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Retail Sales Rise 0.7% Retail sales rose 0.7% in March after rising an upwardly revised 0.9% in February, according to the Commerce Department. The increase was almost double economists’ expectations. Excluding automobiles, gasoline, building materials and food services, core retail sales rose 0.4% for the second consecutive month and were up 3.8% year over year. Building materials sales fell 2.1% from February and were down almost 3.8% year over year. Online sales rose 2.7% after dropping in February. Core retail sales, which are mostly goods and not adjusted for inflation, correspond most closely with the consumer spending component of GDP. The retail sales report covers about a third of overall consumer spending and doesn't include services, such as travel and entertainment. The Home Depot JP Morgan Retail Roundup: Homeowners tend to finance larger home improvement projects, so right now big-ticket projects are often being postponed or are being tackled in smaller bites that can be paid for out of pocket. Larger projects tend to be executed more through Pros. Pros performed exceptionally well for THD on a relative basis in 2023. Significant shifts in existing home sales from year-to-year will have a big influence on business. People tend to spend twice as much as normal when they buy or sell a home. So when existing home sales drop as they have over the past two years, that impacts business. However, in a normalized market, 4% to 5% of homes change hands every year. And even small decreases in mortgage rates result in a bump in sales. Home prices appreciated by 5% last year, even though many economists and analysts called for either a home price correction or a home price collapse during 2023. Currently the housing vacancy rate is the lowest ever recorded. It will take a long time to build enough homes to get the country out of the current chronic shortage. At some point new higher interest rates become “normal” and people get tired of waiting. The acquisition of SRS complements efforts THD has had underway for many years to sell more to the renovator/remodeler, the property investor, to the generalist Pro and to the general contractor who buys across their product categories. THD will have their full complement of services and capabilities for these segments in 17 major markets by the end of the year. SRS will help them address the specialty Pro market, including roofers, landscape contractors and pool companies; these tend to be non-cyclical categories, with most of the work done on existing homes. They will build out carefully; they don’t want to overextend. They want to be able to fill every order with excellence. SRS will operate as a stand-alone company but there will be a lot of cross-selling opportunities, and THD expects to learn a lot from SRS. They’ve reduced their inventory by 20% and their in-stock levels are back where they want them to be, at basically pre-Covid levels. Associate retention levels are now back to pre-Covid levels. In 2022, the associate retention rate fell well below where THD wants it to be; THD says that associates become more productive as they become more experienced. Other News: THD will continue their partnership with Alphabet’s Google Cloud to innovate retail technology to help customers doing home improvement projects. The multi-year partnership involves THD accessing Google Cloud's AI capabilities to enhance the customer experience and optimize operations. It will also include tapping into technologies like machine learning, computer vision, and generative AI to enhance inventory management operations and improve their overall supply chain efficiency. THD earned the top spot as the Most Culturally Inclusive Brand of 2023 from the Association of National Advertisers’ (ANA) Alliance for Inclusive and Multicultural Marketing (AIMM). The awards are based on extensive research in partnership with the Cultural Inclusion Accelerator (CIA), a market research firm that helps companies understand the value of reflecting DEI in marketing campaigns. Their methodology identifies the cultural impact, effectiveness and relevancy of a brand's advertising materials, helping encourage inclusive promotional communications. THD says that since being launched in 2018, THD’s retail media network has become the largest home improvement offering of its kind, providing suppliers with managed service and self-service media buying opportunities on owned and offsite media channels. THD’s retail media network delivers targeted ads to segmented consumers via channels such as in-store digital displays, as well as online advertisements and connected TV. THD is once again holding an online-only event. Decor Days the first week of May will offer savings across home and decor essentials. Categories include furniture, lighting, rugs, wall art, kitchen tools and more, exclusively available online. THD is embracing product circularity by turning waste that would typically be thrown away into something useful. Durable, reusable products lower the amount of waste sent to landfills. The concept of product circularity appeals to customers who want to do their part to help the planet. Between their market delivery operations and reverse logistic centers they are now recycling not only metal, hard plastics and shrink wrap, but also expansive polystyrene (EPS) packaging and the chlorofluorocarbons (CFCs) from reclaimed appliances. Walmart Walmart held a sale exclusively for members of Walmart+ the end of April offering early access to limited-edition items. Like Amazon Prime Day sales, the perk is designed to reinforce the value of the paid membership and make customers feel special. Walmart Restored is a section on Walmart.com that offers refurbished tools, electronics and home appliances. Sellers and suppliers who join the program must clean, inspect and test items before re-selling them. There are two tiers of refurbished items on Walmart.com, Restored and Restored Premium. Restored products must be fully functional and in like-new condition but may have small scratches that don’t impact function. Restored Premium products have been refurbished by either the original manufacturer or a manufacturer-authorized partner and are in like-new condition and should have no scratches or signs of damage, however slight. Restored products can be returned within 90 days for a full refund; Restored Premium products come with a one-year warranty. Amazon Whole Foods will remove Amazon’s Just Walk Out technology from the two stores where it has been in test. Amazon announced separately that they were pulling Just Walk Out from Amazon Fresh stores as part of their ongoing revamp of the chain. Amazon is replacing Just Walk Out with Dash Carts that enable shoppers to scan groceries, connect to online shopping lists, and complete their grocery checkout process. Dash Carts have been tested at select Fresh and Whole Foods locations. Amazon noted that customer feedback indicated a desire to both skip checkout lines and view receipts and savings during shopping. Tech experts report that 70% of purchases made still require human intervention. © Robert Bosch Tool Corporation. All rights reserved, no copying or reproducing is permitted without prior written approval.
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