Stocks Soaring for Brick-And-Mortar Retailers as They Figure out Online Sales
How does a brick-and-mortar brand survive in a world of Amazon’s retail monopoly? A few companies seem to have it figured out.
In the past week, Target, Walmart, Best Buy, and Lululemon have reported a head-spinning increase in eCommerce sales, which immediately resulted in stock share growth. Target (with a 42% increase in online sales), Lululemon (with a 35% increase), Walmart (with a 37% digital growth), and Best Buy (with a 14.5% digital growth) have all reported a very successful quarter. Dick’s Sporting Goods online sales have also gone up by 15%.
As for the stocks, it would appear that investors are ready to reward this triumphant step forward. Lululemon’s stock share is up by more than 42% since January, while Walmart has gained 16% in stock shares so far, and the number seems to be on the rise. Starbucks has gained 30% and Chipotle 70% in stock shares.
So what’s the catch? According to Sucharita Kodali, a retail analyst at Forrester Research, it was the timing. “Now, it’s easier in some ways to be a late mover,” she said in an interview.
Without having to reinvent the wheel or be at the forefront of innovation, a lot of companies were able to pick up tried-and-true tips from businesses who already went through the process and managed to figure out exactly what works. They were able to learn from Amazon and create an online presence to complement their physical stores and give them a boost. For companies like Walmart, acquisitions of smaller startups such as Jet.com also gave them an influx of tech talent that made the process seamless.
But it’s not just Amazon’s experience that’s helping these companies succeed. What these firms have is something Amazon can’t match—brick-and-mortar stores. This omnichannel approach appeals to the customers because it gives them a multitude of options to choose from. From curbside deliveries to buy-online-pick-up-in-store, these businesses can reduce shipping costs and provide better customer experience.
For Target, their same-day delivery service, curbside pickup, and in-store pickup drove more than half of its 42% e-commerce sales growth and 25% of same-store sales growth in the first quarter of 2019. When a customer picks up an item in-store, it’s 90% cheaper for Target because they don’t have to ship it from the warehouse.
Walmart, Target, Home Depot, Best Buy, Macy’s, Dick’s Sporting Goods, Kohl’s, Nordstrom, Lowe’s and J.C. Penney currently have the best omnichannel presence. Other companies that wish to follow their trail of success need to provide more shopping options to satisfy consumers and keep them loyal to the brand.