ECONOMY

Like Going From a C- to a C

Retail sales in October technically improved, but we’re too disappointed to hang this report card on the fridge. 

The details: The U.S. Commerce Department reported yesterday that retail sales rose 0.3% in October—the smallest gain for the sector in six months. The spending bump narrowed to 0.2% excluding car and gas sales, down from 1.6% growth in September.

Digging deeper...early Black Friday felt more like Groundhog Day. Consumer trends we’ve noted since the start of quarantine are stuck on repeat despite retailers’ best efforts to pull sales forward:

• Apparel sales, retail’s weakest link, declined another 4.2% last month. They’ve fallen 30% to date this year.
• Sales at department stores, retail’s second-weakest link, decreased 4.6%. Their 2020 total decline? 17%. 

One bright spot: E-comm sales, which continued their 2020 growth streak by 3.1%. Analysts credited the bump to the Pr*me Day solar system. 

IRL application: Some Q3 earnings results this week back up the Commerce Department’s lukewarm report. Same-store sales growth waned at some of the pandemic’s biggest players (Walmart, Lowe’s), with dimmer numbers at apparel and footwear oriented retailers (Kohl’s). 

Don’t blame the polls

Survey after survey suggested shoppers would check off their gifting lists early this year. They weren’t entirely inaccurate, even if October sales disappointed. 

• Negotiations for additional government stimulus are still gridlocked, limiting shoppers' participation in holiday promos.
• Covid-19 cases sharply increased in October, deterring consumers from visiting sit-down restaurants or indoor shopping centers. 

Looking ahead…We’ll see whether the influx of additional deals = bigger improvements. In a September Retail Brew survey, 40% of retail professionals said their holiday promotions would start in November, compared to 18% who hit the discount buzzer in October. November sales figures will be reported December 16.

So far, the prognosis is grim: JPMorgan analysis shows that credit and debit spending decreased through November 9, with the largest declines in states where the virus is especially prevalent.

E-COMM

DTC Reacts to the Everything Pharmacy

Amazon now ships prescriptions to shoppers through a virtual pharmacy. Perks include discounts on generic medicines, two-day shipping for Prime members, and zero 30-ft. receipts.  

Who’s losing? “The traditional pharmacy players like CVS and Walgreens—both of which have been spectacularly lacking in innovation across much of their businesses,” Neil Saunders, managing director of GlobalData Retail, told Retail Brew. 

• CVS and Walgreens defended their assortments in statements to Reuters.
• But investors backed away: The pharmacies lost a combined $10 billion in market value yesterday.

Flip the ’script

The charge to bring prescriptions online has been led by a class of DTC health startups, like Ro and Hims & Hers. How are they responding to Amazon's entry?

“It would have been great to see Amazon remove middlemen to drive even lower prices for patients rather than exacerbating some of the largest problems of the current system,” Ro CEO and co-founder Zachariah Reitano told Retail Brew. “But overall, more competition is good for patients.”

Plus, these companies are multifaceted: “While convenient home delivery is an example of the benefits our customers enjoy, it's only one part of the holistic healthcare system we're working to build,” a rep for Hims & Hers said.

Looking ahead...experience and branding will make a difference for the digital natives, Saunders told me.

• “[A] brand like Hims/Hers is very well differentiated via its branding and specialized products,” he said. 
• “Ro is a bit more vulnerable because it is focused on pharmacy; however, it has a very good platform and a loyal base of customers.”

SPONSORED BY MAGENTO

Say Hi to Hybrid

What if we told you that three extremely different companies found success using a hybrid e-commerce model? Would you call hijinks, or would you say, “High five, hit me with the deets?”

We’ll assume you want the deets. By blending B2B and B2C, companies can open themselves up to lucrative sales opportunities. But the hybrid model does involve specific selling motions, processes, and infrastructure. 

That’s where Magento Commerce comes in. They helped Company 1 bridge online and in-store experiences. They helped Company 2 implement customizable product catalogs. And if you need unified inventory management, great, because they did this for Company 3.

All three of these companies utilized the power and flexibility of Magento Commerce to help make the switch to a hybrid e-commerce model.

You can learn all about how Magento Commerce helped them do it—and what happened next—right here. 

EXPERIENCE

Show Simon the Receipts

These days, malls can’t lure shoppers with unlimited perfume spritzes and dressing room montages. What about a chance to return unwanted holiday gifts? 

Concierge desks at six Simon malls will process returns for around two dozen retailers this holiday season, CNBC reports. 

• Shoppers can bring unboxed goods and a QR return code to Simon employees; then Simon’s team will process the return. 
• Gap, Levi’s, and Vera Bradley are among the brands participating in the first go-round.

Every sweater stitched with gamboling kittens could help Simon capture foot traffic, and maybe an impulse stop by AEO. Potential halo purchases are urgent: Earlier Covid-19 store closures dented occupancy and rent collection across Simon’s properties.

• Other retailers have found piggybacking success: Kohl’s said traffic to its stores increased after it started processing Amazon returns.

One roadblock? Some states are resuming lockdowns as Covid-19 cases rise, and officials have yet to consider the Talbots-Hot Topic-Express strip essential. Already, Simon has reclosed a mall in El Paso, TX; CEO David Simon called it a sign malls are “being treated unfairly.” 

WHAT ELSE IS BREWING

• Target said it’s gained $6 billion in market share this year.
• Adidas came in first on a ranking of retailers by human rights impact. 
• Justice, the tween brand owned by Ascena, will close all its stores.
• American Express found positive social media reviews can increase SMB revenue by 23%.
• GameStop investor Ryan Cohen asked for the retailer to cut stores and focus on e-comm, in a letter to the board.

COMMUNITY

Welcome back to Coworking, our segment highlighting the best part of Retail Brew: you, the readers. You can nominate yourself or a colleague by clicking here.

We’re taking Coworking international today with Josh Yentob, co-founder of DTC advisory group in.Parallel.

Describe your job like you’re on a date. I help the best U.S. brands launch in the U.K.

One thing we can’t guess about your job from LinkedIn: I now host an event series, Under-Lockdown Sessions, and have recently become the self-proclaimed Letterman of Zoom webinars.

Retail accounts everyone should follow: Nik Sharma and Web Smith.

Brands you’re obsessed with (that aren't your employer): Spotify (listening all day every day), Aesop (owns my bathroom), Corgi (best socks in the world).

SWAPPING SKUS

At this point in the day, you’re due for a lap (or ten) around the block. So pull out those AirPods and take a walk with these e-commerce listens as your soundtrack.

For the 1,000 ft. view: Etsy CEO Josh Silverman explains what’s at stake for online sellers this holiday season. (Business Casual)

For zooming in: These two pods have tips you need to build a better e-comm presence.

• Learn the difference between customer support and customer experience—then hear how brands like Crate & Barrel develop them both. (Future Commerce)
• Mobile shopping is only going to increase this holiday season. Is your storefront optimized and ready? (Commerce Tea)

ICYMI

Catch up on this week’s top Retail Brew stories. 

• Vending Machines Are Getting a Quarantine Makeover
• The Verticale Is E-Comm’s Most Selective Marketplace
• Shopify Will Offset Carbon Emissions From BFCM