centers to service online orders. With this model, the storage space is scarce.

Growth opportunity

Buy now, pay later, according to FIS Worldpay, is the fastest growing e-commerce payment method in the world, followed by the growth of digital wallets. In 2019, the $ 60 billion BNPL market accounted for 2.6% of global e-commerce, excluding China.

Worldpay estimates that use of the option could grow to $ 166 billion by 2023, with an average annual growth rate of 28%. At this rate, it would account for around 5% of global e-commerce outside of China.

According to FIS WorldPay, BNPL currently accounts for less than 2% of North American sales.

Coresight Senior Analyst John Harmon recognizes the opportunity for retailers but does not see it as a panacea.

“I don’t see BNPL as a magical solution, despite its booming adoption, as it’s just a different kind of loan,” Harmon said.

‘Model Edina’ trend occasion hopes to showcase Edina retailers

EDINA, Minn – Style Edina is back for her 2021 fashion show.

Stylist Jodi Mayers, who hosts and produces the show, visited KARE 11 on Saturday to talk about the event and share the latest fashion trends and styling tips for fall.

Mayers said Style Edina is a partnership between retailers from Galleria, Southdale Center and 50th & France, as well as more than 30 volunteer models.

Style Edina 2021 takes place on Sunday, September 26th at the Westin Edina Galleria. It runs from 10 a.m. to 1 p.m., with pop-up shopping and an annotated fashion show. In addition, Mayer added, there will be mimosas. Tickets are available online.

The event benefits a different Edina non-profit organization every year. That year Mayers said the nonprofit partner was Edina ABC, a local branch of a national organization that provides educational opportunities for color students.

Walmart launches supply enterprise to attach different native retailers with shoppers

Walmart announced Tuesday the launch of a delivery service called GoLocal that will move goods from other local retailers to consumers.

The company said it expects delivery to begin in late 2021 and that the delivery fleet will include newer technologies like self-driving vehicles and drones.

“It’s about bringing the skills we at Walmart have focused on building and connecting for our own customers to life for local and national businesses,” said Tom Ward, senior vice president of Last Mile at Walmart CNBC.

Walmart said GoLocal will be a white label service, which means deliveries will not be made on Walmart-branded vehicles. The company said it will offer two-hour shipping at competitive prices, as well as a two-day delivery option. Deliveries are handled by a combination of staff, gig staff, and sometimes other delivery companies.

Walmart is currently partnered with FedEx for online parcel delivery. The company wouldn’t say if FedEx is being used for GoLocal.

However, Ward said the company will find innovative delivery partners including Cruise, a self-driving electric vehicle startup that the retailer invested in last year, as well as Waymo and Nuro. The delivery of drones will also be a focus Partners like DroneUP, another company Walmart invested in last year, as well as ZipLine and FlyTrex.

“We’re excited to have all these different disruptive technologies as we scale up that bring the final mile together at Walmart,” said Ward.

Walmart has spent the past five years building its ability to deliver goods to customers. In August 2016, it acquired the e-commerce start-up for $ 3.3 billion. In March 2018, Walmart launched its Grocery delivery serviceTo fulfill orders from Walmart stores. The company started Walmart Fulfillment Services in February 2020 to compete with the growth of marketplace-centric websites like Amazon and Shopify.

The company closed down in May 2020, but CEO Doug McMillon credited the acquisition Supporting Walmart in expanding its delivery network.

Amazon has a similar service called Amazon shipping, in 2018 designed to compete with UPS and FedEx, however it has stopped working in June 2020.

David Vernon, senior transportation analyst at Bernstein, said a retailer’s local delivery service was unlikely to have a significant impact on FedEx and UPS revenues.

“The local delivery market has 230,000 companies competing in every city across America,” Vernon told CNBC. “There are two national packet networks. They have some overlap; business is shifting towards part of this local business. But in the long run, it’s not exactly the same.”

GoLocal already has contracts with a number of national retail customers, according to Walmart, and will begin accepting applications for new partners starting Tuesday.

Walmart to promote e-commerce know-how to smaller retailers

Just as Amazon Web Services is the profit center that serves a large part of Amazons other shops, Walmart CEO Doug McMillon became increasingly interested in expanding his company’s profit pools beyond the core business of retailing.

Starting Wednesday, small and medium-sized retailers will be able to acquire technology developed by Walmart that enables shoppers to purchase items online and pick them up in-store. These companies will also be able to add products to Walmart’s online marketplace with just a few clicks. To offer the suite of cloud-based services, Walmart has partnered with Adobewho sells the software through a subscription.

“When we started our journey, Covid had just struck,” said Anshu Bhardwaj, vice president of technology strategy and commercialization at Walmart Global Technology. “We reaped the benefits of this omnichannel journey early on.”

Walmart saw sales grow both online and in-store in the wake of the pandemic. While some other retailers have been forced to close stores to contain the spread of Covid-19, Walmart was considered a major retailer and stayed open. Some customers who wanted to limit the time they spent in stores took advantage of Walmart’s online purchase and in-store pickup. These developments accelerated the company’s e-commerce growth. The retailer’s online sales rose 79% for the fiscal year ended Jan. 29, with pickup and delivery sales up triple-digit year-over-year.

Only 7% of US retailers had the “buy online in-store pickup” option enabled in January 2018. The pandemic sped that rate to 22% of retailers last month, the company said Adobe Digital Economy Index.

A significant opportunity remains. Last December, Adobe and market researcher IDC estimated the total addressable market for content and commerce software as a service to be around $ 44 billion.

For those wondering why Walmart wants its potential competitors to succeed, Bhardwaj said these smaller businesses are served anyway.

“Digitization is happening everywhere as consumers evolve,” said Bhardwaj. “There is no choice but to evolve with them.”

Walmart’s size and size, and its proximity to 90% of the US population within 10 miles of any of its stores gives it a significant advantage. Additionally, Bhardwaj said, “We really want to serve our communities, our shareholders, our stakeholders and the community better.”

She noted that about a year and a half ago, McMillon changed the language of a slide he used in presentations from “serve our shareholders” to “serve our shareholders”. Bhardwaj said it was a meeting with McMillon that fueled her idea of ​​selling the technology Walmart developed to other retailers.

Bhardwaj has been involved in other major Walmart technology initiatives. In particular, she performed the successful Scan & Go technology at Sam’s Club, which enables customers to check purchases with a smartphone while adding items to their shopping cart.

The new software business opens up a potential source of income for Walmart and fits in with its strategy to start new businesses that serve new customers and lets the profit flow back into the company to finance further innovations.

Neither Walmart nor Adobe publicly share expectations of how big the business opportunity could be, but Bhardwaj said, “I’ll bet my life on it,” as their current role at the retailer was created to bring their idea to life.

For Adobe, the Walmart partnership increases visibility.

“We can now offer a more holistic solution, a first-class omnichannel experience,” said Peter Sheldon, Adobe’s senior director of Commerce Strategy, in an interview. “From Adobe, [these businesses] will receive world-class e-commerce and world-class omnichannel experiences from Walmart. “

The small and medium-sized retailers will use Adobe to operate e-commerce sites, including shopping cart, search, navigation and product recommendation functions. (Walmart does not use Adobe commerce software for these functions for its own website. It has its own technology.)

Small and medium-sized businesses and retailers with $ 1 billion or more in annual sales already use a variety of Adobe e-commerce products, including Ritual help, Verizon, Unilever, coke, PS, Honeywell, Trader Joes and more.

Walmart provides the technology that enables staff to pick and pack online purchases, and geofencing technology staff need to know when customers will be arriving to pick up their orders.

RH CEO Gary Friedman assured within the retailer’s enlargement plans

RH CEO Gary Friedman told CNBC on Thursday he was confident about the company’s expansion vision, even if some may question the luxury furniture retailer’s moves into the European market or into new industries as a whole.

“It takes a long time to build something extraordinary in this world, and we still feel like we’re honestly just warming up,” Friedman said in an interview with Jim Cramer “Bad money.” “We’re more excited than ever and see more opportunities than ever.”

RH, formerly known as Restoration Hardware, plans to open stores in England and Paris next year as the California-based company expands internationally.

With the debut of its RH Guesthouse concept in New York City, the company is also moving further towards the hospitality industry – it already operates restaurants. That is slated to open in the fall, followed by an RH guesthouse in Aspen, Colorado next year. Friedman refuses to refer to them as hotels, saying RH is trying to “create a new market for privacy and luxury”.

In Aspen, RH also has plans to develop homes in what it calls first “RH ecosystem”.

“A lot of the things we’re going to do are just misunderstood at first. And until they’re seen and respected … then you can’t ignore it,” Friedman said.

Confident that the company can thrive in Europe, Friedman points to RH’s experience sourcing locally sourced products and its position as the leading Italian bedding and Belgian linen seller worldwide.

Friedman acknowledged that RH’s foray into new industries like residential real estate may seem strange at first for a company traditionally viewed as a retailer. “But when you’re trying to build one of the most admired brands in the world, when you want to do something extraordinary, you can’t go down an ordinary path,” he said.

Friedman’s appearance on “Mad Money” on Thursday came the day after RH posted fourth quarter sales and earnings exceeded analysts’ expectations. RH ended fiscal 2020 with sales of $ 2.85 billion. In one Letter to the shareholdersFriedman wrote that RH believes “the data supports the RH brand, which is hit $ 5 billion to $ 6 billion in North America and $ 20 billion to $ 25 billion globally.”

RH stock rose 9% on Thursday to close at $ 529.08 apiece. The stock is up nearly 400% over the past 12 months.

Individuals able to restock wardrobe, however delivery snafus could plague retailers

An Anthropologie on Fashion Island employee greets customers at the store in Newport Beach, CA on Tuesday, May 26, 2020.

Paul Bersebach | MediaNews Group | Orange County Register via Getty Images

Some of us say “so long” about sweatpants.

In the last week of February, seven of the top ten best-selling items on the website of Anthropologie Dresses, the company, were a unit of Urban Outfitterssaid on earnings during a conference call this week. Up until that point, it was lucky to have only included one or two dresses in the top 10 list.

Richard Hayne, CEO of Urban Outfitters, described the change as striking and very positive.

“Until recently, fashion was mostly … casual and homely,” said Hayne. “We’re starting to see what I call ‘go-out fashion’ is starting to catch on. The clothing business is going to change in terms of the categories we sell.”

Apparel sales fell 19% last year as Americans stayed at home and focused their spending on groceries and other household items, according to market researcher The NPD Group.

When shoppers were shopping for clothing, convenience was the issue: sweatpants sales rose 17% year over year and nightwear sales rose 6%, according to NPD. For fashion shoes, which fell 27% over the year, slipper sales rose 21% as consumers mixed From cooking in the kitchen to holding video conference calls from the bedroom to streaming the latest series from the living room sofa.

Retailers like Urban, gap, Abercrombie & Fitch, Macy’s and Nordstrom had to swivel their wares quickly when the lifestyle changed abruptly last spring. They pulled blazers, skirts, and slim-fitting pants from mannequins to replace them with stretchy joggers and roomy pajamas.

However, the adoption of Covid vaccines has increased rapidly in recent weeks. In the United States, an average of 2 million vaccine doses are currently administered each day. At the same time is the number of The reported cases are decreasing. Encouraged by the positive trends, a wave of states have eased Covid restrictions – opening up the possibility for people to venture into restaurants or eateries Night at the cinema. That means many Americans will be looking for something new in their closets.

It’s time for retailers to turn again. It won’t be easy, however. Companies continue to stand in front congested US ports and Shortage of containers, Backlogs of goods that make warehouse shelves with fresh outfits all the more complicated. According to management teams, the shipping delays are between three and four weeks and are associated with higher transport costs.

“Historical volumes, social distancing measures for workers and the lack of drivers to unload goods lead to congestion and significant delays in processing times,” said Ike Boruchow, an analyst at Wells Fargo.

“Sick of equality”

Macy’s department store chain has announced it has a fast work and evening restocking plan as its customers resume more normal activities. Many analysts are counting on a rapid trend reversal in purchasing behavior.

“People have money in their pockets, they are tired of equality and there is going to be an explosion of feel-good shopping,” said Stacey Widlitz, president of SW Retail Advisors. “The weather is turning and people feel positive when they go out again – or even sit in the park in a dress.”

“The nature of people is that they want to feel good,” she added. “You want to feel fresh – especially for the younger generations. It’s your entrance fee to make new contacts.”

Retailers are already taking advantage of this news. Kohl’s website proclaims “The Great Refresh” while Banana Republic advertises “Spring Awakening”. Men’s suit maker Suit Supply’s new ad campaign, alluding to a “new normal”, went viral on social media this week.

However, others are still hedging their bets, Some consumers will likely want to stick to a more casual wardrobe that they have become accustomed to over the past 12 months. Corporations, in turn, might choose to relax the dress code in the office when their workforce returns.

Nordstrom continues to market “Work-from-Anywhere Style” on the home page of its website. Rent the Runway includes part of its mobile app for outfits for Entertaining at Home.

The tween-and-teen clothing retailer american eagle Earlier this week, sales in the current quarter were expected to be the strongest in three years. This depends on the growth of the Aerie brand, which sells work-from-home options like yoga pants, sports bras, pajamas, and lingerie.

Kontoor Brands Meanwhile, CEO Scott Baxter told CNBC that jeans are making a comeback as Americans look for a way to dress up, only slightly more than at home. Kontoor’s brands include denim labels Wrangler and Lee.

“Denim is casual, it’s just … you can wear it, you can wear it,” Baxter said in an interview earlier this week. “When people go back to the office, people think about how they’re going to dress and denim seems like the choice.”

Logistical headaches persist

Retailers don’t just have to worry about measuring demand for resuscitated garments, however. They had logistical headaches for much of the pandemic. And those don’t seem to be letting up, which makes planning for the spring, summer, and back-to-school seasons even more difficult.

Nordstrom found that shipping delays resulted in some of its vacation merchandise not getting to shelves and warehouses on time. to affect fourth quarter results. Work is still in progress to sell this inventory, the company told analysts earlier this week and hopes to get back to normal inventory levels by the second quarter.

Gap also noted Thursday when it reported mixed results for the fourth quarterThis port congestion is expected to continue in the first half of the year. This will lead to increased inventory levels in the second quarter, Gap said.

For Urban, the bigger problem today is getting access to containers for shipping goods, said Frank Conforti, chief operating officer, earlier this week.

“While the ports, especially on the west coast, are absolutely overloaded … and we are seeing two to seven days delay in the ports, the bigger challenge is actually with the arriving ships that have enough containers over in Asia to import products “said Conforti.

The limited availability of truck drivers to move goods across borders from retailers remains another problem, said Dana Telsey, CEO and chief research officer of the Telsey Advisory Group, in an interview with CNBCs on Thursday Sara Eisen.

Companies are unlikely to sort their inventory until just before school starts to meet buyer demand, she said. But like Widlitz, Telsey doesn’t think this will buy into shoppers when they return to stores for a new look anytime soon.

“We haven’t had any apparel spending in over a year,” Telsey said. “I think [people] want to freshen up their wardrobes. “

How CVS and different retailers will dole out any surplus Covid vaccine doses

A health care worker wearing a protective mask fills a syringe with a dose of Pfizer-BioNTech Covid-19 vaccine at a large-scale vaccination site in Sacramento, Calif., On February 4, 2021.

David Paul Morris | Bloomberg | Getty Images

As a Covid-19 vaccination effort at major retailers and pharmacies like begin CVS and WalgreensWhat to do with excess vaccine becomes a bigger question.

Both versions of the vaccine must be stored at very low temperatures. Once thawed, the vaccine must be administered within hours. In addition, vaccine bottles contain multiple doses.

The companies said The Wall Street Journal that they plan to use waiting lists and consider vaccinating employees who are eligible when excess supplies are available. The aim is not to waste any doses that are still tight.

From Thursday, Vaccine doses are sent to thousands of pharmacies and grocery stores like CVS and Walmart in the US This move will start with approximately 6,500 retail locations and will help speed rollout to ensure more Americans are protected Covid-19.

The companies schedule appointments based on the amount of vaccine they receive at each location. However, you could get an excess vaccine if customers don’t show up for an appointment or if a vaccine bottle contains more vaccine than expected.

Currently only two vaccines, one of Pfizer– –BioNTech and another off Modernhave received emergency clearance from the Food and Drug Administration. Both types require two doses of the shot to take effect.

Retailers must adhere to different state and local rules for licensing requirements when managing waiting lists and what to do with excess doses. In some states, retail workers qualify for the vaccine, while in other states they are not considered a high priority group unless they are over a certain age or have a specific illness.

A Walmart spokeswoman told the newspaper that the retailer has reached out to buyers or workers who qualify under a state’s guidelines to get vaccinated in the event of oversupply.

Walmart worked with state health departments on logs to avoid waste, a Walmart spokesman told CNBC. These protocols allow the administration of excess opened and available doses to individuals, including employees, who fall under authorized groups in order of priority.

A Walgreens spokesman told CNBC that they will consider their staff for the remaining doses and will communicate with state and local jurisdictions about any excess doses.

In the meantime, CVS pharmacists will keep a list of qualified patients by state and use that list to determine who will receive the remaining doses of the vaccine, CVS Health senior vice president Chris Cox told CNBC.

Read the full story in the Wall Street Journal.