October 27, 2020
Retail news and trends to watch out for
- Travel retail’s growth drag. Travel retail used to be a key growth driver for beauty brands, but this year it is pulling down companies’ performances. L’Oréal, which returned to growth of 1.6% in the third quarter, said that it if it took out the impact of travel retail the group would have reported a 5% increase in sales. It added that in Western Europe, where sales were down 2.5%, without travel retail the group would have seen growth of 3.3% in the region. Hermès too, which reported a 4.2% increase in sales overall, said that its fragrance business was down 10.4%, largely due to travel retail. Given that the travel-retail business is not expected to return to pre-COVID-19 levels until 2023-2024 at least, and the drag that the channel is having on growth, beauty companies may well shift their business and investment to other channels, namely e-commerce. L’Oréal reported that e-commerce sales rose 61.6% for the first nine months of the year and accounted for 23.7% of business.
- 11.11 kickoff. Alibaba says it is positioning this year’s 11.11 shopping festival as a way for brands to recover business following the impact of COVID-19. This year is shaping up to be the biggest festival ever for Alibaba, with 250,000 brands participating and more than two million new products debuting on Tmall – twice that of last year. Around 800 million users are expected to participate. This year, Alibaba has introduced a new sales period from November 1-3 in addition to November 11 to maximize revenues. Alibaba is also boosting the offer on cross-border platform Tmall Global, given that the Chinese are no longer traveling or shopping abroad. Around 2,600 new brands from abroad will debut on Tmall Global. Livestreaming will be a key focus of this year’s festival, with more than 400 company executives and 300 celebrities livestreaming content to shoppers.
- More digital for the holidays. US-based department-store group Macy’s has ramped up its digital initiatives ahead of the holiday shopping season. The retailer will now offer virtual and in-store personal stylist appointments to provide customers with holiday-related shopping assistance. On the Macy’s website, customers can either book an in-store or virtual appointment or complete a short quiz and the platform will match customers with personal stylists based on results. The retailer is also putting a focus on its curbside pick-up and buy online, pick-up in store (BOPIS) services. Macy’s recently partnered with delivery service DoorDash and became an investor in fintech company Klarna. Macy’s will use Klarna to offer ‘buy now, pay later’ services, allowing shoppers to pay in four interest-free installments at the retailer’s online checkout. ‘Buy now, pay later,’ appeals especially to young consumers.
- Retailers go green. More retailers are looking to show consumers that their stores are environmentally friendly. UK-based supermarket chain Asda just opened a sustainability trial store to help consumers adopt eco-friendly shopping habits. The store in Leeds, UK, features 15 refill stations, including an area for refilling shampoo, conditioner, hand wash and shower gel from Unilever brands, such as Simple and Radox. It also sells certain foods without plastic wrappings and has recycling centers, including a station for hard-to-recycle products. In addition, the retailer has committed to a “Greener at Asda Price,” which it says is a price promise that loose and unwrapped products will not cost more than wrapped equivalents. In the US, meanwhile, department-store group Nordstrom embarked on an in-store recycling program called Beautycycle earlier this month. Customers can dispose of empty beauty packs at Beautycycle boxes in beauty departments at the retailer’s stores. The packs are then recycled by TerraCycle.
- The new holiday season. In-store traffic in the US this holiday season is expected to fall by between 22% and 25% compared to last year, according to retail solutions company Sensormatic Solutions. Typical holiday traffic peaks will flatten as the 10 busiest shopping days, which include Black Friday (November 27), Super Saturday (December 19) and the day after Christmas (December 26), will account for only 34.2% of all holiday traffic, compared with 46.5% in 2019. Additionally, customers have shifted to weekday shopping and are now making more purposeful store visits, as a result of the work-from-home trend and to avoid weekend crowds. The survey says retailers will need to capitalize on shoppers’ new, purposely limited in-store time and prepare for increased buy online pick-up in store (BOPIS) and curbside pick-up options.