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Retail Sales Rise 0.3% Retail sales unexpectedly rose 0.3% in August and sales for July were revised from flat to down 0.4%. Retail sales were up 9.1% year over year. Core retail sales, which exclude automobiles, gasoline, building materials and food services, were unchanged after rising a downwardly revised 0.4% in July. Online and mail order sales fell 0.7% after getting a big boost in July from Amazon Prime Days. Sales of building materials, gardening equipment and supplies rose 1.1% after rising 1.5% in July. 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 correspond most closely with the consumer spending component of GDP. Holiday Sales Forecast Holiday retail sales will increase between 4% and 6% and ecommerce sales will rise between 12% and 14% compared to 2021, when holiday sales grew by 15.1% during the November to January time frame. The lower projected growth reflects the slowdown in the economy and declining demand for durable goods. Inflation is definitely dampening demand and they expect consumers to shift how they spend their holiday budget. Inflation may raise dollar sales, but there will be less growth in volume. Rising prices may push more sales online as consumers look for deals. The Home Depot Goldman Sachs Retail Conference: Their positive comps with both Pro and DIY customers shows that Home Depot has a unique and very healthy customer base, according to CEO Ted Decker. They are homeowners with strong income levels whose homes have appreciated significantly. They believe the value of homes has gone up $8 or $9 trillion over the last 2 years. While that growth in value has slowed somewhat in recent periods, it is still averaging 8% year over year. An analyst asked if people weren’t done with their projects after being homebound over the pandemic. Ted Decker said he certainly was not done with his; for most homeowners the list is never finished. In addition to repairs, remote working has created an increased emphasis on the home and been the catalyst behind many home remodels and improvements. They had a huge spike in outdoors business at the beginning of the pandemic when people were being urged to avoid indoor gatherings. That has leveled off, but now people are focused on indoor projects. They are finishing basements, remodeling bathrooms and converting space to offices and workrooms. Pros are now doing more of the projects that people did themselves during the pandemic, such as interior painting. Their total addressable market of $900 billion is about 50/50 Pro and consumer and their sales are currently also split about 50/50. One big difference is that their Pro business used to be concentrated with smaller Pros, with fill-in business from larger Pros. Now they are attracting larger Pros who buy the entire project from them and also use THD for fill-in. Pros want brand names, inventory and a point of contact for their business. They have been working on all those capabilities, including the loyalty program, their digital B2B website and most importantly, the build-out of their One Supply Chain to support larger jobs and larger quantities. They are five years into their One Supply Chain buildout and feel they will be finished in 2023. Projects include flatbed distribution centers, direct fulfilment centers and market delivery operations that handle flow for big and bulky products. They now have more control because they manage their own facilities. These centers also take a lot of unnecessary activity out of the stores and free associates to spend more time with customers. In addition, they reduce the need to source products to fulfill an order from multiple stores, which is inefficient and time-consuming. Almost half of the dollar value of their inventory has been inflation. They are seeing some needed relief in the broader supply chain and in the global supply chain, which is good and will benefit their business. However, there are some categories that they still see constraints on. There is better container availability and shipping lanes are opening up. They are seeing a tremendous amount of innovation from all their partners across many product categories and think that innovation drives about 50% of sales. They believe they have the tools to manage both inflation and deflation equally well; they are seeing deflation now in some categories that were overly inflated during the pandemic. They are well-stocked for Halloween and Holiday and are excited about the opportunities they see. Lowe’s Lowe's is partnering with Instacart to provide same-day delivery nationwide from more than 1,700 US Lowe’s stores. Lowe's pilot-tested the option in several markets in February. Lowe's said nearly 30,000 items, including items as large as 3x3x5 feet and up to 60 pounds, will be eligible for one-hour delivery. Lowe’s introduced what they termed an industry-first digital technology that allows them to create a virtual replica of a physical store and interact with store data to improve the layout and store operations. Lowe’s Innovation Labs Team built the technology, which was created in the NVIDIA Omniverse platform. Walmart Walmart will hire fewer people for the holidays this year, just 40,000 workers, a nearly 75% drop from the 150,000 hired last year. Walmart plans to start holiday promotions earlier this year in order to allow shoppers to spread out their purchases. Walmart is also expanding the window for returns by more than a month. Gift returns will now be accepted between Oct. 1 and Jan. 31, compared with last year's return window of Nov. 1 to Jan. 24, the company said. Amazon Amazon may be planning an unprecedented second Amazon Prime Day in mid-October in order to get the holiday shopping season off to a fast start. Amazon CEO Andy Jassy confirmed they don’t plan to require corporate workers to return to the office anytime soon. Amazon went to remote work during the pandemic and had hinted that they wanted to bring people back into the office. But in October 2021, managers were left to decide what their employees’ working routines would look like. Jassy says they plan to proceed adaptively as they learn, and that may mean more flexibility for certain teams. Hardware and creative units, for example, have already returned to the office to a certain degree, while engineers continue to show a bias towards remote working. Amazon will scale back on hiring after doubling the size of their fulfilment network in just 24 months in order to respond to pandemic demand. Amazon launched Small Business Month in September to offer education, deals, business grants, and a free virtual summit exclusively for small business customers. Small Business Month also included Small Business Deals Week in mid-September, when Amazon Business will offer discounted exclusive pricing promotions for small business customers. Categories of discount promotions include PCs, consumables, office products, home and furniture items and devices. Amazon Business is also launching the Small Business Grants program, awarding more than $250,000 in business grants to a handful of growing small businesses. Existing Amazon Business customers with annual revenues of $1 million or less can apply for a grant, with one grand-prize winner and a group of finalists and semifinalists receiving monetary grants, Business Prime Memberships, Amazon Web Services credits and training benefits, and more. Amazon acquired warehouse robotics company Cloostermans, a Belgian company that specializes in mechatronics. They build robotics to move and stack heavy packages around the warehouses. Amazon has been one of their customers since 2019. Terms of the deal weren't disclosed. Cloostermans will become part of Amazon Robotics. Amazon made Veeqo available in the US. The free shipping software for sellers includes discounted shipping rates with UPS, U.S. Postal Service, DHL, and FedEx available in the US. Amazon acquired Veeqo earlier this year. It automatically finds the lowest shipping rate available based on size and weight of package and manages sales from multiple platforms, including Amazon, Shopify, Etsy and Ebay. The software also communicates with customers, keeps them posted on order status and provides feedback to the seller. © Robert Bosch Tool Corporation. All rights reserved, no copying or reproducing is permitted without prior written approval.
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