Tuesday, November 22, 2022

Observations

Two stories caught my eye this month, both from Chain Store Age online. The first was a summary of predictions by Forrester Research about the retail industry in 2023 (CSA.com 10/26/2022: Forrester: Five retail predictions for 2023, Marianne Wilson, Editor-in-Chief). Those predictions included:

Retail’s “e-pocalypse” will bankrupt U.S. online-only brands that lack a physical strategy. 76% of total US retail sales will still occur offline…retailers will need to choose one of three options: open physical stores…develop shop-in-shop locations…or partnerships - or close their (virtual) doors.

Retailers will choose one of two supply chain paths: own it or outsource it.  Firms such as American Eagle Outfitters and Gap Inc. offer supply chain as a service, orchestrating execution of contract manufacturing, transportation, storage with other brands…some retailers will opt to outsource outright…moving resources, talent, and capital into customer-facing functions.

Automation will be the savior for continued retail labor shortages. Retailers and brands will invest more heavily, and more strategically, in automation in 2023. Investments will automate functions…both in corporate areas…and in the store (NOTE: see the item in Accelerating about Shake Shack adding self-service kiosks to all locations).

Paid membership programs will boom - but most will fizzle fast. Taking a page from programs such as Amazon Prime, Costco and Walmart+…retailers will channel marketing dollars into …paid membership programs. But unless a retailer can clearly articulate to customers why they should sign up…ROI on that spend will tank.

Retail media strategies will yield far more conversation for most than actual revenue. The impact of retail media dollars will be notable for a few retailers… negligible for most others. Retailers should compete for retail media dollars with advertising in their stores that will reach far more customers than their digital properties.

The other story was about trust – specifically what brands Americans trust most (CSA.com 11/07/2022: The most trusted brand in America is… Dan Berthiaume, Sr. Editor, Technology), which noted in part: “retail did not rank among the five most-trusted industries, which were health care, construction, repairs, technology and real estate”.

Overall (CSA noted) Amazon was the most trusted brand by all generations in a study by Clarify Capital, which surveyed over 1,000 Americans. Amazon was the most trusted retailer (56% of respondents), followed by Walmart (44%) and Target (36%). Among restaurants, the largest percentage of respondents rated Pizza Hut as trustworthy (40%), followed by KFC (39%) and McDonald’s (37%). 

The survey also measured respondent views about brand trustworthiness. 78% of respondents said it is “very important” that a brand is trustworthy, and another 15% said it is moderately important. Only 7% said it is just a little important for a brand to be trustworthy. Nearly everyone surveyed (90%) said that trust makes them more likely to purchase from a business. 49% of respondents said they’d be more likely to recommend a trusted brand to friends, and 43% would leave positive reviews online. 

To determine which U.S. industries are the most trustworthy, Clarify Capital consulted the Better Business Bureau (BBB) and then surveyed over 1,000 Americans about their opinions.

The CSA story goes on to note another survey by advisory firm Simon-Kucher & Partners which indicates that sustainability is also an important factor…65% of respondents consider sustainability when making purchases, a 14% increase from a year ago. The shift in consumer behavior coincides with a shift in sentiment toward sustainability during the past year, as 73% of US consumers view environmental sustainability to be ‘as important’ or ‘more important’ to them than a year ago…Overall, 61% of U.S. consumers rank sustainability as a top five value driver in at least one category.

Chris Cardoni, Editor


KeyPoint Partners Company News

 New Business: VP of Retail Brokerage Don Mace is seeking sites in northern New England for outdoor chain Sportsman’s Warehouse, and Don and Rob Grady are seeking Metro-Boston sites for a franchisee of Houston’s Hot Chicken restaurants...Team News: Laurel Melchiorri joined the company as an Assistant Property Manager, Tania Cole joined as a Property Accountant, and Nick Fragale joined as a Property Manager, all in the Burlington, MA office.



ACCELERATING RETAIL

 REI Co-op is opening its fourth location in NYC and seventh in the Tri-State region, and will open a store in Bedford, NH, its second location in the state. REI has 178 locations in 43 states…Streetwear and

cannabis brand Cookies SF opened a five-story NYC store across from Macy’s flagship…The North Face will open more than 70 stores in North America and up to 300 additional locations globally during the next five years…Capriotti’s Sandwich Shop and Wing Zone announced the signing of 17 franchise agreements that will bring an additional 43 stores to 11 states across the country: 23 Capriotti’s and 20 Wing Zone locations. Capriotti’s has 175 US locations; Wing Zone’s has 31 locations... Puttshack has opened at Brickell City Centre, Miami, FL. Puttshack opened its first US location in 2021 in Atlanta, followed by Chicago, Boston, and Miami. A fourth will open this winter in St. Louis. Additional locations expected to open in 2023…Pep Boys is offering adjoining spaces at 81 of its locations for lease or sublease. The subdivided storefronts are located in 24 states. Pep Boys operates more than 7,500 service bays in more than 900 locations in 35 states and Puerto Rico...Starbucks will open a Reserve Roastery at the Empire State Building. The store will take over three floors and span 23,000 s/f and will be the seventh Reserve location…At Home opened three new stores in October, for a total of 258 locations...Ace Hardware opened 130 new stores in 2022, and is planning to open at least an additional 40 stores in Q4 for more than 170 by the end of the year. The hardware cooperative operates more than 5,600 stores in  50 states and 65 countries…Kohl’s has unveiled a one-of-a-kind concept store in Tacoma, WN, much smaller than a traditional Kohl’s. Kohl’s will open about 100 small-format locations during the next five years or so in markets untapped by existing Kohl’s stores...Ross Stores has opened another 40 locations, 28 under the Ross Dress for Less banner and another 12 under its DD’s Discounts banner...Dollar General opened its 100th Popshelf store in Chattanooga, TN. The retailer is on track to operate approximately 150 standalone stores and 40 combination formats by the end of fiscal 2022. It has a goal of approximately 1,000 stores by 2025 fiscal year end...Shake Shack will add kiosks at every location. The company has 35 locations under construction. In 2023, it plans 65–70 total openings... Target unveiled a new large-format location in Katy, TX. At 150,000 s/f the store is more than 20,000 s/f larger than a typical Target... Maurices is opening 3 stores for its tween brand Evsie in UT, ND; and ID…Dutch Bros. plans at least 150 new shop openings for 2023...Shoe Carnival will open 3 Shoe Station stores in the 4th quarter, ending the fiscal year with 25 Shoe Station stores, 373 Shoe Carnival stores, and 398 total stores.

New England RETAIL

Athleta, Coach, Zwilling J.A. Henckels and Paper Source are set to open within the next year at Assembly Row, Somerville, MA....Topgolf started construction on its first Greater Boston location, in Canton, MA, and plans to open late next year…Johnny Rockets has closed its location at the Burlington (MA) Mall...Three Boston Walgreens have closed, in Roxbury, Hyde Park, and Mattapan...Blank Street Coffee opened a new cafe at 97 Charles St. in Beacon Hill, and plans another opening in Back Bay.



DECELERATING RETAIL

 Sally Beauty plans to close 350 stores in December 2022, most in the US.

MONTHLY RETAIL SALES: COMMERCE DEPT.

 US retail sales rose 1.3% last month, the Commerce Department said. Excluding gas/ autos, sales were up 0.9%.

Source: U.S. Department of Commerce - commerce.gov

CONSUMER CONFIDENCE INDEX

The Conference Board Consumer Confidence Index® decreased in October. The Index now stands at 102.5, down from 107.8 in September.

Source: The Conference Board - www.conference-board.org