This might become a weekly newsletter of what I've seen in Retail and Consumer Goods and thought was interesting. I've aimed to pick some pieces of Retail and CPG-related news, explaining what they mean, with analysis and opinion to put things in context. It's just getting started. Feel free to spread it around - and let me know what you think: what you like, what you don't, what you'd like to see more of.
🗞 News
Costco’s earnings hit by extra expenses from wages, cleaning amid coronavirus pandemic. Wholesale club stores like Costco saw huge surges in mid-late March as consumers stocked up on essential goods (did you already forget the toilet paper memes?). March 12th was the single highest day of sales for wholesale clubs in 1010data's dataset going back through 2010. Store foot traffic has stayed fairly high YoY, but in store sales are moving down, shifting online - just not enough to make up for increased costs of operating. Link
Coronavirus boosts immunity vitamin sales. Wellness retailers are seeing a surge in demand for immunity-boosting vitamins and supplements according to Vitamin Shoppe CEO Sharon M. Leite. Makes sense: pandemic caused by respiratory illness surfaces; people start to pay attention to their health. As demand increases here, 3 questions immediately come to mind for me:
- At the highest level, we've been seeing a growth trend for several years among consumers, millennials especially, paying stricter attention to their nutrition, exercise, and overall wellness. Was this trend a secular variation already, or a periodic one? More so, will coronavirus alter that trend-line, and if so, by how much?
- For retailer-brand collaborations, how do you manage volatility from both ends of the supply chain? I've seen data reflecting continuous overstock of some supplements following an initial shopper demand signal, but you also don't want to lose out on business growth/serving consumer health in a pandemic with out-of-stocks.
- For shoppers and consumers - and this is a bit tangential - as we stock up or alter our continuous purchases towards health-oriented items overall, what's affecting our choices? Online purchases are easy if items are correctly labelled and grouped together as we would expect, but that's not always the case. In store, Atkins and Quest nutrition products, among other brands for protein bars and the like, can sometimes be found separated, placed in little-visited corners you may not naturally walk through or think to deliberately go in hastened grocery runs. Link
Restaurants rebel against delivery apps as cities crack down on fees. I worked at a restaurant through college and remain friends with the business owner. Delivery has always been a bad deal for the small, family-owned, sit-down restaurants. The less reliant a restaurant is on the dining-in experience, the more resilient the spend has been in the days of coronavirus. Fast food and fast casual tickets were up around 20%, while casual dining and fine dining tickets were down 10-25% for the week ending April 5 vs a Jan-Feb average. 1010data analysis speculates, "tipping and delivery fees, seem to play a key part. The fast food and fast casual dining increases are right around a “standard” delivery fee or tip to the driver of $2 - $5. Casual dining’s 12% fall matches the impact of not tipping somewhat offset by a delivery fee, and fine dining shows the heavier impact of lost alcohol sales and no tipping." Link and Link
🔮 Reading
E-Commerce's $600bn is a big number, but US addressable retail is $3.8tr. This week, I found myself revisiting Benedict Evan's annual macro trend presentation, "The Shoulders of Giants". He makes a good point: we connected almost everyone. There are 4bn smartphone users, out of 5bn phone owners, out of 5.5bn adults on earth. In my first look at this presentation a few months back, I dove into the E-commerce data and analysis, and in coronavirus times, that insight gains a whole new perspective. $600bn is only 16% of addressable retail - and yes, these numbers were pre-covid - but it makes you wonder: with the pandemic accelerating trends across the board, how much of covid-induced e-commerce retail share will remain as states re-open? Link
‘Power partnerships’: Manufacturer–retailer collaborations that work. Consumer goods manufacturers and
retailers alike have experienced significant profit declines in recent years; leaders in each were both down more than 20% percent - before Covid-19 - from 2016-2018. McKinsey found that the application of analytics regularly drives meaningful increases in the bottom and top line (no-brainer), but what's especially interesting is the focus on granularity and collaboration in analytics. Link
The coronavirus pandemic is affecting each generation differently, according to LinkedIn’s fourth Workforce Confidence Index — a biweekly measure of how people feel about their job security, financial well-being and career outlook. Link
As states being to re-open, sector spending trends are giving us direction. 1010data takes a look in its latest COVID-19 Impact Check-In Report. Link
😮 Interesting things
📊 Stats
Combined spending across sectors is down -18% YoY. When it comes to General Merchandise & Grocery:
- Grocery is up +2.8%
- Wholesale Club is flat
- Big Box is down -9.1%
- Pharmacy is down -22.3% Link
Thanks for reading. Again, I'm toying with the idea of turning this into a weekly newsletter. What do you think? What topics for Retail and Consumer Goods/Brands would be most interesting for you?
