Retail Sales Rise 0.4%
Retail sales rose 0.4% in August after rising an upwardly revised 0.8% in July according to the latest figures from the Commerce Department. The increase was twice as much as economists were expecting. It was the fifth consecutive month retail sales increased. Core retail sales, which exclude food services, car dealers, building-materials stores and gasoline, rose 0.4% after a downwardly revised gain of 0.9% in July. Core retail sales correspond most closely with the consumer spending component of GDP. Online and other non-store sales were up 1.6% after jumping 1.7% in July. Building materials and garden supply stores jumped 1.4%, the biggest increase in this category since January.
Holiday Retail Sales Forecast
Holiday sales are expected to increase between 4.5% and 5% this year, according to Deloitte’s annual holiday forecast. Deloitte also forecast that ecommerce sales will grow between 14% and 18% this year; ecommerce sales rose 11.2% over last year’s holiday season. Deloitte does its forecasting based on US Census Bureau figures and the current health of the labor market. The National Retail Federation has not issued their holiday forecast yet.
The Home Depot
The Home Depot has augmented their in-store security cameras with software that tracks individuals’ movements throughout their stores using a scan of face geometry, a practice known as faceprinting, according to a new lawsuit filed in federal court in Atlanta. The suit claims this practice is in violation of Illinois’ Biometric Information Privacy Act. Texas, Washington and Illinois are currently the only states with biometric privacy laws.
A segment of Lowe’s “Which Tool Will Win” program began airing on Lowe’s YouTube channel. The segment features the “Bosch Building Challenge” with two competing students from the Northland Workforce Training Center.
Walmart introduced a new rewards credit card program from Capital One. The program features two new credit cards: the co-branded Capital One Walmart Rewards Mastercard and the private-label Walmart Rewards Card. The Capital One card offers 5% back on purchases at Walmart.com, including Walmart Grocery Pickup and Delivery, plus 5% back on in-store purchases when using Walmart Pay for the first 12 months as a special introductory offer. The card also offers 2% back on Walmart purchases in stores outside of the intro offer, 2% back on restaurants and travel and 1% back on everything else. There’s no annual fee and no foreign transactions fee. The Walmart Rewards Card can only be used to shop at Walmart and offers additional benefits, including 2% back on purchases at Walmart Fuel stations. As a comparison, Amazon and Target’s cards offer 5% back on store purchases every day.
Walmart is expanding its online grocery delivery options with a new membership program that gives customers unlimited same-day deliveries for $98 a year, or $12.98 per month. The program goes head-to-head with Amazon Prime, which costs $120 per year. Customers can also pay for same-day deliveries as needed, or can have next-day free delivery on orders of $35 or more for general merchandise and some nonperishable groceries from Walmart.com. The program has been in test in Houston, Miami, Salt Lake City and Tampa, and Walmart says the response has been “positive.”
Walmart hired former Amazon lawyer and exec Nuala O’Connor as the company’s first chief counsel of digital citizenship. She will oversee Walmart’s digital citizenship team and focus on leveraging data and technology as well as advise Walmart on privacy issues, cybersecurity and records management.
Ace held their fall convention in Atlanta at the Mercedes-Benz stadium. To kick things off, Ace Chairman Brett Stephenson thanked Home Depot founder Arthur Blank, who owns the Atlanta Falcons, for sharing the stadium.
Ace introduced their Higher Ground initiative, which will replace their 2020 Vision plan, which has run its course. The five-year plan includes a $2 billion investment to fuel $20 billion in retail revenue, up from $16 billion today.
Ace will boost their advertising spending from $80 million to $120 million in no more than five years to combat consumer perceptions that Home Depot carries more Stihl products, Big Green Eggs and Benjamin Moore Paint than Ace does. In reality, the Home Depot does not carry any of those brands, which do not sell to Home Depot, Lowe’s, Menards or Walmart.
Ace hammered on the four categories for which they intend to become famous: paint, power, backyards & BBQ and home preservation.
Traffic, conversion and average ticket drive sales; two of those are controlled by employees. Research shows that when a customer receives personal help inside the store, spend increases more than 50%, from $24.09 to $37.50.
Ace unveiled their Store of the Future. It’s an 8,000 square foot Cornerstone Hardware store they demonstrated on the market floor, saying that merchandising tactics in the store layout are based on analytics of their best-in-class Ace retailers.
BODFS (Buy-online-deliver-from store) was positioned as a strategic imperative, with Ace CEO John Venhuizen noting that BODFS stores have 57% higher sales than stores that simply allow for in-store pickup.
Vanhuizen said that big box retailers like Home Depot and Lowe’s are better fits for large home renovation projects but Ace is better at home “preservation” and maintenance, helping people fix, repair and maintain their biggest asset.
Ace acquired home repair franchisor Handyman Matters. The company will be renamed Ace Handyman Services. Handyman Matters was founded in 1998 and offers home improvement, remodeling and maintenance services through 57 franchisees in 23 states. Financial terms were not disclosed. The acquisition gives Ace an entry into the “Do It For Me” market. According to Vanhuizen, customers have been “begging” Ace to launch in-house home-improvement services.
General Motors will make Amazon’s Alexa available for cars, trucks and crossovers beginning with model year 2018. Alexa will be available beginning in the first half of 2020. Users will have access to standard Alexa capabilities and GM will be able to create custom features.
Amazon is launching Amazon PayCode, a free service that lets US customers shop online, receive a PayCode at checkout and take it to Western Union within 24 hours to pay for the order in cash. Amazon says that 8 out of every 10 Americans live within five miles of one of the 15,000 eligible Western Union US locations. Analysts say the procedure creates what is essentially a 24-hour cooling off period that allows people to decide if they really want to make the purchase. Consumer researchers believe the approach may leave Amazon with a high number of abandoned orders. A report from the Federal Reserve’s 2018 Diary of Consumer Payment Choice found that 77% of payments are made in person, and 39% of those are made with cash.
Amazon is reportedly working on speeding up checkouts at physical stores by allowing people to use their hand as a form of identification. They plan to roll out the new tech at Whole Foods stores next year. Customers won’t need to touch the scanner; instead it will use computer vision and depth geometry to identify people.
Amazon held a nationwide job fair in six US cities after opening 30,000 jobs. Amazon Career Day was held in Seattle, Boston, Chicago, Dallas, Arlington, Virginia and Nashville, Tennessee. Amazon is looking for people with all types of experience and education, from technical software engineers to program managers and customer fulfillment.
Amazon expanded their Chicago Tech Hub and plans to create 400 new tech jobs in fields including cloud computing, advertising and business development. All told, Amazon Tech Hubs employ more than 20,000 people.
Amazon ordered 100,000 electric delivery trucks from Michigan-based Rivian, which will manufacture the vehicles in Normal, Illinois. Amazon plans to take delivery on the trucks starting in 2021 as part of their goal to become carbon neutral by 2040.
Amazon is opening a new store at Oakbrook Center near Chicago that will sell a mix of the most popular items offered online. The first 4-star store opened in New York’s SoHo neighborhood a year ago, and Amazon has since opened stores in Denver, Seattle and Berkeley, and plans three more in addition to Oakbrook.
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