Minneapolis, MN – Target Corp. continues cutting back on discretionary inventory to invest more in rapidly-growing frequency categories.

This morning, the company announced it has also reduced fall season receipts in discretionary categories by more than $1.5 billion.

While Target is planning cautiously for the remainder of the year, executives said current trends support the company’s prior guidance for full-year revenue growth in the low- to mid-single digit range and an operating margin rate in a range around 6% in the back half of the year.

Target Corp. took a 90% net earnings blow in the second quarter as shoppers shifted their spending to necessities, forcing the chain to go heavy on inventory clearance and, ultimately, cripple its profitability.

The result: Net earnings of $183 million, or $.38 per diluted share, down from $1.817 billion, or $3.65 per diluted share, a year ago.

Short on discretionary spending dollars, inflation-impacted shoppers streamlined their expenses to focus on food and beverage, household and beauty essentials. That, in turn, put pressure on the company to “rightsize” its inventories across the board early in the summer, particularly on items including home, luggage and other categories.

These actions “put significant pressure on our near-term profitability,” said chairman and CEO Brian Cornell.

Still, the company’s traffic and units grew, giving moderate boosts to sales and comps for the three-month period ended July 30.

Total revenue was up 3.5% to $26.037 million versus $25.160 million, and comp sales rose by 2.6% on top of 8.9 percent growth last year.

Additionally, store comps increased 1.3% on top of 8.7% growth last year, and digital comps grew 9.0% following growth of 9.9% last year.

In its earnings results today, Target also pointed out other quarterly strides: an increase in unit share in all five of its core merchandising categories; an almost 11% increase in same-day services – led by Drive Up, which grew in the mid-teens on top of more than 80% last year; and fulfilling more than 95% of Target’s Q2 sales at its stores.

See more:

Target swinging an axe at existing orders as it confronts inventory glut

Target celebrates remodelling milestone and keeps on rolling

Washginton — Furniture and home furnishings sales rose slightly in July in what was a flat month overall for retail, according to advance monthly estimates from the Department of Commerce.

The furniture and home furnishings category recorded an adjusted $12.122 billion in July, up 0.2% from  June’s $12.1 billion. But while sales in the category were relatively flat month-to-month, they were up 2.1% from July 2021’s $11.873 billion. For the year-to-date, furniture and home furnishings sales are at $81.913 billion.

In the overall snapshot, the full retail spectrum came in at $682.815 billion in July, which was basically even with June’s $682.585 billion. Year-over-year, retail was up 10.3% compared with July 2021’s $619.180 billion.

Very few categories recorded substantial growth in July, but non-store retailers led the way with a 2.7% increase vs. June. Building material and garden equipment and supplies dealers and miscellaneous store retailers were both up 1.5% month-to-month.

Those gains were offset by a few notable losses. Gas station sales declined 1.8% as prices dropped, while motor vehicle and parts dealers saw their sales drop by 1.6%. General merchandise stores were down 0.7%, and clothing and clothing accessories stores sales fell 0.6%.

The DOC’s advance estimates are based on a sub-sample of the U.S. Census Bureau’s full retail and food services sample. A stratified random sampling method is used to select approximately 5,500 retail and food services firms whose sales are then weighted and benchmarked to represent the complete universe of more than 3 million retail and food services firms.

See also:

• NRF says recession unlikely in 2022, but 2023 could be a different story
• 3 key areas targeted as consumers shift spending priorities | Survey

New York – Declared a national health emergency on Aug. 4, Monkeypox cases in the U.S. surpassed 10,000 this week.

The most common method of spread is through personal, skin-to-skin contact. Although less common, Monkeypox can also spread by touching fabrics such as clothing, bedding and towels that have been used by someone with the virus, according to the U.S. Centers for Disease Control (CDC).

Could this lead to a spike in demand for health & wellness home textiles similar to the one that grew out of the COVID-19 pandemic?

HTT reached out to manufacturers who developed targeted products during the COVID-19 outbreak well as producers of anti-microbial and anti-viral textiles treatments. Here are 3 things to know:

1. Monkeypox is not on the buy-side radar – at least not yet. While a few manufacturers said they are following the issue, those contacted by HTT said unanimously that none of their retail or hospitality accounts have been asked about it.
2. First things first. Should demand arise, the first logical step would be to test existing textiles treatments against the virus. However, those tests don’t come cheap. “A COVID test costs us about $25K to get done with our protocol. Monkeypox would be way more expensive,” said one manufacturer, who added that absent significant interest from buyers, testing is not worth the expense at this point.
3. Few consumers are worried about Monkeypox. Whether this is a matter of pandemic fatigue in the aftermath of the protracted COVID-19 era or simply because confirmed cases are relatively small in number, surveys have consistently shown that less than 20% of consumers are concerned about contracting the virus.

Of course, the home textiles industry already has a fleet of products available in the market that foster cleaner, healthier living environments. So if something changes, suppliers will be ready.

Tampa, Fla. — According to Littledata, home furnishings retailers need help when it comes to consumers adding products to their online shopping carts.

The e-commerce tracking resource surveyed 2,305 stores in March 2022 and found the average add-to-cart (ATC) rate was at 5%. It noted that anything more than 8.3% would be among the best 20% of stores it benchmarks for ATC rate, while more than 10.4% would be in the elite tier, the top 10%. Its survey revealed that the average ATC rate for furniture and homewares was just 3.46% in May 2022.

Because, a two-year-old digital brand, believes it has the potential to help retailers overcome the add-to-cart obstacle. Since it started in the summer of 2020, it has already helped more than 1,000 small to mid-sized e-commerce merchants boost their conversion rates.

Ashland Stansbury

“We help site visitors move through the buying journey on the site to conversion,” Ashland Stansbury, Because’s founder and CEO told Furniture Today. “The way we help is by placing targeted messaging that tells what consumers need throughout the process.”

Stansbury said when a consumer shops Amazon, even if she doesn’t buy the product she clicks on, Amazon serves her information about that product including cost, availability, shipping dates, specifications and more, as well as similar “you might also like” products. Because integrates onto the Shopify platform and serves consumers similar information.

“Amazon’s secret sauce is: If you’re not going to buy that product, they’re going to move you to another product to buy,” Stansbury said. “We’re serving retailers who sell tons of products. In that move-to-cart process, we serve up messaging like Amazon does that’s relevant to that product and that site visitor.

“We’re pairing product data with site visitor data and bringing those together to give the visitor what they need to make a decision on that product or to move onto another product and make a purchase there.”

She said, by giving consumers information, Because helps answer nearly every “no” that might arise. “The top 10 reasons why (consumers) are not purchasing are all related to missing, inaccurate or confusing information,” Stansbury said.

Because integrates with a Shopify site’s back end to automatically update all available product information as vendors add revisions. That’s one less worry for the retailer, which can focus instead on sales.

“From a customer perspective, the software is scalable for a store as they’re growing the catalog, growing sales and growing visitors,” she said. “We’re not an agency; we’re software. They’re using it themselves without code. They don’t need a developer to make updates. The updates come via back-end data. We have access to back-end data through all their SKUs.”

Stansbury said Because is a great fit for home furnishings retailers due to the high volume of available products they offer from a variety of vendors.

“The thing about the furniture industry is (these retailers) typically sell hundreds or thousands of products on their site,” she said. “That’s our sweet spot: the high volume of products that needs to be updated.”

Sam Marlow, director of British home furnishings retailer Lime Lace Interiors, said the company has had great success using Because to power its shoppable site.

“We use Because Intelligence app to create bespoke banners to highlight certain products in our portfolio. Not only for flash discount codes, but also to highlight certain products which have recently been seen in national publications to give our customers confidence in the products we sell,” Marlow said. “We love the simple and easy to use functionality that means we can update or create new banners without the need for developers and be responsive to the ever-developing world of home interiors.”

And as retailers learn more about Because and see how it works, Stansbury says she sees opportunities on additional platforms as well as new ways to tie into most-used retail applications.

“Our goal is to expand to all the other major e-commerce platforms so we serve more retailers. We’re focused on Shopify now because it’s such a big market. I see us expanding to BluCommerce, Magento, Salesforce, etc., allowing us to serve more merchants,” she said.

“We’re expanding from a partner perspective where we will be integrating into apps that merchants are using on a daily basis. If they’re using an inventory platform or shipping platform or email platform, those become additional touchpoints for us to integrate into their stack.”

See also:

• Looking to succeed online? Foster loyalty | Charting the trends
• In-store vs. online: Home furnishings shoppers embrace both formats

Washington – The U.S. Bureau of Labor Statistics Consumer Price Index for July 2022 showed that the all items index had no increase from June, but overall prices continued their inflationary track and increased 8.5% over the past 12 months. This was less than analyst expectations of 8.7% and better than the 9.1% increase in June.

The biggest contributor to the shift was the decrease in gas prices. The gasoline index fell 7.7% in July, and this decrease offset increases in the food and shelter indexes, resulting in the all items index being unchanged from June.

However, the food index continued to rise and increased 10.9% over the past year, the largest 12-month increase since the period ending May 1979.

The index for household furnishings and operations rose 0.6% after increasing 0.4% in June.

The Federal Reserve considers consumer price inflation as one factor in determining how much more it will be raising interest rates through the rest of 2022.

Related stories:

• Consumers cooler on home merchandise but still spending
• 3 key areas targeted as consumers shift spending priorities | Survey
• Why big purchases top consumers’ no-can-do lists these days | Charting the trends

Washington – Fall and winter seasons are likely to see much lower import numbers at the country’s major container ports after a booming spring season, according to a Global Port Tracker report released Monday by the National Retail Federation, which reported earlier this month that they believe a recession in 2022 is unlikely, and Hackett Associates.

Despite the slow in imports, ports will likely see a net gain over 2021 numbers.

“Retail sales are still growing, but the economy is slowing down and that is reflected in cargo imports,” Jonathan Gold, NRF vice president for supply chain and customs policy, said. “Lower volumes may help ease congestion at some ports, but other ports are still seeing backups and global supply chain challenges are far from over.”

U.S. ports monitored by Global Port Tracker recorded 2.25 million Twenty-Foot Equivalent Units (TEUs) – one 20-foot container or its equivalent – in June. That was a 5.9 percent dip from May when there were 2.4 million TEUs.

The first half of 2022 finished with 13.5 TEUs, marking an increase of 5.5 percent year over year. But things aren’t as peachy for the second half.

“The heady days of growth in imports are quickly receding,” Hackett Associates founder Ben Hackett said. “The outlook is for a decline in volumes compared with 2021 over the next few months, and the decline is expected to deepen in 2023.”

See more:

• Container rates down 21% over last year, still way up historically
• How are U.S. ports faring after West Coast labor contracts expired? Experts weigh in

Based on Global Port Tracker’s projections, the second half of 2022 will be more of a roller coaster:

• July’s final numbers are expected to come in around 2.26 million TEUs, up 3.2 percent year over year.
• August is predicted to be 2.2 million, down 3 percent.
• September at 2.15 million, up 0.4 percent.
• October at 2.13 million, down 3.9 percent.
• November at 2.06 million, down 2.7  percent.
• December at 2.03 million, down 3 percent.

Those predictions would bring the second half of the year to 12.8 million TEUs – a 1.5 percent decrease from the same period last year. But 2022 as a whole will still fare better, projected to finish at 26.3 million compared to 2021’s 25.8 million.

Purchase, N.Y. – Spending increases in July outpaced monthly year-over-year growth seen so far in 2022, with demand and higher prices both contributing factors.

According to Mastercard SpendingPulse – which measures in-store and online retail sales across all forms of payment – U.S. retail spending excluding automotive increased +11.2% year-over-year in July, while retail sales excluding automotive and gas rose +9.0%.

Sales growth for furniture & home furnishings sector was up 5.0%, climbing off last year’s boom but still up a whopping 33.2% compared to July 2019.

Other key takeaways:

• In-store sales remained elevated – up 11.1% YOY and up 13.9% compared to July 2019.
• E-commerce posted its first month of double-digit sales growth since December, up 11.7% YOY.
• E-commerce was up nearly double pre-pandemic levels: +98.5% compared to July 2019. MasterCard attributed some of the growth to July’s major promotional events, which included Amazon Prime Day and piggyback sales offered by competitors.
• Travel spending was strong in July, with lodging up 29.6% YOY and airline sales up+13.3% YOY.

“The latest retail trends place an emphasis on consumer choice and passion driven spending – they’re hunting for deals, shopping across channels and ultimately still spending on experiences and goods that make them feel good,” said Steve Sadove, senior advisor for Mastercard and former CEO and Chairman of Saks Incorporated. “As retailers grapple with excess inventory and supply chain constraints, it’s likely that the promotional activity seen in July will continue to be an important strategy for retailers.”

See also:

3 key areas targeted as consumers shift spending priorities | Survey

Economy headed toward recession? NRF says no

Washington — Despite two consecutive quarters of decline, the informal indicator of a recession, the National Retail Federation’s Chief Economist Jack Kleinhenz said that the U.S. economy still does not appear to be in a recession and remains unlikely to enter one this year.

“Back-to-back contractions have heightened fear of a recession, but while the economy has lost momentum heading into the second half of the year, economic data is not yet consistent with a typical recession,” Kleinhenz said in the August issue of NRF’s Monthly Economic Review.

“Our view is that, while the economy is functioning at a slower pace, it is likely to avoid a recession this year,” he continued. “Despite ongoing uncertainties, we believe the underlying strength of the economy is strong enough to deal with inflation and keep a recession at bay, or short-lived even if we are wrong.”

The Monthly Economic Review noted that gross domestic product declined 1.6% year-over-year in the first quarter and 0.9% in the second quarter. The official declaration of a recession is up to the National Bureau of Economic Research, which has yet to rule on whether the current downturn meets that definition.

Despite the decline, private final sales to domestic purchasers — a key measurement of both consumer and business spending — remained in positive territory for the first half of the year, up 3% in the first quarter and flat in the second, the report said. Employment, retail sales, income and industrial production indicators have seen slower growth, but none have contracted.

Even though economic indicators remain strong, Kleinhenz said, “it is now clear that the world has changed” since the beginning of the year, citing factors that could not be anticipated earlier including the persistence of COVID-19, continuing supply chain challenges, the ongoing war in Ukraine and other issues that have driven the highest inflation rates in 40 years.

The NRF now expects GDP to grow 2% for the year rather than 3.5%. Growth of the Personal Consumption Expenditures Price Index — the Federal Reserve’s favored measure of inflation — is now expected to average 6.2% for 2022, two percentage points higher than assumed earlier.

The NRF has also factored in revised retail sales numbers released by the Census Bureau in April, which increased NRF’s calculation of retail sales for 2021 to $4.61 trillion rather than $4.58 trillion. Even with those adjustments, NRF continues to expect that 2022 retail sales will grow between 6% and 8% over 2021.

See also:

• NRF says recession unlikely in 2022, but 2023 could be a different story
• 3 key areas targeted as consumers shift spending priorities | Survey

Minneapolis – Six months of inflationary pressures have consumers rethinking how they are budgeting their money – including for Holiday 2022.

A recent survey from Digital River, a global commerce enabler, three areas in particular are top of mind for reduced spending:

• 67% of U.S. adults surveyed have reduced their spending on “non-essential” items in the last six months (including vacations and holiday shopping)
• 40% are spending less on summer vacations, including 49% who are reducing travel expenses
• Over a third (38%) expect to spend less at Christmas this year, while another third (32%) are planning to spend the same as usual

The Digital River Survey on Cost of Living and Online Spending Habits also explored how consumers view their personal finances.

• Almost half of US adults (45%) also say their financial situation has got worse in the past 12 months.
• Less than a quarter (24%) think their financial situation has gotten better.
• Three in ten (30%) say it has stayed the same.

U.S. adults are slightly more optimistic for the future however, with almost two in five (38%) expecting their financial situation to get better in the next 12 months and just over a quarter (27%) who think it will get worse.

Even so, online shopping purchases remain high. The survey found that 42% of US adults make an online transaction at least once a week.

• 39% have shopped online more frequently in the past six months
• 54% expect to increase their online shopping tendencies due to convenience
• Despite growth in e-commerce, 45% note not being able to see products in-person as a major barrier of online shopping, followed up delivery price (35%)

Although consumers are tightening their belts, “our research has shown the pace of online spending isn’t expected to slow down despite the squeeze on finances,” said Ted Rogers, chief revenue officer at Digital River.

See also:

Basic bedding suppliers seeing shift in consumer currents

Having inflation fears? CPI numbers reveal spike in household furnishings prices

Savannah, Ga. – The Port of Savannah said it handled 494,107 containers in June, its busiest month on record. The number is up more than 47,000 containers from last June, a 10.6% increase.

“Despite the record volumes, the Port of Savannah remains fluid,” said Georgia Ports Authority Executive Director Griff Lynch. “Several factors have contributed to our growing container capacity, including expedited infrastructure projects, our inland pop-up yards and an influx of truck drivers moving to the Southeast.”

The port credited some of its success to difficulties being seen at West Coast ports, including labor talks, protests and delayed rail access. Savannah is also receiving container trade diverted from the Port of Charleston.

“GPA is currently handling the highest volume of ad hoc and new service vessels the Port of Savannah has experienced to date,” said Lynch. “Uncertainty around the labor talks, unprecedented and unplanned vessel calls, record cargo volume, and vessel diversions to Savannah have contributed to a higher than normal number of vessels waiting at anchor.”

GPA said it is experiencing record truck turns during both its day and night-gate operations. Garden City Terminal saw a weekday average of 14,500 truck moves in June, counting both inbound and outbound gate exchanges.

To better accommodate rising demand, the GPA recruited 166 new workers in FY2022, for a total of 1,647 direct employees.

“I would like to thank our employees, as well as our partners at Gateway Terminals and the International Longshoremen’s Assn. for their outstanding work to keep commerce flowing across our docks,” Lynch said. “Through communication, collaboration and teamwork, we continue to provide unmatched service to our mutual customers.”

Looking forward, the GPA Board approved the purchase of 12 new rubber-tired gantry cranes and other container handling equipment at its regular July meeting. The RTG purchase totals $30.25 million. The Port of Savannah already features 198 RTGs, and another 24 were already on order. Tuesday’s action will bring the fleet to 234 in Savannah.

“Growing our workforce and infrastructure is part of the board’s continuing commitment to keep our deepwater terminals ready to take on new trade,” said GPA Board Chairman Joel Wooten. “Presently, we are expanding our dock space to handle additional big ships and increasing our container storage space in Savannah, while simultaneously enhancing our capabilities to move autos and breakbulk in Brunswick.”

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