Inflation Cools in May, but Grocery Prices Remain Stubbornly High
The CPI in May was up just 4%, it’s lowest reading since 2021
However, excluding food and energy, prices were up a more troubling 5.3% Read More >>
Federal Reserve: Pausing interest rate hikes for first time in 10 months Read More >>
Adobe: Online prices fell -2.3% in May Read More >>
NRF: Conditions look like “soft landing” more than recession Read More >>
Post-Pandemic “Revenge Spending” is on the Wane
People eager to return to travel and experiences helped fuel a surge in airfare and hotel prices since 2021
May’s CPI data saw hotel prices climb at a much slower pace, while airfare dropped for the first time in over a year
Economists hope the trend will help cool overall services inflation which is a key indicator the Fed has been monitoring Read More >>
Source: Retail Dive, Chain Store Age, Creditntell
BJ’s Wholesale Club will open a new store in LaVergne, TN this month. The new store Is BJ’s first in Tennessee and marks the 19th state and 238th store in total for the company. A 2nd Tennessee store is slated for Mt, Juliet later this year, as is a location in Madison, AL which will bring BJ’s store footprint up to 20 states.
BuyBuyBaby may be saying “hello, baby!” after news emerged that at least two different entities are trying to buy the chain out of Bed Bath & Beyond’s bankruptcy filing. Babylist, an online baby registry, has expressed interest in buying the digital assets of BuyBuyBaby, while GoGlobal Retail, which also owns the Janie & Jack children’s clothing brand, would purchase the retail operations and keep the chain’s 130+ stores open.
Dollar General announced that it would be “moderating” the growth of its PopShelf banner in 2023 by reducing planned openings from 150 to 90 new stores. The move comes as OSHA has hit the retailer with $21mm in fines for worker safety violations. Dollar General’s Board approved conducting an independent audit of worker safety procedures this month following several high-profile incidents that led to a protest outside the company’s headquarters during a shareholder meeting.
Five Below is taking advantage of the opportunities presented by two of 2023’s retail bankruptcies. The retailer announced it has acquired 16 stores from Tuesday Morning and 2 stores from Party City to help achieve their goal of opening over 200 new Five Belows in 2023. While many of the Tuesday Morning locations are larger than the typical Five Below, the extra space should help grow the Five Beyond store-within-a-store concept that focuses on technology and other items priced higher than $5.
Gamestop announced that CEO Matt Furlong has been let go and will be replaced by Ryan Cohen as Executive Chairman. Cohen is one of the founders of Chewy and his private equity firm, RC Ventures, took a significant stake in Gamestop in January 2021 that made him the Chairman of the Board. He will now take on a more active role in overseeing management and capital allocation. Under Cohen, Gamestop has been undergoing a digital transformation as the gaming audience increasingly moves to online channels.
H-E-B is expanding its Joe V’s Smart Shop discount grocery format to Dallas with two new stores expected to open within the city by 2025. The discount brand currently operates 9 locations in Houston. The announcement represents further conviction by H-E-B in Dallas-Ft Worth where it already operates several higher-end Central Market stores as well as a delivery service. H-E-B also opened its first 2 namesake stores in the DFW metroplex last fall with 4 more under construction.
Ollie’s Bargain Outlet is planning to open 45 new stores this year, which will bring the retailer to half of its long-term goal for 1,000 total stores. However, CEO John Swygert noted on a recent call that the retailer’s fast growth has presented challenges to its merchandising strategy of a closeouts-only business model. The company is now looking into direct sourcing for some merchandise but stated that the preference is still heavily weighted towards closeouts as much as possible.
Primark continues to expand its U.S. footprint with stores open or about to open in Buffalo, NY; Elizabeth, NJ; Albany, NY; and Hanover, MD. The Irish-based discount fashion retailer now has over 20 U.S. locations and has announced a goal of 60 Stateside stores by 2026. The Hanover store marks the southernmost opening for the brand, which has focused its U.S. market entry on the Northeast.
Rooftop Cinema Club, which operates outdoor movie theaters on top of parking garages in 10 cities is planning to more than double the number of locations for its brand over the next 3 years. The chain signs long-term 10 year percentage rent leases on its theaters, which are typically open 7-10 months per year. Rooftop Cinema Club is currently open in New York, Los Angeles, Chicago, Ft Worth, Houston, Miami, San Diego, and London; with new openings planned for Atlanta, Santa Monica, Las Vegas, and other cities in the coming years.
Retail theft has been on the rise over the past few years and the problem is now bad enough that many of the nation’s largest chains are warning that the issue is having a material impact to the bottom line. On its most recent earnings call, Target noted that shrink would cost the company $500mm in 2023, while Ulta cited shrink as a reason for lowering its margin guidance. Shoplifting is not a new phenomenon, but the rise of organized retail crime is. With the ability to resell just about any product online at rock bottom prices, professional thieves have been causing havoc and creating a dangerous environment for store associates and customers alike. Here is the latest on this disturbing trend:
Barron’s: Shoplifting is Getting Worse, Retailers are Fighting Back Read More >>
Chain Store Age: California passes law aimed at protecting workers from retail criminals, but some fear it goes too far Read More >>
The Street: Walgreens new concept store is designed to stop theft, but customers balk at inconvenience Read More >>
As the world comes to better understand neurodiversity and the needs of people on the autism spectrum, more thought is being put into how to make the world a more accommodating place for people and families living with hidden disabilities. Mesa, Arizona is hoping that it may have found the answer to increasing inclusivity by becoming the world’s first Autism-Certified City. To obtain this certification, Mesa trained its public-facing employees and designed its tourist attractions with the needs of the neurodiverse community in mind. Now, other cities (including High Point, NC, Visalia, CA, and Toledo, OH) are getting in on the trend too. Read More From the BBC Here >>
Video of the Month: While the potential threat of artificial intelligence to take over a number of jobs in the white-collar world has been receiving a great deal of attention lately, when it comes to retail and restaurants robots and other automation tools are beginning to work their way from the factory to the kitchens and selling floors of many businesses. Watch more below in this series from CNBC to find out why you might find a robot scanning the inventory on your next grocery shopping trip:
Retail robots could save companies billions: Watch Now
Some economists have pointed to mounting credit card debt as a reason why retail sales were able to withstand the inflationary headwinds we’ve seen over the last 18 months. However, when it comes to plastic, we still have a long way to go before we are maxed out. Is this a sign of consumer strength, or a warning that many may start overcharging their way to financial woe in an age of high interest rates?
AMERICANS FAR FROM MAXED OUT ON CREDIT CARD DEBT
U.S. consumer credit card balance and limit
Source: New York Fed Consumer Credit Panel/Equifax
A few years ago, much of my time as a researcher was spent trying to convince people that physical grocery stores weren’t going anywhere. Forecasters had seen how Amazon took a sledgehammer to store sales in categories such as books, electronics, and apparel and after their $14 billion acquisition of Whole Foods in 2017, everyone was convinced groceries would be next.
My gut feeling told me that wouldn’t be the case. For one, the thin margins of the grocery business presented a steep hill to climb towards profitability. Secondly, grocers are amazing merchandisers that know the shopping habits of their neighborhood and region better than a tech executive making decisions from a spreadsheet. Third, having strangers pick out highly perishable and individuated items like meat and produce would end up becoming a friction point in a shopping journey that consumers are well used to performing themselves multiple times per week. Lastly, that spoilage issue would only be exacerbated by a delivery system that would cancel out the advantages of having stores located so close to people’s homes.
For a few years, the march of online grocery hype continued despite only representing something under 5% of total food sales in the U.S. There were unprofitable “quick commerce” startups like GoPuff and Getir that opened hundreds of mini distribution centers in major cities and suburbs that promised grocery delivery in 15 minutes or less. Kroger partnered with the UK’s leading online grocer Ocado to scale a robot-enabled delivery network across the country, while other regional and national grocers scrambled to catch up by offering delivery through third party providers like Instacart and Uber that relied on poorly paid gig economy workers. Meanwhile, Amazon rolled out dozens of physical stores under the “Amazon Fresh” banner that, while offering in-store customers the chance to “just walk out”, had the look and feel of a sterile warehouse optimized for delivery drivers more than food shoppers.
With the onset of the pandemic in 2020, it seemed for a moment that the day had finally arrived when shoppers would adopt online grocery shopping in masse. For a little while, this seemed to be true. Online sales as a percent of total grocery sales more than doubled representing just over 10% at their peak. Then, a funny thing happened: online grocery sales plateaued. The world opened up again and people longed to return to their old habits, including grocery shopping. Many of the “quick commerce” startups folded or dramatically scaled back, Kroger’s Ocado plans focused more on a “hub-and-spoke” model that placed stores at the nexus of the fulfillment model, Walmart shut down its experiment in online pickup only locations, and even Amazon paused opening any new Fresh concept stores while they try to figure out how to do grocery right.
This trend was underscored this week when Click Meets Brick released the latest findings in their monthly online grocery habits survey. Sales in May were down 3.4% representing around 9% of total grocery sales. The reasons were simple: the number of online grocery customers fell by -5%, while those that still shopped online did so less frequently. Even more telling, the only fulfillment channel in the online grocery space to see growth was customer pickup at local stores, where freshness and selection would be less of an issue. Meanwhile, delivery and ship-to-home both fell double digits.
While technology is certainly going to continue to change and enhance the way we shop, six years after the Amazon/Whole Foods deal we can see in hindsight that the hype cycle around online grocery shopping is no different than other “inevitable” changes that Silicon Valley has tried to force on consumers, where something is deemed ripe for “disruption” regardless of whether consumer demand exists (when was the last time you were on the “metaverse”?) as a means of getting wild valuations for start-ups with little to no path to profitability. It’s true that grocers will likely continue to offer customers options in the online space, at 9% of sales it’s a niche that is now too large to ignore. And there will be tech startups like Grabango which aim to improve the store experience that should gain traction in the grocery marketplace, however gone are the venture capitalists and tech gurus proclaiming the end of the grocery store as we know it…and I feel fine.
House music was born in the early 1980s at the Chicago club The Warehouse (hence: “House” music) from a synth-driven blend of disco and gospel set to a pounding 4/4 drum machine beat. House music became an anthem of liberation in underground clubs where kids from all walks of life would gather to dance all night and often well into the morning. Soon, the sounds of Chicago House would attract an international audience, and much like the electric blues of the 1950s, House music would become a mainstream phenomenon in much of Europe, helping to spawn much of what we know as “EDM” today. By the late 80s, House had splintered into many subgenres including “deep house” which placed a renewed emphasis on R&B vocal stylings and lyrical storytelling. With summer just getting started, it’s the perfect time to spin the 1989 deep house classic “That’s the Way Love Is” by Ten City to add some Summertime Chi to your seasonal soundtrack!
RETAIL MEME OF THE MONTH
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