The Home Depot announced Thursday that it will donate from its Home Depot Foundation to The Home Builders Institute over the next 10 years, to train veterans, high school students and disadvantaged youth in the construction industry. The US has seen a decline in trained workers in the industry, affecting home building levels and housing prices. Soldiers will make up ¾ of the 20,000 construction workers who will be trained by this program.
Sales at The Home Depot to contractors total 40% of the company’s revenue. 84% of contractors surveyed by the NAHB – National Association of Home Builders – stated worker availability and their cost is their most significant problem. The NAHB also stated that approximately 900,000 single-family homes will be built in 2018, but there is demand for 1.5 million. Shannon Gerber, executive director of The Home Depot Foundation, stated, “We want to bring shop class back, from coast to coast. We’re thrilled to train 20,000 next-generation plumbers, electricians, carpenters and beyond.”
L’Oreal, who utilizes Accelerated Analytics for its retailer point of sale data collection and harmonization for the majority of its US Luxe division retailers, revealed its 2017 results this week. Chairman and CEO, Jean-Paul Agon, spoke at a financial analysts’ meeting with specific results. In the final quarter of the fiscal 2017 year, sales were up 4.1% and 5.5% in same store comps versus 2016. Their full 2017 results were up 0.7% and 4.8% in comps. While he acknowledged, “The beauty market grew at a healthy pace,” the “making of it turned out to be somewhat different from our expectations.” The luxury color cosmetics and skin care both accelerated the sales growth. Mass-market beauty grew less than in 2016. China and travel retail were the strongest sectors and North America grew, yet not as strong as 2016.
Genesco, a Nashville-based specialty retailer and footwear, head wear, sports apparel and accessories vendor, uses Accelerated Analytics for POS reporting for many of its key US retailer accounts. The company announced this week its intention to focus heavier on its footwear business, and is exploring the sale of its Lids Sports Group division. They stated its footwear business is “the optimal platform to deliver enhanced shareholder value over the long term.” They continued to state that its sales “would generate capital that the company can deploy productively to further enhance shareholder value.” A committee and capital firm have been engaged to explore this possibility that is currently in the infancy stages.
The week of February 4 through February 10 kicked off the new 4-5-4 retail calendar year. 2017 ended with a 53rd week, which occurs every 4 years. Retailers reported $3.53 trillion in sales for 2017, up 3.9% over 2016. Retail industry experts are expecting this new 2018 retail year to do well.
The NRF (National Retail Federation) is predicting 2018 sales to grow approximately 4% over 2017, including a record 10-12% increase in online sales, with mall kiosks, pop ups, catalogs and vending machines. NRF President and CEO, Matthew Shay, announced in a press call, “We think these confirm once again that the retail industry, while continuing to transform, is alive and well.” Increases are being attributed to the tax cuts to the corporate tax rates, the decrease in unemployment and increases in take home pay for consumers.
While there were 7,000 major store closings last year, there were also 3,200 new store openings. Retailers are adapting to consumer changing buying trends but are feeling optimistic and “very positive”, says Shay.
Retail trends that look to shape retail in 2018 include urbanization of stores as more people move to cities. The World Bank estimates more than 1 million people per week moving to cities, with greater access to stores. Consumers are also getting better at managing the large amount of online data being shown to them, allowing for retailers to share product information virtually while paring down stores for a showroom experience.
Effective use of Big Data is key for a retailer’s success. The data can be used to tell them customer loyalty, customer preferences, regional and national nuances, and inventory tracking as they redefine their brick and mortar spaces and expand their online presence and success at a seamless multichannel strategy to keep customers happy, as they can complete a transaction anywhere.
The retail industry suffered job losses in 2017, ending December with a 20% decrease in jobs in the retail trade. There was a lot of job expansion in other industries, with huge growth in construction and hospitality, with retail and utilities being the only to drop. The trend of decreasing retail jobs is being attributed to the ongoing shift to e-commerce sales. Retail posted a net loss of 70,000 jobs in the past 12 months. There was good news this past week for retail in the Home Improvement and Hardware retail sector, as both Home Depot and Lowe’s posted the news they would be providing their full-time employees with up to $1000 bonuses, a result of the tax breaks recently approved.
Lowe’s is gearing up for Spring, adding 53,000 full time, part time and seasonal employees to its current 250,000. Lowe’s offers its employees a lot of benefits, even to those who are seasonal or part time in most cases. They provide a 10% employee discount, competitive wages, flex hours and the ability to see their schedule 17 days in advance in order to swap shifts if necessary. Part time and full time employees can also take advantage of their health and wellness benefits, incentive program, 401(k), stock purchase plan, and tuition reimbursement. 200 current Lowe’s store managers started as seasonal employees. Lowe’s is also known as a company that gives back. Last year, all of Lowe’s 1700 stores in the US served their communities through a Lowe’s Heroes volunteer community project. They also gave $2.5 million to disaster relief after the two major hurricanes last year. The company also offers full time employees paid time off for community service. New job openings span across the US, with the largest markets and openings being Atlanta, Boston, Charlotte, Indianapolis, Los Angeles, Raleigh-Durham and New York.
Senior VP of Store Operations at The Home Depot, Marc Brown, joined a panel at the NRF’s Big Show this month to talk about the importance of engaging younger shoppers and the different methods they are undertaking to make that customer connection. The younger generation is particularly devoted to shopping at retailers who try to make a difference. Mr. Brown spoke about Home Depot’s long-term charity work, such as with Habitat for Humanity, helping veterans find housing and disaster relief efforts. “There’s a period of time where the business part doesn’t matter because you’ve got to get things back to normal for that community, “ he said.
With Millenials’ and Gen Zers’ heavy use of social media, this outlet is increasingly a growing part of the brand-consumer relationship. 55% of Gen Zers choose brands specifically because they are socially responsible or eco-friendly and 66% of consumers want retailers to take a stand on important political issues.
With improved employment levels and the housing market booming above 2006 levels, home improvement retail stocks have continued to grow. The Home Depot has outpaced the S&P 500 in the last 6 months, growing 39.3% versus the home improvement retail’s gain of 37.7% and S&P 500’s increase of 13.7%. The company attributes their success to maximizing square footage initiatives in current stores versus opening new ones, and focusing on the customer experience and buy online – deliver from store capabilities. Home Depot has been reporting strong numbers for the past 5 years, with record breaking year over year comps the past two quarters.
Back in October, The Home Depot stocks were trading at $163 and Lowe’s was only at $80, but since then Lowe’s is up 29% and Home Depot is up 21%. Home Depot has more physical stores in the US, with 2283 compared to 2144 at Lowe’s. Revenues through Q3 were much higher than Lowe’s but several other factors that can affect stock are looked at. As of Q3, gross margin for Home Depot was 34.1% and Lowe’s was 34.2%. Both CEOs are accredited for strategies that provide shareholder returns while minimizing risk. While The Home Depot’s revenues overall are higher, at $77B at Q3 compared to Lowe’s $53B, the average ticket is higher at Lowe’s, at $71.60 compared to Home Depot at $63.55.
Today Home Depot stock (HD) is reporting at $204.45 and Lowe’s (LOW) at $107.11.
Huge growth in fragrance and beauty is the largest contributor to the travel retail market, with wines and spirits coming in second. The current travel retail market was valued at $69.5 billion in 2016, and is predicted to reach $125.1 billion by 2023. Within perfumes and cosmetics, Accelerated Analytics customers including Estee Lauder and L’Oreal are opening outlets at every major international airport. With an improving economy there will be increases in travel and tourism. In Europe, which is one of the largest travel retail markets with $21 billion of the sector, they are seeing a significant presence from apparel and cosmetics brands, especially from LVMH from France, which holds a large share of luxury apparel, perfumes and cosmetics in the region. Perfumes and cosmetics accounted for 30% of the travel retail market in 2016 findings and is expected to dominate the market by 2023.
As 2017 closed with high holiday sales results across online and brick and mortar retailers, predictions for 2018 and beyond are very positive. After years of news reports of store closings and retailer bankruptcies, 2017 had more store openings than closings and that pattern is expected to continue through 2021. A newly released study by Zebra Technologies, conducted by IHL Group, shows that 42% of retailers had a net increase in stores, while only 15% had a net decrease. The study also projects North America and Europe sales through 2021, to rise 3% annually. That equates to growth to $5.5 trillion in sales. Retailer feedback to the study about their focus indicated a continuation of what appears to be working: providing customers with engaging experiences, and increasing technology in stores to manage inventory and improve the in-store returns process after online purchasing.
The Home Depot announced it closed its acquisition deal of The Company Store, finalizing on December 19. While the acquisition does not include The Company Store’s five retail brick and mortar locations, it did include “product development and sourcing capabilities to help us expand our online décor business into broader categories across the entire home,” said Chairman, CEO and President, Craig Menear. Founded in 1911, The Company Store has had great online sales success and industry leading capabilities in resourcing high quality products in bedding, bath and related categories.
Research analysts indicate that décor-oriented merchandise, such as flooring, lighting and window treatments, account for $25 billion of The Home Depot’s sales and décor alone is about $3 billion. This makes up about 28% of all Home Depot sales. However, expansion in this area will appeal to shoppers who tend to look to Bed, Bath & Beyond.