If there was any doubt that the future of retail is omnichannel, Q2 online sales results for Walmart, Target, Home Depot and Lowe’s tell the story of growing digital dominance during the pandemic.
According to the Marketplace Pulse, US e-commerce sales jumped 44.5% in Q2 2020 as retailers generated $211 billion in online sales in the second quarter compared to $146 billion a year ago. Prior to the pandemic, e-commerce had been growing at an average of 15% per year before this nearly three times growth in e-commerce. That’s quite a show despite the coronavirus impact.
Walmart led the parade
Walmart’s Q2 results showed comparable-store sales growth of 9.3% over Q2 2019 and a 97% jump in online sales. This impressive e-commerce performance comes on top of a 74% increase over Q1 2019. Walmart’s average online grocery sales orders were also up 27% as consumers shifted to online grocery shopping in response to COVID-19.
Overall Q2 revenue was $137.74 billion vs $135.48 billion expected by Refinitiv estimates and net income nearly doubled to $6.38 billion compared with $3.61 billion in 2019.
Innovations by the retailer such as buy online pickup in-store (BOPIS) and same-day delivery also contributed to Walmart’s sales success. Walmart also announced a new US same-day delivery partnership with Instacart offering delivery from Walmart stores in Tulsa, Los Angeles, San Francisco, and San Diego. Instacart will deliver groceries, alcohol, household essentials, and other products from Walmart in as little as an hour. Walmart Canada already uses Instacart and if this test succeeds, it will be expanded further in the US.
On the horizon is an Amazon Prime-like membership service called Walmart+ which aims to increase competition even further for e-commerce domination. In an analyst call yesterday, CEO Doug McMillion said, “We’ve been testing membership with Delivery Unlimited subscriptions since late last year. That customer offer was limited to a grocery and consumables delivery service as the reason to sign up.”
“Since that launch, we’ve proven to ourselves that we can pick and deliver a broad set of categories across the supercenter, not just food and consumables, but a wide assortment of general merchandise,” McMillion added.
Not bad for a bricks and mortar chain that was late to the e-commerce party!
Target posts record Q2 earnings & digital sales
Hard to believe but Target even managed to outperform Walmart when it comes to e-commerce. Its comparable-store revenue grew by 24%, a company record. Digital sales were up an amazing 195% Q2 in 2019 accounting for 13.4% of total revenue growth.
Target’s same-day sales using Shipt delivery services were even more impressive, jumping 273% as stores played a key role as fulfillment centers across the US. In the first six months of this year, Target added more than 10 million e-commerce customers.
As PYMNTS.com reported, “Target’s internal analytics show that multi-channel guests spend four times as much as a store-only customer and 10 times as much as digital-only customers. Drive-up customers have increased overall spending by 30 percent. Digital customers have doubled their repeat purchase rate over 2019.”
Home Depot builds home reno sales
Home Depot built an impressive Q2 with profits up 25% to reach $4.33 billion on sales of $38.05 billion, up 23%, compared to an expected $34.5 billion by analysts.
The company saw double-digit growth in the number of transactions, average order size, and sales per square foot in Q2 2020 compared to 2019. Same-store sales also increased by 10.1%.
“They’re not spending on travel and entertainment and restaurants, they’re spending it on maintaining and enhancing their home,” Chief Financial Officer Richard McPhail said in an interview with CNBC. “And we think that we’ve reintroduced home improvement to the consumer in our markets.”
In an analyst call, CEO Craig Menear said digital sales doubled and customers picked up an estimated 60% of their orders in-store. There’s that winning omnichannel combination again as homeowners stayed home and renovated kitchens, bathrooms and spend big on other home improvements.
Lowe’s digital sales grew too
Likewise, Lowe’s also saw similar home-improvement Q2 growth of sales to reach $27.3 billion with net earnings of $2.8 billion.
“We delivered very strong second-quarter results, with all merchandising divisions posting comparable sales growth exceeding 20% and all US geographic regions delivering comparable sales growth of at least 30 percent,” said Lowe’s President and CEO Marvin Ellison.
Lowes.com e-commerce sales jumped an impressive 135% and the company said it plans to increase capacity by adding four new e-commerce fulfillment hubs and seven new bulk distribution centers in the US.
Shift in payments preferences predominates
Riding right along with the growth in e-commerce sales is a corresponding shift in the use of debit, mobile, and contactless payments in-store and online.
Also, in the mix is the realization by businesses that automated accounting and invoice systems offer the potential for lower costs, faster payments, more efficiency and transparency, and the possibility of much-improved cashflow management.
It’s the perfect storm of the old and the new ways of doing business, and e-commerce omnichannel sales are suddenly at the top of the shopping list for business as they try to respond to quickly changing consumer shopping habits and payment preferences.
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