Retail Sales Rise 1.0%
Retail sales rose a healthy 1.0% in June and sales for May were revised up to a slight 0.1% decline from the 0.3% decline first reported. The increase was greater than expected. Analysts said some of the increase is due to higher prices for many goods, but also shows that consumer spending is resilient, and people still have savings. Spending dropped at building supply stores for the third consecutive month. Online sales rebounded, rising 2.2% after falling 1% in May. The retail sales report covers about a third of overall consumer spending and doesn't include services, such as haircuts, hotel stays and plane tickets. Core retail sales rose 0.3% in June after dropping a downwardly revised 0.4% in May. Core retail sales correspond most closely with the consumer spending component of GDP.
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THD plans to spend $5 billion with Tier I diverse suppliers by 2025, according to their 2022 environmental, social, and governance report, which also noted that they spent $3.3 billion with Tier I diverse suppliers in 2021. THD reported that their US associate base was more ethnically diverse than the US working population overall. About 36% of new hires were women, and more than 57% of hires in 2021 were ethnically diverse. THD also launched a Tier II supplier diversity program to encourage its suppliers to spend more with diverse businesses. THD also reported that the percentage of female managers and managers from underrepresented minority groups was higher than their representation in the US population.
Lowe's launched Into the Blue, Lowe's Product Pitch Event, in late July. Entrepreneurs and businesses of all sizes have until August 14 to apply for a chance to participate in this first-ever live event. Lowe's plans to invest a target of $5 million in purchase orders to new suppliers, giving them the opportunity to have their products carried in Lowe’s stores and online. Select businesses chosen for Into the Blue will have the opportunity to pitch directly to Lowe's representatives and leadership executives in early November at the new Lowe's Tech Hub in Charlotte, N.C. that’s opening this fall. In addition to product pitches, Into the Blue will include extensive networking, a supplier fair and mainstage and breakout sessions. The sessions will offer a variety of business tips and topics to help educate participating business owners as they work to scale up their operations.
Walmart is cutting prices on apparel, summer goods and high-end big-ticket items in order to clear their shelves of items consumers no longer need or no longer want to spend money on before the holiday season. WM said people are spending more on groceries but switching to store brands and spending less on many other things.
Walmart, which reports earnings in August, warned on profits and slashed their outlook at the end of July, sending their stock into a tailspin and casting doubt on how long the US consumer will keep spending money.
Walmart told suppliers that they will begin charging a transport fee to offset rising transportation costs. Walmart said they will charge some of their suppliers a new fee to transport goods to their warehouses and stores. It will be a fuel surcharge fee and a collect pickup fee, according to internal memos. The pickup charge is calculated as a percentage of the cost of goods received by Walmart. The fuel surcharge is based on the cost of fuel to transport the goods. Suppliers complained about the short notice and the lack of clarity about how much fees will be. Amazon added a 5% fuel and inflation surcharge to all items shipped using Amazon fulfillment services earlier this year.
Walmart’s deal with electric vehicle (EV) maker Canoo prohibits the startup from doing business with Amazon and gives WM an option to buy more than 20% of Canoo stock. The five-year purchase agreement provides for an initial order of 4,500 of Canoo’s pod-like Lifestyle Delivery Vehicles, with an option for Walmart to buy up to an additional 5,500. Walmart said the deal helps them move toward their goal to eliminate all greenhouse gas emissions from their supply chain by 2040. Neither company said how much Walmart agreed to pay for the vehicles, but Canoo said during a May earnings call that their Lifestyle Delivery Vehicles have a targeted starting price of $34,750.
Ace Hardware held a 20% off sale on select Craftsman V20 power tools, outdoor power equipment and accessories during July. The V20 line features an interchangeable battery that powers all the tools in the line. Craftsman will participate in the event by donating $100,000 to Children’s Miracle Network Hospitals, which Ace supports.
Ace held their fourth annual Ace Rewards Days, offering exclusive online deals and special bonus offers for Ace Rewards members that were only available on the Ace website. Rewards Days were held July 12 and 13, and coincided with Amazon Prime Days.
Amazon’s second quarter sales rose 7% to $121.2 billion, easily beating expectations. Amazon forecast net sales of $125 billion to $130 billion for the current quarter, also ahead of analysts’ estimates. Online sales, the largest share of total sales, were $50.9 billion in the quarter, down 4% from a year ago. Since going on a hiring spree in the first quarter, Amazon has been working to “right size” their headcount by slowing hiring and allowing for natural attrition.
Amazon customers ordered more than 300 million items and saved more than $1.7 billion dollars during Prime Day, according to Amazon. Prime Day, really a two-day event, was held July 12 and 13. Amazon does not report exact revenue, but Adobe reported revenue in the US reached $11.9 billion, up from $11 billion last year. As usual, Amazon sold lots of Amazon devices and Amazon private label products, along with electronics. Amazon said that it was the biggest Prime Day ever.
Amazon hit pause on the construction of six new office buildings in Bellevue and Nashville, Tennessee, in order to reevaluate the designs to best suit hybrid work. The pausing and delay of construction will not affect Amazon's hiring plans; they have pledged to create 25,000 jobs in Bellevue and another 5,000 in Nashville.
Amazon is reportedly cutting back on its private-label business, including their top-selling Amazon Basics brand, by winnowing the number of items and categories. According to an exclusive article in the Wall Street Journal, Amazon is also considering nixing its private-label selections altogether. Amazon has historically stressed that private-label only accounts for 1% of the company's retail sales. Amazon has built a private-label business with 243,000 products since founding the line in 2009, according to the Journal. Amazon strongly denied the claims, but in addition to less-than-stellar sales for many private label brands, Amazon is facing legal scrutiny for allegedly copying name-brands.
Amazon has started using electric delivery vehicles provided by EV company Rivian, as part of their strategy to achieve net zero emissions across their operations by 2040. The EVs started hitting the streets of Baltimore, Chicago, Dallas, Kansas City, Nashville, Phoenix, San Diego, Seattle and St. Louis in July. Amazon and Rivian plan to have the custom EVs operating in more than 100 cities by the end of the year and anticipate the US fleet to reach 100,000 vehicles by 2030. Amazon’s 2040 net zero goal forms part of the company’s commitment under the Climate Pledge, a global initiative that targets net zero by 2040.
Recent test crashes have caused yet another regulatory setback for Amazon Prime Air drone services, according to inside sources reported by Business Insider. According to the sources, the crashes alarmed the Federal Aviation Administration enough to withhold permission for Amazon to begin test flights that must be completed in order to get the program off the ground. Amazon must complete 7,000 test flights as part of a federal regulatory requirement for durability and reliability. According to an internal document, they had hoped to complete nearly all of them by the end of July. So far, they’ve completed 3,000 flights, but are still awaiting flight approval from the FAA, which declined to comment on the story. Amazon called the story “false” and “purposely misleading.”
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