EARNINGS

Apparel Still in Peril?

On the cusp of earnings szn, apparel companies are reflecting on their holiday performances and hoping for a stronger 2021. 

On the rebound: January department store sales grew 1.5%, according to Mastercard SpendingPulse data, as stimmys, gift cards, and bad stocking stuffers drove consumers back to the mall. But results varied among standalone brands.  

• Apparel was the only retail sector in January that shrank YoY, although the drop was the smallest since the outset of the pandemic.  

Watch the shop

What we’re seeing isn’t new. January disparities between department stores and apparel brands are carrying over from the end of 2020, when in-store traffic and e-comm strength varied. 

• Nordstrom anticipates revenue to increase 25+% in fiscal 2021. E-comm accounts for about half of its overall sales, up from a third in 2019. 
• Kohl's also reported an extended holiday bump, with help from its Amazon returns partnership. But Q4 revenue is still expected to decline 10% YoY. 

Apparel brands…largely kept afloat via e-commerce, since lockdown restrictions continue to suppress foot traffic.

• Coach, Kate Spade, and Stuart Weitzman sales declined 4%, 13%, and 27%, respectively. Overall sales for owner Tapestry fell 7% during the holidays. 
• Ralph Lauren is expecting a larger-than-anticipated drop in Q4 revenue. Why? New lockdown restrictions abroad muzzled sales during the holiday shopping season.

One exception: Canada Goose. Its Q3 wholesale revenue increased 11% as shipments to department stores and retailers were delivered later than usual. 

The takeaway: E-commerce has taken off across categories, but the lingering effects of the pandemic, including tightened wallets, might mean apparel won’t return to pre-pandemic levels until 2022 or beyond. About four in 10 consumers expect to shop in-store at the same or even a slower rate for apparel after they’re vaccinated. 

E-COMM

Social Commerce Buys Followers

Social media companies have invested time, money, and mega ring lights into their native shopping experiences. But their digital carts haven’t attracted followers quite like “time for a thread .” 

• In a new report, eMarketer found that US social commerce sales will reach $36 billion in 2021, a nearly 35% increase from 2020. 
• Even with that growth, receipts from Instagram et al will only account for 4.3% of total e-comm sales.

The holdup? Users still see apps like Pinterest and TikTok as places to build their personal brands—not to shop brand brands. Only 9% of US social media users “regularly” made purchases via social commerce as of August 2020, per an eMarketer and Bizrates Insights survey. 

Francis Scialabba

What’s a ’gram to do?

Keep posting anyway—especially if they’re a fashion or accessories brand. Even if retailers aren’t converting sales on social, “social commerce strategies also influence e-commerce and brick-and-mortar purchases that happen days and weeks after exposure,” eMarketer principal analyst Andrew Lipsman told Retail Brew.

As for in-app purchases...Lipsman suggested retailers can jump-start sales by defining their visual identity and ensuring their non-ad content is shoppable. 

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WORKFORCE

A Hazardous Situation

Kroger plans to close two Long Beach, California, stores after the city instituted a “hero pay” measure requiring grocery store employees be paid an additional $4/hour. 

What’s the beef? The mayor of Long Beach signed a 120-day hazard pay ordinance last month. It applies to grocers that sell at least 70% produce and employ 300+ people nationally, and at least 15 per store. But Kroger says the policy makes it difficult for two already struggling stores to be profitable. 

• The closed stores—Ralphs and Food 4 Less— together employ about 200 people. 
• Long Beach was the first California jurisdiction to mandate hazard pay for grocery workers, per the Washington Post. 
• Oakland and Los Angeles followed with similar measures requiring an extra $5/hour. 

Zoom out: Hazard pay has been a central pandemic issue for retailers, with companies taking different approaches. 

• Kroger and Amazon gave employees a temporary $2/hour bump in hazard pay, but their raises expired last year.  
• On the other hand, Trader Joe’s recently increased its hazard pay from $2/hour to $4. Target’s taken a slightly different approach, increasing its minimum wage to $15/hour and giving its employees a $200 holiday bonus. 

Looking ahead...Grocers and local jurisdictions will continue to debate hazard pay. Two grocery trade associations filed a lawsuit against Seattle’s hazard pay law, which went into effect Wednesday. 

WHAT ELSE IS BREWING

• Estée Lauder rode the skincare boom to exceed earnings estimates. 
• Peloton raked in $1.1 billion in revenue last quarter. But it’s still struggling with delivery delays. 
• Family Dollar is taking its Instacart delivery partnership nationwide.
• Victoria’s Secret could spin off from L Brands by August. Meanwhile, it's permanently closing its Herald Square flagship. 

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SWAPPING SKUS

The pandemic was the last thing many traditional shopping malls and department stores needed. Now, firms are making a last-ditch effort to save their tenants. 

• JCPenney and its new owners face an uphill battle to reinvent the company and win back customers within the evolving retail industry. (Texas Monthly)
• REITs are creating joint ventures to acquire and rehabilitate department stores, but will the investments pay off? (Retail Dive)

FRIEND OR FAUX?

ID the invented headline below, and you’ll ace your entrance exam to the Amazon Counterfeit Crimes Unit. Which of the four retail stories below is fake? 

1. ThredUp was flooded with Buffalo Bills’ merch after their conference championship loss.

2. Kate Spade sold out of a heart-shaped purse after it went viral on TikTok.

3. For Valentine’s Day, lucky couples could win a private date at...Lowe’s.

4. Ugg expands product assortment with shearling boots for dogs.

Keep reading for the answer.

ICYMI

Catch up on the Retail Brew stories you may have missed. 

• Ulta Commits $25 Million to Diversity and Inclusion Efforts 
• Rebag Deploys Artificial Intelligence for Luxury Appraisals
• Wholesale Vintage Is a Surprise Win at Nordstrom

FRIEND OR FAUX? ANSWER

1. Nope, Bills fans aren’t offloading their jerseys onto resale platforms. They’re too loyal.