Walmart has announced it is rolling out its Express Delivery service in nearly 1,000 stores.
Walmart has been piloting Express Delivery in 100 stores since mid-April, but has accelerated the development of the program in an effort to meet customers’ needs in the midst of the pandemic. Express Delivery will let customers order some 160,000 items from stores and have them delivered to their doorstep within two hours.
“We know our customers’ lives have changed during this pandemic, and so has the way they shop,” said Janey Whiteside, chief customer officer, Walmart. “We also know when we come out of this, customers will be busier than ever, and sometimes that will call for needing supplies in a hurry. COVID-19 has prompted us to launch Express Delivery even faster so that we’re here for our customers today and in the future.”
The service will debut in nearly 1,000 stores in early May, reaching nearly 2,000 stores in the coming weeks. This is good news for shoppers around the country, as they endeavor to stay safe during the pandemic.
“You’ve got to bail everyone out,” says Expedia and IAC Chairman Barry Diller. “This is like when you’re picking losers and winners. Everybody is in the same position which is the world stopped for commerce. You see this when you drive down streets and you see big cities and small cities and you see nothing is open. They’re ghost towns. The damage that is being done every day is enormous. Everybody needs to be bailed out of this one-time thing and we’ll worry about paying the bills later.”
Barry Diller, media mogul and Chairman of IAC and Expedia, says that every business in the United States must be bailed out in an interview on CNBC:
You’ve Got To Bail Everyone Out
What we’re doing at Expedia is using the time to do a lot of the things that we were not able to do when we were running a hundred miles an hour to keep up with our growth. You can think of it as a small business writ large. And then one day the door closes. And if you’ve got a small business with nobody coming in you have no revenue. Well, travel-related companies have no revenue. Expedia, like many large travel companies, has a very very large cost base so we haven’t yet dealt with that specifically. The real planning inside the company is to come out of this stronger than when we went into it.
The bailouts of the airlines are necessary. Full stop. You’ve got to bail everyone out. This is like when you’re picking losers and winners. Everybody is in the same position which is the world stopped for commerce. You see this when you drive down streets and you see big cities and small cities and you see nothing is open. They’re ghost towns. The damage that is being done every day is enormous. Everybody needs to be bailed out of this one-time thing and we’ll worry about paying the bills later.
What has to happen is the fear has to decline
What has to happen is the fear has to decline. The fear of associating with other people. There are plenty of friends of mine who say I’m not going to go to the theater or I’m not going to do this because I’m afraid. Actually, now people are saying, even though you’ve been isolating for three weeks you can’t come over to my house, which is kind of nuts. Fear is the next thing that’s going to thaw. Until that happens, whether you test people on the way in or whatever you do, at some point everybody’s going to have to be comfortable being a foot away from other people. If that fundamentally changes then a huge amount of our infrastructure disappears, which I don’t think will happen.
You kind of have to get over it (the fear). You go into a theater and you’re sitting literally within inches of people, you go in thinking that no one is going come in with enormous toxicity. No one is going to come in who has got some terrible communicable disease and sneeze on you. You kind of just trust in that. We’re all too frightened right now. We’re gonna have to get over it or everything will change.
One Way Or the Other This Is Going To Be Over or We’re Over
When we see the damage that is being done everywhere we’ll really see in the second quarter (what’s happening). How can you get fair value? I absolutely believe that in a year or two from now this will be over. One way or the other this is going to be over or we’re over. But how can you value that today? I don’t think you can do it?
II think the streaming will be impacted by (the crisis) also. You go a few more months and while people say (that Netflix) and other subscriptions to entertainment) will be the last things they’ll cut because people feel they desperately need it to just get through the day but that is eventually going to take its toll. People truly will not have the discretionary income to afford it.
Cornoavirus Doesn’t Change the Dynamics of Anything
But it doesn’t change the dynamics of anything. You’ve got the competitors. Streaming has taken over the world. Hollywood is irrelevant. The only companies that have a true path, an absolute clear business model path forward, have nothing to do with the entertainment business. Amazon and Netflix. Everybody else, good luck to them. They may be able to build subscription services that may be profitable but that world has changed forever. I think this pandemic has nothing to do with it other than earnings that are going to be much less for a while.
Of course, there are opportunities (to invest in) you just have to have a very long view or sure-footed look at things as not only they are but as you think they will be. We’re looking at some very large potential acquisitions for IAC. This is the environment where if you are acquisitive you’re going to do the thing that for many years everybody’s asked for. Oh my God, everything’s over-inflated and prices are crazy. You can’t buy things for this or that without these new premiums. Well, you know what, that’s all gone. If you’ve got capital what could be a better time than to exploit what is a terrible downfall for many companies.
You’ve Got To Bail Everyone Out, Says Barry Diller
In a letter to shareholders, Amazon CEO Jeff Bezos said regular testing may be a critical component in protecting Amazonians.
As the coronavirus pandemic continues to take its toll, Amazon has become a critical lifeline for many individuals and organizations. The company recently hired an additional 100,000 warehouse workers, only to announce it would hire an additional 75,000 more to help keep up with demand.
At the same time, the company is facing challenges keeping its workers safe. As workers become infected, there is an ever increasing threat of the virus spreading and shutting down entire warehouses and distribution centers, threatening the entire supply chain. To help reduce the risk, Amazon already has a team working on building out incremental testing capacity.
“A next step in protecting our employees might be regular testing of all Amazonians, including those showing no symptoms,” writes Bezos. “Regular testing on a global scale, across all industries, would both help keep people safe and help get the economy back up and running. For this to work, we as a society would need vastly more testing capacity than is currently available. If every person could be tested regularly, it would make a huge difference in how we fight this virus. Those who test positive could be quarantined and cared for, and everyone who tests negative could re-enter the economy with confidence.
“We’ve begun the work of building incremental testing capacity. A team of Amazonians—from research scientists and program managers to procurement specialists and software engineers—moved from their normal day jobs onto a dedicated team to work on this initiative. We have begun assembling the equipment we need to build our first lab and hope to start testing small numbers of our frontline employees soon. We are not sure how far we will get in the relevant timeframe, but we think it’s worth trying, and we stand ready to share anything we learn.”
Bezos’ announcement is good news and will hopefully help ensure Amazon is able to keep its employees safe, and keep the supply chain running.
Expedia and IAC Chairman Barry Diller said that the economic and business landscape caused by the coronavirus and the political actions to fight it have been cataclysmic. Diller does not see a return to normal anytime soon. He believes that people will first have get over being scared and that won’t be easy.
Barry Diller, Chairman of Expedia and IAC discusses our current “cataclysmic landscape in an interview on CNBC:
I See the Landscape As Cataclysmic
I see the landscape as cataclysmic,” says Diller. “We’re in something that it’s very hard to be objective about because we’re in the eye of it and we’re inside of it. We can’t really see it for what it is. Everybody says the same thing there’s been nothing like it before and while we know some things we really know nothing. We know nothing about what happened and when we’re going to get out of it. “
What will we be doing and will our habits change? Will this result in some really profound difference in people’s lives in the future? So I see it as everybody is scared. The fact that we have so much media and so much information with all it telling us that we’ve got to be quite scared about cohabitating with anyone. That ain’t good.
A Quick Return To Normalcy Will Not Happen
No, (I don’t believe that we will go back to normal on the other side of this as we did after 9/11). What I said then was that if there’s life there’s travel. I still do believe that but this is not going to be what happened then which was a very very quick return to normalcy. That is not going to happen. At best, we’ll have kind of a rolling way out.
As far as travel is concerned, while I’m absolutely optimistic that it will happen at some point, I don’t think it will be soon. It will probably be September, October, November, or December to really get life back. And in order to travel, you have got to have that. So they’re totally different conditions. This is not analogous. I don’t think this is analogous to anything and is certainly not analogous to 9/11 and to the financial crisis in 2008.
Amazon announced it has hired the initial 100,000 warehouse workers it originally pledged, and is now hiring an additional 75,000.
In the midst of the worst pandemic since the Spanish Flu, Amazon has been a lifeline for many individuals. The e-commerce giant has been struggling, however, to keep up with demand for groceries and basic necessities, even limiting fulfillment of non-essential items. In an effort to keep up, Amazon previously announced it would hire an additional 100,000 warehouse workers, even starting them at $2 an hour more than standard pay.
Now the company has confirmed it has hired those initial 100,000 additional workers, and is expanding its hiring to include 75,000 more.
“Today, we are proud to announce our original 100,000 jobs pledge is filled, and those new employees are working at sites across the U.S.,” reads the company’s blog post. “We continue to see increased demand as our teams support their communities, and are going to continue to hire, creating an additional 75,000 jobs to help serve customers during this unprecedented time. Interested candidates can apply at www.amazon.com/jobsnow.”
Amazon’s announcement is good news for everyone concerned. The additional workers will help the company keep up with demand as the crisis drags on, while the new jobs will be a lifesaver to individuals whose livelihood is being impacted.
“The important thing to think about is that the biggest threat to brick-and-mortar retail is really the current version of themselves,” says Caruso CEO Rick Caruso. Caruso is one of the most successful retail developers in the United States. “Many of them have to evolve and many of them have to change because the consumer is going to change. This crisis, I believe, is going to change consumer culture, their expectations, and what they want from retailers in a really significant way.”
Rick Caruso, founder, and CEO of the Caruso real-estate empire discusses how retail will be forever changed even after the current crisis is over:
This Crisis Is Going To Change Retail
I hope (retail jobs) come back I think some are going to be lost. The retail environment is tough out there right now. The important thing to think about is that the biggest threat to brick-and-mortar retail is really the current version of themselves. Many of them have to evolve and many of them have to change because the consumer is going to change. This crisis, I believe, is going to change consumer culture, their expectations, and what they want from retailers in a really significant way.
They’re going to be winners and they’re going to be losers. I think the winners are going to be very connected. They’re going to be curated and feel more local. They’re going to feel more personalized and they’re going to have a better value proposition. There are many out there that we’re doing that before this crisis began and they’ll continue to do it. I think they will be rewarded with great success and hopefully, they will drive a lot of hiring. There will be more retail jobs coming back into the current economy.
People Are Going To Want More Physical Space
I do think that people are going to want to have more physical space (after this crisis is over). I think they’re going to operate differently. Listen, 9/11 fundamentally changed our habits as human beings. But the one thing that is always crystal clear is we’re human souls that want to have a sense of connection and community and our properties provide that. The challenge for retailers inside their four walls is going to be to meet the customer where the customer wants them to be.
The very innovative and very smart retailers are going to do very well. When you get to crowded restaurants and things like that I think they’re going to have to change how they operate. Movie theatres may have to change how they operate for a while. There’s certainly going to be a shift. What we have seen is the isolation gets very tiring very quickly. So I think people are going to want to come out and they’re going to want to celebrate life and they want to connect with their community.
Economy Is Built On The Back Of The Entrepreneur
Some (of our retail tenants) are and some aren’t (paying rent right now). The ones that I worry about the most and I care about a lot are the smaller ones. These are the entrepreneurs and the people that have started a small business or a small restaurant. We’re leaning in with all of those to support them. I’m a big believer that the economy is built off the back of the individual entrepreneur.
We’re going to support them to get them reopened so they can rehire and move forward. The tenants that are more creditworthy, which is a big chunk of our portfolio, they have been paying. My expectation is that they should, given these times, so that we can put more resources into the smaller businesses which clearly will need our help.
We’re Giving Smaller Tenants Concessions On Rent
We’re meeting with each of (our small business tenants) individually. It depends on certain circumstances but we’re going to give them concessions on rent. We certainly may give them concessions and investment in terms of TI’s and maybe upgrading their stores. Whatever they need to do. Our properties are very popular for a number of reasons but one of them is the small retailers, the entrepreneurs, the restaurant tourism. They’re the soul of the properties and they’re the fabric of the properties. We need those to survive.
What we don’t want to do is have successful properties that are just full of national retailers. National retailers could be great but they don’t have the same connection to the community and the same soul that a local entrepreneur has. Those are the ones we’re very focused on supporting and working with.
This Crisis Is Going To Change Retail, Says Caruso CEO Rick Caruso
While some industries may be reeling from the coronavirus pandemic, ecommerce ad spending is experiencing a boon.
According to Search Engine Land, a recent report details the growth ecommerce ad spending is currently undergoing, jumping “from $4.8 million the week of February 17 to $9.6 million the week of March 9. The data, released by media sales intelligence firm MediaRadar on Friday, encompasses advertising spend across national TV, print and digital media, including websites, Snapchat, YouTube and podcasts.”
The data is another indication that the U.S. and world economies are experiencing fundamental shifts as a result of the pandemic. People are practicing social distancing, working from home, turning to social gaming for human interaction, relying on cloud environments, communicating via Slack or Microsoft Teams and turning to videoconferencing in never before seen numbers. Similarly, the increase in ad spending corresponds to people sheltering in place and relying on ecommerce for their day-to-day needs.
The longer the pandemic goes on, the more likely such trends will become permanent, forever changing how people go about their personal and work lives.
Amazon is using artificial intelligence (AI) to better understand search queries and why a person may be looking for something.
Understanding why a customer searches for a product is just as import as knowing what they searched for. Knowing the context can help a retailer make relevant recommendations for other products that not only compliment the item being searched for, but the activity or reason behind the search. Amazon is intent on cracking that piece of the puzzle, and is applying AI to the problem.
“In a paper accepted to the ACM SIGIR Conference on Human Information Interaction and Retrieval, my colleagues and I present a new neural-network-based system for predicting context of use from customer queries,” writes Adrian Boteanu. “From the query ‘adidas mens pants’, for instance, the system predicts the activity ‘running.’
“In tests, human reviewers agreed, on average, with 81% of the system’s predictions, indicating that the system was identifying patterns that could improve the quality of Amazon’s product discovery algorithms.”
As Amazon continues to improve its algorithms, shoppers should see increasingly relevant shopping recommendations and the research could open a whole new arena for personalized digital shopping assistants.
Amazon has reported its first coronavirus case in one of their warehouses, raising questions about the possible impact on supply lines.
The Atlantic is reporting that an Amazon warehouse worker in Queens, New York has tested positive for coronavirus, prompting the company to email all the other workers to inform them.
“We’re writing to let you know that a positive case of the coronavirus (COVID-19) was found at our facility today,” the email read.
In the short-term, Amazon has closed the facility and is taking extra time to deep-clean it, while all employees were sent home with full pay. In the long-term, the revelation leaves a lot of questions about the supply chain at a time when companies’ capabilities are already being pushed to the limit. Amazon recently announced it would suspend shipments of all non-essential items in an effort to keep up with demand.
Studies have shown that the coronavirus can live for up to 24 hours on cardboard, and as long as 72 hours on plastic or steel. If more warehouse workers test positive for the virus, it could raise concerns about transmission through the very supplies people are relying on to stay safely at home. As Amazon and other fulfillment centers have to close facilities to disinfect following confirmed cases, it could have a profound impact on the entire supply chain, causing delays that no one can afford.
Over the weekend, Apple CEO Tim Cook announced that all stores outside of Greater China would be closed till March 27.
With declining numbers of cases in China, the company has reopened stores there. As the pandemic sweeps the rest of the globe, however, the company made the decision to close all stores outside of Greater China.
“We will be closing all of our retail stores outside of Greater China until March 27,” writes Cook. “We are committed to providing exceptional service to our customers. Our online stores are open at www.apple.com, or you can download the Apple Store app on the App Store. For service and support, customers can visit support.apple.com. I want to thank our extraordinary Retail teams for their dedication to enriching our customers’ lives. We are all so grateful to you.”
As the situation continues to unfold, however, it seems the stores may be closed beyond March 27. BGR was the first to notice that a banner on Apple.com says: “Our retail stores are closed until further notice.”
Fortunately for employees, Apple is taking measures to make sure their financial needs are met.
“All of our hourly workers will continue to receive pay in alignment with business as usual operations,” continues Cook. “We have expanded our leave policies to accommodate personal or family health circumstances created by COVID-19 — including recovering from an illness, caring for a sick loved one, mandatory quarantining, or childcare challenges due to school closures.”
“Foot traffic has been the secret,” says Tim Lesko of Granite Investment Advisors. “Walmart a couple dozen years ago moved into grocery and that move, which was widely panned at the time, has really led foot traffic to stay steady. You’re still seeing same store sales growth in a retail industry that is really really under a lot of pressure. Stores that are able to maintain foot traffic, people that are going for grocery and then buying other goods, really creates a strong backdrop against other retailers.”
Tim Lesko, partner at Granite Investment Advisors, discusses how foot traffic driven by their grocery business is key to Walmart’s continued growth in an otherwise difficult retail sector:
Grocery Foot Traffic is Walmart’s Secret
There are two things that are most important to us. One is that Walmart a couple dozen years ago moved into grocery and that move, which was widely panned at the time, has really led foot traffic to stay steady. You’re still seeing same store sales growth in a retail industry that is really really under a lot of pressure. So pretty happy to see that even though same store sales were a little light compared to street estimates, they were still positive.
Second is the online business. They continued to spend a lot of money and have done a really good job of growing that online business. People fail to recognize that they’re the second largest online retailer in the US.
Foot traffic has been the secret. Stores that are able to maintain foot traffic, whether they be stores that are people hunting for bargains in the TJ Max’s of the world or people that are going for grocery and then buying other goods really creates a strong backdrop against companies like Pier 1 which went bankrupt over the weekend. You’re seeing bankruptcies all over the landscape. You have to drive foot traffic.
Multiple Revenue Streams Makes Amazon a Difficult Competitor
Multiple revenue streams is why Amazon is such a difficult competitor. They have businesses outside of their core retail business that really drive the profits and they continue to sell goods at a loss online. But interestingly, you have Amazon that’s moving from being a virtual merchant to now a bricks and mortar merchant, getting into grocery, getting into daily distribution of goods to people.
Walmart’s been doing that for years and has all of the goods in your geography. In the future world of same-day delivery and next day delivery, Walmart’s very well-positioned to provide that service. It’s almost like they’re both heading towards the same way but with Walmart at a much better valuation.
Grocery Foot Traffic is Walmart’s Secret, Says Analyst
Google is doubling down on its efforts to make inroads in the retail market, with its latest planned acquisition aimed at helping brick and mortar businesses list their inventory online.
Pointy is a Dublin, Ireland-based tech startup that specializes in helping businesses easily list and manage their inventory online. The company works with retailers throughout Ireland, as well as in nearly every town and city in the U.S.
“With Pointy, merchants simply plug a small box into their barcode scanner or install the Pointy app on their point of sale system, which surfaces the products that they sell directly into the ‘See what’s in store’ section of their business profile on Google Search,” according to Google’s announcement. “Since we introduced this functionality a few years ago, Pointy has been one of our key partners, helping thousands of local merchants display this data within Google. We’re looking forward to working with Pointy to help even more local retailers bring their product inventory online.”
Pointy already has close ties with Google, having partnered with the search giant over the years, and sees the deal as the next logical step.
“When we started Pointy, our mission was to make things better for local retailers,” reads a blog post on Pointy’s site. “That remains our mission today. All of our services continue to operate as usual. We look forward to building even better services in the future, with the backing of Google’s resources and reach.”
“Today is a big step forward for Pointy, but there is still a very long way to go. We’re as excited about the future as when we first started.”
The terms of the deal were not disclosed but, pending the standard approval process, the deal is expected to close in the coming weeks.
The Wall Street Journal is reporting that Intercontinental Exchange (ICE), the owner of the New York Stock Exchange “has made a takeover offer for eBay Inc.”
ICE has been interested in buying eBay before, and has now approached the e-commerce giant once again, although the WSJ says the talks are not formal. If eBay were interested, ICE would likely have to come up with more than $30 billion to make the deal happen, reflecting eBay’s current valuation of $28 billion, plus a considerable premium.
The WSJ’s sources said ICE is mainly interested in eBay’s marketing business, not the online classified division, which even eBay has considered selling.
We will continue to monitor the story and provide updates as it develops.
Direct to consumer brands are doing incredible numbers on Shopify, says Shopify COO Harley Finkelstein. He says that Kylie Jenner has generated almost a billion dollars in sales on the platform and many other influencers such as Kanye West, Drake, and most recently Tom Brady are also doing very well.
“Even if you go beyond just Kylie, you look at companies like Bombas and Allbirds and Tommy John and Fashion Nova, these are brands that didn’t exist five or ten years ago and they’re absolutely doing incredible numbers on Shopify with no slowing down in mind,” says Finklestein. “Shopify was built to help anyone that has an idea start a great business and sell to a global audience.”
Harley Finkelstein, COO of Shopify, talks about the incredible numbers DTC brands are doing on Shopify, the huge success of Shopify Capital, and their quick acceptance of cannabis stores in Canada and potentially the rest of the world, in an interview with Jim Cramer on CNBC:
DTC Brands Doing Incredible Numbers on Shopify
We’re really happy with how we ended the year and certainly, the quarter was great and we’re really excited about our future. We’ve been at this now for almost 14 years. We’ve grown to 820,000 merchants up from 600,000 merchants a year ago. We have a big top of funnel with brand new entrepreneurs getting started on Shopify for the very first time. We also have some very large brands like the big CPGs and some big direct to consumer (DTC) companies all using Shopify to scale their businesses. We’ve got a really great business model and we’re having a lot of fun.
It’s amazing. I think the Kylie story ($1 billion in sales) was surprising to a lot of people, not for us because we see so many stories like that all the time. Whether it’s Kanye West launching his Yeezy store on Shopify or Drake’s store or Tom Brady’s new store, we see all of these major brands and huge influencers using Shopify to create authentic products and sell it to the audience. I always sort of think back to if DTC and direct-to-consumer were around when Michael Jordan was creating the Jordan brand with Nike I think Nike would be a supplier and Michael Jordan would be the brand. He would own the entirety of his business as opposed to getting a licensing fee.
We’re really excited about this. But even if you go beyond just Kylie, you look at companies like Bombas and Allbirds and Tommy John and Fashion Nova, these are brands that didn’t exist five or ten years ago and they’re absolutely doing incredible numbers on Shopify with no slowing down in mind. Shopify was built to help anyone that has an idea start a great business and sell to a global audience. We really do bend the learning curve to make it really easy to get started.
Shopify Helping Democratize the Entire Business Process
The ones that succeed, not all of them do, but the ones that do succeed they grow really large with us and over time we want to provide them with more services and more solutions. For example, we launched Shopify Payments a couple of years ago. We went to the payments companies and negotiated rates on their behalf. We launched Shopify Shipping and went to the shipping company and negotiated shipping costs on their behalf. We always are trying to find economies of scale to help democratize the entire business process for these small businesses.
More recently we realized that a lot of these small businesses also need capital. Because we have so much information on them we’re able to make really quick and very effective underwriting decisions so we were able to go and offer them capital cash advances. We’ve given out hundreds of millions of dollars of cash advances to a lot of these small businesses who if it wasn’t for Shopify would not be able to get this money on their own.
Entrepreneurs Want to Own Their Audience
Etsy fundamentally is a marketplace. Etsy is a place where someone who makes a product can go to find an audience. But our feeling is that you know for an entrepreneur they don’t always want to rent the audience. They want to own the audience. They want to have a direct relationship with their customers. They want to own the entire to profit margin. They want to be able to sell and have long-term relations with the people that are buying their products.
So companies like Etsy do a really good job of curating a bunch of products and renting those customers to those makers. We think the marketplaces are really great but we think ultimately makers and entrepreneurs and merchants want to have a direct relationship with the people buying their products. One of the things that is not well known about Shopify but one way to think about what we do is really this retail operating system. Merchants can start a store with us very easily and they can build a beautiful online store but they can also cross-sell to different marketplaces like eBay or Amazon.
The idea is that it feeds all feeds back in one centralized back office which is Shopify. That’s where they can run the entirety of their business. Really the idea is let’s become the most important piece of software they use on a daily basis. The first thing they open every morning, the last thing they close every night. So obviously marketplace will play a role there but ultimately merchants want to find customers wherever those customers exist and more and more they want to sell direct to those customers.
Shopify Facilitating Cannabis Sales in Canada
The reason we started with Canada was there was clarity in Canada. The Canadian government, the legislature, they were very clear with how they were going to roll out the commercialization and the legalization of cannabis sales on the consumer side. We felt it was really important for us to act quickly and effectively to not only win as much of the Canadian market as we possibly could but also to show the rest of the world as they begin to think about cannabis sales that we are the first phone call that they should be making.
Whether it’s the province of Ontario or British Columbia or most of the largest licensed producers like Canopy in Canada, Shopify is what’s powering those retail sales. We think that we can do a great job helping other countries and other regions do the same thing.
“Amazon is not going to put everyone out of business,” says retail guru Dan Hurwitz of Raider Hill Advisors. ”In fact, they’ve taught a lot of retailers how to distribute goods properly. They’re actually going to help a lot of retailers thrive at the end of the day. In our business, the best merchant wins, whether it’s Amazon, whether it’s Macy’s, whether it’s Target, or whether it’s Walmart. As a practical matter, if you can have a bricks-and-mortar presence and a digital presence at the same time you’re going to be a winner.”
Dan Hurwitz, CEO of Raider Hill Advisors, discusses how Amazon’s retail success has driven other retailers to improve and some may have found ways to create a retail experience even better than Amazon.
Amazon Is NOT Going To Put Everyone Out of Business
Amazon is not going to put everyone out of business. In fact, they’ve taught a lot of retailers how to distribute goods properly. They’re actually going to help a lot of retailers thrive at the end of the day. In our business, the best merchant wins, whether it’s Amazon, whether it’s Macy’s, whether it’s Target, or whether it’s Walmart. We’ve all learned never to bet against Walmart. As a practical matter, if you can have a bricks-and-mortar presence and a digital presence at the same time you’re going to be a winner. Target is doing it right, Walmart’s doing it right, and Best Buy is doing it great.
What’s happening is 70 percent of those people that buy online pick up in-store are also buying something else in the store. The cohesion between bricks and mortar and digital is what’s making people successful. Those that aren’t doing it successfully will ultimately fail. There is (significant) up-sale when you buy online and you still pick up in-store. Don’t forget, people are going to be incentivized to pick up in the store because retailers lose money shipping goods for free. They’re going to have to figure out a better way to get you into the store. When they get you into the store there’s an up-sale and that up-sale is a highly profitable up-sale. We’re going to see more of that as this evolution continues.
The whole concept of an apocalypse of bricks and mortar was really overblown. Best Buy was the best example. People were talking about them disappearing. They’ve done a phenomenal job turning it around as has Target and as has Walmart. That will continue.
Some Department Stores Will Struggle To Survive
Some (department stores) will struggle to survive and some will get it done. I happen to be a fan of Macy’s. I like what Macy’s is doing. I think they have a very strong management team and they have great real estate. They have sophisticated buyers and they’re reinventing their inventory. They’re looking they’re sourcing the right goods just at the right price at the right time. They have to make the experience better obviously. People talk about experience, but the merchandise is the experience. You can have a great experience but if you have lousy merchandise it’s not going to work. Macy’s has a great buying group that I wouldn’t bet against.
There would have been a number of great retailers for Amazon to own (via acquisition) nationally. The question is, if they really have a store, forget about Whole Foods for a minute, just an Amazon store, I’m not so sure what they put in it. They’re great distributors of goods but if you walk into their stores today I don’t know if you would argue that they run a great experience or store with terrific merchandise. I think they have to run a different kind of store. But I do think there’s an opportunity for them to expand their reach dramatically.
Amazon Is NOT Going To Put Everyone Out of Business
“Speed and convenience and really driving consistency of operations are core themes,” says Wendy’s CEO Todd Penegor. “You think about how you can continue to drive speed. The digital journey is a big one. How do we drive folks into mobile ordering? How do we drive awareness on mobile ordering? What we do see is when folks mobile order the check size is about 20 percent higher. Those are just great opportunities to continue to connect to that next generation of consumer and create a better experience and gather even more data to connect with them into the future.”
Todd Penegor, CEO of Wendy’s, discusses how their innovative improvements in the digital journey are improving speed and the customer experience in an interview by Jim Cramer on CNBC:
Wendy’s Innovated the Digital Journey For a Better CX
We are connecting to that next generation of consumer through social media and having a lot of fun doing it. It is driving folks into our restaurant. Chance the Rapper tweeted that he would love to have his spicy nuggets back. We challenged him to see how many likes he could get. We said that if you get two million likes we will bring spicy nuggets back. He did that and we brought spicy nuggets back. Immediately, and you see that in our third-quarter results, from day one, even before we turned on national advertising, people showed up in our restaurants to buy those spicy chicken nuggets. They wanted them back and they learned about it through social.
There’s a ton of good things happening. We’re still working on speed, so speed and convenience and really driving consistency of operations are core themes. You think about how you can continue to drive speed. The digital journey is a big one. How do we drive folks into mobile ordering? How do we drive awareness on mobile ordering? What we do see is when folks mobile order the check size is about 20 percent higher. Those are just great opportunities to continue to connect to that next generation of consumer and create a better experience and gather even more data to connect with them into the future.
Delivery Innovation Continues To Be a Great Growth Engine
Delivery continues to be a great growth engine for us. We’ve got over 85 percent of the system supported by delivery. We announced today that we will have all of our ordering integrated on delivery into our point-of-sale system. That’ll allow us to get the food to the customers even faster. We’re one of the fastest today at 30 minutes from the time you order to the time you get the food. Now that it’s going to be integrated into our POS we can probably shave another three to five minutes. It could also open us up to use other delivery providers beyond just DoorDash which will be another great opportunity to expand access to our brand.
We talked a lot today about our brand and really doing fast food done right. Fast food done right can resonate across the globe and fresh is what a consumer is really looking for. It is a true point of differentiation (with competitors). We talked about making a move into Europe over the next 12 to 18 months and really starting in the UK and really front-running some of that with company restaurants. We talked about up to 20 company restaurants over the next couple of years. We will bring franchisees into to play that out in the UK, but it will create a beachhead for us to really start to drive some growth into all of Europe. It’s a big burger-eating area of the world. The category has been growing and we have the right to play and can be differentiated on fresh.
Wendy’s Reintroducing the Black Bean Veggie Burger
We’ve talked about plant-based probably four years ago. We are way ahead of the curve when we had a black bean burger that we were working on. Unfortunately, at the time it was operationally complex and it took additional equipment in the restaurant. Today, we figured out how to solve for that. We’re looking for that flexitarian customer. We’re trying to do it the Wendy’s way. We’re trying to do it with Wendy’s quality. Whether you’re a flexitarian or a vegetarian the black bean burger can solve for that. We have that in tests in one market now and we’re looking to bring that to market sometime during the course of 2020.
Flexitarian is one of those millennial terms and in folks are looking to have a lot of beef but and traditional proteins but also flip into more vegetable and and other proteins. We’re real fresh never frozen North American beef. We are about having great quality food and we always want to do things the Wendy’s way. We think a black bean burger, something that’s natural in a square to make sure that it follows along the lines of our square hamburgers, is a great fit for our brand will allow folks to continue to come into our restaurant to drive frequency.
We talked a lot about frequency. Our average customer comes to a Wendy’s five and a half times a year. We have a huge opportunity to drive frequency. Whether it’s the offerings like a plant-based burger, whether it’s entering breakfast, or driving our digital journey going forward.
How Wendy’s Innovated the Digital Journey To Improve the Customer Experience – CEO Todd Penegor
“Over 50% of everything that gets sold on Amazon actually comes from small and medium-sized businesses.,” says Amazon’s VP of Small Business, Nick Denissen. “Their success is our success so we’re definitely focused on doubling down on that. We have over 1.9 million small and medium-sized businesses in the US who work together with Amazon to conduct their business. Those include our sellers, authors, and skilled developers. They’re just a very important part of the customer experience we serve up.”
Nick Denissen, vice president of small business at Amazon, discusses the huge impact that small businesses have on Amazon sales in an interview on CNBC:
Over 50% of Everything Sold On Amazon Is From Small Businesses
Over 50% of everything that gets sold on Amazon actually comes from small and medium-sized businesses. Their success is our success so we’re definitely focused on doubling down on that. We have over 1.9 million small and medium-sized businesses in the US who work together with Amazon to conduct their business. Those include our sellers, authors, and skilled developers. They’re just a very important part of the customer experience we serve up.
The 58 percent I just culled out they are actually the part of the business that is growing faster than our first-party business. We definitely have our interests aligned with small businesses on all fronts. As I pointed out, 58 percent of everything that gets bought is from small and medium-sized businesses. Many customers don’t realize that.
Amazon Storefronts Shed a Little Bit More Light On Small Businesses
Last year, we launched Amazon Storefronts to shed a little bit more of a light on small businesses. Amazon Storefronts is essentially a curated shopping experience where customers can dedicatedly shop from local small businesses. They’re all US-based small businesses. When we opened that Storefront last year a little bit over a year ago we had 20,000 sellers. To date, we’re excited to announce that we actually have 30,000 sellers.
We’ve also developed special technology for them to share more content. They can actually share their story. Those sellers have reached 70 million customers in the last year and sold over 250 million products. I think those numbers speak for themselves that we really are helping and that small businesses can get discovered on Amazon.
Amazon Announces Small Business Spotlight Awards
Today, we’re super excited to announce our Small Business Spotlight Awards. We’re continuing to shine a spotlight on many of these exciting small businesses where they can share their stories. We’re announcing 18 finalists across three categories. There’s Small Business Woman of the Year Award, Entrepreneur Under 30, and Small Business of the Year Award. When we asked our sellers to nominate themselves for this process we actually had over 1300 nominations. Since it’s the first time we did it we really didn’t know what to expect.
Starting today our customers can vote until November 8th for their favorite small business in this category. One thing that we’ve learned is that customers do like to learn more about these small businesses, about their stories, and also other small businesses get a lot of inspiration from small businesses. We’re pretty excited to have these sellers on this journey with us.
Small Business Winner Will Get $80,000
We’re also conducting two live seller events in the US today where we’re enabling small businesses to meet customers and to actually conduct a sale. I just want to call out that one of the nominees, one of the finalists in the Small Business of the Year award, is Damhorst Toys and Puzzles. They are a multi-generational company. They’ve been in business for 48 years. They hand manufacture their wooden toys in Missouri and now they found their way online with Amazon. They’re growing and it’s great to see those types of companies.
The winner will get an $80,000 award so we’re pretty excited to have them continue to grow and prosper on Amazon. One of the things we hear from small businesses is it’s not easy to find the skill sets to help them drive an online business, in particular businesses who have started offline. That’s one of the areas we’re also looking at. How can we help small businesses on that front? So stay tuned on that.
Amazon VP Nick Denissen Says 58% of Sales Come From Small Businesses
Walmart and Nuro have partnered to bring driverless grocery delivery to Houston, Texas, according to an announcement Nuro posted on Medium.
Nuro is a robotics company specializing in electric, self-driving vehicles. The company already operates a delivery service in Houston for Kroger. In their blog post, Nuro emphasized the benefits of working with Walmart, a company that revolutionized the supply chain and retail experience.
The service will be available to a select group of pilot customers at first.
“Nuro’s self-driving technology and fleet will power this pilot with Walmart to provide customers in Houston with another innovative, accessible option for getting the groceries they need day-to-day.
“To start, self-driving deliveries will be available to a pilot group of participants who have opted in to try the service, teaching us more about how to best serve those customers. Through the pilot, we’ll gain insights that will enable us to further develop and refine our service, while helping Walmart create the best end-to-end customer experiences.
“At Nuro, we believe in the power for self-driving technology to support and improve local commerce, and see this technology as a key part of our future. We’re working to expand our footprint in Houston, to maximize the impact of our delivery platform for the community at city-scale. Throughout 2019, we’ve been building toward this objective, and this partnership represents another step forward.”
Should the Nuro/Walmart venture prove successful, it’s a safe bet communities around the country may start getting their groceries delivered this way.
Google has used the National Retail Federation’s annual conference as a platform to unveil its latest efforts to gain retail cloud customers.
Amazon may be the dominant cloud player, but Microsoft and Google are both working to chip away at that lead. One area, in particular, that Amazon is vulnerable is in the retail market. Many retailers are reluctant to rely on the cloud giant, with whom they often compete with for online sales. Microsoft has made headlines lately with a focus on the retail market, emphasizing partnership with retail customers, rather than competing with them.
Google appears to be taking the same approach, improving their retail-oriented features in the hopes of continuing to be an appealing alternative to Amazon. According to a post on the company’s blog, Google has expanded its Retail Acceleration Program (RAP).
“That’s why we’re excited to expand our Retail Acceleration Program (RAP) to a broader set of customers in 2020. RAP is a services offering that helps retailers optimize their websites, build a unified view of customer data, and drive increased foot traffic. Today, we’re also expanding the availability of Customer Reliability Engineering, a white-glove service that helps retailers plan and execute flawlessly during their peak shopping seasons. Customers such as Kohl’s, Wayfair, and Shopify have already turned to Google Cloud to help them stay worry-free during Black Friday and Cyber Monday.”
Google is also using its position to help retailers provided a unified experience for customers.
“Retail customers are becoming more and more “channel-less” in their shopping. It’s imperative, then, to provide a consistent experience for customers as they move between channels in their shopping journeys. Our Google Cloud API Management for Retail solution, powered by Apigee, allows retailers to easily integrate the systems that power different sales channels, providing a more unified shopping experience for customers.
“Retailers struggle with the real estate that bulky computer servers take up in their stock rooms, and also face challenges in centrally managing all of their server applications. Today, we’re piloting Google Cloud Anthos for Retail, which helps retailers streamline and modernize their store operations. Rolling out more broadly in 2020, Anthos for Retail enables retailers to consistently deploy, configure, and manage applications across their fleet of stores at scale—without sacrificing performance or reliability.”
With Google a distant third among U.S. cloud providers, behind Amazon and Microsoft, it will be interesting to see if the company’s retail efforts yield results.
“The mall is more or less dead except in 279 great cases where we’ve got fabulous malls out there,” says legendary retail analyst Jan Kniffen. “But the 1,100 malls they’re struggling. It’s the levered retailers and the mall-based retailers that are struggling. We’re going to have 26 retail bankruptcies this year. But in a downturn, we could see 100 and we’re going to see 12,000 stores closed this year. It will be the highest number that’s ever closed in history. But we could see 50,000 close in a downturn. It’s because we don’t really need those retailers and we don’t need those stores because the business is moving online at a fierce pace.”
We’ve had really good retail reports. Think about it. Walmart was fabulous. Target was fabulous. Home Depot was good. Lowe’s was good. Just run down through the group that has already reported and, in general, if you weren’t mall-based full price you did great. Off-mall did great, online did great, and discount did great. The retail market and the consumer couldn’t be better. Levered mall-based retailers are dead. The mall is more or less dead except in 279 great cases where we’ve got fabulous malls out there. But the 1,100 malls they’re struggling. They’re running down comps. The mall is not the place to hang out anymore. Now you hang out in front of your computer and then you go with your friends to do something like go to restaurants and you don’t care about hanging in the mall.
But the people hanging in the mall were never the people that bought the stuff in them. All the people who bought the stuff in the mall were all the women in America who went to work for the first time in the 1980s and blasted them all to the ceiling. We pulled everything out of the mall except for women’s apparel for all practical purposes and that has now settled into this nice slow roll. People don’t dress for work anymore and the malls not any fun and there’s plenty of other alternatives. Just 20 years ago when the mall was really booming we didn’t have a strong T.J. Maxx and Ross stores and Burlington stores. The stuff across the street from the mall was very boring in those days. Those are really good retailers today.
Business Is Moving Online At a Fierce Pace
The two best retailers in the world right now are Costco and Walmart. They are big, strong, have super supply chains, and can handle the tariffs no problem. They’ll gain market share under tariffs. They can even handle a downturn in the economy because they’re both super well-capitalized. Even people like Macy’s that have been struggling, they can handle a downturn in the economy because they’re not levered. They’ve got plenty of cash flow. They pay a 10 percent dividend and they buy back stock.
It’s the levered retailers and the mall-based retailers that are struggling. I keep saying we’re going to have 26 retail bankruptcies this year. We just got two more to talk about. But in a downturn, we could see a hundred and we’re going to see 12,000 stores closed this year. It will be the highest number that’s ever closed in history. But we could see 50,000 close in a downturn. It’s because we don’t really need those retailers and we don’t need those stores because the business is moving online at a fierce pace.
We Know That Everybody’s Getting Out of China
We know that everybody’s getting out of China. They were getting out of China before the tariffs started. Now they’re just getting out of China faster. Yeah, the shoe guys are still getting 60 percent of their stuff out of China but it used to be 90 percent. The apparel guys are still getting 15 percent of their stuff out of China but it used to be 50 percent. So that’s already happening.
The tariffs have not been that big a deal. Tier four, the new tariffs that are about to kick in, if they kick in, would be a big deal for my world. But maybe they’re not going to kick in, which is the other thing that’s going on. We’re not really sure it’s going to happen but it’s still causing everybody to move faster out of China. So Trump has accomplished what he wanted to accomplish. He’s getting American business out of China.
The Mall Is More or Less Dead, Says Legendary Retail Analyst Jan Kniffen
“I think this world is coming down to winners and losers,” says Levi’s CEO Charles Bergh. “The Levi’s brand is incredibly strong and so we’re in a position with all of our customers to be asking for more, to be asking for more floor space and more open-to-buy budget. They need us. They need strong brands today and Levi’s is a brand that can drive traffic for them. We’ve got some really strong collaborations happening and that brings a lot of heat to the business.”
Chip Bergh, CEO of Levi’s, discusses the strength of the Levi’s brand and how they are appealing to millennials through innovation, personalization, and collaborations with Netflix, in an interview with Jim Cramer on CNBC:
Charles Bergh, President and CEO, Levi Strauss & Co
Levi’s Is a Brand That Can Drive Traffic
I am a big believer in winners and losers. I think this world is coming down to winners and losers. The Levi’s brand is incredibly strong and so we’re in a position with all of our customers to be asking for more, to be asking for more floor space and more open-to-buy budget. They need us. They need strong brands today and Levi’s is a brand that can drive traffic for them. Our fall-winter season just took the stores, literally this week. We’ve got some really strong collaborations happening and that brings a lot of heat to the business.
We’ve got a collaboration with Hello Kitty. We’ve got a very successful collaboration right now with Stranger Things, the hit Netflix show. All that’s on floor now. We’ve also introduced this laser technology where consumers can customize their own jeans online. A consumer can go online and literally design their own jeans finished by a laser. We can finish a pair of jeans for the consumer and ship it to them in less than a week.
Customization and personalization are a huge part of what we’re doing. In fact, in all of our mainline doors around the world, we’ve got tailor shops. We are really catering to the consumer. We’re letting consumers personalize and customize their own t-shirts. Our t-shirt business is on fire. I’m very optimistic about the future here in the US and also globally.
Levi’s laser-powered personalization technology lets you customize denim with rips, fades, patterns to patches.
Sustainability Is Really Important To Us
Sustainability is really important. We’re a company that really is all about our values. We talk about value and values. One of the things when we did the IPO I said we’re not going to change how we run the company. We’re going to continue to stand for things that are important. This company has a track record of not being afraid to take a stand on important issues of the day. Sustainability is really important to us. We use it as a constraint and innovation. In fact, this laser technology is just one example.
We developed this technology primarily to eliminate a lot of the chemicals that are in the supply chain. Finishing a pair of jeans requires dozens and dozens of chemicals and we’ve eliminated over a thousand chemicals by being able to finish our jeans with a laser. This shirt that I’m wearing is a combination of cotton and hemp. Now hemp historically has been like burlap. It’s a very tough fiber. We’ve worked with a supplier that creates cottonized hemp. This product feels as if it’s cotton but it’s also woven with hemp. Hemp is a lot more sustainable. It takes less water to grow than cotton and you can grow a lot more per acre of land. It’s a lot more sustainable as a fiber and it’s cheaper as a fiber too.
Levi’s Is a Brand That Can Drive Traffic, Says Levi’s CEO Charles Bergh
