U.S. consumer spending momentum held up in February, reported Mastercard Wednesday, saying retail sales, excluding auto, grew 8.7% year over year and 17.3% compared with pre-COVID-19 pandemic spending. A spurt of “return to office attire” spending (up 37.6% year on year) boosted sales at apparel and department stores. Electronics and appliance spending rose 12.2% year on year. In-store growth rates continued to rally, rising 10% vs. February 2021 and 8% pre-pandemic, said the company, while e-commerce grew 4.4% year on year, 86% vs. February 2019. With COVID-19 restrictions continuing to ease, restaurant sales were up 30%-40% in most states last month, Mastercard said.
Target, which led the movement among major retailers to a $15 hourly minimum wage (see Ref:1801090015]) five years ago, announced Monday it’s setting a $15 to $24 hourly starting range and expanding healthcare benefits for employees and their families. The retailer will invest up to $300 million in its team over 2022 as part of the company’s Target Forward initiative to create “equity and opportunity” for its employees, partners and communities, said Melissa Kremer, chief human resources officer. The new wage structure will apply to hourly team members working in Target stores, supply chain facilities and headquarters locations, it said. Starting wages will vary by location based on the local job market with “market-level wages" set by the retailer based on factors including industry benchmarking and local wage data. In April, the company will roll out “broader, faster” access to healthcare coverage for hourly employees, plus new benefits, including virtual physical therapy at no cost. About 20% of Target’s team will be newly eligible for comprehensive healthcare benefits, the retailer said. Hourly store team members who work a minimum average of 25 hours a week will be eligible to enroll in a Target medical plan vs. the previous minimum of 30 hours per week. Employees will also get faster access to 401K plans, it said.
Despite concerns over inflation, international tensions, labor shortages and COVID-19 impacts, January retail sales grew 8.5% unadjusted year on year, said the National Retail Federation Wednesday. Electronics and appliance stores were down 3% unadjusted year on year; they rose 1.9% month over month, it said. Retail sales -- excluding automobile dealers, gasoline stations and restaurants -- were up 4.7% seasonally adjusted from December, after a dip of 3.6% from November, said the trade group. NRF believes current growth trends and overall consumer financial health can continue, “and current pressures in the economy should be moderated if election-year political pressures don’t result in policy decisions that compound the challenges our economy is already facing,” said CEO Matthew Shay. Chief Economist Jack Kleinhenz noted forces weighing on consumer behavior in January including the omicron variant, rising inflation and the end of the enhanced child care tax credit at year-end: “Despite all that, consumers ramped up spending even after a record-breaking holiday season.”
After a tough 2020 due to COVID-19, retail brick-and-mortar sales rebounded last year, growing 8.2% globally to $21.1 trillion, eMarketer reported Monday. Total retail grew 9.7% last year to $26 trillion, it said. The market research firm projects physical store sales will grow 2.6%-3.4% annually until 2025.
Best Buy is using Amazon Web Services as its preferred provider for cloud infrastructure services and its partner for developing cloud engineering talent, the companies said Thursday. Best Buy already runs its digital commerce business and other strategic workloads on AWS, blogged Tom Litchford, Amazon head-worldwide business development-retail. Extending its cloud footprint will allow Best Buy to accelerate its cloud migration and move additional retail operation workloads from on-premises data centers to AWS, said the companies. Through the collaboration, Best Buy customers will be able to interact virtually with experts for live demos of physical products, the companies said. The AWS cloud technologies will help support Best Buy’s Totaltech program that gives members access to 24/7 tech support via chatbot. Best Buy will expand its use of AWS capabilities and AWS Marketplace, a digital catalog with thousands of software listings from independent vendors that simplifies deployment of software that runs on AWS. The collaboration gives Best Buy’s technologists access to AWS’ cloud training curriculum and resources. Best Buy committed to 1,000 new hires to its technology team, including 30% Black, Latino, indigenous and women employees as part of its diversity initiative, it said. AWS cloud technologies enabled Best Buy to deploy in two days a curbside pickup program at the beginning of the COVID-19 pandemic, Litchford said.
E-commerce sales growth slowed in 2021 to 16% from 57% in 2020, said Caila Schwartz, Salesforce senior manager-consumer strategy and insights, retail and consumer goods, on a Wednesday Retail TouchPoints virtual retail trends webinar. Higher prices factored into slower sales growth, with inflation given as consumers’ top concern heading into the holiday season. Digital sales grew 9% year on year for November and December to $257 billion. Salesforce estimates U.S. consumers paid 25% more online year on year for goods going into the holiday season. Higher prices fed interest in installment payments: orders using buy now, pay later options grew 8% year on year in 2021; orders processed using Apple Pay increased from 2% to 4%, while credit card usage declined more aggressively in 2021. When installment payment plans were introduced, the average order value was $300 or more; average value has fallen to $130, and Salesforce expects that to continue as consumers look to installment plans as credit card alternatives, Schwartz said. Online demand didn’t have the usual spikes associated with tentpole sales event days during the holidays. The global average discount rate during Cyber Week dropped from 26% in 2020 to 24% in 2021, said Salesforce. Sales were up 16% year on year in the first two weeks of the holiday sales season; in the last two weeks, store fulfillment doubled sales for customers using buy online, pickup in store. BOPIS is driving a “fully integrated physical and digital” retail experience, said Schwartz, saying there’s room to improve BOPIS, curbside pickup and other “creative fulfillment options to keep shoppers engaged.” Though mobile is driving most online traffic, “it’s still lagging behind in orders,” Schwartz said. Reducing friction in the checkout process is key to improving growth in the e-commerce channel. Streamlining the buying process to “as few taps as possible” is a good start to improving the customer experience, she said.
Retailers expect 16.6% of merchandise sold last year, totaling $761 billion, to be returned, said the National Retail Federation Tuesday. The 2020 return rate was 10.6%. Online returns in 2021 were in line with recent years at an average of 20.8%, NRF said. Of the $1.05 trillion online sales last year, $218 billion were returned and $23.2 billion deemed fraudulent, NRF said. A survey of 57 retailers fielded Oct. 13-Nov. 15 by Appriss Retail and NRF said for every $1 billion in sales, the average retailer incurs $166 million in merchandise returns; for every $100 in returned merchandise accepted, retailers lose $10.30 to return fraud. The categories with the highest return rates followed 2020 results: auto parts, apparel, and home improvement and housewares. “As total retail sales continue to accelerate from sustained consumer demand during the pandemic, it is no surprise that the overall rate of returns has also been impacted,” said Mark Mathews, NRF vice president-research development and industry analysis. An upside is that returns allow retailers a chance to “connect further with customers and provide a positive experience.”
Conn’s entered the Daytona Beach, Florida, market, bringing its store total to 158 in 15 states, it said Friday. The 36,000-square-foot location sells CE, furniture, mattresses, appliances and home office products. It’s the 11th Conn's store to open in Florida in the past 13 months.
Amazon is upping its brick-and-mortar game with apparel stores where shoppers can try on and buy clothes, shoes and accessories at Amazon.com prices, it blogged Thursday. The first Amazon Style store is due to open this year at The Americana at Brand in Los Angeles. Customers will be able to send items to a fitting room by app and then browse more options, rate items and request other sizes or styles using a touchscreen in the fitting room. Upon entering the fitting room, shoppers will find the items they requested while browsing the store, plus others based on their preferences. As customers browse and scan items that “catch their eye,” Amazon will recommend picks for them; those who share information like style and fit can get more refined recommendations, it said. Items scanned at Amazon Style are saved in the Amazon Shopping app, so customers can revisit and purchase at a later time or find more items online from the new brands discovered in the store. Amazon Style uses technologies and processes from Amazon’s fulfillment centers to hold items that can be delivered from back-of-house to a customer “within minutes,” the company said. Customers check out using the Amazon One palm recognition service. Store employees provide customer service, deliver items to fitting room closets, handle merchandising and manage back-of-house operations, it said.
Fraud attempts between Thanksgiving and Cyber Monday jumped 14%, “particularly with electronics items,” reported ACI Worldwide Tuesday. Tactics included account takeover, synthetic fraud and friendly fraud, it said, saying merchants should have fraud systems in place that can easily detect a genuine transaction versus a fraudulent one. Supply chain fears drove a 28% increase in October shopping, while buy now, pay later (BNPL) transactions increased 30% October-December, peaking at 43% in October, it said. The value of transactions increased 28% globally in October 2021 vs. October 2020 on concerns of delivery delays and low inventory. Buy online, pick up in-store (BOPIS) adoption rose 68% year on year October-December, continuing to ride consumer concerns over COVID-19, ACI said. Consumers are showing continued interest in picking up their orders from in-store lockers as merchants increasingly adopt the “fast and safer” self-service method, it said. “Worldwide shopping continues to evolve as consumers rapidly embrace new ways to pay or receive their goods -- driven by merchant modernization and rapid consumer adaptability,” said Debbie Guerra, ACI head-merchant payments. Other findings: (1) North America and Europe had a 31% increase in BNPL transactions October-December over the prior year; (2) Consumers shopping with mobile devices spent $31 more on average than consumers using nonmobile devices.