Despite the predicted closure of 25,000 bricks-and-mortar stores, the fall in retail would not be as expected.
The ‘new normal’ opportunity is now developing in e-commerce. What’s noteworthy is that not few but practically all bricks-and-mortar retailers are seeing a surge in online sales – irrespective of where they are located.
In fact, this is now considered by many such retailers as not only their next growth opportunity, but also as a check on the falling bottom line.
Even as lockdowns in various countries have been lifted, consumers find themselves being fearful of stepping outside with the pandemic still showing no signs of subdual. It is therefore, no surprise that online sales have surged tremendously even during a period of lull in stores.
The British Retail Consortium- KPMG Retail Sales Monitor revealed a 60.2 per cent rise in online sales of non-essential items for the month of May.
With most consumers looking to shop sitting at home, many companies have either been forced to revamp their e-commerce strategies or make the shift online at this time. For some, the soaring e-sales have balanced out a portion of the losses incurred due to temporary store closures.
Inditex, which reported a 44 per cent decline in turnover for the first quarter, a first for the company in 2 decades, can credit online sales to be the saving grace. It indeed was!
Inditex’s e-commerce sales saw a whopping 50 per cent climb, specifically rising 95 per cent in April. Now, the Spanish retailer is aiming to garner a quarter of its revenue from online sales by 2022.
adidas, which was expecting a decline of €100 million in profits for the second quarter, is seeing higher-than-expected growth in China. The sharp increase in e-commerce activity and sales has been more than making up for the slightly lower footfall in stores as compared to last May.
Adidas can expect its second-quarter results to almost be at par with last year, as there has been an increase in revenue for the month of May overall.
The Children’s Place has been investing big on company’s digital business in last 3 years and it is expected to be same going forward. The digital sales, notably, shot up by 300 per cent in the first quarter for the brand.
Then there’s Target! Its online comparable sales rose by a huge 141 per cent, benefiting from investments in same-day delivery services such as in-store pick up, drive-up and Shipt, and accounted for almost all of its same-store sales growth for the first quarter ended 2 May.
Similarly, the digital business for Gap has been outstanding during the first quarter. Elaborating further on this, Sonia Syngal, President and CEO, Gap, Inc. said “While net sales and store sales continued to reflect material decline in the month of May due to store closures, we saw more than 100 per cent surge in online sales during the month.” Now that’s a remarkable increase.
Also Read: Gap too registers losses in Q1!
Hugo Boss said online sales jumped 39 per cent in the first quarter to account for 11 per cent of total sales and then increased again significantly in April. Puma saw its online business grow by nearly 40 per cent in Q1 and by 77 per cent in April.
Even Kohl’s Corp has reported quite a surge in online activity with sales rising 24 per cent for the first quarter overall and 60 per cent in the month of April alone. Despite the company’s more than 1,100 stores being shut for the past few months, it continued operating through its app and website – and continued successfully.
Then there is UK-based womenswear brand Sosandar which has experienced a 98 per cent increase in traffic during lockdowns as more people are now turning to casualwear.
While the revenue soared in this period for the e-tailer, the order numbers rose by an astounding 44 per cent. New customer acquisition too increased by 15 per cent – and all this despite a 69 per cent reduction in marketing costs.
British multinational clothing, footwear and homegoods retailer Next reopened its website on 14 April only to shut it down within 2 hours by 8.30 am.
Next had decided an order limit which it could safely fulfill for a day and the surge of orders within 2 hours shows that consumers have the urge to shop online as soon as they are given the right opportunities.
Alibaba Group also reported fourth-quarter revenues and profits which beat out forecasts by quite a margin, as more people shopped online for essentials because of the coronavirus lockdowns. It’s core commerce business increased by nearly 19 per cent to 93.87 billion yuan or US $ 13.16 billion in the quarter.
Even Walmart’s online business grew 74 per cent in the first quarter ended 30 April, as it invested in store pick-up and delivery at the time when demand for such services soared. That drove their sales volumes to records, with the number of new customers rising four times since mid-March.
While situation is slowly returning to normalcy in some countries, many others are still struggling to come out of this crisis indicating an uncertain future. However, it is quite clear that e-commerce could turn out be a saving grace for many small and big brands in the months to come.