Other Retailers Gain Foothold In Shifting Marketplace

The HomeWorld Business 2020 Retail Champions, a special report from the May 18 print edition, examines six retailers (pictured above with story links) that will lead the post-COVID-19 retail recovery. This bonus story looks at other key retailers primed to support a renewal of the housewares retailing business. View a digital version of the entire May 18 edition by clicking one of these links: Flipbook or PDF.

NEW YORK— When Kroger published its “Sharing What We’ve Learned: A Blueprint for Businesses” to help business create safe working environments in the COVID-19 pandemic, the U.S. was simultaneously realizing how great an effect the coronavirus was having on life in the country and beginning to look forward to the end of movement and shopping restrictions that made them radically reconsider how they might purchase everything from food to durable goods such as major appliances.

Kroger, the largest supermarket operator in the U.S. and one that has been deeply involved in responding to market change before and during the coronavirus outbreak, is one of the companies with the resources and momentum to come out of the coronavirus crisis in a stronger relative position than when it started. With the blueprint, the company wanted to spur consideration about how to get the economy and the retail marketplace going again. In looking ahead to what some characterize as the new normal, Kroger recognized it has a leadership role to play. However, a lot of companies, because of the channels they are in or because of certain individual attributes, should find themselves stronger in the post-crisis world, and they aren’t just the declared Retail Champions.

Six Leaders Drafting Plans For Post-COVID Retail Rebuild
Other Retailers Gain Foothold In Shifting Marketplace

Wayfair, for one, finds itself in demand, with net revenues in the first quarter reaching $2.33 billion, up 20% year over year. In a conference call, co-founder, co-chairman and CEO Niraj Shah said consumers responding to changing conditions as winter turned to spring drove Wayfair sales gains in home furnishings and housewares.

The competitive landscape changed, he said, “as many physical retail stores closed temporarily, leading customers to move increasingly towards shopping online across all categories, including home. This pickup in demand has continued to gain momentum. And in the U.S., the rollout of stimulus monies in mid-April served as an added accelerant of new and repeat customers coming to Wayfair.”

Shah maintained that changing shopper behaviors now will have lasting ramifications.

“We believe there are clearly definable long-term advantages accruing to Wayfair in this period,” he said. “It is likely that e-commerce adoption is going to spur change across a wide swath of categories. In our case, millions of new customers shopped at Wayfair over the last several weeks.”

Across the board, e-commerce-based retailers are looking at how they can serve consumers turning to them to cope with movement restrictions and store closures. eBay extended its efforts with small businesses as COVID-19 made its presence felt. It launched Up & Running, an accelerator program developed to help small retailers without an e-commerce presence start selling online. As it extended its free shipping program to make its offering even more attractive, Overstock saw April sales leap 120%, with home furnishings leading and, critically, new customer growth jumped 250% year over year.

Designed an essential business that needed to stay open, the home center/hardware store channel gained a significant advantage in the market not just because in terms of sales but also in consumers coming through the door for household essentials including paper goods and cleaning who normally don’t shop the channel or who only show up for nails and lightbulbs.

Home Depot has benefited, with store traffic up 31.3% from the week of April 20 to 26, according to store traffic researcher Placer.ai. But the riches weren’t all swept up by the leader. Lowe’s traffic increased by 71.8% in the period as its overall store visits actually surpassed those of Home Depot’s for the first time since Placer began analyzing location data in January 2017. Ethan Chernofsky, Placer vp/marketing, noted that the gain occurred in a period of particularly aggressive Lowe’s marketing.

Of course, the supermarket channel is another that had the advantage of remaining open when other retailers shut down, which gave many companies a chance to introduce their expanding range of services to consumers who might not try them for years or at all. However, mass-market retailers that sell groceries are enjoying a lift as well, with the ability to fulfill online orders a key to building consumer relationships under difficult conditions.

In a Coresight Research study conducted in mid-March, and well before stay-at-home requirements were enforced in much of the country, 14.4% of U.S. respondents said they had started purchasing groceries online because of coronavirus and 34.9% said they are buying more groceries online because of the health threat posed. In an interesting turn, 10.5% of respondents said they are buying online less because of coronavirus, but keep in mind Coresight conducted the survey before contactless pickup and delivery were widespread.

Office superstores might not have gained recognition for it but they’ve gotten a boost in the coronavirus-stricken environment. According to market researcher 1010data, growth of working from home in late winter spurred the first year over year office supply store consumer spending growth in more than three years, up more than 20%.

Of course, store closings and consumer joblessness that the COVID-19 outbreak caused have been painful for many retailers, with Neiman Marcus becoming the first of what many expected to be a number of bankruptcies among well-known retailers. Yet one retail channel that has been largely shut down is likely to reassert itself quickly when closed stores begin to open again: off-pricers. Riding high before coronavirus hit, the two largest and dominant companies in the sector, TJX and Ross, had to close stores. But, with healthy balance sheets and advantages waiting, including manufacturers that need to dump inventory and create buying opportunities for off-pricers, the channel is set to jump back strong after the COVID-19 crisis.

“It’s just a blip to them,” said Neil Stern, senior partner at consultancy McMillan Doolittle.