Distribution February 2023
Retail Sales Fall 1.1%
Retail sales fell a seasonally adjusted 1.1% in December and sales for November were also revised to show a 1.0% decline compared to the 0.6% drop previously reported. Sales fell in several gift-related categories as shoppers cut back on holiday purchases and sales at online retailers fell 1.1%. However, sales rose 1.3% in October as shoppers took advantage of early deals. Excluding automobiles, gasoline, building materials and food services, retail sales fell 0.7% in December after dropping 0.2% in November. Core retail sales correspond most closely with the consumer spending component of gross domestic product. Unlike many government reports, retail sales aren't adjusted for inflation and can reflect price differences in addition to purchase totals so they are impacted by rising prices. The retail sales report covers about a third of overall consumer spending and doesn't include services, such as travel and entertainment. The National Retail Federation (NRF) reported that sales in November and December rose 5.3%, below expectations and a dramatic slowdown from holiday sales in 2021, which rose 13.5%.
The Home Depot
THD will start paying hourly associates by the minute after several lawsuits charged the company with underpaying employees. THD previously rounded time up or down to the closest 15 minutes; now everyone will get paid for the exact number of minutes worked.
THD rolled out a new app developed in-house to help store associates prioritize tasks more effectively. The app, dubbed Sidekick, is a new addition to hdPhones, The Home Depot's mobile devices dedicated to improving the associate and customer experience. Powered by machine learning, the app guides associates to prioritize the highest demand product, which shelves to restock and the location of the excess product on overhead shelves. A dashboard visible by associates and managers shows what needs to be done. Sidekick integrates with other THD platforms so information across platforms is consistent.
THD expanded their Pro Xtra loyalty program, introducing new membership tiers with escalating benefits. With three new tiers, Member, Elite, and VIP, Pros will enjoy more benefits that keep building as they spend. When customers enroll in Pro Xtra, they gain access to specialized perks, business tools to better manage and grow their businesses, exclusive sales and events in stores and online, paint rewards and more. Every dollar spent counts toward earning rewards and helping the Pro reach the next level. Additional perks include a new Elite support line for prioritized, exclusive assistance for business needs, VIP experiences, account management services with personalized purchase support from Home Depot experts, and preferred pricing. Additional benefits for members of all tiers will be released throughout the year.
CEO Marvin Ellison spoke to a crowd of thousands at the National Retail Federation Conference in New York as he received the National Retail Federation’s The Visionary award. Ellison said Lowe’s was very optimistic that the market will be strong in 2023 and feels they have made the appropriate level of investments to be able to continue to take market share. While acknowledging that parts of the macro economy will see some slowdowns, they don’t believe there will be a big recession or economic downturn in the home improvement industry. Ellison said demand drivers remain strong and a slowdown in new construction doesn’t necessarily hurt the industry, as older homes require more upgrades and maintenance. Lowe’s is also not concerned about the supply chain since they currently source from more than 35 countries. Ellison believes their brick and mortar stores are more relevant than ever as they now serve as essential hubs and distribution centers as well as retail stores.
Lowe’s brought their One Roof Media Network in house by taking ownership of advertising and sales operations. They launched their retail media service in October 2021. It provides omnichannel advertising services, with a focus on putting brands at the forefront. That includes utilizing customer data and real-time shopping trends to develop advertising, marketing and creative services. The media network provides customizable advertising solutions and proprietary data and insights. Bringing them in house should provide a greater return on investment for advertisers. Lowe’s One Roof has more than 200 clients including Stanley, Black & Decker. Lowe’s partnered with Yahoo on off-site media experiences, including digital out-of-home, addressable TV and connected TV, which help target specific viewers.
Walmart raised the starting wages of US workers in stores and warehouses from $12 to $14 in February. Rivals, including Amazon and Target, have a $15-an-hour minimum wage. The federal minimum wage is set to increase to $9.50 an hour on July 1, from $7.25 an hour now. Walmart's changes, the latest in a series of increases to close the gap with rivals, will push the company's average hourly wage to over $17.50. Currently hourly workers earn an average of around $17, a spokeswoman said. The US job market has been tight, with December’s unemployment rate of 3.5% matching multidecade lows. Despite some signs that the labor market is losing some momentum, Walmart continues to grapple with a tight labor market for some core jobs, including store workers and truck drivers. Around 340,000 of Walmart's 1.6 million U.S. workers will see a raise in their March paychecks because of this latest change.
Ace reported that online holiday sales in December were up 37% from 2021 with a 28% increase in traffic to the site and a 20% increase in orders. Q4 gross online sales were up 32%, orders rose 13% and traffic was up 25% over 2021.
Ace Hardware was named one of the Top Ten Franchises in the world for 2023, according to Entrepreneur magazine's Franchise 500. Ace moved up from 12th in 2022 to number seven out of 500 ranked franchise businesses. Ace was also named #1 in its retail category once again.
Ace Handyman Services was ranked #1 in the Home Repairs/Handyman Services category. Overall, Ace Handyman Services ranked #127 on the Franchise 500 list, rising from #238 on the list in 2022. Ace Handyman Services is a stand-alone subsidiary of Ace Hardware corporation created in 2019 as a collective of locally-owned franchise businesses. The roster of services includes carpentry, plumbing, electrical, drywall, painting, flooring and more.
When news leaked that Amazon planned to layoff 18,000 employees, CEO Andy Jassy scrambled to get ahead of reports. Jassy explained in a hastily crafted press release that Amazon’s era of trying to be everything to everyone is over; Amazon needs to learn to do less and concentrate on what is most important and most profitable. He wants Amazon to focus where they spend their resources and time and find ways to do more for their customers at a lower cost and pass on savings to customers. Or, as he put it, invent and simplify. The majority of job cuts will be in Amazon stores and their people, experience and technology teams, representing about 5% of the company’s corporate jobs.
Amazon will wind down their charitable-giving arm, Amazon Smile, in February, saying their impact is “spread too thin,” because they have donated to more than one million organizations over the past decade. Amazon Smile was launched in 2013 and will cease operations on February 20. Amazon funded a half-percent of each purchase made to a charity of the customer’s choice. Participating charities will receive a one-time donation equal to about a quarter of what they received in 2022. Amazon said the program did not create the impact they had envisioned and they will continue to invest in other areas where they believe they can make meaningful change. The Association for the Prevention of Cruelty to Animals, Nature Conservancy, St. Jude’s and the American Red Cross were the only groups to receive more than $1 million over the program’s life.
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