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

Bentonville, Ark. – Walmart U.S. in recent weeks has been capturing more business from middle- and higher-income shoppers. But they’re mostly sticking to the food and consumables aisles.

For the second consecutive quarter, general merchandise comp sales were down in the mid single digits, with particular softness in electronics, apparel and home products. The strongest categories were automotive, lawn & garden and back-to-school.

At Sam’s Club, the home and apparel division comped up in the low teens, led by strength in apparel, outdoor living, seasonal and toys.

Key merchandising takeaways from this morning’s Q2 call with investors:

Inventory clearance. At the close of Q2, inventory was down 15 percentage points, but Walmart is still working through excesses in electronics, home and sporting goods. “We’ve also canceled billions of dollars in inventory to align with anticipated demand,” said John David Rainey, EVP/CFO.

Selective investments. Merchants have reassessed demand on a sub-category by sub-category basis, cancelling orders in the process in some cases. Walmart Inc. president and CEO Doug McMillon said the company will still bet big on items it expects to pay off, citing Halloween inflatables as an example. “You don’t want to go into too much of a defensive mode,” he said.

Second half seasonal goods. Fall and holiday products are focused on newness and heavily tilted toward opening price points. “We expect inflation to continue to influence the choices families make,” said McMillon.

Looking ahead. The overall business at Walmart U.S. is much larger than it was in 2019. “Next year, we’ll see purchasing levels that are more in line with the way we see demand going in terms of the mix today,” said John Furner, president and CEO of the division.

Total Walmart Inc. revenue for the quarter was $152.9 billion, up 8.4%, or 9.1% in constant currency. Operating income fell 6.8% to $6.9 billion.

See also:

• 3 reasons why Walmart now expects difficult terrain for general merchandise
• The Good, the Bad & the Ugly: Walmart | Warren Shoulberg

New York – Seven leading volume retailers with combined annual home textiles sales of $17.6 billion will report their second quarter results this week. Here’s a quick hit list of what to look for.

Walmart: Reports 8/16. Home textiles sales = $7.1 billion

A month ago, Walmart cut its full-year guidance, saying the slowdown in general merchandise sales that began in Q1 was still ongoing, thus causing more markdowns than it had planned for. Earlier this month, Walmart laid off more than 200 headquarters staff as part of a restricting in the home office. Are things looking any rosier for the bellwether retailer?

Target: Reports 8/17. Home textiles sales = $4.2 billion

A rapid shift in the sales mix during Q1 left Target overloaded with inventory in categories like home, and it began planning more conservatively in discretionary categories. But Target is also a big destination for Back-to-Campus, especially dorm essentials. Its investor update this week should provide an early read on the season.

TJX Cos: Reports 8/17. Home textiles sales = $3.5 billion

The blistering pace of growth at TJX cooled down in Q1. Comp at HomeGoods declined 7% on top of a 40% increase in the year-ago quarter, and the home department comp at Marmaxx was off at a similar pace. However, the overall home business was described as very healthy and execs said shoppers were taking price increases in stride. We’ll find out on Wednesday whether that’s still the case.

Kohl’s: Reports 8/18. Home textiles sales = $1.5 billion

In early July, Kohl’s announced that business was even softer than it had anticipated and adjusted its expectations down accordingly. In home, where Q1 sales tumbled 17%, Kohl’s said it would pursue ancillary growth in home décor categories where it has relatively little share. We could get more insight on those plans this week.

Ross Stores: Reports 8/18. Home textiles sales = $1.3 billion

The off-pricer received its second quarter home goods imports earlier than expected, and with demand for the home category declining, Ross stored them in packaway and planned to flow them later this year. Ross execs said they expected sales and profitability to improve over the course of the year. We’ll learn this week if the there are any signs that the tide has begun to turn.

Home Depot and Lowe’s: Report 8/16. Combined home textiles sales = $1.17 billion

Home Depot kicked off the year with a strong Q1 performance as DIY customers continued to trade up for better-quality home improvement products. Execs were feeling optimistic about medium-to-longer term  demand. Lowe’s wasn’t as lucky, with first quarter sales down 4% on what the home improvement retailer attributed to unseasonably cooler spring temperatures, although sales trends began improving in May. The question: How will the outlook each shares this week be impacted by the flattening house market?

The tombstone should read:

DTC

Born: 2010, Died: 2022

Rest In Store

With the recent news that the beauty brand Glossier had become the latest direct-to-consumer brand to begin selling its products through a third-party retailer – Sephora – we can officially close the chapter on the digitally native era.

Sure, companies like Glossier, Casper, Warby Parker – and closer to home textiles, Boll & Branch and Parachute – continue to sell online with a direct-to-consumer model. But increasingly they are opening their own stores or placing their products for sale through other established retailers.

Casper has more than 65 of its own stores and says it products are available through nearly two dozen other retailers from Bed Bath & Beyond to Rooms To Go to Wayfair. Warby Parker, the eyeglass company, says more than half of its sales come from its own stores rather than from its e-commerce operations. Just about every other consumer product company that began life online has moved into physical retailing in one way or another.

Not since the explosive emergence of the catalog showroom model in the 1970s and 80s and their just-as-quick meltdown later in that century have we seen a retail format rise and fall in such a rapid manner. (OK, maybe the flash sale phenomenon lasted even shorter, but that really was a blip, don’t you think?)

And before the nasty rebuttals come from the DTC guys out there, I’m not saying you’re toast, I’m just saying you need physical outlets to make it work.

How did this all happen? When the DTC guys first came along and said stores are the enemy and they had a better way, it all sounded pretty inviting. And it was, what with free deliveries, ridiculously liberal return policies and in many cases prices that were extremely competitive with what legacy retailers were selling things for. Of course, it helped that most of these start-ups were adhering to the tech model as pioneered by Amazon – all about building the top line and not anything about the bottom line. While a handful of DTC start-ups said they were profitable, most danced around the question both before and during the pandemic.

Now that conspicuous consumption – especially for home products – has calmed down significantly and virtually-free money is gone with rising interest rates, the need to reel in expenses and actually show a profit has usurped the esoteric beauty of only selling online.

So, we find ourselves in a new era for all of these businesses. Call it DTC2.0 or Sometimes-Direct-to-Consumer or even Sell-it-However-We-Can, but this is now officially the end of DTC as we knew it. And you know what? The industry is the better for it for all of these companies getting into the business.

We’ve seen the establishment of new brands, something that is most difficult to create and sustain, especially in home textiles. Retailers have new places to buy from and new things to offer their shoppers. Existing vendors have had to adapt their products and policies to compete against the upstarts.

And, most importantly, the visibility of these products – again, especially in soft home – has been enhanced and enlightened in the eyes of the consumer. For an industry that does a poor job of communicating with the ultimate users of its products, this is a huge step up.

The best DTC companies will stick around and continue to prosper. We just have to call them something else now.

Little Rock, Ark. – Although business went slack during the second quarter, Dillard’s retail sales for the first half logged double-digit increases.

The regional department store company reported that retail sales for the 26 weeks ended July 30 rose 10% to $3.13 billion – a figure that excludes operations from the company’s CDI Contractors construction business. Comp sales were also up 10%.

“Business softened in the [2nd] quarter as we lapped the strongest second quarter in our history. Our first half performance was far better than last year’s, with net income up 21%, earnings per share up 44% and gross margin up 240 basis points,” said William T.  Dillard II, company CEO.

Total retail sales for the second quarter ended July 30 ticked up 1.0% to $1.553 billion while sales in comparable stores were flat. Stronger performing categories included men’s apparel and accessories and cosmetics. Ladies’ apparel was the weakest performing category.

Q2 net income fell 12.0% to $163.4 million, or $9.30 per share.

See also:

Dillard’s turns in strong Q4

Dillard’s: Home goods take a back seat as apparel surges

New York – Market research and insights firm YipitData has released its second annual Home Goods Market Share Index for home goods pure players.

“As concerns around consumer spending and inflation heighten and growth of the home goods industry slows, it’s becoming more important for retailers to understand their performance relative to the larger market context,” said Dan Pellegrinelli, YipitData’s vice president of research.

“Our Home Goods Market Share Index can help contextualize growth and understand consumer behavior trends like total spend and average order values,” he added. “This could be a game changer when it comes to staying competitive in the current market.”

YipitData’s research shows that even with the post-pandemic return-to-store movement, monthly gross merchandise value for the top 10 home retailers overall has shrunk compared with last year, indicating a noticeable decline in consumer spending on home goods.

While overall sales are well above where they were in early 2020, the data suggests there is a return to pre-pandemic levels, according to Pellegrinelli.

Home Goods Market Share key takeaways:

• Bed Bath & Beyond, Ashley Furniture, Wayfair and Overstock have seen the largest decreases in market share year over year. While Overstock and Wayfair experienced a huge boom in sales at the beginning of the pandemic, they have not been able to keep up as consumers increasingly return to in-store shopping.
• Wayfair continues to have the largest market share but is losing share as omnichannel retailers grow.
• Of the top 5 retailers who gained market share in Q2, the majority are considered high price point brands with average order value over $1,000:
  1. La-Z-Boy
  2. Pottery Barn
  3. Restoration Hardware
  4. Arhaus
  5. Crate and Barrel/CB2

Since the first quarter report, one of the biggest losses is from Overstock, which went from No. 9 to No. 13. Bed Bath and Beyond also dropped from No. 2 to No. 5. The gainers included HomeGoods, which moved from No. 3 to No. 2, and Big Lots, which moved from No. 5 to No. 3.

Several regional furniture chains made it onto the Top 30 list including Raymour & Flanigan at No. 16, Nebraska Furniture Mart at No. 17, Bob’s Discount Furniture at No. 18, Havertys at No. 23 and Badcock Home Furniture at No. 24.  The biggest movers from Q1 to Q2 included Bob’s which went up from No. 20 to No. 18 and Badcock which went down from No. 21 to No. 24.

The current top 30 home goods pure players according to YipitData’s analysis are:

1. Wayfair
2. HomeGoods
3. Big Lots
4. Ikea
5. Bed Bath & Beyond
6. Restoration Hardware
7. Ashley Furniture
8. Pottery Barn
9. La-Z-Boy
10. At Home
11. West Elm
12. Crate & Barrel/CB2
13. Overstock
14. Living Spaces
15. Rooms To Go
16. Raymour & Flanigan
17. Nebraska Furniture Mart
18. Bob’s Discount Furniture
19. Williams Sonoma
20. The Container Store
21. Pottery Barn Kids & Teens
22. Arhaus
23. Havertys
24. Badcock Home Furniture
25. Frontgate
26. Ethan Allen
27. Room & Board
28. Furniture Row
29. Rejuvenation
30. Serena & Lily

The quarterly index of the 30 retailers is put together by YipidData’s retail and e-commerce analysts by tracking trends and estimated sales using the company’s alternative data solutions. It measures year-over-year growth and quarterly market share changes based on combined sales across digital and brick-and-mortar. The current results are for the second quarter of fiscal 2022.

See also:

• HomeGoods, Big Lots gain Q2 share in home as Bed Bath & Beyond declines further
• Which home categories were the biggest winners on Prime Day? Here’s the data

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

Seattle – While Bed Bath and Beyond was the largest home retailer prior to the pandemic, it has been unable to keep up momentum and is now the fifth largest retailer, behind Wayfair, HomeGoods, Big Lots and Ikea.

The new 2Q22 Home Goods Market Share Index examines which home goods retailers are winning market share and how these trends have shifted over time. The YipitData Insights index offers a look at the market share of the top 30 U.S. home goods pure players by online and offline GMV (gross merchandise value).

Second quarter market share rankings for the Top 5 included:

1. Wayfair: 14.41% share, down 1.04 pp (percentage points) from Q2 last year
2. HomeGoods: 10.45% share, up 0.03 pp year-over-year
3. Big Lots: 8.21% share, up 0.26 pp
4. Ikea: 7.59% share, up 0.04 pp
5. Bed Bath & Beyond: 6.19% share, down 1.77 pp

Other key takeaways from the data:

Overall, spending in the home goods space has started to stagnate, with YoY GMV growth decelerating starting from March 2022. While overall sales are still higher than they were in early 2020, YipiData cautioned the industry may start to see a return to pre-pandemic levels. In Q2 2022, overall spending was down 10% YoY.

Monthly GMV for the top 10 home-specific retailers overall has shrunk compared to last year, indicating a noticeable decline in consumer spending on home retail products.

As inflationary pressures and costs of goods hit the industry, prices are also rising.  With the exception of Ikea, average order values have increased across home goods retailers.

Yipit uses transaction data to calculate total digital and brick-and-mortar sales for home retail pure players, then ranks the top 30 by market share.

More like this:

Which home categories were the biggest winners on Prime Day? Here’s the data

HomeGoods, Pottery Barn lead in gobbling up market share

High Point, N.C. – It was bound to happen sometime, and it seems that 2022 is the year. For the first time, home décor shoppers made more transactions using their mobile device than they did a desktop.

According to Syte’s The State of eCommerce Discovery in 2022, 52.9% of transactions in the first half of the year took place on via mobile. The study calls this change “a critical tipping point for home décor brands and retailers as it represents a shift in consumer behavior that will need to be mirrored in the overall approach to customer experience.”

Although mobile logged more transactions and more sessions by device, desktops still reigned supreme in most other categories, including time spent on a site (7:22 minutes vs. 5:35 minutes); conversion rate (2% vs. 1.1%) and items ordered (1.6 vs. 1.4)

Most important to note, desktops accounted for a higher average order. Syte’s research found a home décor order via desktop averaged $220.20, while the average order value through a mobile device was $166.10, a difference of more than 32%.

Looking at the various means by which consumers search for home décor products, email topped the charts as the source for longest time spent on e-commerce sites, coming in at just over 21 minutes. After “other,” in a distant second at 7:26 minutes, direct searches, Google paid and Google organic rounded out the top five.

Email was also the leader for generating traffic that produced the highest average order value at $334.50. Direct was second at $233.30, followed by Pinterest, $211.20; affiliate, $192.40; and other, $192.10.

About the data

The data for Syte’s The State of eCommerce Discovery in 2022 is based on more than 1.2 billion e-commerce sessions in the home décor, fashion and jewelry verticals as recorded in Syte’s database from January through June 2022. Syte is a product discovery platform that uses AI to create search and discovery experiences for shoppers.

See also:

• In-store vs. online: Home furnishings shoppers embrace both formats
• Consumers cooler on home merchandise but still spending