If there’s anything the past few years have taught the retail industry, it’s that the ability to respond and pivot accordingly is king, all while staying true to your core customers and creating the best experience for them. It’s a daunting task that few retailers successfully accomplish.
And as inflation continues and consumers look to allocate more of their budget toward essential goods and activities, the impact affects retailers across all industries. Recent Q4 earnings reveal the strategies retailers called upon to deal with economic challenges. Here’s a glimpse at the retail survivors — and the ones that might hope for a better Q1 report.
See also: Retail CEOs Want Their Loyal Consumers Back, Reflecting on Q4 Earnings
Doller General and Five Below Double Down on Discounts
In a difficult economy, Dollar General remains appealing to customers seeking affordability and convenience.
During its last earnings report, Dollar General attributed its success to its dedication to customer satisfaction and expressed confidence in its ability to adapt to evolving customer needs and maintain profitability.
Amid inflation and other economic pressures, the company has emphasized its low price point and private label offerings, which have boosted sales despite the difficult economic conditions.
Dollar General CEO Jeff Owen noted during an earnings call that customers are shifting their spending to more affordable options, including the retailer’s private brands, which represent over 20% of its total sales within consumables. In response to this trend, the company plans to increase its private brand offerings across various categories. Additionally, they plan to offer fresh produce in 5,000 stores by the end of 2023 and eventually expand this to 10,000 stores.
See also: Dollar General Takes Aim at Walmart, Beefs Up Private-Label Brands and Perishables
Then there’s Five Below, which is looking to expand its customer base by introducing its Five Beyond concept, which offers items priced above $5 but still below market averages. The concept was introduced as a store-within-a-store and has been launched in almost 20% of its store fleet, or 250 stores. The discount retailer is planning to convert an additional 400 stores into the Five Beyond concept.
The move followed a successful fiscal fourth quarter, which included a strong January despite macroeconomic challenges. The company’s revenue for the quarter was $1.12 billion and the profit for the year was $261.5 million.
See also: Five Below Courts High Earners With Five Beyond
Dick’s Sporting Goods Leans Into Health and Wellness
This past quarter, Dick’s Sporting Goods reported capitalizing on the health and wellness trend that has persisted since the beginning of the pandemic, despite consumer cutbacks in other discretionary spending.
Dick’s Sporting Goods CEO Lauren Hobart said on a call with analysts that the retailer is seeing its consumers prioritize fitness even more than they did pre-pandemic. Shoppers are starting to see sports and fitness products “more as necessities than discretionary.”
In the quarter, the retailer concentrated on developing brand loyalty by utilizing data and investing in technology to enhance its omnichannel services. And as consumers look more and more into in-person experiences, the company plans to capitalize on its physical locations by offering more contextual commerce experiences.
See also: Omnichannel Athletes Make Sports and Fitness Spending a Top Priority
Albertsons Banks on Essentials and More Essentials
As consumers refocus their budgets, Albertsons Companies aims to tap into a new source of revenue by allowing consumers to use their health benefits toward eligible purchases at its more than 2,200 stores across the United States. The grocery chain recently announced two partnerships, one with global FinTech firm FIS and one with healthcare technology company Soda Health, to facilitate this initiative.
Albertsons Executive Vice President of Pharmacy and Health Omer Gajial said partnerships are key in providing customers with access to a wide range of nutritious food, supplements, and over-the-counter medicines.
See also: Albertsons Goes After Consumers’ Health Benefits Spending with New Partnerships
Dillard’s Focus on Smarter Inventory and Customer Experiences
Family-owned retailer Dillard’s, with most of its around 280 stores located in the South, previously made the mistake of overbuying and heavily relying on discounts to clear inventory before the pandemic. However, as of 2023, the retailer has managed to successfully turn its business around, with a 23.5% reduction in inventory levels in the fiscal year that ended on Jan. 28 compared to 2019.
Today, thanks to better inventory management and personalized service, the company generates approximately $6.9 billion in yearly sales, and its stock has surged over 1,500% since April 2020.
Bed Bath & Beyond Isn’t Beyond Anything
Bed Bath & Beyond has partnered with ReStore Capital to introduce a vendor consignment program to enhance its merchandise availability. President and CEO Sue Gove stated that the new program would enable the retailer to strengthen merchandise availability and better meet customer demand for Bed Bath & Beyond and buybuy Baby.
The announcement comes after more than two months since the retailer reiterated its bankruptcy warning after loan default.
See also: Bed Bath & Beyond Launches Program to Improve Merchandise Availability
Nordstrom’s Big Blue Discount Mistake
In its fiscal fourth quarter, luxury retailer Nordstrom resorted to offering deep discounts to clear its inventory, resulting in reduced sales and profits.
The big question now is whether the bargain hunters who flocked to Nordstrom for discounted merchandise will stick around. Nordstrom’s management doesn’t seem to think so as the retailer anticipates that sales will continue to decrease in the upcoming fiscal year and has decided to exit the Canadian market entirely, with plans to shutter all 13 store locations in the country by late June.
The company has already closed its Canadian website and will only fulfill existing orders. Sales at Nordstrom Rack, the company’s off-price banner, also experienced a sharp decline.
See also: Deal Chasers Flock to Nordstrom, but Will They Stay for the Service?
Amazon Go Isn’t a Total Go
Amazon announced it would close eight of its cashierless Go stores in Seattle, New York City, and San Francisco to cut costs as it rethinks its physical grocery business.
“Like any physical retailer, we periodically assess our portfolio of stores and make optimization decisions along the way,” a company spokesperson told PYMNTS on March 6. “In this case, we’ve decided to close a small number of Amazon Go stores in Seattle, New York City and San Francisco.”
The news came just days after reports that Amazon was suspending construction on HQ2, its massive second headquarters in Northern Virginia.
See also: Amazon Rethinks Footprint for Cashierless Amazon Go Stores
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