Credit Product Penetration of Retail Sales
Shopping experience refresh
- “We are excited to pilot a virtual store staffed by dedicated associates … but with no physical customers. Customers can interact via chat and screen sharing to see physical products.” – Best Buy
- “Piloting a new holistic market approach … to leverage all our assets across stores, fulfillment, services, an outlet, lockers, our digital app both in-store and In-Home Consultation labor.” – Best Buy
- “Enhanced the customer experience during the Anniversary Sale, with new virtual and in-store events to drive engagement … built on success of last year including digital catalogs with personalized content and product recommendations, online wish lists, and remote selling and styling tools.” – Nordstrom
- “We are investing in stores, digital business and omnichannel capabilities … piloting self-returns and self-pickup in stores. We had a very successful launch of the Sephora at Kohl’s digital experience … and an aggressive store rollout plan.” – Kohl’s
- “We are launching virtual search in-store, a customer can hover a phone over a product and explore similar items on Lowes.com … to integrate the online and in-store shopping experiences.” – Lowes
- “We’re excited to launch e-commerce on homegoods.com in Q3. We believe this is something our existing customers have been waiting for, and there’s another way for us to attract new shoppers.” – TJX
- “The streaming app is our flagship, providing a highly immersive, interactive and frictionless experience with the ability to make purchases directly through the app using a remote control.” – Qurate
- “We now have 140+ small store format locations … and remodeled over half the chain … transforming the shopping environment while optimizing the layout in support of our same-day services.” – Target
- “Cloud-powered checkout enables seamless experiences for customers and associates like mobile Check Out With Me, Scan & Go and Self-Checkout.“– Walmart
COVID-19 commentary
- “Customers continue to interact with us digitally at a significantly higher rate than pre-pandemic as online sales were 32% of domestic revenues compared to 16% in Q2 of fiscal ‘20.” – Best Buy
- “Casual and home categories continue to see the strong demand levels they experienced during the height of the pandemic, while categories quiet during that period, like traditional wear-to-work and dressy, showed increases.” – Macy’s
- “I want to acknowledge the likelihood that the second half of the year will continue to be volatile, particularly in light of the ongoing uncertainty surrounding the Delta variant.” – Target
- “78% of consumers have said that the pandemic made them realize that shopping online is better and easier than their previous perception. 80% of U.S. consumers believe they are the same or better off economically than they were before the pandemic. “ – Signet
- “Customer behaviors changed in Q2, people shopped with us more in stores than online.” – Walmart
Card revenue
- “We generated $197MM in credit card revenues, up $21MM from Q2 2019, and ahead of expectations. Increasing by 30 bps as a percent of net sales to 3.5%, higher than prior annual guidance.” – Macy’s
- “2Q21 credit card rev. of $92MM down $2MM vs 2Q19. Lower interest and late fee revenues from lower balances due to high payment rates and lower interchange fees from lower spend.” – Nordstrom
- “The increase in other revenue of $30MM for 2Q21 was driven by an increase in credit revenue due to lower write-offs. YTD, other revenue decreased $13MM driven by lower credit revenue due to lower accounts receivable balances.” – Kohl’s
- “2Q21 credit card profit sharing rev. of $172MM, up $4MM vs 2Q19 and up $14MM vs 2Q20.” – Target
Payments and loyalty programs
- “Loyalty performance improved on all tiers of Star Rewards. Platinum, Gold, and Silver average spend per customer increased by 15%, and avg. spend per visit increased 11% … Bronze tier is one of our best customer acquisition vehicles, with ~26% of members under 40, and 56% ethnically diverse.” – Macy’s
- “Loyalty is a powerful engagement driver, members contributed 70% of Q2 sales.” – Nordstrom
- ”Our loyalty is tied to a credit card and that’s fine … but we are committed to getting into a loyalty program not tied to the credit card. We will have tests towards the end of this year.” – L Brands
- “Our new tiered loyalty program roll-out (new two to three-day shipping promise for top-tier loyalty members), combined with our already strong cross-brand credit card programs, enabled our 65 million known active customers to shop with rewards across our portfolio.” – Gap
- “We started the year with a very low A/R balance … we do expect credit to grow throughout the year, but it will still be flat vs last year as we build that A/R back up.” – Kohl’s
- “Target Circle launched in 2019 and has more than 100MM members … offering meaningful rewards.” – Target
- “[The Stars for Everyone Program] helped drive a 49% increase YoY in Starbucks Reward membership … we added 1MM+ new active members. Our 24MM+ active members represent 51% of all spend—up 8 percentage points over pre-pandemic. Our ability to engage has never been higher.” – Starbucks
Omnichannel & mobile
- “We are also piloting mobile app checkout so that customers, particularly grab-and-go customers, can quickly check out without needing to interact with an associate.” – Best Buy
- “Customers are more comfortable buying online, but we’ve never been more confident in importance of physical stores … they remain the center of our experience due to the project nature of our business.” – Home Depot
- “Our capital spend will increase from $650MM this year to ~$1B … heavily focused on omnichannel capabilities with investments in digital shopping experiences, data and analytics, technology infrastructure, and more efficient fulfillment capabilities.” – Macy’s
- “Digital sales up 30% YoY and 24% over 2Q19. Digital penetration of 40% was a bit lower than Q1 as store traffic and sales trends improved across all regions.” – Nordstrom
- “Our digital business in Q2 was up 128% vs 2Q19 … stores were up around 39% in Q2.” – L Brands
- “At over $6 billion in sales, our online channel is ranked number 2 in U.S. The online business grew 65% versus 2019 and contributed 33% of total sales in the quarter.” – Gap
- “More customers are embracing experiences that effortlessly fit their lifestyle, with drive-thru representing 47% of transactions and mobile ordering for in-store pickup at 26%.” – Starbucks
- “Sam’s Club members are utilizing curbside pickup and the adoption of Scan & Go is at an all-time high. The success of Scan & Go at Sam’s … led to including it as part of the Walmart+ offering.” – Walmart
Headwinds
- “There are still headwinds we continue to face. The supply chain constraints, the tight labor markets, elevated levels of holiday shipping surcharges, and potential unforeseen impacts of the COVID variant.” – Macy’s
- “The teams are mitigating supply chain headwinds from closures in the countries where we source and make our clothes and delays due to transportation challenges.” – Gap
- “YTD we’ve closed 24 stores as part of our 350-store closure plan for N. America … And that while we will still maintain an online presence, we will be closing our stores in the UK and Ireland.” – Gap
- “We’re continuing to see a bit more cost inflation than normal [low single digits], but our merchants are working with suppliers and monitoring price gaps to keep prices low while managing margins.” – Walmart
Source: Retailer earnings calls and SEC filings.
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