Retail Radar 09-April-2024

Retail Radar – Weekly

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Top of Mind

The End of an Era: 99 Cents Only Stores and the Decline of Discount Retailers

The recent closure of all 371 99 Cents Only Stores locations marks a significant moment in the changing landscape of American retail. The California-based chain, known for its eclectic mix of deeply discounted merchandise, was a fixture in many communities for over four decades.

Its demise highlights a broader trend: the rise of inexpensive online shopping. However, there is a broader concern with these critical points of destination closing. While discount retailers account for 5 – 6% of US retail, other discounters’ growth has outstripped traditional retail.

Several factors have contributed to this decline. Rising inflation and supply chain disruptions have made it difficult for discount stores to maintain their low prices. The growth of e-commerce giants like Amazon has offered consumers a more comprehensive selection and often better deals. Additionally, changing consumer preferences have shifted towards stores offering a more curated, higher-quality shopping experience.

Interim CEO Mike Simoncic said in a statement that the retailer has struggled for years due to the COVID-19 pandemic, changes in consumer demand, inflation, and rising levels of product “shrink” — a measure that encompasses losses from employee theft, shoplifting, damage, administrative errors, and more.

Social Impact and Food Deserts

The closure of discount stores like 99 Cents Only Stores has a disproportionate impact on low-income communities. These stores often served as a lifeline for families struggling to make ends meet, providing affordable groceries and household essentials. Their absence can exacerbate the problem of food deserts – areas where residents have limited access to fresh, healthy food.

In addition, many of those people need access to online merchants like Amazon. It's more than a loss of a store. It’s the escalation of a loss of food security.

The loss of discount stores can also lead to job losses and a decline in local economic activity. These stores were often significant employers in the communities they served.

The Future of Discount Retail

While the traditional discount store model may struggle, the demand for affordable goods remains robust. Retailers like Dollar Tree and Dollar General are thriving, indicating a shift towards a more streamlined discount model focused on a narrow range of essential items.

99 Cents Only Stores is going into liquidation will Beyond.com scoop up the remains of this next victim of retail ennui?

Tech Spotlight

From Checkout Lines to Line-Free: The Global JWOT Revolution Ignites, But Has the U.S. Flame Burned Out?

Ten years ago, did you think you could waltz into a store, snag what you needed, and bounce without the hassle of checkout lines?

That’s Walk Out Technology (JWOT) for you – a spicy concept that was supposed to reshape retail. Originally Amazon’s brainchild with its Go stores, this tech is still one of the cool new kids on the block, but you’ll need to ask, “Which block?”

But here’s the twist – Amazon’s stepping back, saying "Thank you, next" to running its own JWOT stores.

They're still in the game, dealing the tech like a deck of aces in a white-labeled hand. Before deciding to pass the torch, Amazon had already set up shop with 22 locations in the US. The long-term plans for the technology have yet to be disclosed.

Let’s jet over to China, where JWOT isn’t just fitting in; it’s slaying.

With its streets wired up for mobile payments and its citizens looking for the next big thing in convenience, this digital-first nation is gobbling up JWOT faster than you can say "open sesame." Take Convenience Bee – a heavyweight champion in the JWOT ring, boasting over 2000 stores across 25 cities and bagging a cool $300 million from Tencent. That’s not just playing; that’s dominating.

Stateside, we’ve got the contenders – AiFi, Grabango, Zippin – strutting their stuff, refusing to let the dream die. AiFi earned a 2022 $65 million Series B fundraise, flexing its muscles to take autonomous shopping globally. They’re not just part of the game; they’re looking to run it, aiming to be the biggest name in JWOT.

So, what’s making #JWOT the heavyweight champion in China? It’s all about that smooth blend with the digital lifestyle. This tech isn’t just about skipping lines; it’s about weaving into the fabric of daily life, syncing up with mobile payments and social platforms not just to sell but to connect and dazzle. It’s personal, efficient, and all powered by AI – from keeping shelves stocked to tweaking prices on the fly, minimal human touch is required.

Looking into the crystal ball, JWOT’s future in China isn’t just bright; it’s dazzling. Tailored to digital dynamos and backed by the big guns in AliPay and Tencent, it’s not just changing the game – it’s setting new rules. This isn’t just a tech trend; it’s a global retail revolution, a playbook for the future of shopping that’s personal, automated, and, dare we say, a bit magical.

So here’s the question—are you ready to step into next-generation retail and let JWOT transform your shopping format? And maybe at fire sale prices in the US?

Looking ahead, the future of JWOT technology in China appears promising. Its adaptability to Chinese consumers' digital habits, combined with retailers' strategic implementation to enhance customer experience and streamline operations, suggests a successful trajectory. This model, supported by significant technological advancements and investment, could serve as a blueprint for the global retail industry, signaling a shift towards more autonomous and personalized shopping environments.

The Disruptors

Artemis Patrick: The Trailblazer Ushering Sephora into a Luxe Future

Artemis Patrick, taking the helm at Sephora US, is not just stepping into a role but transforming Sephora into a luxury lifestyle hub. With group company parent LVMH's backing, Patrick's vision is to morph shopping from a mundane task into an unparalleled experience, blending beauty retail with luxury, digitization, and a personal touch.

Under her leadership, Sephora is not just selling products; it's selling an experience underpinned by a solid commitment to diversity, equity, and inclusion (DEI). Patrick's dedication saw BIPOC-owned brands gaining prominence in-store, a move that celebrated diversity and catered to a broader audience. Her prowess earned her the Fragrance Foundation 2022 Circle of Champion award, highlighting her impact.

Patrick’s Retail as a Service (RaaS) initiative within JCPenney, overseeing 500 stores, illustrates her knack for brand-first strategies, setting the stage for Sephora’s future endeavors. However, with Sephora's physical store network facing the dual threats of market saturation and the digital shift, Patrick’s forward-looking strategies are more crucial than ever.

The competition with Ulta Beauty sharpens the focus on creating an inviting, inclusive shopping experience that appeals to all demographics. Patrick’s strategy? Elevating Sephora's brand storytelling, integrating cross-brand initiatives within LVMH, and leveraging digital platforms to maintain Sephora’s aesthetic crown.

Opportunities lie in transforming Sephora stores into destination points, harnessing omnichannel strategies, and embedding technology to enhance customer service and offer a seamless shopping experience. Sustainability and inclusive beauty remain at the forefront, aligning with consumer expectations and driving loyalty.

As Artemis Patrick charts Sephora’s course, How will her visionary leadership redefine luxury retail in an increasingly digital world?

What’s your take on Sephora’s journey into the luxe future under Artemis Patrick’s stewardship?

Read the longer dive into all things SEPHORA , 酩悦·轩尼诗-路易·威登集团 , and Artemis Patrick here. ??

?#RetailTech, #LawrenceLerner, #RetailStrategy, #TechTrends

Onward.

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