Retail Sales Rise 1.9%
Retail sales rose 1.9% in September after rising 0.6% in August and were up 5.4% from September 2019. It was the fifth consecutive monthly increase in retail sales. Sales were well ahead of expectations and rose in every major category except for electronic and appliance stores. Core retail sales, which exclude automobiles, gasoline and sales at building and supply stores and factor into calculations for GDP, rose 1.4% in September after falling a downwardly revised 0.3% in August. Building and supply store sales rose 0.6% and online retail and catalog sales were up 0.5%.
The Home Depot
THD introduced a new educational video series, Virtual Field Trips, which will be available in their digital DIY workshops library. Home Depot suppliers will provide kid-friendly, behind-the-scenes tours and insights into how products come to life and eventually make it to the retailer's shelves. The Virtual Field Trips provide fun, exclusive tours, curated specifically for young doers. From plant genetics to supply chain, THD has broken down the process into creative, interactive, digestible videos with accompanying DIY projects that THD believes will bring the excitement of a traditional field trip to the pandemic virtual world many families are now living in. Virtual Field Trips and hundreds of family-friendly projects, from creating a cardboard box playhouse to making a solar oven, along with many resources for kids can be found at www.homedepot.com/kids.
THD will expand their partnership with Discovery Education in spring 2021 to bring more digital resources and projects to their Science Fair Central platform. Originally launched in 2017, Science Fair Central has provided more than two million educators and students with STEM project starters, information on scientific processes, material checklists and more. Discovery Education is the global leader in standards-aligned digital curriculum resources, engaging content and professional learning for K-12 classrooms. THD first launched monthly workshops for kids more than 20 years ago.
THD swiftly cut ties with long-time advertising agency Richards Group after founder Stan Richards described a proposed ad campaign for Motel 6 as “too black.” Motel 6, Keurig and Dr. Pepper also fired the agency because of the comments. While Stan Richards, age 87, turned over the reins of the company to Glenn Dady last year, he remained involved in the business and blamed himself for making a huge mistake, even though the meeting was internal and the comments were not intended for the general public. No word yet on who THD will select to replace Richards Group, which is widely viewed as a highly strategic and effective agency.
Lowe’s will give hourly employees an additional $100 million in discretionary bonuses as Lowe’s heads into the busy holiday season. Full-time staff will receive $300; part-time and seasonal employees will receive $150. This latest round will bring the company’s total bonuses during the pandemic to more than $775 million.
Lowe’s has mapped out a strategy for the holidays that aims to cut down on the shopping rush that typically surrounds Black Friday. They will focus on the home as a key theme, and hope to give new meaning to the phrase “home for the holidays.”
Lowe’s will offer an expanded selection of products for the holidays, including tools and many other traditional home center products. Lowe’s will also offer many new products designed to take advantage of consumers'’ pandemic-driven focus on home, such as small kitchen appliances, home décor, outdoor playsets, backyard movie players and battery-operated ride-on toys. They began offering free local delivery of fresh Christmas trees the end of October. Lowe’s will also offer free local delivery of decorative items, including fresh-cut wreaths and tree containers with a purchase over $45.
Lowe’s is dedicating November to Pros, calling it “PROvember” and offering Pros special deals and the chance to win a 2021 Chevy Silverado packed with more than $3,000 worth of DeWalt tools.
Lowe’s is targeting professionals with new services and initiatives, including a partnership with Stream for a free augmented reality video chat service called JobSight that allows professionals to meet with clients virtually, a feature that is particularly suited to doing business during a pandemic. Retail analysts believe there is room in the fragmented marketplace for Lowe’s to gain share with professionals.
Walmart is redesigning their stores so that the layout mimics the Walmart app, making it easier for shoppers to find what they are looking for. The redesign will roll out to 200 US stores by the end of the year and 1,000 more by the end of 2021. Shoppers will reportedly notice that Walmart’s departments are being more clearly organized and will have new larger signs. The redesign process actually began pre-pandemic, but features that people have gotten used to have been integrated, including contactless payments. The redesign was inspired by customer feedback and may be further tweaked depending on how shoppers respond.
Q3 sales rose 2.4% to $3.0 billion and organic daily sales rose 4.6%, driven by significant share gains in the US segment and strong growth in the endless assortment businesses which more than offset declines in Canada. US segment sales were up 3.1%, outperforming the MRO market, which declined an estimated 5% to 6%. This increase was driven largely by higher volumes of pandemic-related products, partially offset by year-over-year decreases in non-pandemic product sales. The declines in non-pandemic product sales continued to moderate, while growth in pandemic product sales remained elevated, but began to ease from the levels experienced earlier in the year.
There was no material impact from foreign exchange rates during the 2020 third quarter and the third quarter of 2019 and 2020 had the same number of selling days.
Q3 sales rose 33.7% year over year to $96.1 billion, handily beating expectations. Excluding the $691 million favorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 36% compared with third quarter 2019. Amazon also raised their guidance for Q4 and now expects revenue between $112 and $121 billion.
Sales grew for all Amazon segments except physical stores. Sales at online stores, which includes products Amazon sells directly to consumers on their website, grew 38%. Amazon’s sales from third-party sellers rose 55%. Revenue from Amazon Web Services, their cloud computing business and Amazon’s largest profit driver, grew 29%, and Amazon’s advertising business grew 51%. Meanwhile, Amazon’s sales at physical stores, including Whole Foods, dropped 10%.
More than 320,000 people attended Amazon’s Career Day, a virtual event that provided insights, tips, and advice to job seekers on how to build their career and apply for more than 130,000 corporate, technology, and operations positions available at Amazon in North America. Amazon received a record 384,000 applications for roles in Canada and the US within a week of announcing the event.
Amazon CEO Jeff Bezos said that the company’s decision to raise the minimum wage to $15 per hour two years ago and the investments they have made around the world in recruiting and training have helped them successfully manage the unprecedented increase in sales that has been driven by consumers’ overall migration to shopping online.
Amazon announced plans to add more than 3,000 new schools to Amazon Future Engineer, a four-part program that funds high-quality, age-appropriate computer science curriculum for students and professional development for teachers. With the addition of these new schools, Amazon Future Engineer will expand to reach over 550,000 K-12 students across more than 5,000 elementary, middle, and high schools in underserved communities.
Amazon avoided calling Prime Days in mid-October their biggest sales days ever but said that the independent sellers on their platform had nearly 60% better sales than last year. With Prime Day moved from July to October, it provided an unofficial early start to the holiday shopping season. Unofficial estimates place sales at close to $10 billion, even with Amazon India holding their own Prime Day celebration earlier. Numerator data shows that the average order was $44.21, down from $59.02 in 2019, and the average shopping cart held 1.6 items. About 29% bought holiday gifts, with about a quarter of those shoppers saying they did at least half of their holiday shopping. Only 52% bought something that was part of a Prime Day deal, and 21% of Prime Day shoppers also bought something from another retailer. The most popular items were Amazon tech items: The Echo Dot smart speaker, Amazon Smart Plug, Fire TV Stick, Echo Show and new or reloaded gift cards. Household essentials, health and beauty, toys and video games and home and garden were other popular categories that each saw a purchase by at least 1 in 5 shoppers.
Amazon is adding 100,000 seasonal jobs across the US and Canada for the busy holiday shopping season. In addition, Amazon hired 100,000 people in September and added 33,000 employees focused on corporate and tech roles.
Amazon’s corporate office may not return to pre-pandemic staffing levels until the middle of 2021. Some managers have told their teams they can continue to work from home until July or August 2021, according to the Washington Business Journal. In July, Amazon said that employees who are able to telework should continue doing so until January 8, 2021. An Amazon spokesperson said the official back-to-work date has not changed, but individual managers have the leeway to make different accommodations for their staff. Alphabet’s Google has already announced July as their return to the office date, with Microsoft, Uber and Airbnb making similar statements. Despite the work from home trend, Amazon is adding about 900,000 square feet of office space across six cities. They also purchased the Residence Inn next to HQ2 so they can demolish it and expand the footprint.
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