Retail Industry Success Factors

With most Q2 results in, we’re getting a picture of retail performance. 🔄 A bit like in Uno, the reverse card is being played. Some retailers that have been performing badly are starting to see declines bottom out or are moving into modest growth (think Best Buy, Target, Foot Locker, Peloton, Victoria’s Secret, Gap). 📉 In contrast, some of the traditional star performers are struggling to keep up the fast pace and are seeing a slowdown (think Lululemon, Ulta, Dollar General). 💰 Are economic dynamics playing a role here? Partly. But strategy and competitive forces remain critical. Ulta has more competition, so too does Lululemon which failed to inspire with its womenswear in Q2. Target has recently invested a lot in price and value. Foot Locker, Victoria’s Secret and Gap all have turnaround programs. 🤔 On this front, don’t always buy the narratives retailers spin. Dollar General blames its weaker numbers on pressures on its customers. There is truth in this, but it has been true for a long time. The issue now is that inflation is not flattering the growth as much and there is more price competition in grocery. Oh, and some stores are terrible and are preventing sales and repeat visits.  🖼️ The long-term picture remains vital because quarterly results fluctuate and create noise. An example is Nordstrom, which has 3.4% growth this quarter, versus Dillard’s which has a 4.9% decline. Look at the Q2 numbers compared to 2019, and Dillard’s has grown sales by 4.4% while Nordstrom’s sales have grown by just 0.2%. A long term view is sometimes a better signal of the health of the business model. 🏡 Home related categories remain very pressured. A lot of this is linked to the more sluggish housing market: moving is an important driver of demand. Some bigger ticket purchases are financed, so high interest rates play a role too. ↔️ The market remains polarized with a balance of winners and losers. Out of the selection in the graph below, 17 retailers are in growth and 18 are in decline. 🐌 Growth rates have, generally, deteriorated since Q1. From the retailers shown below, 21 have lower growth rates than in Q1, 14 have higher growth rates. The average, overall growth rate has dropped by a modest 0.5 percentage points since Q1. So no recession, but some modest slowdown. #retail #retailnews #earnings #consumer #economy #shopping

US July Retail Sales: Never bet against American consumers. 📈 While the robust July retail sales numbers might surprise many who continue to doubt American consumers, the data aligns well with our forecasts ahead of the release (RSM forecasted 0.8% vs. consensus at 0.4%). Further disinflation and 15 consecutive months of positive real wage growth have been key tailwinds for spending, despite increasing concerns about economic growth. 🧾 In a separate report, initial jobless claims and continuing claims both came in lower than expected, keeping them at a healthy distance from our recession threshold. 📊 So far, most of the key economic data following the July jobs report suggests that the market may have overreacted to some of the weaknesses in job gains and unemployment. The calls for a 50-basis point cut in September, and even after that in November or December, seem much less reasonable now given the economy's strength. This makes the bar for a super-sized rate cut in September higher, in our opinion. Unless we see job gains falling to between zero and 50,000 in August or the unemployment rate rising to 4.4% or higher, the Fed is likely to cut its policy rate by only 25 basis points in September. 🚗 Auto sales were the main driver of total sales in July, up 3.6%. We expect sales of automobiles and other big-ticket items to continue performing well as financing costs ease further. Excluding volatile components, the control group, which feeds into GDP calculations, grew by 0.3%, consistent with our forecast that it will remain a key driver of growth in the third quarter.

One persistent theme about the U.S. economy in recent years has been that it has been more resilient than expected, including in the face of high interest rates. Today's retail sales report is the latest case in point. Despite a challenging retail environment, September saw a surprising 0.4% increase in sales, with a stronger 0.5% gain excluding autos. Notably, sales excluding autos, gasoline, and building materials rose 0.8%, fueled by a solid back-to-school shopping season, particularly in clothing, which was up 1.5%. Leading the gains were specialty retailers, grocery stores, and restaurants. Year-over-year, retail sales are up 1.7%, and a more robust 3.7% when excluding autos and gasoline. While some prices, like gasoline, dropped in September, giving consumers extra buying power, areas like durable goods and car sales remained flat. In the latest job market data, new unemployment claims fell by 19k to 241k, but continuing claims are still above 1.8 million. Employment data in the near term may be cloudy due to various external factors including hurricanes and flooding, but overall, the economy is showing resilience, with falling interest rates and cooling inflation creating a generally positive outlook. The recent economic performance, highlighted by strong consumer spending and a supportive job market, suggests that despite uncertainties—such as the upcoming elections and global events—the U.S. economy is exceeding expectations. The Federal Reserve's recent rate cut of 0.5% signals a shift towards a more accommodating monetary policy, with future cuts likely to be smaller. This environment of potentially falling interest rates, alongside a robust stock market, can provide consumers and businesses with a measure of confidence.

Retail Reality Check: What Target & Lululemon's Rough Patches Teach Us So Target's foot traffic fell 3.9% year over year in June, marking its fifth consecutive month of declines since rolling back some DEI efforts, with its "Trust & Like" score dropping from 70 to 65. Meanwhile, Lululemon Athletica Inc. is facing slowing sales, with US observed sales falling 4.2% in June and foot traffic down more than 8%. Their iconic black leggings are even piling up at outlet stores. These trends come amid rising competition and warnings that US consumers are cutting back spending. These situations offer lessons for all brands navigating today's dynamic landscape: 👉🏾 Values & Authenticity Matter: As seen with Target, consumer confidence and brand loyalty are deeply tied to perceived values. Disconnecting from stated commitments can have tangible impacts on traffic and revenue. 👉🏾 Agility & Adaptability are Paramount: Even strong brands like Lululemon face headwinds from competition and shifting consumer spending habits. Continuous monitoring of market trends and swift strategic pivots are essential. 👉🏾 Core Product Health: When even a brand's "iconic" products face waning demand, it signals a need to re-evaluate core offerings, competitive positioning, and consumer value. 👉🏾 The Full Customer Journey: Foot traffic and sales are symptoms. Brands must look deeper into the holistic customer experience, ensuring their mission resonates at every touchpoint, both online and in-store. So, what other insights are you noticing about retail performance? Share your thoughts. Emma W. Thorne Megan McDonough #Retail #BrandStrategy #MarketDynamics #Lululemon #Target

Most brands approach on-shelf velocity as an afterthought. Fix it by doing these 3 things: 1️⃣ Win the shopper’s attention without a big budget: → Use bold, clear packaging that stands out—even at a glance. This is your biggest marketing piece and needs to tell your story. → Make your message simple: What makes your product unique? What is your story? → Tell your story at-shelf if possible: use small-scale signage like shelf tags or custom stickers provided to retailers. 2️⃣ Make retailers love you with minimal resources: → Create a flywheel of positive news: share stories of local buzz, positive reviews, or strong community engagement. → Offer low-cost promotional support like co-branded events or retailer-specific social shoutouts (you can't do this for everyone, so be clear on your priority customers and channels) → Be proactive: Check in often with retailers to ask what’s working and help restock displays (if legal). Hustle! 3️⃣ Turn buyers into repeat customers on a budget: → Drive trial with targeted in-store promotions that reinforce what your brand stands for, or small samples. → Engage them online: Add QR codes or links to your packaging to share behind-the-scenes content. → Build word of mouth: Have strong content marketing and community-building going on out of store. 𝐌𝐨𝐬𝐭 𝐛𝐫𝐚𝐧𝐝𝐬 𝐝𝐨 𝐧𝐨𝐭 𝐝𝐨 𝐭𝐡𝐞𝐬𝐞 𝐭𝐡𝐢𝐧𝐠𝐬! They wait for retailers to build velocity for them. NO. That's YOUR job. And you'll lose the placement much quicker than you got it if you don't do that job. Success at retail doesn’t come from placement alone—it’s about scrappy, consistent execution. The key to shelf velocity is about owning your part of the process—no matter how small your budget is. = If you’re a smaller brand looking to compete and grow at retail, let’s talk. I help brands like yours punch above their weight and win.

How are you measuring your sales team's activity and capacity to boost outcomes? Our analysis shows that top-performing sales reps allocate 20% more time to direct customer interactions than their peers, while the least effective reps spend up to 45% of their day in fragmented, non-productive tasks. These disparities in time management and capacity utilization are key factors driving sales performance and outcomes. Our data has revealed clear patterns that People leaders should consider: 📊 Top Sales Reps Spend More Time with Customers: The highest-performing reps dedicate more time to direct customer interactions, with the top 25% spending around 20% more time in client meetings than their peers. 📈 Capacity and Efficiency Vary Widely: Sales teams in the top 10% of performance work longer hours, but critically, they spend a greater proportion of that time on high-impact sales activities, with 65 total actions per day versus 25 for under-capacity AEs. ⏳ Time Fragmentation is a Key Obstacle: Reps with lower performance spend 45% of their day in fragmented time, compared to only 20% for top performers. This significantly reduces selling time and customer touchpoints. 👥 Territory Coverage Matters: AEs with high coverage of their clients (90%) see far more frequent interactions than those with low coverage (~45%), impacting overall account management and outcomes. 🕒 Selling Time Influences Performance: Reps in the top quartile spend nearly twice as much time selling (10 hours per week) compared to underperforming reps, leading to significantly better outcomes. 📅 Internal Meetings Consume Valuable Time: Teams that log more than 8 hours per week in internal meetings see reduced customer touchpoints and lower performance. Limiting internal meetings to less than 4 hours per week drives better results. 🏆 Effort and Efficiency Must Align: While some reps are high-effort performers, focusing on time spent in the right activities (i.e., client meetings) is what sets efficient achievers apart. 🔍 Benchmarking Shows Clear Gaps: Comparing sales teams to industry benchmarks can highlight disparities in workday length, customer touchpoints, and meeting intensity, helping teams identify areas for improvement. 💬 Manager Involvement is Key: Teams where managers spend more time supporting reps in strategic customer interactions show higher success rates, while too much involvement in non-client-facing activities can hinder productivity. 📊 Focus on Quality Over Quantity: AEs with fewer client touchpoints but deeper, more meaningful interactions (as shown in top-performing reps) tend to see better results than those who prioritize quantity over quality. Explore more of our detailed findings and sales activity benchmarks at Worklytics in the comments below. How are you optimizing your sales team's capacity and activity to improve outcomes? #PeopleAnalytics #SalesEffectiveness #HRAnalytics #DataDrivenSales #TalentAnalytics

Ross Stores announced on Monday that it has already opened 16 new locations this year and plans to open 90 stores in total by the end of 2025. Meanwhile, Kohl’s is taking the opposite approach, closing 27 underperforming stores next year as part of an effort to streamline operations. Two national retailers, two completely different strategies. This isn’t just about store counts—it’s a snapshot of how retail is evolving and who is winning in today’s environment. ➡️ Why is Ross Expanding? Ross continues to thrive in a retail climate where consumers are prioritizing price and value. Off-price retail is winning. Shoppers are increasingly looking for discounts, and Ross delivers name-brand merchandise at lower prices without the costs associated with e-commerce. Simple, profitable operations allow Ross to keep overhead low by operating no-frills stores with a rapid-turn inventory model. This efficiency enables steady expansion. Real estate shifts are working in Ross’s favor. As retailers like Kohl’s reduce their footprint, Ross is seizing the opportunity to open new stores in prime locations at more favorable lease terms. ➡️ Why is Kohl’s Closing Stores? Kohl’s sits in a challenging position—too expensive to compete with off-price retailers like Ross but not premium enough to differentiate itself. The middle market is shrinking. Consumers are either trading down to off-price stores or shopping with premium brands directly, leaving Kohl’s caught in between. A costly store footprint is weighing it down. Many Kohl’s locations are in aging shopping centers with declining foot traffic, making them expensive to operate. Turnaround efforts have yet to pay off. While initiatives like Amazon returns and Sephora shop-in-shops were designed to bring in new customers, they haven’t delivered the traffic needed to offset closures. 💡 Lessons for Big-Box Retailers and Mid-Tier Apparel Brands Consumers need a clear reason to choose a retailer. Whether it’s price leadership, exclusivity, or experience, brands that fail to define their value proposition struggle to compete. Flexibility beats scale. The era of sprawling big-box footprints is fading. Retailers that optimize store size and location strategy will be better positioned for long-term success. Off-price is here to stay. The continued expansion of Ross, T.J. Maxx, and Burlington shows that value-driven shopping is a permanent consumer shift, not a temporary trend. The middle market is the hardest place to be. Brands that aren’t firmly positioned as either premium or discount risk losing relevance. Ross is capitalizing on these consumer shifts, while Kohl’s is making tough choices to adjust. The question is: Is this just another retail cycle, or is the middle market shrinking for good? Can mid-tier department stores and apparel brands find a way to fight back, or is off-price retail the future? If you’re navigating these shifts & want insights on how to stay competitive, just email me.

IN OFF-PRICE NEWS... How 2025 Tariffs Could Supercharge OP Retailers As I initially predicted months ago, at the onset of the tariff rumors coming down on China and other prominent manufacturing countries - while tariffs often evoke doom-and-gloom headlines for retailers, off-price stores may actually benefit from today’s trade turbulence. Rising uncertainty around U.S. tariffs has left consumers jittery about spending—particularly on discretionary items—but that caution is a boon for discounters who thrive on value, flexibility, and treasure-hunt excitement. Consumer sentiment, measured by the University of Michigan, fell 13.7% year-over-year in August, with inflation worries front and center. It's worth noting that shoppers are feeling the pinch on purchasing power, creating fertile ground for off-price to shine. Retail analysts agree: when wallets tighten, shoppers pivot toward retailers that deliver quality at below-market prices, and off-pricers like The TJX Companies, Inc. and Ross Stores, Inc. are perfectly positioned. TJX CEO Ernie Herrman highlighted the advantage on the last earnings call: even with tariffs, merchandise margins stayed flat, and guidance was raised. Ross Stores’ Jim Conroy echoed similar results—lower-than-expected tariff impacts were offset by savvy sourcing. The secret sauce? Price and agility. Off-price retailers buy at 20–70% below MSRP, giving them a built-in buffer. Nancy Mair can spot a game-changer when she sees it, especially as legacy retailers feel compelled to raise prices on tariff-affected goods. On op of that, the model resonates because value isn’t cheap—it’s quality, durability, and trend-aware. What’s more, the off-price model allows retailers to pivot inventory quickly. Categories like accessories, seasonal footwear, and apparel can shift to match consumer demand, while offering “small indulgences” that spark joy even in uncertain times. Herrman emphasizes that availability has been fantastic, thanks to traditional brands frontloading inventory at lower tariff rates—creating a pipeline for off-pricers into 2026. E-commerce marketplaces like SHEIN, Temu, and TikTok Shop may compete on price, but off-price retailers win on in-person experience, curation, and the thrill of the hunt. Even resale platforms like ThredUp, while attractive, don’t fully replicate the off-price mix of quality, accessibility, and immediacy. The takeaway? Tariffs might rattle traditional retail, but off-price has a real opportunity to capture share, reinforce consumer trust, and thrive in the next 12–18 months. For brands and retailers navigating uncertainty, this is a model worth studying closely. *** #OffPrice #Retail #Economy #ConsumerHabits #Business #Sales

As online shopping grows, here’s one way small brick-and-mortar businesses can sustain success: By offering experiences impossible to replicate online. I saw this play out when I stumbled upon Two Chicks Quilting in Texas. Despite the rise of endless aisles of Etsy, this small shop has continued to thrive. Their secret? Turning shopping into human bonding. Here’s how they make “community” their competitive advantage. 1. Invest in customer relationships  The owners know every patron by name and provide personalized guidance tailored to their unique needs. Customers feel invested in the success of the biz. 2. Double down on niche expertise Positioned as specialists in quilting, they offer classes and education that back up their authority. Quilters turn to them first. 3. Cultivate a "welcoming place"  More than a store, they've created a welcoming gathering space driving foot traffic. Groups even coordinate annual retreats there. These strategies have built loyalty and resilience and enabled Two Chicks to become a main street staple. Small biz owners: Stitch together your own unique value. Not through transactions, but through connections. 

𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗲𝘀 𝘁𝗼 𝗥𝗲𝗱𝘂𝗰𝗲 𝗥𝗲𝘁𝘂𝗿𝗻 𝗥𝗮𝘁𝗲𝘀 𝗮𝗻𝗱 𝗔𝘃𝗼𝗶𝗱 𝗙𝗲𝗲𝘀 And it’s not just about refunds anymore. Sellers are now getting slapped with 𝗲𝘅𝘁𝗿𝗮 𝗿𝗲𝘁𝘂𝗿𝗻 𝗽𝗿𝗼𝗰𝗲𝘀𝘀𝗶𝗻𝗴 𝗳𝗲𝗲𝘀 Even if the product comes back unused. Here’s how smart brands are getting ahead of it: 𝟭. 𝗤𝘂𝗮𝗹𝗶𝘁𝘆 𝗖𝗼𝗻𝘁𝗿𝗼𝗹 Check every product before listing and after receiving it. Regular quality checks reduce returns caused by defects and protect your brand image. 𝟮. 𝗔𝗰𝗰𝘂𝗿𝗮𝘁𝗲 𝗗𝗲𝘀𝗰𝗿𝗶𝗽𝘁𝗶𝗼𝗻𝘀 & 𝗜𝗺𝗮𝗴𝗲𝘀 Avoid returns by writing clear, detailed product descriptions and specs. Add accurate size guides and high-quality, real photos to set the right expectations. 𝟯. 𝗦𝘁𝘂𝗿𝗱𝘆 𝗣𝗮𝗰𝗸𝗮𝗴𝗶𝗻𝗴 Use strong, protective packaging to prevent damage during transit. Damaged items lead to returns and customer dissatisfaction. 𝟰. 𝗣𝗿𝗼𝗺𝗼𝘁𝗲 𝗘𝘅𝗰𝗵𝗮𝗻𝗴𝗲𝘀, 𝗡𝗼𝘁 𝗥𝗲𝗳𝘂𝗻𝗱𝘀 Encourage customers to exchange instead of returning. It saves the sale, especially with sizing issues in fashion. 𝟱. 𝗦𝗲𝘁 𝗖𝗹𝗲𝗮𝗿 𝗘𝘅𝗽𝗲𝗰𝘁𝗮𝘁𝗶𝗼𝗻𝘀 Be upfront about shipping times, especially for custom or international products. Clear timelines reduce complaints and returns. 𝗜𝗻 𝗲𝗖𝗼𝗺𝗺𝗲𝗿𝗰𝗲, 𝗲𝘃𝗲𝗿𝘆 𝗺𝗲𝘁𝗿𝗶𝗰 𝘁𝗲𝗹𝗹𝘀 𝗮 𝘀𝘁𝗼𝗿𝘆. Product Return Rate? It tells you how much you're losing and how much you could be saving. Handle it well, and your profits will thank you.