2016 WAS A GREAT YEAR FOR DIY RETAIL

The holiday season is upon us, and how DIY retail will fare remains to be seen, but 2016 by most accounts has been a great year for DIY retail. The North American Retail Hardware Association (NRHA) is estimating industry growth for 2016 to end at 5.8%. The Home Improvement Research Institute (HIRI) is estimating a little higher, at 6%. The US Census Bureau reports home improvement industry sales through September at 6.7% growth over 2015.

Building materials and home improvement retail sales are 3 to 1 higher than overall retail sales increases for this year.

What has led to the success, and which areas in the DIY space have seen the best results?

Most economists agree that the renewed housing market seen in 2016 will continue into 2017. Add to that higher consumer confidence rates, multi-family housing construction has led to higher sales at home centers and lumber dealers. Remodeling projects and big-ticket purchases are stronger. Big ticket items, such as appliances, have seen the biggest sales uptick in the segment.

Accelerated Analytics DIY customers, using their retailer POS data to analyze sales and inventory, are experiencing the same trends. Across the Accelerated Analytics customer index, June and July showed poor results, followed by an improving August and strong September. 20% of Accelerated Analytics customers’ sales tickets are big ticket items, over $900 per sale. These items were identified as appliances and other expensive items, along with supporting/supplemental products.

The NHRA is predicting 2017 sales to continue this trend and that home improvement product sales should continue to outpace overall retail sales in 2017, anticipating DIY industry growth in the range of 5%.

For more industry stats and observations, download the Accelerated Analytics Retail Industry Briefing Book, which is a monthly publication of key retail industry trends, published to over 7,000 subscribers per month.

Sources: Accelerated Analytics, Hardwareretailing.com

THE HOME DEPOT’S HOMETOWN OF ATLANTA DISCUSSES THE RETAILER’S TECH EDGE

Atlanta news station 11Alive (NBC) sat down Sunday with The Home Depot’s Sr. Director of Digital Strategy & Mobile Applications, Matt Jones, about how the company uses technology to enhance in-store and online customer experiences.

Says Mr. Jones about the retailer’s mobile app, the latest strategy has been to help the customer navigate in the store while shopping. The app also gives consumers the ability to read product ratings and look up detailed product information while looking at products in the aisle, enhancing the shopping experience.

“One of the challenges is being able to visualize how the products will look in your home, “says Mr. Jones. “A door could be an example, a patio set could be an example.”  

When asked how the use of technology has impacted sales, the bottom line and overall efficiencies within the organization, Mr. Jones says the blending of the in-store and digital experiences has definitely been a driver of sales success.

Who is The Home Depot’s tech consumer? “We’ve got a very diverse customer base, from the professional customer…to the customer buying home décor…to the customer doing a DIY project at home.” This year marks the biggest wholesale change to the mobile app in years.

There are a few things Home Depot is focused on for 2017 according to Mr. Jones: giving customers a way to personalize their app and online shopping to focus on their interests. He feels that the faster you can get a consumer to the information they want and will find most valuable is the key to success.

Source: 11Alive.com 

HOME DEPOT SEES BIG GAINS IN 3RD QUARTER GOING INTO HOLIDAY SALES

The Home Depot posted one of the biggest retail jumps post-Halloween among US retailers, seeing online visits increase 17.4% and daily visits to HomeDepot.com over 20 million in the first week of November. The Home Depot is also poised to increase mobile traffic to 53% over the 2015 holiday season.

Online sales increased 17% during the third quarter and US same-store comps grew 5.9%. Significantly, over 40% of online orders placed were items picked up in the store, driving their omnichannel success.

For the first 9 months of the year, sales were $72.39 billion, up 7.2% from last year. The Home Depot attributes the growth to an increase in the number of people who made purchases in its stores and the amount of spend per customer transaction. The company expects its 2016 year to end with increases of 6.3%.

One thing to watch as the holiday season continues – last year Q4 numbers were very high due to prolonged warm weather, up 8.9% over 2014, making it harder for Home Depot to beat same store sales this year.

Sources: Internet Retailer, CNBC

ACCELERATED ANALYTICS LUXURY FRAGRANCE VENDORS POISED TO GROW 5.9% BY 2026

Future Market Insights released a report today that estimates the global perfume market is estimated to reach $39.67 billion by the end of this year, and expects growth of this segment of 5.9% over the next ten years. The firm looked at several Accelerated Analytics beauty and fragrance companies for its report, including Estee Lauder Companies, LVMH, Coty Inc., L’Oreal International, Elizabeth Arden Inc., Shiseido Co. Ltd., Puig and Parlux/Perfumania Holdings Inc.

The reports found that demand is being bolstered by the millennial consumer segment, as well as increased online retail strategies from these companies. Female fragrances are leading the increase, with year-over-year increases from 4-5.2% over 2015 to 2026. While online retailing is the most attractive shopping means to this segment of consumers, in-store remains 80.5% of the market share, due to the personal and olfactory nature of fragrance marketing.

Millennials are drawn to products that have natural ingredients. Fragrance vendors are offering more “Eau Fraiche” (alcohol free) products.

The Western Europe market is the largest consumer, and expected growth consumer, of fragrance products, followed by North America.

To get more retail insights from the Accelerated Analytics team, register for our (free) monthly Retail Industry Briefing Book here.

Source: Luxury Daily

HOME DEPOT FOCUSES ON THE ONLINE SHOPPER…BY FOCUSING ON THEIR STORES

The Home Depot has been on the great end of the rebounding housing market with a continued 4% increase in sales in the last quarter, while homeowners work on big remodeling projects like installing decks or remodeling kitchens. Without plans to add more new stores, Home Depot focuses on how to use their existing stores in new ways.

About 42% of Home Depot online shoppers order online, but pick up in the store. To accommodate that, Home Depot is allocating capital to build out store storage to hold those products. When the customer is in the store, the retailer is trying new displays that help the customer shop easier. For example, the spray-paint section is set up like a soft drink display, so as one can is selected, the next can pops into place. In the lumber and millwork flooring area, the displays are easier for the customer to shop off of on their own, and the signage has been improved.

For the increasing online sales where customers want the items shipped to their homes, Home Depot has opened 3 new fulfillment centers that can deliver orders to 90% of their customers within 2 business days. They are also looking into leveraging their store locations to use local economical transportation for buy-online, ship-to-store orders.

Source: Wall St. Journal, IHRC

FALL IS HERE…WILL ECONOMIC FACTORS RISE?

Economic indicators for August dropped, but 2016 overall is still growing.

Home Sales: Existing-home sales dropped .9% in August, marking the second month in a row of decline. However, year-over-year sales are up .8% over last year. While new home sales have been steadily rising, existing-home sales make up 90% of the home sale market. The National Association of Retailers reports that with the housing market in 2016 being the strongest sector of the economy over the past two years, the market may be a “victim of its own success”. Sales early this summer reached the highest levels since 2007, which has led to an increase in prices and a shortage of inventory. The average home price is $240,200, up 5.1% from 2015. The NAR feels an increase in home building would solve the issue. A Commerce Department report this week indicated building permits for single-family homes, the largest segment of the housing market, increased in August.

Manufacturing: The Conference Board reported its leading economic index, weighing 10 different economic indicators, dropped .2% in August. The decline in attributed to the average workweek of production workers and the amount of new orders. However, in the six-month period ending in August, the index increased .9% to an annual rate of 1.8%, which is in line with slow growth reported in gross domestic products. It is forecasted to grow at a 3% pace.

Retail Sales: US retail sales were up 1.9% in August, which was down from 2.4% in July. Retail sales had shown strong gains in the spring but has slowed through the summer months. Sales at department stores fell .6% and general merchandise store sales were flat. Building and garden equipment store sales dropped 1.4%. Retail sales are expected to be on the rise, with Halloween sales expected to boom and the 2016 holiday outlook expected to be positive, especially in e-commerce sales.

Sources: Wall St. Journal, Market Watch

BRING ON THE HOLIDAYS….AND ECOMMERCE SHOPPING

To gear up for what is expected to be a very high e-commerce driven holiday shopping period, UPS says it will hire 95,000 seasonal workers this year, and FedEx Corp will hire close to 150,000. Overall retail hiring is expected to be the same as last year’s high numbers, but a shift to preparing for high online sales with those jobs is clear. Target Corp announced plans to hire 70,000 workers at distribution and fulfillment centers, up 15% from last year.

eMarketer announced survey results that found while moderate growth of 3.3% is expected for holiday retail overall, ecommerce is anticipated to make its biggest jump since 2011, up 17.2%. 71% of shoppers polled said they would make some to all of their gift purchases online. Rubicon Project found similar results in their survey, finding 73% of respondents will shop online, and that 22% of shoppers plan to do all of their holiday shopping online. The report shows that online shoppers will spend 64% on gift cards, 57% on apparel and accessories, 46% on toys and 37% on technology.

Cyber Monday is on track to produce higher results than Black Friday. A shift in the holiday calendar this year is also expected to help retailers. Christmas falls on a Sunday rather than a Friday like last year, giving last minute shoppers an extra Saturday to shop. Hanukkah begins 18 days later than in 2015, which should help generate sales in the latter part of December.

Source: NRF Smartbrief, Chain Store Age, Drug Store News, Fortune

CANADIAN CLOTHING SALES ARE ON THE RISE

The National Retail Federation (NRF) reported today that Canadians are spending more on clothing, footwear and accessories. Statistics Canada released a report that total retail sales in the clothing segment totaled $41.9 billion in 2015, a 38% increase from a decade ago.

During that decade, many retailers exited the Canadian retail market, such as Maxx Canada and Aeropostale. Stores still in the market that primarily sell clothing and accessories made up for 67% of the sales. Retailers of sporting goods, books and music saw their clothing business increase by 50%.

The Statistics Canada report noted that although many retailers closed, most were replaced by higher-end stores. Women’s clothing and accessories totaled $17 billion of the $42 billion, while men’s clothing and accessories were at $9.4 billion. Footwear was right behind at $7.1 billion and luggage and jewelry had $4.4 billion in sales.

Source: NRF Smartbrief, CTV News

HOME DEPOT TURNS STORES INTO MINI DISTRIBUTION CENTERS

The Home Depot announced a 6.6% increase in revenue and a 9.3% increase in net profit to $2.4 billion.

The retailer stated that customers are taking advantage of their new options for retrieving their ecommerce orders. In the second quarter, about 42% of Home Depot’s online orders and almost 90% of its online returns were handled by its stores.

Ecommerce sales were just 5.6% of Home Depot’s sales in the second quarter, but were up 19% from a year ago, showing significantly higher growth in sales than in-store. Home Depot is choosing now to invest in infrastructure and order management software to address ecommerce fulfillment from their stores. Online purchases can now be delivered from over 700 stores, faster and with shorter scheduled-delivery windows than possible before.

Source: Wall St. Journal

WILL THIS WEEK BRING AN OLYMPIC RISE TO RETAIL SALES?

Even before the Olympics started, the retail industry has experienced a big spike in athletic apparel. The growing popularity of “athleisure” clothing have helped athletic apparel see an increase this year of 14% to $45.7 billion as of the end of May.

Now the Olympics are in full swing, and the athletes are all decked out in sponsor apparel and logos. Many retailers are selling specifically to the Olympics market. While these retailers may not separate out specific Olympic-driven sales, several are counting on its popularity to drive sales. Athletic apparel in the children’s department is expected to be successful, as younger viewers look up to the athletes. Patriotic colors of red, white and blue are also expected to be popular.

Dick’s Sporting Goods will have specific Olympic displays. Dick’s CEO Edward W. Stack, announced his company’s plan to donate $1,000 for every medal won by Team USA. Macy’s has an exclusive partnership with Ralph Lauren to sell opening and closing ceremony outfits in its stores. Nike, as an official Olympics sponsor, has over 100 Team USA products for sale, and Under Armour has a “country pride” collection.

Retail sales for June will be announced this Friday. May saw an uptick in sales. Retailers are hoping June and July were positive with back to school shopping, followed by buoyed sales in the athletic apparel segment this week. Check back to our blog page to see how the summer retail news is shaping up.

Sources: USA Today, Forbes

BACK TO SCHOOL AND COLLEGE SALES HELP RETAIL SUMMER SLUMP

Back to School sales helped raise retail sales by .3% over the previous week and 2.5% over one year ago, following a four-week decline in June into July. Expectations are that Back to School sales will rise another 2.5% from July through September, which will be a successful repeat of the 2015 season.

Discounters and wholesale clubs were the strongest contributors to the rise in sales last week, with focus on electronics, clothing, shoes and books. Back to School season is highly promotional as retailers clear inventory for the upcoming holiday season. The National Retail Federation expects total spending to reach $75.8 billion, up from $68 billion in 2015. 60.5% of consumers plan to shop in discount stores, followed by 59.6% shopping in department stores. This rising trend over 2015 is significant, as 2015 was a drop from 2014’s splurge year by consumers in the Back to School/Back to College season.

Source: WWD.com, NRF

US BEAUTY MARKET EXPECTED TO GROW TO $90 BILLION IN 2020, AND ACCELERATED ANALYTICS COSMETICS BRANDS ARE IN THE NEWS!

Today’s $80 billion US beauty market will continue to grow according to a report by Euromonitor International. This growth rate will mean the beauty market will grow by 45% in 10 years. In 2015, the premium beauty category grew 7%, with premium foundation sales increasing 14.2%, compared to just 3% the prior year. Consumers have been shifting to premium products, looking for high quality products. Many luxury beauty brands who use Accelerated Analytics POS reporting to optimize inventory levels, track promotions and drive sales are in the news with big headlines this week, such as Parlux Fragrances, Shiseido, Inter Parfums, Estee Lauder, Elizabeth Arden, Coty and L’Oreal. Click Here to learn more about our solutions for beauty brands.

JUNE RETAIL SALES LOOK GOOD FOR DEPARTMENT STORES

Department stores and general merchandise stores helped June have a strong increase in retail sales. Department stores rose .7% to $13.2 billion and general merchandise stores rose .4% to $56.1 billion. Overall, retail sales rose .6% in June, to $457 billion, above economists’ expectations for the month.

“June’s retail sales grew at a solid pace on the heels of a strong showing for both May and April,” said Jack Kleinhenz, chief economist at the National Retail Federation. “Consumer spending has rebounded strongly in the second quarter after two weak previous quarters. Additional job gains and rising wages are supporting the strength in retail sales and should provide momentum going into the second half of 2016.”

Apparel and accessories stores had a slight decline of a 1% drop in sales to $21.1 billion. Those clothing stores did have a strong May.

Economists are optimistic for a continued strong second half of the year, and expect back to school sales growth slightly higher than was seen last year.

Source: WWD.COM

HOME IMPROVEMENT SPENDING EXPECTED TO REACH $321 BILLION BY MID-2017

After the housing crash of 2006, the US home remodeling market saw its worst downturn in history. Growth in home improvement spending has grown on average about 4.9% since then. Now, with home equity back and home prices on the rise, people are putting their cash to work to remodel and repair their homes.

Growth is expected to reach 8% by the start of 2017 and annual spending should reach an estimated $321 billion by the middle of next year, according to a new report from Harvard’s Joint Center for Housing. Kitchen and bath remodels are popular, along with high-yielding investments such as replacing insulation. Many are choosing to do multi-room remodels at the same time, up 67% from a year ago.

Growth in home remodeling is sure to boost sales for retailers such as The Home Depot, Lowe’s and Sherwin Williams.

Vendors who want better insights into their sales and inventory at their DIY retailers can CLICK HERE to learn more about our POS reporting solutions. 

Source: CNBC

FOURTH OF JULY SALES KICK INTO GEAR: WHAT WILL THE BEST DEALS BE?

School just got out, and everyone is gearing up for the big Independence Day summer holiday. But retailers are already thinking about Back to School, wanting to clear out summer inventory to make way for Back to School sales that will start right after July 4. So where will the biggest savings be, and on what products?

The best deals will be on summer items such as swim and beach wear. Also, as trendy teen and youth apparel sales have suffered in the past few months, these retailers are offering extreme deals for the 4^th of July. The holiday is expected to shatter travel records due to lower gas prices. Also, as consumers spend more on experiences than on merchandise, retailers are promoting items shoppers need to have those road trips and experiences. The holiday weekend will be a great opportunity to stock up on active wear, camping gear and outdoor gear.

Wait until Back to School sales, after the holiday, for denim and electronics, when these items will have deeper discounts. Popular beauty products are not expected to be discounted, as this category is doing well and are high-margin goods for the retailers.

Source: Forbes.com 

IT’s DAYS OF SUPPLY INSTEAD OF WEEKS OF SUPPLY FOR DIY RETAILERS LIKE HOME DEPOT

While the DIY retail segment is currently booming – Home Depot is targeting a 15% sales growth by 2018 – their strategies for inventory in their stores is changing. “Get comfortable with days of inventory, not weeks,” Tom Shortt, Home Depot’s senior vice president of supply chain, says is the message going out to stores. 

Rather than filling its warehouse stores with inventory, Home Depot wants fewer items on its shelves and wants those items within customers’ reach. Online shopping is making retailers think of better ways to profitably serve online shoppers and have inventory in stores, as well. They need to decide if they will ship to consumers from a distribution center or store.

WalMart and Target have also made changes to in-store inventory levels. WalMart’s inventory levels rose slower than sales, helping to improve their gross profit margins in the first quarter.  Boosting sales and stocking less items increase the percentage of cash they get back from the amount they invest in inventory. The strategy is to put less inventory in the stores and replenish more frequently based on demand instead of a forecast.

Home Depot’s strategy is called “Project Sync” which includes such changes as seeing suppliers send 2 trucks five days a week, versus 5 trucks 2 times per week.

Monitoring the return on invested inventory capital and tracking consumer demand closely in order to manage inventory and replenish based on demand can only be accomplished with frequent analysis of POS data in stores, looking at SKU-Store sales and on hands, trending days of supply and sales to stock ratios.

Source: Wall St. Journal

HOME DEPOT AND LOWE’S ATTENTION TO PROS SHOW DOUBLE DIGIT SALES INCREASES

Both Home Depot and Lowe’s report that they have increased sales to professional customers by double digits. They have taken several steps to seek out professional and MRO buyers, including adding products to their pro business lines as well as offering new services, making it easier for pro customers to order and receive supplies. “We continue to strengthen our pro business, driving comps well above the company average, by further advancing our products and services offering to better serve the pro customer,” said Lowe's COO Ricky Damron during the company's Q1 earnings conference call.

Lowe’s has developed an omni-channel approach to pro business, using Account Executive Pro Services with more than 180 representatives in the field. They also have a targeted marketing strategy aimed at the professional customer and buying events in store to generate new business.

Home Depot offers pros private label cards with extended terms and special return policies. They are also expanding a flexible delivery program seven days a week and next-day delivery, as well as in-store pick-up in 2 hours. Home Depot says it currently has a small percentage of sales in building and maintenance and Menear said “we think there’s lots of opportunity to grow.”

Source: Inddist.com

TAKEAWAYS FROM ACCELERATED ANALYTICS’ GS1 CONNECT 2016 SESSION: ‘The Importance and Value of Data Sharing – Using Point-of-Sale Data to Deliver Outstanding Customer Experiences’

I had the opportunity to lead this session last week and came back with some takeaways that I wanted to share, as I feel they are reflective of the state of retail today and how retailers and vendors are using point-of-sale data to manage their business in this time of OMNI-channel, customer-experience driven retail.

Customers want a single-vision of brands and be able to have a consistent, complete and winning experience every time they shop, in whatever channel they shop in. To ensure products are available when and where the customer shops, retailers need real-time inventory visibility, a seamless order management system and the ability to deliver. Retailers and brands realize they need to work together to have both a single view of the customer and a single view of their data in order to be successful.

Some interesting, yet not surprising, statistics were gathered from the retailers and vendors represented in the room. When asked about managing their POS data week to week, 66% were using POS data that was not provided via an EDI 852 file, eliminating their ability to automate the collection and processing of the data electronically, and instead having to work with multiple sources and formats of data. This process of data management and then trying to create usable reports to have meaningful partnership conversations between retailer and vendor is extremely time consuming: 83% of the retailers in the room spend 11-50+ hours per week managing and processing their POS data. More staggering was 95% of the vendors in the session were spending 11-50+ hours per week: 30% spending 11-20 hours, 40% spending 25-50 hours and 25% over 50 hours per week!

The good news is over half of the attendees in the room felt they are getting better at managing and using POS data each week, but 30% still admit to ‘Barely Using’ their POS data. Recognizing that heavy resources are needed to use POS data, especially on the vendor side, is making vendors ask, “Do we build an in-house solution to manage this, or outsource it?” CLICK HERE for an infographic detailing the pros and cons of each, and the differences in resource and financial investment.

Based on the time and effort being made by most of those represented, it is clear that POS data sharing is important for effective collaboration between retailers and vendors to “get it right for the customer”. POS data can be used to not just track units sold overall, but can give product/store level details on out-of-stocks, weeks of supply, sell thru %, average sales, geographic trends, inventory investment and lost sales opportunities. CLICK HERE for our industry sell thru % guidelines infographic.

We need to do everything we can to exceed our customers’ expectations and deliver an outstanding experience for them when they come across our brand. Sharing POS data and then using it to partner together to analyze it will help shape the customers’ experiences and give us inventory visibility and fulfillment across channels to meet customer expectations.

Want to learn more? Contact Jennifer@AcceleratedAnalytics.com to start a conversation. CLICK HERE to download whitepapers on analyzing POS data like a pro.

- Jennifer Freyer, Director of Sales and Marketing, Accelerated Analytics

CONGRATULATIONS 2016 GRADUATES! GRAD GIFT SPEND HIGHEST IN 10 YEARS!

The National Retail Federation (NRF) reports that 2016 graduation spending will reach a 10-year high this year, with spending expected to reach $5.4 billion. Americans celebrating high school and college graduations give special gifts, and retailers are offering a lot of options for the best gifts possible. Retailers will need to keep graduation gift items up front and in stock, and advertise locally for shoppers who look online before going shopping.

NRF’s 2016 Graduation Spending Survey revealed the average person buying graduation gifts will spend $106.45, up 3.9% from last year. Each individual graduate should not get too excited, though – the average shopper is buying for 2 graduates this year, so the spend is higher but spread out among more recipients.

Not helping retailers is the fact that cash is the most popular gift, given by 56%. Greeting cards, with the cash inside, will make up 39% of spend. This is followed by gift cards at 31%, clothing at 14% and electronics at 11%.

While the amount of spend averages $106.45, the age group of the gift giver makes a difference. Spending by those aged 45-54 will average $120.74, compared with $78.08 from those 18-24.

Source: NRF.com 

HOUSING GAINS AND MILD WEATHER KEEP HOME DEPOT GOING STRONG

The Home Depot’s stock opened at a record-high level today, after announcing they topped first quarter expectations. Mild weather and a strong housing rebound are attributed to their successful first quarter. Revenue increased to $22.76 billion from $20.89 billion. Same store year over year sales rose 6.5% overall,up 7.4% in US stores.

Chairman and CEO Craig Menear said the company saw “week to week demand spikes caused by weather variability”. Home Depot originally forecasted 2016 earnings of $6.12 to $6.18 per share, with revenue predicted to increase 5.1-6% and same store sales to rise 3.7-4.5%. With its positive first quarter, Home Depot now predicts 2016 earnings of $6.27, sales to rise 6.3% and same store sales to rise 4.9%.

Having cited a strong housing rebound as another reason for a strong first quarter, steady growth for the housing market looks like it will continue. The National Association of Home Builders reported continued strong sentiment in May. Low mortgage rates are fueling demand that have boosted expectations for home sales in the next six months to the highest level of the year. More housing data is due out later this week, including housing starts and existing home sales.

Source: US News & World Report, Wall S. Journal