This Year in Retail - A 2023 Recap
Hello Friends,
The retail space in 2023 was marked by AI, inventory crises, and yet another rollercoaster year for brick-and-mortar retailers. Organized retail crime and inventory shrinkage made the daily headlines of major news outlets and dominated earnings calls. Organized theft seemed to hit everyone and was often cited as the main culprit for turning San Francisco’s once booming retail economy into more of a ghost town.
Investments in AI drove the customer and shopping experience to new heights. In beauty especially, AI is being leveraged to help consumers make more educated purchases in a world where foot traffic is down, and in store try-on is becoming more limited.
AI is also being used to help drive better demand planning and forecasting to help retailers get out of the surplus inventory rut that has dominated the majority of 2023.
While there was no shortage of things to highlight in 2023, below is some of the most noteworthy I’d like to leave you with…..
2023 was fueled by fast fashion, due in part to the shift in marketing dynamics and social media selling. Shein, a fast-fashion giant founded in China, has turned retail on its head, especially for a demographic that wants things cheap and wants them now. And it has lofty goals: The company has reportedly filed, confidentially, for an initial public offering. Their success is attributed to low prices, but A.I. and thoughtful demand planning is a big part of their strategy; it’s really responding and seeing what people are searching. Shein is more similar to that of a tech company than a retailer.
Inflation and spending moderation dominated headlines in 2023, until it was time to shop for the the holidays. Black Friday online sales hit a record $9.7 billion across the US, up 7.5% versus last year, according to a report by Adobe Analytics. In-person sales saw a minor 1% uptick in growth as well. online consumer spending rose 9.6% year over year to $12.4 billion on Cyber Monday, according to an Adobe Analytics report. Between Nov. 1 and Nov. 27, shoppers spent $109.3 billion online, up 7.3% from last year
The rollercoaster that was Bed, Bath and Beyond. The retailer announced bankruptcy in April of this year. Overstock.com bought the website, mobile app and name for $21.5 million — stores and merchandise were excluded from the sale — and rebranded itself as Bed Bath & Beyond.
There was no shortage of other retailers filing for bankruptcy - Tuesday Morning, SmileDirectClub, Party City, Rite Aid, WeWork, Showfields to name a few.
Amazon had an eventful year. The Federal Trade Commission (FTC) filed a complaint against Amazon, highlighting concerns about the company's business practices. The complaint accuses Amazon of inhibiting sellers from offering lower prices on competing retail sites by manipulating product visibility. Although no longer a formal policy, the FTC alleges that Amazon continues to enforce this indirectly, artificially inflating prices and hindering the growth of other retail platforms. Additionally, Amazon is accused of pressuring sellers who wish to list products under Amazon Prime to use the company's fulfillment service, giving Amazon an unfair advantage in warehousing and shipping. This alleged practice restricts sellers' choices and impedes the growth of alternative delivery-fulfillment-service companies, as Amazon has already secured a significant portion of potential customers. The FTC argues that these actions contribute to anti-competitive behavior and harm market competition. The retailer announced in August it will eliminate 27 of its 30 clothing brands and all of its private-label furniture lines. The e-commerce giant also shuttered its brick-and-mortar apparel stores, almost a year and a half after opening the first location. In 2022 Amazon had previously announced its plans to close all 68 of its brick-and-mortar bookstores, pop-ups and shops carrying toys and home goods in the United States and United Kingdom. Amazon’s holiday shopping results were relatively solid compared to previous years. 11-day shopping event from Nov. 17 to Nov. 27 was its largest yet when compared with 11-day sales periods surrounding Black Friday and Cyber Monday in previous years.
Adidas ended its partnership with Yeezy after a series of antisemitic rants earlier in the year by Kanye West. In currency-neutral terms, sales in North America were down 16%, but executives noted that things would have been worse if it hadn’t sold the Yeezy inventory during the quarter. Without Yeezy, North America sales would be down 20%. the company lost over $400 million from not selling Yeezy in Q1, so the loss of Adidas’ single most important revenue stream poses a fundamental challenge for the brand’s future,” according to analysts.
Walmart has announced it is investing more than $9 billion over a two-year period to upgrade and modernize some U.S. stores with improved layouts, expanded product selections and new tech additions. These investments are aimed at changing the retailers image from merely a steep discounter to a destination where customers can also purchase fashionable home goods and clothing. Some of the investments include refreshed interiors and exteriors, with new paint, updated flooring, modernized restrooms, LED-lighting and new signage for brighter and easier navigation through the stores, the company said.
TJX Companies, in my opinion, was the strongest performer in 2023. The company announced it’s plans to forego the online store space and focus solely on its brick-and-mortar locations. The company is on pace for a record-high close and has outperformed same store sales in each quarter of the year.
Thats a wrap for me in 2023. Thank you again to all the subscribers and supporters for making This Week in Retail a success. I look forward to our engagements in the New Year!