Distribution January 2022
Retail Sales Rise 0.3%
Retail sales rose just 0.3% in November after surging an upwardly revised 1.8% in October. Results were well below expectations. Sales were up 18.2% year over year. Analysts noted that inflation accounts for some of the big increase over 2020. Spending rose 4% at online retailers. Analysts noted that online shopping dominated early holiday shopping but expected in-store shopping to rise as the holidays draw closer and shipping deadlines loomed. Excluding automobiles, gasoline, building materials and food services, core retail sales rose 1.6%, doubling October’s increase. Core retail sales were up 11.3% year over year. Core retail sales correspond most closely with the consumer spending component of GDP. The National Retail Federation forecast that 2021 retail sales will rise between 6.5% and 8.2%, which would beat the previous record growth rate of 6.3% in 2004.
Holiday retail sales surged 8.5% between November 1 and December 24, according to the MasterCard SpendingPulse survey. Sales were up 10.7% compared to the pre-pandemic 2019 shopping season and more than 20% from holiday 2020. It was the biggest yearly increase in 17 years, despite disruptions from Omicron and persistent supply-chain snags. A strong job market and rising wages fueled the jump; numbers were also boosted by inflation.
Online sales were up 11% from a year ago and 61% from 2019, before the pandemic sent shoppers hunkering down at home en masse, according to the survey. This holiday season, ecommerce made up 20.9% of total retail sales, up from 20.6% in 2020 and 14.6 % in 2019.
Consumers also returned to stores this holiday season, fueling an 8.1% increase at brick-and-mortar stores versus last year. Store sales rose 2.4% versus 2019.
The 8.5% surge in 2021, which includes spending by cash, check credit and debit cards, exceeded MasterCard's previous estimate of a 7.4% increase. The National Retail Federation had forecast an 8.5% to 10.5% increase over 2020, a number that excludes auto sales, gasoline and restaurants.
The Home Depot
The Home Depot Foundation, Home Builders Institute (HBI)and Habitat for Humanity International came together to spread some holiday cheer. Students from The Home Depot Foundation's 10 Path to Pro military base programs gathered for an end-of-year celebration. Each Path to Pro military base program was given a $10,000 grant to help the Foundation pull off an Operation Surprise campaign moment. From there, each of the 10 military bases surprised a local Habitat for Humanity veteran family with a $10,000 Home Depot gift card. The HBI trades training programs work closely with local Habitat for Humanity affiliates on projects that do good and allow participants to learn important skills such as building ramps and doing home repairs while giving back to their community. Path to Pro was founded in 2018 to address the skilled labor gap. The goal of the program is to educate more people in skilled trades, while connecting skilled tradespeople with jobs and careers and generating interest in trade professions through educational campaigns.
Lowe’s now expects full-year 2022 revenue and profits to be lower than originally forecast, due to waning demand for home improvement products. Lowe's said it expects same-store sales to fall as much as 3% in 2022, as the easing of coronavirus restrictions encourages Americans to leave behind some pandemic shopping habits such as spending on paint, tools and gardening equipment for DIY projects. Lowe's Chief Financial Officer David Denton expects demand to decline in mid-single digits in 2022. Rising distribution costs due to global supply chain hurdles and higher wage expenses are also expected to hurt Lowe's profits. Lowe’s now expects 2022 total sales to be between $94 billion and $97 billion, below analysts' estimates of $97.6 billion.
CEO Marvin Ellison joined CEOs from Duke Energy and Bank of America to talk about the role adaptability played during the pandemic as part of the Charlotte Regional Business Alliance’s annual economic outlook. Ellison said that executives need to engage with employees, even multiple layers down, in order to know what is really happening with the workforce. He also noted that people who are working remotely need to feel as if they have just as many opportunities as those in the office. The CEO of Duke Energy said that the mindset has changed from waiting for the pandemic to be over to learning to live with it and adapt and continue to grow.
Lowe’s is celebrating its centennial by implementing 100 community projects across 36 states that range from housing to playgrounds and cultural preservations. Ellison said that kind of work is good for communities and really resonates with employees.
Lowe’s has been able to meet all of their staffing goals despite the labor shortages and has invested almost $2 billion in wage and equity for frontline associates over the past two and half years, in addition to all the initiatives enacted during the pandemic.
Walmart is expanding their Market Fulfillment Centers, which are small, automated warehouses in a Walmart store or a building addition that are filled with thousands of frequently purchased items from groceries to games. The fulfillment centers use robotic technology and artificial intelligence to handle online orders. Some are even able to provide automated pickup for customers. Automated bots pick the items needed and then store the orders until the customer picks it up.
Ace did a Holiday Roundup for Kids campaign in December that benefitted Children’s Miracle Network Hospitals (CMNH). Shoppers had the opportunity to round their purchases up to the nearest dollar and support the local CMNH in their area.
Ace Hardware won a Golden Halo Award from Engage the Good. The Golden Halo is the group’s highest honor for companies and causes that engage in activities designed to build both the bottom line and a better world. Ace won the award for their technologically innovative and humanly engaging strategies to increase point of sale fundraising for Children’s Miracle Network Hospitals.
Ace added an influencer marketing strategy to their media mix as part of a larger move into what they call “PR activations” to appeal to DIYers and first-time homebuyers. Ace partnered with OKRP. Ace is trying to reach younger customers, particularly millennials who are aging into home ownership, and is incorporating new PR tactics to reach them, including TikTok and music videos. The music video for the holidays was titled Holi-DIY.
Amazon reinstituted a mask mandate for all US warehouse workers in December after coronavirus cases surged. Amazon had previously required masks only for unvaccinated workers.
Amazon’s Amazon Web Services (AWS) had a major network outage the first week of December that caused problems for many websites and other online services. It took Amazon more than nine hours to fully resolve the issues. The outage affected Amazon’s home page, Alexa, Amazon Prime Music and Video and many other sites, including Venmo, Roku and streaming companies. It was mid-month before Amazon explained that one of their automated processes caused the outage by triggering a large surge of connection activity that overwhelmed the networking devices and resulted in outages and delays.
OSHA is investigating the collapse of an Amazon warehouse in Illinois that killed six people who were attempting to shelter from a deadly and powerful tornado that left a swath of death and destruction in Kentucky, Tennessee, Arkansas and Illinois. The warehouse was severely damaged. It did not have a basement because the area is prone to flooding. The fatalities occurred outside the designated “take shelter” area.
Amazon began producing their own navy blue, 53-foot branded shipping containers in 2018. In its first year, Amazon Logistics shipped more than 5,300 containers from Beijing to ports in California and Washington state. Since then, Amazon has progressed to the point that they are shipping more than 10,000 of their own containers every month and rank among the top five transportation companies in the Trans Pacific. Since the pandemic started, shipping container prices have surged from under $2,000 to over $20,000. Industry observers say that because Amazon charters their own ships, they can choose which ports to unload at, based on availability and port congestion, and can often get unloaded in just a few days. It’s all part of their strategy to avoid supply chain bottlenecks and slowdowns.
In the past two years Amazon has almost doubled the size of their fulfillment network, adding more than 450 new facilities used to store, sort and ship items. Many of them are concentrated near big cities, making it easier for Amazon to provide faster delivery to more people. In mid-November more than 98% of packages arriving at Amazon delivery centers were delivered the next day. Previously Amazon used a system which boxed packages in one facility and then sorted and shipped them in another. Now they are opening more warehouse centers that double as fulfillment and delivery locations.
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