“We’re moving fast, we’re innovating, we’re having fun.” The words of a start-up retail entrepreneur, right? Well, no, it’s actually an exec from Walmart – Marc Lore (President and CEO of Walmart eCommerce, U.S.).
“All (our stores) are doing way beyond expectations…we can have a really large brick-and-mortar experience.” That’s got to be a legacy retailer, correct? Wrong again. It’s Philip Krim, co-founder and CEO of online mattress retailer, Casper.
We’re experiencing a “Freaky Friday” moment in retail – where grown-up retailers are behaving like start-ups, and start-ups are acting more like grown-ups. Perhaps it’s a sign that we are reaching a new level of market maturity after a disruptive couple of decades, post that first fateful headline in the New York Times in 1994 – “Attention Shoppers: Internet Is Open.”
Legacy retailers such as Walmart and Target are swapping big box thinking for a start-up-in-a-garage mindset, with striking results.
Walmart’s latest earning release saw comps up 4.5%, and online sales increase 40%, on the back of a buoyant economy, and innovations like grocery pick-up expansion(now 1,800 stores), new “Pickup Towers” (700 by end 2018), new website, new interactive digital installations in store and new brand acquisitions. As CEO Doug McMillon said: “We are pleased with how customers are responding to the way we’re leveraging stores and e-commerce to make shopping faster and more convenient.”
Competitor Target is also investing heavily in its future, with hundreds of “reimagined” stores, new small-formats, a new drive-through service, the acquisition of grocery-delivery start-up Shipt to facilitate same-day delivery, and the launch of a dozen or more new private label brands in the past year. All that has contributed to good momentum in the second quarter, with “unprecedented” traffic growth of 6.4%, comp sales growth of 6.5% and digital sales surging 41%. According to CEO Brian Cornell, “(we are) putting digital first and evolving our stores, digital channels and supply chain to work together as a smart network to deliver on everything guests love about Target”.
Meanwhile, the start-ups are going old-school as their brands develop and business models mature. JLL Retail Research released a point-of-view last week observing that “E-commerce Retailers Plan 850 Physical Stores in the Next 5 Years.” Among them, Casper is set to open 200 stores in the next three years, lingerie retailer AdoreMe will launch up to 300, and cult sneaker brand Allbirds will continue its physical expansion beyond its recently opened 4,800 sq. foot SoHo flagship*.