Retail Sales For June Provide An Early Boost, But Bond Yields Mostly Calling The Shots

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The first week of earnings season wraps up with major indices closely tracking the bond market in Wall Street’s version of “follow the leader.” Earnings absolutely matter, but right now the Fed’s policies are maybe a bigger influence. In the short-term the Fed is still the girl everyone wants to dance with.

Lately, you can almost guess where stocks are going just by checking the 10-year Treasury yield, which often moves on perceptions of what the Fed might have up its sleeve. The yield bounced back from lows this morning to around 1.32%, and stock indices climbed a bit in pre-market trading. That was a switch from yesterday when yields fell and stocks followed suit. Still, yields are down about six basis points since Monday, and stocks are also facing a losing week.

It’s unclear how long this close tracking of yields might last, but maybe a big flood of earnings due next week could give stocks a chance to act more on fundamental corporate news instead of the back and forth in fixed income. Meanwhile, retail sales for June this morning basically blew Wall Street’s conservative estimates out of the water, and stock indices edged up in pre-market trading after the data.

Headline retail sales rose 0.6% compared with the consensus expectation for a 0.6% decline, and with automobiles stripped out, the report looked even stronger, up 1.3% vs. expectations for 0.3%. Those numbers are incredibly strong and show the difficulty analysts are having in this market. The estimates missed consumer strength by a long shot. However, it’s also possible this is a blip in the data that might get smoothed out with July’s numbers. We’ll have to wait and see.

Caution Flag Keeps Waving

Yesterday continued what feels like a “risk-off” pattern that began taking hold earlier in the week, but this time Tech got caught up in the selling, too. In fact, Tech was the second-worst performing sector of the day behind Energy, which continues to tank on ideas more crude could flow soon thanks to OPEC’s agreement.

We already saw investors embracing fixed income and “defensive” sectors starting Tuesday, and Thursday continued the trend. When your leading sectors are Utilities, Staples, Real Estate, the way they were yesterday, that really suggests the surging bond market’s message to stocks is getting read loudly and clearly.

This week’s decline in rates also isn’t necessarily happy news for Financial companies. That being said, the Financials fared pretty well yesterday, with some of them coming back after an early drop. It was an impressive performance and we’ll see if it can spill over into Friday.

Energy helped fuel the rally earlier this year, but it’s struggling under the weight of falling crude prices. Softness in crude isn’t guaranteed to last—and prices of $70 a barrel aren’t historically cheap—but crude’s inability to consistently hold $75 speaks a lot. Technically, the strength just seems to fade up there. Crude is up slightly this morning but still below $72 a barrel.

Losing Steam?

All of the FAANGs lost ground yesterday after a nice rally earlier in the week. Another key Tech name, chipmaker Nvidia (NVDA), got taken to the cleaners with a 4.4% decline despite a major analyst price target increase to $900. NVDA has been on an incredible roll most of the year.

This week’s unexpectedly strong June inflation readings might be sending some investors into “flight for safety” mode, though no investment is ever truly “safe.” Fed Chairman Jerome Powell sounded dovish in his congressional testimony Wednesday and Thursday, but even Powell admitted he hadn’t expected to see inflation move this much above the Fed’s 2% target.

Keeping things in perspective, consider that the S&P 500 Index (SPX) did power back late Thursday to close well off its lows. That’s often a sign of people “buying the dip,” as the saying goes. Dip-buying has been a feature all year, and with bond yields so low and the money supply so huge, it’s hard to argue that cash on the sidelines won’t keep being injected if stocks decline.

Two popular stocks that data show have been popular with TD Ameritrade clients are Apple (AAPL) and Microsoft (MSFT), and both of them have regularly benefited from this “dip buying” trend. Neither lost much ground yesterday, so if they start to rise today, consider whether it reflects a broader move where investors come back in after weakness. However, one day is never a trend.

Reopening stocks (the ones tied closely to the economy’s reopening like airlines and restaurants) are doing a bit better in pre-market trading today after getting hit hard yesterday.

In other corporate news today, vaccine stocks climbed after Moderna (MRNA) was added to the S&P 500. BioNTech (BNTX), which is Pfizer’s (PFE) vaccine partner, is also higher. MRNA rose 7% in pre-market trading.

Strap In: Big Earnings Week Ahead

Earnings action dies down a bit here before getting back to full speed next week. Netflix (NFLX), American Express (AXP), Johnson & Johnson (JNJ), United Airlines (UAL), AT&T (T), Verizon (VZ), American Airlines (AAL) and Coca-Cola (KO) are high-profile companies expected to open their books in the week ahead.

It could be interesting to hear from the airlines about how the global reopening is going. Delta (DAL) surprised with an earnings beat this week, but also expressed concerns about high fuel prices. While vaccine rollouts in the U.S. have helped open travel back up, other parts of the globe aren’t faring as well. And worries about the Delta variant of Covid don’t seem to be helping things.

Beyond the numbers that UAL and AAL report next week, the market may be looking for guidance from their executives about the state of global travel as a proxy for economic health. DAL said travel seems to be coming back faster than expected. Will other airlines see it the same way? Earnings are one way to possibly find out.Even with the Delta variant of Covid gaining steam, there’s no doubt that at least in the U.S, the crowds are back for sporting events.

For example, the baseball All-Star Game this week was packed. Big events like that could be good news for KO when it reports earnings. PepsiCo (PEP) already reported a nice quarter. We’ll see if KO can follow up, and whether its executives will say anything about rising producer prices nipping at the heels of consumer products companies.

Confidence Game: The 10-year Treasury yield sank below 1.3% for a while Thursday but popped back to that level by the end of the day. It’s now down sharply from highs earlier this week. Strength in fixed income—yields fall as Treasury prices climb—often suggests lack of confidence in economic growth.

Why are people apparently hesitant at this juncture? It could be as simple as a lack of catalysts with the market now at record highs. Yes, bank earnings were mostly strong, but Financial stocks were already one of the best sectors year-to-date, so good earnings might have become an excuse for some investors to take profit. Also, with earnings expectations so high in general, it takes a really big beat for a company to impress.

Covid Conundrum: Anyone watching the news lately probably sees numerous reports about how the Delta variant of Covid has taken off in the U.S. and case counts are up across almost every state. While the human toll of this virus surge is certainly nothing to dismiss, for the market it seems like a bit of an afterthought, at least so far. It could be because so many of the new cases are in less populated parts of the country, which can make it seem like a faraway issue for those of us in big cities. Or it could be because so many of us are vaccinated and feel like we have some protection.

But the other factor is numbers-related. When you hear reports on the news about Covid cases rising 50%, consider what that means. To use a baseball analogy, if a hitter raises his batting average from .050 to .100, he’s still not going to get into the lineup regularly because his average is just too low. Covid cases sank to incredibly light levels in June down near 11,000 a day, which means a 50% rise isn’t really too huge in terms of raw numbers and is less than 10% of the peaks from last winter. We’ll be keeping an eye on Covid, especially as overseas economies continue to be on lockdowns and variants could cause more problems even here. But at least for now, the market doesn’t seem too concerned.

Dull Roar: Most jobs that put you regularly on live television in front of millions of viewers require you to be entertaining. One exception to that rule is the position held by Fed Chairman Jerome Powell. It’s actually his job to be uninteresting, and he’s arguably very good at it. His testimony in front of the Senate Banking Committee on Thursday was another example, with the Fed chair staying collected even as senators from both sides of the aisle gave him their opinions on what the Fed should or shouldn’t do. The closely monitored 10-year Treasury yield stayed anchored near 1.33% as he spoke.

Even if Powell keeps up the dovishness, you can’t rule out Treasury yields perhaps starting to rise in coming months if inflation readings continue hot and investors start to lose faith in the Fed making the right call at the right time. Eventually people might start to demand higher premiums for taking on the risk of buying bonds. The Fed itself, however, could have something to say about that.

It’s been sopping up so much of the paper lately that market demand doesn’t give you the same kind of impact it might have once had. That’s an argument for bond prices continuing to show firmness and yields to stay under pressure, as we’ve seen the last few months. Powell, for his part, showed no signs of being in a hurry yesterday to lift any of the stimulus.

TD Ameritrade® commentary for educational purposes only. Member SIPC.

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I am Chief Market Strategist for TD Ameritrade and began my career as a Chicago Board Options Exchange market maker, trading primarily in the S&P 100 and S&P 500 pits. I’ve also worked for ING Bank, Blue Capital and was Managing Director of Option Trading for Van Der Moolen, USA. In 2006, I joined the thinkorswim Group, which was eventually acquired by TD Ameritrade. I am a 30-year trading veteran and a regular CNBC guest, as well as a member of the Board of Directors at NYSE ARCA and a member of the Arbitration Committee at the CBOE. My licenses include the 3, 4, 7, 24 and 66.

Source: Retail Sales For June Provide An Early Boost, But Bond Yields Mostly Calling The Shots

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Critics:

Retail is the process of selling consumer goods or services to customers through multiple channels of distribution to earn a profit. Retailers satisfy demand identified through a supply chain. The term “retailer” is typically applied where a service provider fills the small orders of many individuals, who are end-users, rather than large orders of a small number of wholesale, corporate or government clientele. Shopping generally refers to the act of buying products.

Sometimes this is done to obtain final goods, including necessities such as food and clothing; sometimes it takes place as a recreational activity. Recreational shopping often involves window shopping and browsing: it does not always result in a purchase.

Most modern retailers typically make a variety of strategic level decisions including the type of store, the market to be served, the optimal product assortment, customer service, supporting services and the store’s overall market positioning. Once the strategic retail plan is in place, retailers devise the retail mix which includes product, price, place, promotion, personnel, and presentation.

In the digital age, an increasing number of retailers are seeking to reach broader markets by selling through multiple channels, including both bricks and mortar and online retailing. Digital technologies are also changing the way that consumers pay for goods and services. Retailing support services may also include the provision of credit, delivery services, advisory services, stylist services and a range of other supporting services.

Retail shops occur in a diverse range of types of and in many different contexts – from strip shopping centres in residential streets through to large, indoor shopping malls. Shopping streets may restrict traffic to pedestrians only. Sometimes a shopping street has a partial or full roof to create a more comfortable shopping environment – protecting customers from various types of weather conditions such as extreme temperatures, winds or precipitation. Forms of non-shop retailing include online retailing (a type of electronic-commerce used for business-to-consumer (B2C) transactions) and mail order

China’s Slowing V-Shaped Economic Recovery Sends Global Warning

China’s V-shaped economic rebound from the Covid-19 pandemic is slowing, sending a warning to the rest of world about how durable their own recoveries will prove to be.

The changing outlook was underscored Friday when the People’s Bank of China cut the amount of cash most banks must hold in reserve in order to boost lending. While the PBOC said the move isn’t a renewed stimulus push, the breadth of the 50 basis-point cut to most banks reserve ratio requirement came as a surprise.

Data on Thursday is expected to show growth eased in the second quarter to 8% from the record gain of 18.3% in the first quarter, according to a Bloomberg poll of economists. Key readings of retail sales, industrial production and fixed asset investment are all set to moderate too.

The PBOC’s swift move to lower banks’ RRR is one way of making sure the recovery plateaus from here, rather then stumbles.

The economy was always expected to descend from the heights hit during its initial rebound and as last year’s low base effect washes out. But economists say the softening has come sooner than expected, and could now ripple across the world.

“There is no doubt that the impact of a slowing China on the global economy will be bigger than it was five years ago,” said Rob Subbaraman, head of global markets research at Nomura Holdings Inc. “China’s ‘first-in, first-out’ status from Covid-19 could also influence market expectations that if China’s economy is cooling now, others will soon follow.”

Group of 20 finance ministers meeting in Venice on Saturday signaled alarm over threats that could derail a fragile global recovery, saying new variants of the coronavirus and an uneven pace of vaccination could undermine a brightening outlook for the world economy. China’s state media also cited several analysts Monday saying domestic growth will slow in the second half because of an uncertain global recovery.

China’s slowing recovery also reinforces the view that factory inflation has likely peaked and commodity prices could moderate further.

“China’s growth slowdown should mean near-term disinflation pressures globally, particularly on demand for industrial metals and capital goods,” said Wei Yao, chief economist for the Asia Pacific at Societe Generale SA.

The changing outlook reflects the advanced stage of China’s recovery as growth stabilizes, according to Bloomberg Economics.

What Bloomberg Economics Says…

“Looking through the data distortions, the recovery is maturing, not stumbling. Activity and trade data for June will likely paint a similar picture — a slower, but still-solid expansion.”

— The Asia Economist Team

For the full report, click here.

Domestically, the big puzzle continues to be why retail sales are still soft given the virus remains under control. It’s likely that sales slowed again in June, according to Bloomberg Economics, as sentiment was weighed by controls to contain sporadic outbreaks of the virus.

Even with the PBOC’s support for small and mid-sized businesses, there’s no sign of a broad reversal in the disciplined stimulus approach authorities have taken since the crisis began.

The RRR cut was partially to “manage expectations” ahead of the second-quarter economic data this week, said Bruce Pang, head of macro and strategy research at China Renaissance Securities Hong Kong.

“It also provides more policy room going forward, as the momentum of the economic recovery has surely slowed.”

— With assistance by Enda Curran, Yujing Liu, and Bihan Chen

Source: China’s Slowing V-Shaped Economic Recovery Sends Global Warning – Bloomberg

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Critics:

The Chinese economic reform or reform and opening-up; known in the West as the Opening of China is the program of economic reforms termed “Socialism with Chinese characteristics” and “socialist market economy” in the People’s Republic of China (PRC). Led by Deng Xiaoping, often credited as the “General Architect”, the reforms were launched by reformists within the Chinese Communist Party (CCP) on December 18, 1978 during the “Boluan Fanzheng” period.

The reforms went into stagnation after the military crackdown on 1989 Tiananmen Square protests, but were revived after Deng Xiaoping’s Southern Tour in 1992. In 2010, China overtook Japan as the world’s second-largest economy.

Before the reforms, the Chinese economy was dominated by state ownership and central planning. From 1950 to 1973, Chinese real GDP per capita grew at a rate of 2.9% per year on average,[citation needed] albeit with major fluctuations stemming from the Great Leap Forward and the Cultural Revolution.

This placed it near the middle of the Asian nations during the same period, with neighboring capitalist countries such as Japan, South Korea and rival Chiang Kai-shek‘s Republic of China outstripping the PRC’s rate of growth. Starting in 1970, the economy entered into a period of stagnation, and after the death of CCP Chairman Mao Zedong, the Communist Party leadership turned to market-oriented reforms to salvage the failing economy.

Citation:

US Jobs Report June 2021: Payrolls Jump 850,000, Unemployment Rate at 5.9%

The pace of U.S. hiring accelerated in June, with payrolls increasing by the most in 10 months, suggesting firms are having greater success recruiting workers to keep pace with the economy’s reopening.

Nonfarm payrolls jumped by 850,000 last month, bolstered by strong job gains in leisure and hospitality, a Labor Department report showed Friday. The unemployment rate edged up to 5.9% because more people voluntarily left their jobs and the number of job seekers rose.

The median estimate in a Bloomberg survey of economists was for a 720,000 rise in June payrolls. “Things are picking up,” said Nick Bunker, an economist at the job-search company Indeed. “While labor supply may not be as responsive as some employers might like, they are adding jobs at an increasing rate.”

The gain in payrolls, while well above expectations, doesn’t markedly raise pressure on the Federal Reserve to pare monetary policy support for the economy. Even with the latest advance, U.S. payrolls are still 6.76 million below their pre-pandemic level.

Demand for labor remains robust as employers strive to keep pace with a firming economy, fueled by the lifting of restrictions on business and social activity, mass vaccinations and trillions of dollars in federal relief.

Read more: Black Men’s Labor Force Rises to Largest Ever Amid Recovery

At the same time, a limited supply of labor continues to beleaguer employers, with the number of Americans on payrolls still well below pre-pandemic levels.

Coronavirus concerns, child-care responsibilities and expanded unemployment benefits are all likely contributing to the record number of unfilled positions. Those factors should abate in the coming months though, supporting future hiring.

Wage growth is also picking up as businesses raise pay to attract candidates. The June jobs report showed a hefty 2.3% month-over-month increase in non-supervisory workers’ average hourly earnings in the leisure and hospitality industry. Overall average earnings rose 0.3% last month.

“The strength of our recovery is helping us flip the script,” Biden said in remarks Friday. “Instead of workers competing with each other for jobs that are scarce, employers are competing with each other to attract workers.”

The Labor Department’s figures showed a 343,000 increase in leisure and hospitality payrolls, a sector that’s taking longer to recover because of the pandemic.

Job growth last month was also bolstered by a 188,000 gain in government payrolls. State and local government education employment rose about 230,000, boosted by seasonal adjustments to offset the typical declines seen at the end of the school year.

Hiring was relatively broad-based in June, including other notable gains in business services and retail trade. However, construction payrolls dropped for a third straight month and manufacturing employment rose less than forecast.

“Most of the new jobs now being created are in sectors that were slammed by the pandemic, while companies in other industries are struggling to find available workers,” Sal Guatieri, senior economist at BMO Capital Markets, said in a note.

Read More

The overall participation rate held steady and remained well short of pre-pandemic levels. The employment population ratio, or the share of the population that’s currently working, was also unchanged.

Digging Deeper

  • Average weekly hours decreased to 34.7 hours from 34.8
  • The participation rate for women age 25 to 54 rose by 0.4 percentage point; the rate among men in that age group also climbed
  • The number of Americans classified as long-term unemployed, or those who have been unemployed for 27 weeks or more, increased by the most since November
  • The U-6 rate, also known as the underemployment rate, fell to a pandemic low of 9.8%. The broad measure includes those who are employed part-time for economic reasons and those who have stopped looking for a job because they are discouraged about their job prospects

Stocks opened higher and Treasury securities fluctuated after the report.

 

By and

Source: US Jobs Report June 2021: Payrolls Jump 850,000, Unemployment Rate at 5.9% – Bloomberg

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Critics:

The labor force is the actual number of people available for work and is the sum of the employed and the unemployed. The U.S. labor force reached a high of 164.6 million persons in February 2020, just at the start of the COVID-19 pandemic in the United States. The U.S. labor force has risen each year since 1960, with the exception of the period following the Great Recession, when it remained below 2008 levels from 2009-2011.

The labor force participation rate, LFPR (or economic activity rate, EAR), is the ratio between the labor force and the overall size of their cohort (national population of the same age range). Much as in other countries in the West, the labor force participation rate in the U.S. increased significantly during the later half of the 20th century, largely because of women entering the workplace in increasing numbers. Labor force participation has declined steadily since 2000, primarily because of the aging and retirement of the Baby Boom generation.

Analyzing labor force participation trends in the prime working age (25-54) cohort helps separate the impact of an aging population from other demographic factors (e.g., gender, race, and education) and government policies. The Congressional Budget Office explained in 2018 that higher educational attainment is correlated with higher labor force participation for workers aged 25–54. Prime-aged men tend to be out of the labor force because of disability, while a key reason for women is caring for family members.

The Congressional Budget Office explained in 2018 higher educational attainment is correlated with higher labor force participation. Prime-aged men tend to be out of the labor force due to disability, while a key reason for women is caring for family members. To the extent an aging population requires the assistance of prime-aged family members at home, this also presents a downward pressure on this cohort’s participation.

See also

Not Just AMC: These Are The Meme Stocks Reddit Traders Are Pumping Again As Experts Urge ‘Extreme Caution’

In this photo illustration, a Reddit logo seen displayed on...

After crashing earlier this year, a slew of so-called meme stocks skyrocketed again Wednesday as individual investors remounted an effort to pump up the prices of Wall Street’s most heavily shorted companies—prompting experts to warn that the saga pinning institutional investors against Reddit traders could end badly.

Key Facts

Headlining the recent resurgence among so-called meme stocks, shares of AMC spiked more than 100% Wednesday and have surged a staggering 570% over the past month, as heightened options activity and increasing short interest in the stock help retail traders squeeze institutional investors betting on a decline out of their risky bets.

Meanwhile, struggling brick-and-mortar retailer Bed Bath & Beyond is soaring nearly 51% Wednesday as traders on Reddit’s r/WallStreetBets discussion board tout that the stock’s short interest has climbed to nearly twice the level of fellow meme-stock GameStop, which led the January rally and is up about 60% in the past month.

In similar fashion, shares of former phone-maker BlackBerry surged as much as 15% Wednesday and have skyrocketed nearly 55% in the past month as retail hype picks up now that short interest has hit a nearly four-year high.

Other resurgent meme stocks embroiled in the latest frenzy include Beyond Meat and Koss Corporation, which have soared nearly 40% apiece in recent weeks.

Crucial Quote

“Right now, the majority of Wall Street is on standby until Friday’s employment report, so meme-stock mania and cryptocurrency trading could have little resistance,” Edward Moya, a senior market analyst at Oanda, wrote in a Wednesday email, pointing to “joke” token dogecoin’s meteoric same-day rise as a sign of further unabated market mayhem. “The retail force behind this movement is still strong, so it is anyone’s guess how much larger this bubble can grow.”

Chief Critic

“Although we have seen some exiting of positions throughout the year, the majority of short sellers have been happy to sit on significant paper losses in the hope that retail investors will blink first and the losses won’t be realised,” Ortex analysts wrote in a Wednesday note. “This now looks like a flawed strategy.”

Key Background

The recent meme stock rise follows a similar surge in January, when activist investors perched on Reddit’s r/WallStreetBets board pumped struggling firms like GameStop and BlackBerry in a bid to hurt short-sellers. “There’s a certain vigilante mindset amongst those traders being drawn into this social-media frenzy to pump certain stocks,” Nigel Green, the CEO of $12 billion advisory Devere Group, said in a Friday email, adding that “extreme caution should be exercised before joining stock frenzies of such nature.” Meme stocks have been incredibly volatile this year, with most crashing in late January once institutional investors piled out of their short bets after weeks of meteoric gains. Thus far, only AMC, which has also benefitted from businesses reopening, has recouped those losses.

What To Watch For

It’s unclear how long it may be before short interest once again wanes, but some analysts have said the market could sour again once the Federal Reserve indicates it will ease up on its accommodative policy, which has effectively facilitated high asset valuations by injecting unprecedented amounts of cash into the economy. That could happen as soon as June, when Fed officials meet again to discuss policy changes.

Tangent

In another sign of frenzied investing, shares of Mudrick Capital Acquisition Corporation II plunged 15% Tuesday after a slew of Reddit traders started placing bearish short bets on the stock following a Bloomberg report its namesake sponsor cashed out of its AMC stake because shares were “overvalued.”

I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at jponciano@forbes.com

Further Reading

AMC Skyrockets After Announcing New Perks For ‘Extraordinary’ Reddit Traders And Retail Investors (Forbes)

Here Are The Meme Stocks WallStreetBets Traders Are Pumping Up During This ‘Extremely Erratic’ Reddit Rally (Forbes)

Source: Not Just AMC: These Are The Meme Stocks Reddit Traders Are Pumping Again As Experts Urge ‘Extreme Caution’

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r/wallstreetbets, also known as WallStreetBets or WSB, is a subreddit where participants discuss stock and option trading. It has become notable for its colorful and profane jargon, aggressive trading strategies, and for playing a major role in the GameStop short squeeze that caused losses for some U.S. firms and short sellers in a few days in early 2021.

The subreddit, describing itself through the tagline “Like 4chan found a Bloomberg terminal,” is known for its aggressive trading strategies, which primarily revolve around highly speculative, leveraged options trading. Members of the subreddit are often young retail traders and investors who ignore fundamental investment practices and risk management techniques.

The growing popularity of no-commission brokers and mobile online trading has potentially contributed to the growth of such trading trends. Members of the communities often see high-risk day trading as an opportunity to quickly improve their financial conditions and obtain additional income. Some of the members tend to use borrowed capital, like student loans, to bet on certain “meme stocks” that show popularity within the community.

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References

Amazon And Walmart Slug It Out For Retail Supremacy As Pandemic Boosts Sales For Both Giants

In 2020, the pandemic provided a powerful sales boost for both of retail’s two biggest companies. Walmart’s WMT +0.9% annual revenue last year rose 6.7% to $559.15 billion. It was the fastest top line growth in 12 years, and kept the Bentonville, Ark.-based behemoth in first place among the entire Global 2000 for total sales.

The surge was even stronger for Amazon.com AMZN +1.9%, which saw sales soar 37.6% to $386.06 billion in 2020, the second highest of any Global 2000 company on this year’s list. The jump was Seattle-based Amazon’s biggest year-over-year percentage revenue increase since 2011.

Walmart for now has the highest sales of any company in the Global 2000, but Amazon, currently ranked second, should overtake Walmart in revenue by the end of next year, according to analysts’ forecasts. Amazon’s overall Global 2000 ranking is already ahead of Walmart’s (No. 10 vs. No 18), and one three of the four criteria considered for company size: profits (No. 16 vs. No. 34); assets (No. 129 vs. No. 160); and market value (No. 4 vs. No. 17).

Thanks to buoyancy in its stock price, Amazon in 2020 became a trillion-dollar company by market capitalization. Amazon shares gained 41% for the year ending April 16, more than five times Walmart’s 8% return, and its $1.71 trillion market value is more than quadruple Walmart’s $396 billion.

The two titans of retail often battle to win business from the other, like in the lucrative grocery business, where Walmart enjoys a nearly 20% market share compared to 2% for Amazon, which owns the Whole Foods WFM 0.0% grocery chain. Walmart’s lead is under assault from Amazon and from local grocery stores using services like Instacart to leaning more heavily into online sales.

One initiative literally bearing fruit for Amazon is its growing number of Amazon Fresh AMZN +1.9% locations set up to peddle perishable products to grocery shoppers in a brick-and-mortar store. Walmart for its part is not standing still and expanding its presence in the online channel where sales surged 79% last year.

The third biggest retailer in the Global 2000 is China’s e-commerce giant, Alibaba Group Holding Ltd., which outranks both Amazon and Walmart in terms of profit, and whose market value of $658 billion exceeds that of Walmart. Overall, it’s the 23rd biggest company in the Global 2000. Although Alibaba is the heavyweight of online commerce in China, competition is fierce with rivals like JD.com, the world’s sixth biggest retailer with an overall rank in 2021 of No. 101, up sharply from No. 238 last year.

Business was brisk in 2020 for home improvement retailers, as both Home Depot HD -0.6% and Lowe’s moved up in overall ranking. The pandemic also helped to propel some new names from the retail world into the Global 2000, including Williams-Sonoma WSM +2.5% (No. 1319), Dick’s Sporting Goods DKS +3.4% (No. 1848), and Big Lots BIG +3.5% (No. 1848).

I am the deputy editor of investing content for Forbes Media. I’m responsible for money and investing coverage on Forbes.com and in Forbes magazine. As editor of the Forbes Dividend Investor newsletter service, I send out two dividend stock recommendations per week and send out weekly updates with the best 25 current buys. I’m also a Senior Editor for Forbes Newsletter Group, including its virtual events business, Forbes iConferences. Prior to joining the company, I spent five years with CNN Financial News working with Lou Dobbs, where I produced long-form pieces and reported on management, entrepreneurship and financial markets. I’ve also worked for Bloomberg TV and Inc. Magazine.

Source: Amazon And Walmart Slug It Out For Retail Supremacy As Pandemic Boosts Sales For Both Giants

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Hole Inc. inventory outperforms market on sturdy buying and selling day – MarketWatch

Coronavirus: Moderna touts effectiveness of booster shot towards some Covid variants – because it occurred – Monetary Occasions

U.S. shares bounce Friday, however are nonetheless down for the week – MarketWatch

Jeff Bezos’ Amazon Could End Up Bankrupt For These Reasons, According To Specialist

Right now, Jeff Bezos is the richest man in the world thanks to Amazon , his leading online sales company. However, retail expert Doug Stephens predicts that the giant could fall over the next decade, even going bankrupt.

On his Business of Fashion corporate page, Retail Prophet’s founder and advisor to some of the world’s most respected brands predicts “the end of Amazon.”

“I think that in ten years Amazon is going to decline and these are just some of the reasons,” Stephens wrote.

Amazon follows in Walmart’s footsteps

One of the reasons for the possible bankruptcy of the online trading platform would be that it is following the same patterns as other companies. Stephens gives Walmart an example.

“Between 1962 and the early 2000s, Walmart led the retail business, beating out dozens of competitors large and small. By 2010, Walmart had opened a staggering 4,393 stores, of which more than 3,000 opened after 1990, ” explains the expert.

After suffering a big drop in sales in 2015, Walmart has failed to take off in online retail. “The decline of the once impenetrable giant has shown that even the most titanic companies can fall,” Stephens said.

Amazon offers efficiency, but no shopping experience

The specialist considers it dangerous that Bezos intends to maintain the same long-term operating model. “In our retail business, we know that customers want low prices, and I know that is going to be true 10 years from now. They want fast delivery; they want a wide selection, “ said the tycoon in statements taken up by Business of Fashion.

However, Stephens believes that people don’t just buy because they want the products as quickly as possible. They also want the full shopping experience : getting out of the house, touching the products, comparing them with each other, trying new things or getting inspired. In that sense, the disadvantage of Amazon is limited to online purchases.

Focus on customer service will be lost

When a company has a powerful leader like Jeff Bezos at the helm, it would hardly function without him. The expert predicts that, as Amazon continues its expansion, the figure of Bezos could dissipate or disappear. Then it would be possible that you lose your initial mission, which is customer satisfaction, to prioritize the optimization of processes based on figures and data.

He also anticipates that the company will innovate less. “The energy, once directed to improving the business, will be depleted in simply working to maintain the organizational infrastructure ,” Stephens noted.

See also: See why Jeff Bezos will increase his fortune thanks to the arrival of Airbnb to Wall Street

Dough Stephens cites other reasons for Amazon’s potential downfall , such as the rumored toxic work environment and the migration of current partners to other,

friendlier delivery platforms.

The combination of these factors could cause Amazon to suffer losses over the next decade and be replaced by another similar company that offers better conditions for partners, workers and customers.

By: Entrepreneur en Español Entrepreneur Staff

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.

Foundation for Economic Education

Support Out of Frame on Patreon: https://www.patreon.com/OutofFrameShow Watch our newest video, “The Social Dilemma Is Dangerously Wrong… Part II”: https://youtu.be/pOYxN_a7zL4 Check out our podcast, Out of Frame: Behind the Scenes: https://www.youtube.com/channel/UCiS5… Bob thinks we should just confiscate all the wealth from all the billionaires in America to pay for government programs. But even if that were possible… would it even work? ______________________________ CREDITS: Written by Seamus Coughlin & Jennifer Maffessanti Animated by Seamus Coughlin Produced by Sean W. Malone

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Covid Boosted Retail Subscriptions Up To 145%: The New Retail Therapy?

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Subscriptions is now perhaps the default way we consume music and premium video content. Is it possible that will happen for retail as well? “It’s not just media and entertainment that seems to be surging,” Recurly CEO Dan Burkhart told me recently on the TechFirst podcast. “The highest growth was actually counterintuitive … curiously, the subscription commerce category really took off.”

That’s not what I expected to hear.In a crisis, many tend to get conservative. If a global pandemic is threatening our income, we shut down unnecessary expenses, trim luxuries, batten down the hatches, and prepare to ride out the storm in as strong a financial position as possible. And that’s in fact what happened — at least for richer people — near the beginning of Coronavirus.But not for subscription retail.

bestmining3Growth in subscription retail actually outpaced multiple other categories. Recurly manages subscription programs for about 700 companies including Amazon-owned Twitch, Asana, CBS, Starz, AMC, Barkbox, and more, and released a report on the impact of Covid-19 on different verticals:

 

  • Streaming: Growth up to 89.8%
  • Education: Growth up to 60%
  • SaaS/Cloud: Growth up to 51%

Consumer goods actually dipped early in the pandemic, only to rise in March through May, peaking at 145% growth. In contrast streaming media, with superstars like Netflix and the new Disney+, peaked at just under 90%. Also high, but not nearly as impressive.

What’s going on? Perhaps some good old-fashioned retail therapy, with a side-helping of surprise.

“I think there could be a little bit of a guilty pleasure in that it’s a bit of a decadent affordance to have something come to your home that you anticipate,” Burkhart told me. “That anticipation provides a little bit of a self-gifting twang, I think, that perhaps individuals were craving a bit.”

And, of course, there’s the convenience factor. Which Covid-19, of course, has dialed up to 11: masking up to go to a physical store isn’t super-fun for even the most pro-mask crowd.

“The cost and friction of actually going to a store even for simple groceries is something that I know in our family we’re talking about, and we might do a rock paper scissors to see who goes to the grocery store this time,” Burkhart says.

The education category was also up, with boosts of up to 73.2% in free trials, subsiding as schools closed. And, as we’ve seen, cloud and software-as-a-service tools are up as well.

Of course, subscriptions were up in general even before Covid-19. Burkhart says that’s in part due to risk-aversion: buying access to a service is relatively cheap and easy to cancel, whereas a one-time purchase of a commodity can be more irrevocable and seemingly wasteful. You bought the movie, it sucks, and you’re stuck with it, versus you subscribed to a streaming service, and you’ve got multiple options to try. If you don’t like any of them, you can always cancel.

One challenge: subscribing to many, and having multiple small holes in your bank account, draining money almost invisibly. Which, of course, forces subscription companies to continue to deliver value:

“Companies really need to shoulder the burden of making sure that they are continuing to deliver value in whatever it is they’re selling by way of a subscription model, in order to achieve that long term benefit,” Burkhart says.

There’s always going to be one-off purchases that we need to shop for intentionally But it’s possible, given the trend, that many of our recurring retail and grocery purchases could move to a subscription model.

Milk, toilet paper, shampoo, butter … once you have your favorite brand and you trust a provider to know the schedule at which you need replenishment, moving to subscription isn’t that big of a stretch, perhaps.

Even after Covid-19.

Get the full transcript of our conversation here.

Follow me on Twitter or LinkedIn. Check out my website or some of my other work here.

I forecast and analyze trends affecting the mobile ecosystem. I’ve been a journalist, analyst, and corporate executive, and have chronicled the rise of the mobile economy. I built the VB Insight research team at VentureBeat and managed teams creating software for partners like Intel and Disney. In addition, I’ve led technical teams, built social sites and mobile apps, and consulted on mobile, social, and IoT. In 2014, I was named to Folio’s top 100 of the media industry’s “most innovative entrepreneurs and market shaker-uppers.” I live in Vancouver, Canada with my family, where I coach baseball and hockey, though not at the same time.

Source: https://www.forbes.com

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Retail Workers Are Trying to Escape the ‘Merry-Go-Round’

February 17, 2019 – Orlando, Florida, United States – A Payless ShoeSource store is seen in Orlando, Florida on February 17, 2019, the first day of the firm’s liquidation sale after confirming on February 15, 2019 that it will close its 2,100 stores in the U.S. and Puerto Rico. The company filed bankruptcy in 2017 and closed 673 stores. (Photo by Paul Hennessy/NurPhoto via Getty Images)

Sue Reich worked for 27 years at Shopko, a Midwest retailer that sold clothing, shoes, housewares, and electronics, until, one day, her employer didn’t exist anymore. Shopko, which employed 14,000 people across 26 states, filed for bankruptcy last year and closed all its stores last summer after it couldn’t find a buyer.

The same story is happening across the country as the retail apocalypse continues. In 2019, retailers including Payless ShoeSource, Dress Barn, and Barney’s closed 9,200 stores; Payless alone cut 16,000 jobs. Already this year, chains including Macy’s, Pier 1, and Fairway have announced closures and layoffs. Employment in retail in January was down 8 percent from the same time last year, according to new Bureau of Labor Statistics (BLS) data released Friday morning, at the same time, jobs in transportation and warehousing, industries critical for e-commerce, were up 28 percent. Department stores have shed 241,000 employees in the last five years, according to BLS data, and clothing stores cut 67,000 jobs.

But there is no national outcry as workers like Reich lose their jobs, no movement to protect the people being thrust out of work, calling for an end to store closures, or to find funding to ensure these workers end up in better jobs. Sure, there was a @SaveBarneys campaign, but it traded on nostalgia, featuring vintage TV spots and magazine ads, rather than on concern for workers, and it failed. The high-end retailer, which filed for bankruptcy last year, was sold to Authentic Brands Group, which started closing and liquidating stores in November.

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Compare this with the commotions that have surrounded smaller job losses in industries such as manufacturing or mining. When Carrier, an air-conditioning company, said it was moving 1,400 jobs to Mexico, then-candidate Donald J. Trump seized on the issue in his stump speech and eventually struck a deal to keep some of the jobs in Indiana. “We hear politicians talk about the loss of factories and manufacturing and mining, but there has not been the same level of outcry around the loss of retail jobs,” says Nicole Mason, the president of the Institute for Women’s Policy Research, a think tank based in Washington, D.C..

“I would conjecture that one of the reasons we’re not talking about it is that it impacts predominantly women.” Nearly 80 percent of cashiers were women in 2018, according to IWPR data. As online shopping grows, and employment in warehouses grows, retail jobs for women are shrinking, while men’s jobs are growing — an IWPR analysis found that the retail industry lost 54,300 jobs between 2016 and 2017; over that time, women lost 160,300 jobs while men gained 106,000.

In the past, when factories shut down or jobs moved overseas, the government stepped in to protect workers who lost their jobs. The federal Trade Adjustment Assistance (TAA) program, first authorized in 1962 and expanded in 1974, 2002, and 2009, assists workers whose jobs have been displaced because of trade; it offers training subsidies and a weekly income for people who have run out of unemployment benefits.

Workers over 50 who find new jobs at a lower wage than they’d been making can also receive money from a wage insurance program to supplement their new income. But those funds aren’t available to retail workers. “Because they weren’t trade-affected, they can’t get that monthly stipend,” says Liz Skenandore, a career services specialist at Great Lakes Training and Development in Wisconsin, who deals with a steady flow of laid-off retail workers. “It would be ideal, if there was a ‘you were affected due to the internet’ category.”

Similarly, in the 1980s, after a series of factory shutdowns in the Rust Belt, a group of Ohio legislators pushed for the WARN Act, which required employers to give advance notice of mass layoffs and plant closings and to pay back wages if they did not provide that warning. Around the same time, under pressure from unions, Congress created Manufacturing Extension Partnership programs, which use federal, state, and private dollars to retrain displaced manufacturing workers for jobs in high-demand fields.

Another thing Sue Reich didn’t receive when she was laid off from Shopko: severance pay. She spent decades working for the company, and says she was told that if she worked through the store’s liquidation, she’d receive severance. But Shopko never paid Reich or workers like her anything beyond a small sum for vacation days they hadn’t taken. “It’s been challenging every month,” says Reich, who scrambled to find another job and now works part-time at a credit union, though it has not turned into full-time work as she had hoped.

Her husband, a saw operator at a factory, is working overtime so the family can pay its bills. In contrast, the thousands of workers who have lost jobs at places such as General Motors and Ford over the past year have received months of severance pay based on the amount of time they had worked at the companies. Sun Capital, a private equity firm that owned Shopko, did not respond to TIME’s request for comment.

It’s no accident that there are government policies protecting workers in industries such as manufacturing. These are industries that have long been unionized, and in the 1980s and 1990s, as the United States negotiated trade deals such as NAFTA, unions worked with elected officials from districts that were in danger of losing factories, says Kate Bronfenbrenner, a professor at Cornell University’s School of Industrial and Labor Relations. They made sure that any trade deal included programs to help workers who would be displaced. To sell the trade deal, Congress had to agree to fund worker retraining and subsidy programs. Lawrence Katz, a Harvard economist who served in the Labor Department under President Clinton, says the administration tried to introduce a universal dislocated worker training program in the 1990s that would have helped retrain any displaced worker, but couldn’t get widespread support.

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But retail is disappearing not because of a trade deal, but because the way consumers buy things is changing. Tech companies like Amazon didn’t have to negotiate with Congress to be able to sell things online; they could just start doing it. That’s meant that there is no constituency that must make sure retail workers end up on their feet in order to get a bill passed. “When people lose their jobs in the service sector and retail sector, those are women and people of color, and there is no Congressional constituent for them like the ones that were negotiating the trade bill,” Bronfenbrenner says.

Factory shutdowns are visually jarring; hulking. Abandoned factories dot landscapes across the United States; in Detroit, entrepreneurs made a business out of giving tours of the ruin. Retail’s meltdown is also visually jarring, but is hidden inside America’s malls. TIME recently walked through a mall in Green Bay, Wisconsin that had lost a Shopko and Payless store, and there were twice as many vacant stores as operating ones. The lights were off in large sections of the mall that were blocked off with crime tape, and the only foot traffic was women in workout clothes walking the long, wide corridors for exercise in the cold winter months.

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As more sudden retail layoffs happen, Jack Raisner, a professor of law at St. John’s University, says he sees an opening for states or the federal government to pass more protections for retail workers. He recently helped New Jersey pass a bill that updates the WARN Act to apply to more retail workers, which he hopes will inspire similar bills in other states. The New Jersey bill, which was signed into law last month, was a response to mass layoffs that left hundreds of Toys “R” US workers who had worked through the holidays with the promise of severance without any such pay, he says. It says that any company that employees at least 50 people in the state is required to give 90 days notice of a mass layoff; without such notice, it must pay all laid-off workers at least four weeks of back pay.

If they don’t give 90 days notice, employers must also pay terminated employees one week’s pay for every year they’ve worked there. “Putting people out on the street after years of service without anything is a horror and a tax on the public,” says Raisner. He also worked with Senators Sherrod Brown of Ohio and Chuck Schumer of New York to craft the Fair Warning Act of 2019, which would update the WARN Act nationally. The bill was introduced in November. “The anxiety over these layoffs is unabated despite what everyone says about this economy,” Raisner says. “I think there’s a real grassroots movement interested in something happening about this.”

Though business owners in New Jersey say that the state’s new law will deter companies from coming to the state, broader protections for retail workers in the form of retraining or re-education programs could be good for the larger economy. As technology changes the nature of work, people who get more education or increase their skills are best positioned to do the types of jobs that computers and robots can’t yet do. This in turn grows the nation’s productivity rate, and its economy. Now, technological change is happening faster than ever before; McKinsey estimates that by 2030, growing automation will mean that as many as 375 million workers (14 percent of the global workforce) will need to switch occupational categories.

In retail, where the average hourly wage for people who aren’t managers is just $16.86, laid-off workers don’t have the resources to stop working for six months or two years to get a certification or degree in another industry. “For the most part, these workers are living paycheck to paycheck, and the idea of being without a job is scary,” says Anthony Snyder, the chief executive officer of the Fox Valley Workforce Development Board in Northeast Wisconsin, which helps laid-off workers find new jobs. That’s why many retail workers are on what Snyder calls the “retail merry-go-round,” where their employer dissolves or closes down, they find another retail-related job, and then get laid off from it, too.

Amanda Padgett has been on this merry-go-round for years. Padgett, a 36-year-old mother of two, was laid off from Shopko last year. Before that, she worked at an ice cream store and a call center for a national retail chain that laid off all its employees. With each layoff, she has wanted to go back to school and get a degree in something that would get her out of retail—maybe learning to become a medical coder or a radiology tech. But as long as she needs to pay the rent, put food on the table and take care of her kids, she needs to bring in a paycheck, so she finds herself in another low-wage job, making minimum wage, until it, too ends. When she heard the rumblings last year that Shopko was closing, Padgett says, “all I could think was, ‘here we go again.’”

The United States has systematically disinvested in resources that would help low-wage workers without a big financial cushion go back to school. Federal investments in workforce training have fallen 40 percent over the past 15 years, when adjusted for inflation, according to the National Skills Coalition, a group that advocates for worker training. This means many federally funded job centers only offer perfunctory classes such as building a resume or using a computer, rather than the type of longer-term interventions that typically help people switch careers, says Amanda Bergson-Shilcock, a senior fellow at the National Skills Coalition.

“You have a lot of workforce boards trying to figure out what interventions they can provide that are meaningful to the lives of workers and responsive to the needs of the industry,” says Bergson-Shilcock. “But at the same time, they’re doing it with less and less money from the federal level.”

There are some scattershot examples of states trying to help retail workers specifically. In Wisconsin, a grant for laid-off retail workers will pay for tuition for retraining in high-demand fields as well as help with mortgage payments and cover books, transportation, and child-care. It’s helped people like Ginger Gillis, 42, who did data entry for Shopko for 14 years until the company closed. Gillis always wanted to go back to school but never could make the financials work; she’s now getting an associate’s degree in Architectural Technology from Northeast Wisconsin Technical College. But Gillis has an advantage: her husband has a good job, which means she doesn’t have to worry about having an income while she’s going back to school. Many retail workers “don’t have a nest egg, so they run into the next retail job before we can even talk to them,” says Snyder, of the Fox Valley Workforce Development Board. Only 27 of the 400 dislocated retail workers in his district have taken advantage of the grant, and even then, he’s run out of money to give out. “There is not enough money to serve everyone we’d like to serve with the greatest investment,” he says.

Other countries have much more robust safety nets for laid-off workers, whether in retail or other fields. In Canada, workers whose jobs are eliminated in mass layoffs are guaranteed termination pay if their employer doesn’t give at least eight weeks’ notice, and severance pay if they have worked for an employer for five or more years. In European countries like Sweden, laid-off workers receive financial support, a job counselor, and money for retraining, provided they are members of a union, which about 70 percent of Sweden’s workers are.

In the United States, those types of strong supports are almost only available to workers in a union, which is a shrinking share of the workforce (just 10.3 percent of American workers were members of a union in 2019.) But those unionized workers are reaping the benefits. Some partnerships between labor and management have started training low-wage workers for new positions before they even lose their jobs. In the Building Skills Partnership in California, a local union struck a deal with dozens of businesses, agreeing that the businesses could take a small amount out of workers’ paychecks to fund retraining efforts. UNITE-HERE, a union that represents service workers in Las Vegas, bargained with casinos such as MGM Resorts International to require that they alert the union to new technology being used and guarantee job training for all displaced workers.

The question now is whether the government will step in to protect retail workers as it did manufacturing workers, even though retail is not unionized. Economists largely agree that retail is about to go through what manufacturing did, says Anthony Carnevale, the director of Georgetown’s Center on Education and the Workforce. Manufacturing was once one-third of the workforce; now it’s eight percent. “There’s no question,” he says, “that retail is up next.”

By Alana Semuels February 7, 2020

Source: Retail Workers Are Trying to Escape the ‘Merry-Go-Round’

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Five Reasons Why Legacy Retail Won’t Survive This Decade

Does legacy retail have a future in the age of digital?

It’s that time of year. No, I’m not thinking of Veganuary (I can’t even pronounce the word), no, I’m thinking of that time of year when most retailers declare their Christmas trading figures…..kind of. Because as we know, reporting periods are massaged and margin and returns are never disclosed.

However, although we may have to reach for a rather large pinch of salt, the annual list of Christmas winners and losers still gives a good indication of the relative state of the market.

A quick look at the Retail Week Golden Quarter league table for Christmas 2019 trading is at once both revealing, and depressingly predictable.

The Liverpool of the retail industry? Boohoo, who else? Closely followed by ASOS. Meanwhile, a scan further down the table shows the Norwich City’s of the retail world have one thing in common: a) they are older more established businesses who b) have their heritage grounded firmly in bricks and mortar retailing.

As with everything, there are some notable exceptions such as Fortnum & Mason, Primark and Pets at Home, however these are businesses who have a very clear sense of their purpose and brand identity and largely succeed because of that.

The remainder sit firmly within a retail category which is increasingly being polarized, differentiating itself by being average, uninspiring and mediocre. To what am I referring? Legacy retail.

Earlier this month, I was in New York for the annual retail festival otherwise known as NRF. And NRF 2020 will go down as something of a watershed conference for retail. Why? Because, the world is changing, consumer attitudes are changing and the conference reflected this shift towards a more human-centric, planet first, sustainable agenda.

Perhaps for the first time, the nature of the purpose of retail and of retail businesses is being openly questioned and challenged. To earn a profit for their shareholders or to do good for the planet. Or both? How retail businesses will be measured in the future as we move through this decade will be very different from today.


And in the twenties, this will have profound implications for legacy retail which will continue its, inexorable and predictable slide into oblivion. Here are five reasons why.

1.Ways Of Working

Silo’ed, vertical, hierarchical, top-down, command and control – sounds familiar? Virtually every retail business would say that they are customer focused, however the way they are organised is totally the opposite.

Instead of putting an emphasis on working as one business, powerful fiefdoms emerge, competing for resources in ways which ultimately may benefit them but not the holistic enterprise.

It’s typical of legacy retail, it’s damaging and it’s ultimately destructive. Never mind inappropriate touching or egotistical leaders and owners, this behavior is endemic. Legacy retail will always be legacy retail while this structure exists.

2.Metrics

While many traditional metrics, which have served retail for decades, are still entirely appropriate, there are others which have no place in new retail. They no longer reflect the changing landscape of retail and the new ways in which success and the path to growth should be measured.

Legacy retail still clings to a sales first business model where everything revolves around the Monday morning sales meeting. Let’s be honest, many still have difficulty in sales attribution in an online world. Listen to a newer start-up retailer and they simply refer to sales, they don’t differentiate between online and physical because it’s all one entity.

For those still measuring sales per square foot, see you later.

3.Digital Skills

It’s all very well having clever, digital natives in your marketing, merchandising, IT and commercial departments but if the very top of the business isn’t on the same wavelength, you’re wasting your time.

Sadly, the board of most legacy retailers is anything but digitally savvy. This is important for two very good reasons. Investment decisions abound and there will always be a list longer than the budget allows.

But sometimes, instinct rather than hurdle rate, needs to take precedence. This is where a digitally enabled board can make the difference between success and failure.

4.Social

Spoiler alert: we’re still only scraping the surface of the potential for social engagement and social selling in retail. Legacy retail doesn’t really do social. It should, it really should. According to Maybe* the average social user spends two hours twenty two minutes each day scrolling through their social media feed.

Which is where they would see all that wonderful engagement from legacy retail. Except they don’t. Because for legacy retail, the priority is on measuring footfall, sales per employee and other meaningless metrics.

Ever asked yourself, how is my customer feeling? Give it a try, it just might surprise you.

5.Perfect Storm

Perhaps I’m being a little harsh on legacy retail? After all, aren’t they caught in a perfect storm, the like of which has never before been experienced? What were those reasons for poor performance again? Let’s see if I can remember them, in no particular order:

  1. Rising costs
  2. The weather
  3. Online
  4. Brexit
  5. Low consumer confidence

But you don’t hear new retail bleating about external factors. That’s because they have a clear sense of purpose, a laser focus on their brand and what it stands for and above all they know and engage with their customers.


Thankfully, there will always be those who come along to take the place of legacy retailers – on the high street and on our smartphones. And there will always be glorious exceptions to the rule where a sense of brand, authenticity, artisan, inspiration and excitement abound within their DNA.

But sadly, for many, the new rules of retail coupled with the new consumer, and an inability to reinvent, will mean only one thing. But as has always been the case, retail is an abundantly resilient industry and what we will witness this decade will be the rejuvenation of retail.

And for that reason alone, we have cause for optimism.

Follow me on Twitter. Check out my website.

For this, my 100th post for Forbes, I asked my Twitter audience what subject they most wanted me to write about. Legacy retail emerged an overwhelming favorite

I am a retail analyst, writer, and keynote speaker on retail challenges and trends with a focus on consumer behavior, customer experience, and technology disruption. Prior to founding Retail Reflections, during my 20-year retail career, I held senior positions at Kingfisher and Superdrug and have worked with many of the UK’s leading retailers. I’ve been named a top retail influencer by several publications and my observations on the High Street and many aspects of retail regularly appear in the press.

Source: Five Reasons Why Legacy Retail Won’t Survive This Decade

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