Distribution February 2020
Retail Sales Rise 0.3%
Retail sales rose 0.3% in December after rising an upwardly revised 0.4% in November and were up 5.8% from December 2018. Sales increased in 12 out of 13 major categories. Core retail sales, which exclude food services, car dealers, gasoline stations and building materials stores, rose 0.5% after being basically flat in November. Core retail sales correspond most closely with the consumer spending component of GDP. For all of 2019, retail sales increased 3.6%, down from an almost 5% increase in 2018. The big jump in 2018 was attributed to a boost from tax cuts.
Holiday Retail Sales Rise 4.1%
Holiday retail sales in 2019 grew 4.1% over the same period in 2018 to $730.2 billion, according to the National Retail Federation (NRF). Online and other non-store sales were up 14.6% to $167.8 billion and are included in the overall total. The numbers exclude automobile dealers, gasoline stations and restaurants. Building materials and garden supply stores were up 1%. The increase met NRF expectations for 3.8% and 4.2% growth and was nearly twice the 2.1% increase for holiday 2018. Retail sales in December 2019 alone increased 0.5% seasonally adjusted over November and were up 6.7% unadjusted year over year. Retail sales excluding automobiles rose 3.4% between November 1 and December 24, according to Mastercard SpendingPulse.
The Home Depot
The Home Depot paid just under $28 million for the six-story Paces Summit office development in the Vinings area near company headquarters just northwest of Atlanta. The Home Depot already has more than 6,500 employees at headquarters.
Lowe’s plans to hire more than 50,000 full-time, part-time and seasonal workers for more than 1,700 stores this spring. They plan to hold hiring events over the next three months. Spring is the busiest season for home improvement projects, and Lowe’s wants to be sure they have knowledgeable people in place to better serve customers and operate more efficiently.
Lowe’s hired Taco Bell’s CBO Marisa Thalberg as their new Chief Brand and Marketing Officer. She will start mid-February and report directly to CEO Marvin Ellison. It’s a new position for Lowe’s, and one that Ellison believes needed to be created.
Lowe’s CIO Seemantini Godbole spoke at the National Retail Federation’s conference in January, touting the benefits of developing the technologies that are core to their processes rather than relying on third-party solutions. Lowe’s has been developing more of their own applications and website features. Bringing these functions in-house leads to much faster development cycles and a more agile company, according to Godbole.
Walmart unveiled a new automated system that picks and packs online grocery orders at high speed. The system, called Alphabot, operates in a 20,000-square-foot facility attached to a Walmart store in Salem, New Hampshire. They plan to build similar facilities in Mustang, Oklahoma and Burbank, California later this year. Automated grocery systems are estimated to pick and pack orders as much as 10 times faster than a human. The greater speed would enable Walmart to rapidly expand their capacity to process online orders. When customers arrive to pick up orders, their groceries are bagged and ready to go and workers can retrieve them from one of several stations attached to the shelving system. For now, Walmart workers will continue to pick and pack fresh produce, although Walmart is exploring systems that could automate that process.
Walmart plans to bring inventory-scanning robots from Bossa Nova Robotics to another 650 stores by this summer. The 6 foot tall robots are currently deployed in about 350 Walmart stores. The robots, which move autonomously around the store, use cameras to scan shelves and detect out-of-stock items and check for pricing accuracy. The 650 additional robots will be serviced by Bossa Nova partner NCR Corp., according to The Robot Report.
Walmart launched their Walmart Advertising Partners program to expand advertisers’ direct access to Sponsored Products campaigns. Walmart has hired several executives with engineering level experience to support brands that include Kellogg and Hershey. A recent survey by media group Kenshoo estimated that 90% of Americans buy something from Walmart every year, with nearly 160 million visitors visiting the website and/or stores weekly.
Ace vaulted into the top ten in Entrepreneur's 2020 Annual Franchise 500 ranking, moving up 7 spots from No.13 to No.6. Ace was also once again named No.1 in their category. Key factors in the evaluation include costs and fees, size and growth, support, brand strength and financial strength and stability.
Michael Magee is the new President and General Manager of Emery Jensen Distribution, a division of Ace Wholesale Holdings. Magee will report to Ace Hardware’s Chief Merchandising and Sales Officer, John Surane. Magee will be responsible for growing the wholesale business. His past experience includes Crayola, Newell Brands, Jarden, Sara Lee and more.
Sales for 2019 increased 2.5% to $11.5 billion, with currency subtracting 0.5% from growth. Volume grew 2.5% for the full year and 3.5% for the fourth quarter. Q4 sales rose 3% to $2.8 billion. There was no impact from foreign currency in the fourth quarter.
Q4 sales rose to $87.4 billion, exceeding forecasts. North American sales were up 22% to $53.6 billion, while international sales grew 14% to $23.8 billion. Full year sales rose 20.5% to $280.5 billion. CFO Brian Olsavsky said that spending on the one-day shipping costs was less than the $1.5 billion previously expected. Nevertheless, shipping costs for the fourth quarter rose 43% to nearly $12.9 billion. Amazon expects first quarter sales growth of 16% to 22%, between $69 billion and $73 billion.
Amazon also released the actual number of Amazon Prime customers, who pay $119 annually for unlimited shipping, media services and other discounts and perks. When CEO Jeff Bezos last commented on the number of customers back in April 2018, 100 million people were subscribed to the program. As of the end of the quarter, there were more than 150 million paying members of Amazon Prime.
Amazon staff grew 23% in 2019, to 798,000 people. Sales rose 34% to $10 billion for Amazon Web Services (AWS). Much of the hiring was related to the move to faster shipping speeds. Amazon is also continuing to add software engineers in the AWS and Alexa businesses, as well as in sales and marketing and operations.
For all of 2019, Amazon sales grew 20% to $280.5 billion, not including a $2.6 billion negative impact from foreign exchange rates.
Amazon ended their temporary ban on FedEx ground shipments for third-party sellers, reportedly because FedEx is now meeting Amazon’s on-time delivery requirements. More than half the items on Amazon come from third-party sellers who do business on Amazon’s online marketplace.
Amazon will provide law enforcement with more data on counterfeit goods as part of efforts to crackdown further on fakes listed for sale on Amazon. The presence of fake merchandise has created real problems for big brands, and some have declined to sell on Amazon. Amazon will now disclose merchant info to European and US federal authorities every time they confirm a counterfeit was sold to a customer.
Amazon is willing to invest billions of dollars to prevent the sale of counterfeit goods, according to Amazon Consumer Chief Jeff Wilke, who was addressing the WSJ Tech Live conference. Wilke said Amazon’s business depends on customers trusting the company; last year they spent $400 million on technology and a staff of 5,000 people tasked with tracking counterfeit and unsafe items.
Amazon has built a fleet of 30,000 last-mile delivery trucks and vans since creating their own delivery network in 2018, and currently handles about half of their deliveries. Amazon is investing so much in growing their fleet they are creating a business boom for automakers.
Amazon is reportedly considering opening stores in Germany, their second-largest market after the US. The report came from German newspaper Welt am Sonntag, which interviewed German ecommerce chief Ralf Kleber. Amazon also wants to promote shopping via Alexa-controlled devices and was selling Echo Dots at big savings.
Amazon is reportedly working on a method to replace credit cards with human hands using advanced biometrics. Customers would connect their credit card information to their palms and would be able to make purchases by tapping their palm.
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