2017, winners and losers: the American lesson for Retail

02 Jan 2018

A lesson from the USA. Several phenomena that originated there in the last decade have been trendsetters for what has then become common to all Western Retail. Like, sometimes, the wrong interpretations that have been given of them, often suggested by emotionality and not backed up by an at least cursory reading of the data.

Digital commerce, for example, has been the subject of an unprecedented "cry wolf!", but the country's first retailer, Walmart, has sales volumes greater than the entire American online shopping. This has certainly led to the decline of some brands that are resistant to change, but the decisive causes should be sought in the indebtedness incurred by groups, in wrong investments following the boom of the Nineties, in the failure to innovate formats, in the late understanding of the evolution of the consumer and, perhaps above all, in the pathological excess of supply.

At the end of 2017, the American lesson for Retail is also more than ever valid for this year, and forgetting the excessive pessimisim of circumstance about the "Retail Apocalypse", some "pluses" and "minuses" can be identified with good approximation.

Walmart is almost a lesson in itself. Since when, in June 2016, Doug McMillon launched his strategy "to reimagine retail again" to the shareholders' meeting, it seems to have made no mistakes in 2017. Acquisitions (Jet.com, Bonobos, Parcel), reorganisation of the network, increase in online sales, new customer services, leadership in the "delivery war". The agility and reactivity that not everyone expected of a giant.

Department Stores. According to estimates by Fung Global Retail & Technology, over 5,300 stores closed during the year. The lesson is simple: the crisis of this format seems irreversible. Unless ...

eCommerce driven. It is no longer just a leitmotif for scholarly presentations at a conference, but a reality certified by numbers.  The success of brands like B8TA provides the best lesson on the importance of unified trade: centrality of the flagship store, reduced floor area, better shopping experience, a pick-up station and care of online contact with "physical" consumers are the factors that create the competitive advantage towards "pure online retailers".

Delivery. Delivery services are central in competition. Even more than Walmart, just look at the recent acquisitions of Shipt (food delivery) and Grand Junction made in 2017 by Target. Companies which, among others, have established themselves in no more than three years of life.

Fashion. The 2016 crisis continued without let-ups in 2017. A record year for bankruptcies: Limited, Wet Seal, BCBG Max Azria, Vanity, Rue 21, Papaya Clothing, True Religion, Alfred Angelo and Styles for Less, as well as smaller niche companies. In this segment, selection dramatically rhymes with innovation.

Private Label. Present and future increasingly important: Target has launched 12 new private brands, including lines aimed at disabled children and lifestyle brands that focus on emotionality in the relationship with the consumer. Not least the Walmart move with Uniqely J, aimed at Millennials.

Voice assistants. Formidable growth of this particular type of consumer support. According to eMarketer, in 2018 5.6 million Americans will use a voice assistance device for their purchases at least once a month, 129% up over the previous year. Amazon and Google Home in the lead.

"Tortoise" e-commerce. The lesson is very simple: the greater the importance of digital commerce, the more signs that do not propose themselves online with acceptable performances are penalised. According to Retail Systems Research, the average site takes 9.5 seconds for mobile uploading and 16.6 seconds for desktop uploading. Times that are too long compared with the three seconds beyond which it is likely that customers will be lost.