Moody’s: Physical presence integral part of online growth for retailers
NEW YORK — A physical store presence is key to most retailers for their online growth strategy, according to a new report by Moody’s Investor Services. Based on existing data, Moody’s estimate online sales as a percent of total retail sales are just 6% today and will increase to 7.1% by 2016, potentially reaching a double-digit (mid-teens) share of the total retail sales pie in about five years.
Even though most groups in the retail industry have made significant strides in building an e-commerce presence in recent years, the report found, most of the 13 sub-sectors in the report still derive a surprisingly small percent of their overall sales from online channels.
“Despite the apparent popularity of the Internet to the U.S. consumer, most retail sectors are still far from fully leveraging this potential,” the report stated.
Here are some highlights of the Moody’s report, which was written by Moody’s VP, senior analyst Charles O’Shea:
- Online Presence is a longer-term credit-positive for U.S. retail. A viable online channel is becoming more critical for brick-and-mortar retailers to maintain and strengthen their competitive positions. “In our view, online sales is a cost-effective way to maximize existing physical locations and to leverage distribution capability,” O’Shea said. “We believe the successful development of this channel will ultimately be a credit positive for retailers.”
- Mass store closings are unlikely as companies increase online presence. Moody’s sees little evidence online growth is causing more retailers to close large numbers of physical store locations to save on unnecessary costs.
- Extensive store networks give shoppers the option to see and touch the product that they may have researched online, which is one of the reasons store networks will remain a crucial link in the online logistics chain, the report finds. Points of distribution for ship-from-store capability also will remain important.
- Online growth among retail sectors will vary widely. Some sectors have made tremendous strides in building a viable online presence, in particular the music, video and digital content group, which we expect will double its online sales penetration to 70% by 2016. At the other end of the spectrum, the food, beer and wine group has barely moved the online needle and will likely not grow beyond 1% penetration by 2016.
- Growth may be greater than public data suggests. Moody’s findings are drawn primarily from the Census Bureau and Department of Commerce, which uses historical data-based surveys rather than direct reporting from companies, which means findings are far from comprehensive.
“Many companies do not report their online business and there is little consistency with respect to individual disclosures of what actually constitutes an online sale,” O’Shea said. “We think these constraints suggest that the volume of online sales are actually larger than what available data sources suggest.”
Julep Beauty hires chief delivery officer
SEATTLE — Omnichannel beauty brand Julep Beauty has hired Dwight Gaston as chief delivery officer, overseeing Julep's operations, customer service, fulfillment and product development teams.
Julep develops more than 300 new products each year for its Maven subscribers and e-commerce customers, and shipments are growing as more beauty enthusiasts discover Julep's range of toxin-free nail, skin care and makeup products, the company stated.
With more than 20 years of experience in the e-commerce and technology industries, Gaston joins Julep from online jewelry retailer Blue Nile, where he spent the past 15 years in executive roles. Most recently, he was Blue Nile's SVP of operations, and previously served as VP of operations and director of fulfillment operations. Earlier in his career, Gaston was a consultant with Bain & Co.
"After two decades in the e-commerce industry, I can honestly say I've never seen a more innovative consumer retail company than Julep," Gaston said. "Julep customers are fanatical about the brand, and the company uses social and mobile to connect with this passionate community to find out exactly which products resonate and which don't. Julep is on a tear and I'm excited to join the company to help build a distribution network that can scale with this tremendous growth."
"Julep is the first 'full-stack' beauty company, controlling every stage of the customer experience from product ideation, to testing and feedback, to manufacturing and fulfillment and delivery," said Jane Park, CEO and founder of Julep. "Operations and fulfillment are such a critical part of enabling the kind of unique customer experience we are creating, so Dwight's deep experience in building large-scale, e-commerce infrastructure will be incredibly important as we continue our rapid growth trajectory."
Larabar introduces granola line
MINNEAPOLIS — The makers of Larabar have announced the debut of Renola, a new type of granola made with nuts, fruits, seeds and spices, which the brand is billing as an alternative to classic granola.
"People love snacking, and we want them to feel good about their choices," said Julia Wing-Larson, marketing manager for Larabar. "Larabar has always been a great, gluten-free food, and we saw an opportunity in the marketplace to deliver a grain-free granola to consumers that is not only delicious, but full of whole and simple ingredients."
Renola is available in three flavors: Cinnamon Nut, Cocoa Coconut and Berry. Consumers can purchase Larabar Renola at select Target stores, as well as a variety of grocery stores, for a suggested retail price of $1.79.