Nimble retailers pulling ahead

Retailers

It became even more evident last week with the latest batch of earnings reports: Big-box stores and off-price retailers have been responding faster to shoppers’ increasing shift online with expanded deliveries and better merchandise. But many mall-linked clothing chains and department stores continue to suffer weak sales as they struggle to attract shoppers.

“There is an increasing shift in retail,” said Neil Saunders, managing director at GlobalData Retail. “It’s a brutal cycle, and it’s difficult to pull out of the tailspin.”

In fact, for the first two fiscal quarters of this year, earnings at off-mall retailers rose 3%, compared with a drop of 29% for mall retailers, according to Retail Metrics, a retail research firm, which analyzed results at 105 retailers.

Last week, Target raised its annual earnings guidance after reporting strong sales and traffic. It was helped by its same-day delivery services, as well as a strong lineup of homegrown brands. Lowe’s, the nation’s second-largest home improvement retailer behind Home Depot, blew past Wall Street’s second-quarter earnings expectations, propped by strong demand for spring goods and sales to contractors.

Saunders and other analysts say that they started to see a clear difference between retail’s winners and losers four or five years ago, but that gap has gotten more broader because of a combination of factors. For several years, a strong economy provided tailwinds to retailers of all stripes, and last year’s tax cuts gave merchants a nice sugar high. But as the economy starts developing some cracks, vulnerable retailers will become even more exposed.

Analysts also say that the shift to online shopping keeps accelerating, giving a big advantage to retailers like Target and Walmart who’ve been able to invest billions of dollars in online deliveries and in their stores. Some mall retailers are now looking at other ways to attract shoppers, including subscription rental services and finding out areas to sell secondhand clothes.


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Bradley Sterner

Retail businesses are of prime importance in this consumerist era. A commodity is now much more than just a product which is used and thrown, it is an important cog in the capital market machine, and the use patterns greatly affect the manufacturing and making trends! Bradley understands this quintessential topic, and writes to justify his causes.

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