This Week in Retail #37
Hey Friends,
Retail has now become an ecosystem that lives,breathes and evolves as an extension of our daily life and it’s only expected to get smarter and considerably more connected. InsightAce Analytic Pvt. Ltd. has released a report on the "Global Internet of Things in Retail Market," projecting significant growth from US$ 57.8 billion in 2023 to US$ 464.9 billion by 2031, with a CAGR of 30.1% from 2024 to 2031.
Some additional highlights:
IoT is revolutionizing the retail sector by enhancing customer experiences, optimizing operations, and enabling new business models.
IoT technologies like smart shelves, beacons, and connected devices provide real-time data on inventory, customer preferences, and store traffic, allowing for efficient stock management, personalized marketing, and streamlined supply chains.
The adoption of IoT is expected to drive innovation and efficiency, helping retailers remain competitive.
The rise of omnichannel retailing and IoT-enabled smart stores, which offer immersive and personalized shopping experiences, further contributes to the market's growth
Target is hosting its first chainwide denim take-back event from now until August 10, coinciding with the back-to-school shopping season. Customers can drop off up to five used denim items from any brand in any condition at Target stores to receive a one-time 20% off promo code for new denim apparel purchases through the Target Circle loyalty program. This offer includes national brands like Levi’s and Target-owned brands like Cat & Jack, Goodfellow & Co., Wild Fable, and Universal Thread. The promo code must be redeemed during the promotional week. Target will recycle and repurpose the donated denim with its partners, promoting sustainable choices and reducing landfill waste.
McDonald's reported an unexpected decline in global sales, marking the first drop in 13 quarters. The decrease was attributed to deal-seeking consumers avoiding higher-priced menu items like Big Macs, with a significant impact from low-income customers cutting back on visits. U.S. comparable sales fell by 0.7% in the quarter ending June 30, compared to a 10.3% increase the previous year. International sales, which contributed nearly half of the company's 2023 revenue, dropped by 1.1%, primarily due to weakness in France. Additionally, a slower-than-expected recovery in China and the Middle East conflict negatively impacted sales, resulting in a 1.3% decline in the segment operated by local partners, compared to a 14% increase a year ago.
Apple Inc. has reached a tentative collective bargaining agreement with retail employees at its Maryland store, marking a first for the company's US locations, the International Association of Machinists (IAM) announced. The deal, pending approval by the store's 85 employees on August 6, covers scheduling, severance, and subcontracting, and mandates that disciplinary actions must not be "arbitrary, capricious or without merit." The three-year agreement will provide an average 10% pay increase while maintaining current healthcare, retirement, and staffing conditions. The Maryland store is one of two unionized Apple sites in the US, both organized in 2022, with similar contract negotiations ongoing at an Oklahoma City store unionized with the Communications Workers of America.
Pacsun has launched a new men's activewear collection called A.R.C., which stands for active, recreation, and comfort. This follows the previous year's expansion into women's activewear. The collection focuses on multifunctional pieces designed for the dynamic lifestyles of Gen Z males, featuring fabrics like heavyweight fleece, stretch nylons, and moisture-wicking polyblends. After the initial release, Pacsun plans to add a portfolio of outside brands, including a recent drop from the activewear brand Y.I.W.O.
L Catterton, a private equity firm backed by LVMH Moet Hennessy Louis Vuitton, has acquired Hammerson’s stake in Value Retail, which manages the renowned Bicester Village and other luxury outlet malls. The transaction, valued at around $1.9 billion, includes nine prime luxury retail properties across Europe and two in China. This acquisition enhances L Catterton’s portfolio, emphasizing its strategic focus on high-value retail properties, while capitalizing on the resilience of luxury outlet centers amid the rise of online shopping.
Costco, is leaning in heavily to technology to enhance its customer experience. On their latest earnings call, CFO Gary Millerchip, gave a glimpse of what’s behind the curtain. “Technology is going to be one of our key priorities moving forward. How do we improve that member engagement and the relationship we have with them in our brick-and-mortar warehouses, as well as online, and through other aspects such as travel and so forth?" he explained. More on member engagement - "Technology we see is a great opportunity to enhance the member relationship with Costco and also drive a lot more business for us as well as we move forward. So, we're going to continually innovate." This Week in Retail will keep you updated on any technology initiatives that roll out in upcoming editions. Costco has been testing mobile membership scanning at a handful of stores to help crackdown on membership sharing. The scanners also mean employees don't need to ask customers for their membership cards at cash registers and self-checkout.
In some other Costco news - the warehouse club made headlines as the “Doomsday” retailer of choice by offering a discounted Emergency Preparedness Food Bucket promising 150 just-add-water food and beverage servings, all with a 25-year shelf life. This sent em down the doomsday prepping rabbit hole. The surge in doomsday prepping, once considered a niche activity, has evolved into a robust $2.46 billion industry. This shift is largely driven by an increasing societal focus on self-reliance amid various global uncertainties, including the lingering effects of the COVID-19 pandemic, supply chain issues, natural disasters, and geopolitical tensions. As a result, disaster preparedness has moved from the fringes of society to a more mainstream concern.
A survey by Finder revealed that nearly a third of American adults have invested in emergency preparedness, purchasing essentials like food, water, and medical supplies. The survey also noted a gender and generational divide in prepping behaviors, with men and Gen Z being more inclined towards such measures. This trend has not gone unnoticed by companies, with brands like Yeti and Uncharted Supply Co. offering high-end survival kits. Even major retailers like Costco and Home Depot are capitalizing on this market, offering emergency preparedness products.
The market's growth is further fueled by a general atmosphere of anxiety, exacerbated by ongoing global conflicts and economic instability. A March study indicated that 83% of consumers are concerned about their near-term economic prospects, while a May survey found that nearly two-thirds of U.S. consumers live paycheck to paycheck. As these uncertainties continue, the demand for doomsday preparedness is expected to remain strong, providing a sense of security in an unpredictable world.
Walmart has ended it’s credit card deal with Capital One - Walmart cites there is no changes for current cardholders, allowing them to continue to earn and redeem rewards. While no new credit card partner has been announced, this poses a huge advantage for retailers like Target, Costco, and Amazon who currently all have advantageous partnership in place.