Holiday retail sales to cross a major threshold
Holiday retail sales are poised to cross a major threshold this year, fueled by low unemployment, income growth, high consumer confidence and a favorable calendar.
Total retail sales in the United States will increase by 5.8% to $1.002 trillion, according to eMarketer, which raised its projections from its earlier forecast. It is the first time holiday sales will cross the $1 trillion mark, with 2018 showing the strongest growth since 2011. Spending momentum will get an added boost from a favorable holiday calendar that features the maximum 32 days between Thanksgiving and Christmas.
Brick-and-mortar sales for the holiday season will jump 4.4% to $878.38 billion (higher than the $863 billion that eMarketer previously had projected). Brick-and-mortar still represents the majority (87.7%) of holiday sales, although its share has steadily declined in recent years.
“While e-commerce will continue to see strong double-digit gains, brick-and-mortar retail should be a particular bright spot this holiday season,” said Andrew Lipsman, principal analyst at eMarketer. “Retailers are luring in shoppers with remodeled stores, streamlined checkout and options to buy online, pick up in-store.”
E-commerce sales this holiday season will increase by 16.6% to $123.73 billion, according to eMarketer, representing 12.3% of all holiday retail sales this year.
“For retailers, it will be a battle for e-commerce market share,” said eMarketer forecasting analyst Cindy Liu. “We should expect more promotions and perks like free and fast shipping, as retailers compete against Amazon.”
Holiday sales via tablets and smartphones are also growing, representing 43.8% of e-commerce this year, equate- to 5.4% of total holiday sales.
Walmart’s mobile barcode scanner to go the augmented reality route
Walmart’s mobile app barcode scanner just got a makeover.
Realizing that most shoppers currently use the app’s barcode scanner as a price checker, members of Walmart Labs began evaluating how to improve this technology. The answer was to create an augmented reality (AR)-based scanner that would help customers more time, and possibly money.
Using Apple’s AR platform ARKit, Walmart Labs created an AR barcode scanner that loads products faster, and makes it easier to compare products by more than just price, according to Walmart Labs’ “Tech Blog.”
Here’s how it works: Walmart iOS app users can open the scanner by tapping the barcode icon in the search bar. Once the scanner has loaded, users tap the AR icon in the navigation bar to launch the AR scanner.
The scanner applies “anchor dots” to scanned items. As users pan their phone between previously scanned products, the bottom product tile updates based on which anchor dot the scanner is pointing at. If users look at a row of products, the price of the product located at the center of the screen is updated, and also features product reviews.
The technology is already reducing the time it takes to scan multiple items by an average of 50%, according to said Tim Sears, senior engineering manager, Walmart Labs.
“When a customer launches the scanner, they get a direct connection between the digital and the physical world that their screen and camera lens creates for them,” said Sears. “We have a big vision for the future of scanning with augmented reality, and we’re excited to be taking this first step towards many exciting things to come.”
The AR Scanner, which is available on an opt-in basis, is currently available for the iPhone 6s and newer devices.
This is not Walmart’s first try at AR technology. In June, the discount giant began testing a 3D virtual shopping tour, a service that enables customers to virtually browse a curated apartment. The service features nearly 70 items from both national brands and Walmart’s private label offerings.
The new solution coincided with Walmart’s new digital home furnishings shopping experience — one of many elements featured on Walmart’s redesigned website, which was introduced in February.
CVS Health beats Street in Q3
CVS Health’s third-quarter results beat Wall Street expectations, with the Woonsocket, R.I.-based company posting $47.3 billion in revenue and $1.73 in earnings per share ahead of the expected close of its acquisition of Aetna. The revenue represents year-over-year growth of 2.4%, as its same-store prescriptions grew 9.2% and its pharmacy services segment claims increased 5.7% for the quarter ended Sept. 30. Year-to-date, the company said it has generated $6.4 billion in cash flow from operations and free cash flow of roughly $4.9 billion.
“Strong revenue and adjusted EPS, along with significant cash flow year-to-date, demonstrate our success in driving value,” said CVS Health president and CEO Larry Merlo. “Our year-to-date results continue to validate our confidence in the strength of our model. As we approach the closing of our transformative acquisition of Aetna, our integration teams are making great progress to assure that once final approvals are obtained, we can begin to execute on our integration plans.”
Net income for the quarter was $1.4 billion — up 8.2% ($105 million) year-over-year. CVS Health cited a $268 million decline in its income tax provision, offset by a decline in pre-tax income, as the primary driver of the increase. Its $163 million decrease in pre-tax income was attributed to the net interest expense on financing associated with the Aetna transaction.
Consolidated operating profit for the quarter declined $146 million, or roughly 5.8%, to $2.4 billion. The company said this was driven by a $64 million increase in costs related to the Aetna acquisition, as well as an increase in operated expenses from investing tax cut savings into wages and benefits, and an increase in operating expenses. Gross profit in its business segments helped offset the decline, the company said.
The company’s retail/long-term-care segment saw revenues increase 6.4% to $20.9 billion in the quarter. Much of this growth was attributed to same-store prescription growth, which increased 9.2% year-over-year on a 30-day equivalent basis. CVS Health cited adoption of its patient care programs, PBM and health plan alliances and inclusion in various Medicare Part D networks — as well as brand inflation — as the primary drivers, though they were offset slightly by reimbursement pressure.
Same-store sales increased 6.7%, with pharmacy same-store sales up 8.7% in the quarter. CVS Health noted that recent generic introductions had a negative impact of 190 basis points on growth. Its generic dispensing rate for the quarter was 87.3% in the retail/LTC segment, up roughly 10 basis points. Front-store sales increased 0.8% for the quarter, which CVS Health attributed to health and beauty care category sales.
Revenue for the quarter from its pharmacy service segment increased 2.6% year-over-year to $33.8 billion. The company said this growth was driven by pharmacy network and mail choice claim volume growth, as well as brand inflation — all offset by price compression. The company processed 394.5 million claims on a 30-day equivalent basis for the quarter, marking a 5.4% increase over the year-ago period. Mail choice claims increased 7.4% to 71.8 million on a 30-day equivalent basis. Generic dispensing rate for the segment increased 20 basis points to 87.2%.
Looking forward, CVS Health affirmed its standalone guidance, continuing to expect a decline in GAAP consolidated operating profit of between 39% and 41%, reflecting a Q2 goodwill impairment. It expects adjusted EPS of between $6.98 and $7.08 for the full-year. Its cash flow from operations is expected to be roughly $9 billion, with $7 billion in free cash flow.
Since the close of Q3, CVS Health received the Department of Justice’s conditional approval of the Aetna acquisition, dependent on the divestment of Aetna’s standalone Medicare Part D prescription drug plans. The company is selling those assets to a subsidiary of WellCare Health plans, with the close subject to the close of the merger. The company now is waiting on five state approvals, with the transaction expected to close by Thanksgiving.
“While CVS and Aetna remain separate companies today, the performance of both companies highlights the very solid financial foundation on which we’ll build our revolutionary new model that will transform the health care experience for consumers and, in the process, deliver substantial value for our shareholders,” Merlo said.