Can Customers Predict Sales? Answer: Duh!
Estimated Read Time: 4 Minutes
We'd be remiss to not have some sort of "look back on 2020" article in this year's Holiday issue of Wayfind. Especially given the WTF kind of year this one has been. Phew!
The pandemic has done a number on just about every industry with retailers feeling the brunt of it. Some retailers thrived in the innovation inducing conditions brought on by stay-at-home orders, while others floundered and flailed to stay afloat. But it's not just a global pandemic that brought these changes on our industry, the consumer played a major role. Consumers have been telling us for nearly a decade what they want from brands including when, where and how they want to buy products from you.
We thought for this stroll down the 2020 memory lane, we'd mash up the state of retail brands with our annual research study we affectionately call GBU—The Annual Report Card. In this report, we ask consumers to quite simply rate 100 of the world's leading brands as either Good (this brand totally gets me), Bad (this brand is just okay) or Ugly (I wouldn't care if this brand went away tomorrow). So without further ado, let's get down to business.
It's more fun to start with the ugly stuff right?!
2020 might be the nail in the coffin of Specialty retail stores. In fact, 10 of the 15 Ugliest brands from our study were Specialty retailers. Let that sink in for a minute.
Let's start with Ascena—they own(ed) brands like Ann Taylor, Justice, Catherine's, Loft and Lane Bryant. In July of this year they announced Chapter 11 restructuring1 and, in the months, following firmed up deals to sell both the Catherine's and Justice brands while also closing brick and mortar locations for the brands they hung on to2.
Another category that was already on the downtrend when it came to foot traffic…retail banking. As younger consumers flock to digital first banking applications and tools, traffic to bank branches has been on a slippery slope for the past year. A post-COVID survey from McKinsey found that 15-20% of customers will increase their usage of digital banking channels even after the crisis has passed3. This all coincides perfectly with the 4 regional bank players that debuted on our Ugly brand list in 2020.
Some brands have really nailed it this year. These brands were prepared—ahead of the explosive demand for BOPIS, buying online, and delivery. Why have some of these brands been so successful? While many of them are big box behemoths, the one thing all these brands have in common is that they have the customer at the core of everything they do.
Amazon's third quarter results blew analysts out of the water as the retail mega brand reported a 37% increase in earnings year over year4. Our team can personally attest to contributing to Amazon's success this year (we're looking at your Prime membership) as ecommerce sales are breaking records at a rapid pace.
Deemed an essential businesses, Walmart and Target's sales have fared well this year. Walmart's most recent earnings (Q2 2020) showed an e-commerce spike of 97% as well as same-store sales growth by 9.3%5. Walmart has risen to the COVID-ocassion by putting pedal to the innovation medal as the retail giant rolled out pandemic testing sites (will vaccine sites be next?), amped up BOPIS, delivery and self-check-out options, and began rolling out their Walmart Health prototype. Telling a similar but redder story is Target, with Q2 2020 sales at an all-time high, including dramatic growth from their curbside pickup service (700%)6. Always a fan favorite in our GBU surveys, Target has made valiant efforts to seamlessly integrate their mobile app and web experience into the lives of their consumers, offering multiple BOPIS options, easy returns and an aggressive loyalty program.
Sitting around our homes everyday sure makes it easy to see all the things you'd like to change or fix! DIY megabrands like The Home Depot and Lowe's appear in the GBU Good top 15 list consistently year over year. During the pandemic, home improvement stores have become the second fasted growing retail segment in both brick and mortar and online sales7. The Home Depot saw a sales increase of 23% in Q2 of 2020 (YOY)8 while Lowe's saw a 34% increase in the same time period9. And the trend seems to have staying power as 40% of consumers have indicated that they plan to continue home improvement projects beyond the recession, according to research from the NPD Group10.
If this is your first GBU rodeo we don't tend to focus on the Bad category too much. They are the meh brands. They serve a purpose but aren't seen as exceptionally great or terrible. But for those of you that need to read the full book and not just a cliff's note version, we'll humor you with the below chart. 🙂
So what does all of the above tell us? Our customer research and thought leadership is spot on at predicting how well a company's sales will be? Hardly. Rather it's the customer that predicts a company's profit margin, success and growth. Listen up. They might be trying to tell you something.
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