In 2018, several major retailers, including Toys R’ Us, Mattress Firm, Nine West, Claire’s and Sears filed for bankruptcy. Every other day we’re seeing headlines about the end of retail as we know it, or how millennials have killed yet another beloved retailer.
The news is chock-full of articles about iconic retailers like, Macy’s, Foot Locker and Rite Aid (to name a few), closing stores. This ongoing chatter of the retail apocalypse has the industry terrified.
But, contrary to click-inducing headlines, the industry is actually growing, not shrinking. So, how can we make sense of what’s happening in retail? While the industry isn’t dying, it obviously is evolving.
If we start by looking at some of the players who have announced additional physical store openings, such as Amazon, Casper and Warby Parker, it becomes clear they have one major thing in common. These digitally-native brands have kept technology and consumer centricity at the core of what they do and, because of that, have created business models that resonate with customers.
But digital strength isn’t only relevant for those brands that were born digital. Our Digital Strength Index (DSI) links digital strength to revenue and examines the top 1,000 U.S. public companies to give them a digital score between 1 and 100.
So, what can the DSI tell us about some key retailers as we head into 2019?
Here is who is in good standing:
Ulta Cosmetics – Average DSI score: 82
Ulta continues to invest in customer experience, both in store and across the digital ecosystem. The company is on track to open 100 stores in 2018, and revenues are up 28 percent from last year. We expect this strong performance to continue going into the holiday season and 2019.
Tiffany and Company- Average DSI score: 88
Tiffany has always made investing in digital a priority. The company recently announced a full-scale omnichannel transformation effort to bolster revenues. This investment in digital will pay off for the brand and generate strong returns in 2019.
Sprouts Farmers Market – Average DSI score: 95
Sprouts Farmers Market continues to grow, with annual growth around 15 percent and they’ve announced they plan to open 30 new stores in 2019. Sprouts has an incredibly strong digital presence with an engaging digital ecosystem, strong content, vivid imagery, and strong partnerships with players like Amazon. This presence has allowed them to outperform their competitors and grow in a time when many other grocers are struggling.
Urban Outfitters – Average DSI score: 86
Urban Outfitters has performed well during a time when many of its peers have not. The company’s focus on e-commerce has led to double digital sales increases online for all three brands: Urban Outfitters, Anthropologie and Free People. The brand has increasingly worked to create seamless experiences in store and online. For example, Anthropologie’s mini-home showroom concept has been piloted throughout stores and is expected to be rolled out to more in the coming quarters.
Here is who is at risk:
Dillards – Average DSI score: 54
Dillards has struggled in recent quarters as it tries to remain relevant to its customer base. While the brand has made statements about investments into omnichannel technologies and optimizing its assortment, its digital strength has been decreasing steadily over the last few quarters. With this in mind, Dillards should look to strengthen their investments in digital, focusing on omnichannel commerce and solutions that better engage core customers.
Sysco – Average DSI score: 34
Sysco, the largest food distributor in the U.S., hasn’t performed well in the DSI, despite their position of leadership in the industry. However, the company has announced long-term plans of a digital overhaul, identifying opportunities to better modernize their supply chain and deliver better point of service systems for customers. While its average score remains low, we saw an 11 percent increase from the most recent quarter, indicating they’re moving in the right direction.
Signet – Average DSI score: 53
Signet, the retailer that owns Zales, Kay Jewelers, Jared, etc., will close around 200 stores by the end of their fiscal year. The brand has struggled to differentiate its offerings among the many players in the market, and has a lower digital strength than many of its peers or competitors in the industry. Earlier this year, the company announced a three-year transformation plan with initiatives around e-commerce, omnichannel capabilities, and store experience innovation. We will have to see how these initiatives will contribute to their overall score, but if they aren’t able to execute on these initiatives well, we can expect to see these stores slowly fade away.
J.C. Penney – Average DSI score: 49
J.C. Penney has become the quintessential example of a brand that’s struggled for an identity in the digital age. While a score of 49 on a 100-point scale may not seem dire, retail is a technologically advanced industry, so J.C. Penney is far underperforming compared to its peers from a digital perspective. The brand is closing seven stores this year, but shuttered more than 140 in 2017. Without an investment in digital, the company looks like it will follow the path of Sears and some of the others who just couldn’t survive.
As the retail industry continue to evolve, it’s clear that to remain relevant, and survive, retailers need to invest in digital and quick.
Esta noticia está patrocinada por:
Evolución del logo desde 1972.
Cuando nació / Antes / Ahora
