Login

Department stores got crushed this holiday season. Amazon soared to new heights. The Gap turned things around. The BloomReach Relevance Report returns.

Happy New Year! Resolution: Read more. Start with the BloomReach Relevance Report. Department stores have a serious case of post-holiday blues Macy's Manhattan flagship We’d be remiss (whatever that means) if we didn’t participate in the annual post-holiday rite of pointing out how e-commerce sales grew by a double-digit percentage, while department-store sales continued to decline. In fact, it seems we’re in a sort of department-store-aggedon, with Macy’s and Kohl’s turning in sickly holiday shopping sales reports, Sears selling off the iconic Craftsman brand and closing stores and, Nordstrom parting with its key digital hire less than a year after he arrived. The Seattle retailer, known for grand pianos and even grander customer service, said it was going to take a long look at its long-term digital leadership as it figures out its next move, GeekWire reported. It’s not a shocker that department stores are struggling in the face of Amazon, fast-fashion retailers and discounters with fast-changing promotions. They’ve been in decline for years, which isn’t to say that the declines were baked into stock prices. Department stores got clobbered on the news. Many chains have tried many things: Stores in stores; buy-online-pickup-in-store, smaller footprints, exclusive brands, in-store taverns (this seems to hold the most promise, but maybe that’s just us). There comes a point when you have to wonder whether there really is an answer. The BRRR has some experience working at newspapers, proud institutions that are facing their own department-store-like decline. After years of chasing the answer to declining revenue, it's beginning to become apparent that for newspapers maybe there isn’t an answer. Speaking of newspapers, Scott Herhold, of the Mercury News, of San Jose, California, wrote a Swiftian column in the wake of the recent shopping-mall-food-court riots. Herhold's target? A California mall that banned unaccompanied minors on the assumption that teens cause riots. (No telling what they’ll do when they get a couple of Orange Juliuses in them.) Herhold suggested, tongue-in-cheek, that the mall would find many advantages to banning all shoppers from their property. Sadly, given the state of department stores, you have to wonder whether Herhold’s vision of shopper-less malls might just happen on its own. The bright spot on the retail side is that there is much more to retail than department stores. Online retail is roaring. If you look at the recently completed holiday season, online sales set a record, according to CNBC, as they probably will next year, the year after that and for years to come. MasterCard Shopping Pulse reported that online spending during the holiday season was up nearly 19 percent over 2015, when it was up 17.5 percent over the previous year. Of course, unless your name is Amazon, the celebration is slightly muted. About that Amazon amazonbox Um, crushed it. Yep. You might have had a good holiday, but Amazon had a really good holiday. Like 2015, the Seattle behemoth raked in about 40 percent of online holiday retail spending in 2016. That’s after nabbing 60 percent of all e-commerce growth in 2015. It all kind of reinforces the notion that doing the same thing isn’t working all that well for a lot of digital retail. Or as Ken Cassar, an Amazon watcher with market researcher Slice put it to CNBC in an email: "2017 is clearly becoming the year [once again] that Amazon's competitors have no choice but to think differently in order to counter Amazon's dominance in the e-commerce channel.” There was plenty of evidence that the Prime thing that Amazon does is catching on. Amazon said a record number of people ordered through Prime this holiday season, which makes sense, though Amazon doesn’t reveal actual numbers. Amazon also said more people signed up for Prime this holiday season than in any past season, according to CNBC. Some other gaudy Amazon holiday facts, courtesy of Amazon:

  • More than a billion items shipped under the Prime program.

  • The retailer sold enough “Hamilton: The Revolution” books and Hamilton albums to give a copy to everyone who attends a performance of the musical at the Richard Rodgers Theatre in New York — for 96 shows in a row.

  • The fastest Prime Now delivery on Christmas Eve took 13 minutes. It landed at a Redondo Beach, California, home at 9:05 p.m. and it included a couple of Tile item finders.

  • Amazon sold enough “Harry Potter: Complete 8-Film Collection” to play for more than 300 years.

Well, you get the idea. A different kind of Gap accounting Gap store off Union Square in San Francisco Did we mention that it’s not all doom and gloom? Of course we did. Clothing retailer the Gap stunned those who get stunned about such things when it reported a boffo holiday season. At a time when the big department stores were reporting more declines in in-store sales, Gap shows up with a 2 percent year-over-year increase in same-store sales for the holiday period. If you break out December, things look even juicier: December same-store sales were up 4 percent over 2015. Retail-watchers were expecting a 1.7 percent decline for December, not far off what the department stores saw for the holiday season. Much of the good news is thanks to strong sales at Old Navy, which saw a 12 percent increase in same-store sales in December. Banana Republic, on the other hand, peeled away some of the sales spike, slipping into a 7 percent same-store sales decline. The overall black ink had Gap execs punching up their guidance for the full year, saying they now expected earnings to be beyond the high end of their previous guidance of $1.92 a share. The stock market said, “Yes!” Gap shares rose 10 percent in after-hours trading Thursday, after closing down 4 percent, Business Insider reported. Retailers turn to tech to turn things around interior shot of layout of a Staples store So, if you’re a department store or not Amazon, what are you going to do? Innovate or find someone to innovate for you, Retail Dive says. The industry publication ran through a number of specific examples. Yes, we’ve been on this soap box before. It so happens we find it comfy. As for Retail Dive’s examples?

  • Staples turned to artificial intelligence and machine learning to help it scale up, by a staggering amount, the number of stock-keeping units (or SKUs) it’s added to its site. Retail Dive mentions IBM’s Watson. It does not mention BloomReach, but we will. (Hey, what’s the ‘B’ for in BRRR, anyway?) It also started accepting Apple Pay on its websites, a payment form it started accepting in-store in 2014, RD says.

  • Sears is partnering with Uber, so that customers can earn loyalty points for Uber rides, RD says. And it’s integrated its Shop Your Way loyalty program with a service that provides paycheck advances, which does offer a hint of the desperate leading the desperate. What could really be interesting, though, Retail Drive says, is something called WallyHome, a home sensor technology company that Sears bought. RD isn’t sure what Sears will do with WallyHome and nobody knows what’s going to happen to Sears, but it will be interesting to watch.

  • JCPenney is working on its mobile app and has put improving its omnichannel experience at the front of the line. Good ideas, but not ones that scream “innovation.” RD rightly notes that these JCP efforts come after substantial progress in other areas.

One lesson here is that anything is better than standing still while waiting for the anvil of Amazon to drop on you. One seller’s junk is some buyer’s treasure rv When the string runs out on this BRRR thing, we know what we’re going to do: retail arbitrage. The Wall Street Journal had a fascinating story in the “news to us” category that chronicled the exploits of shade-tree entrepreneurs who scour the countryside for goods that are selling well-below their value — or what the entrepreneurs believe the value is. We know that the WSJ story, “The secret to a career in an RV: Always be selling,” requires a subscription, so we’ll give you a run down. (And here’s an old NPR story on the craft.) By the way, isn’t “always be selling” the secret to SaaS sales? Maybe that’s us again. Anyway, these retail arbitrageurs, as they’re known, buy stuff like toothpaste for 75 cents a tube and then turn around and sell it on Amazon as two for $7.50, the WSJ says. It’s not necessarily easy money. Finding the cheap stuff means bargain hunting, brick-and-mortar style, driving from town to town (hence the RV thing). It means keeping tabs on markets and pricing, shipping the goods (usually to an Amazon warehouse, which handles fulfillment). Like we said, not necessarily an easy life — but certainly an interesting one. Quote of the week “As e-commerce grows, returns will become an increasingly glaring challenge for retailers.” — Alan Gershenhorn, UPS chief commercial officer, regarding this year's record number of e-commerce returns, as reported in the Daily News of Memphis. Photo of Staples store courtesy of Staples. Photo of RV by Daniel Oines published under Creative Commons license. Other photos by Mike Cassidy. Mike Cassidy is BloomReach’s storyteller. Contact him at mike.cassidy@bloomreach.com. Follow him on Twitter at @mikecassidy.