Retail Category Successes Amidst the Carnage, Amazon-like Disruptor Appears

0 Posted by - 3rd August 2020 - Technology

Too many of our once great retailers are going out of business, but some categories are doing better … [+] than others.

Getty, Sanford Stein

We have all been inundated with numbing numbers, associated with the near-weekly cadence of once great retailers filing for Chapter 11 bankruptcy. Or worse dissolving altogether.  A July 16thWall Street Journal article, entitled “Which Stores Are Opening or Closing Amid the Retail Shakeout” provides us with a sector by sector look at the overall 2020 retail openings and closings. The article is the most detailed look of net closings and openings by category and brand that I have seen. And while the numbers tallied in mid-July are certainly in flux, the big picture is both sobering and revealing.

Dissecting the Carnage

The tabulation highlights economic and consumer shifts, already in motion before COVID-19, and accelerated since. I enlisted my trusty calculator and novice-level graphic design skills to pull together a chart that highlights some profound category imbalances and addresses some core industry trends.

Store openings and closings through July 2020 highlight some stark category imbalances that speak to … [+] core industry trends.

Sanford Stein

Of the seven categories, Apparel, Discount, Health & Beauty, Home, Department Store, Food & Grocery, and Others; two of the seven categories appear as clear outliers. The fact that both the Discount, and Food and Grocery categories were anomaly’s with openings outnumbering closings, tells us much about the prevailing economic and consumer behavioral shifts already underway, and exacerbated by the pandemic. I believe these factors are likely to continue, for the foreseeable future.  

Belt Tightening and Middle-Class Collapse

We are seeing clear signs of economic adjustment, due to coronavirus related layoffs, general unease, and consumer retrenchment. Both the Discount category and Food & Groceries projected 2020 growth speaks volumes. This is further highlighted by the fact that the dollar stores make up 75 percent or 1426 of the store openings in that category. Additionally, the lead player, Dollar General

, represents 979 of the announced new 2020 locations. They are also opening larger stores which include a substantial amount of food in their product mix. It is also fair to say that the dollar stores are cutting into what was once exclusively Walmart


The Food & Grocery growth has been supercharged by Aldi, which is booming as more Americans by necessity or choice, are seeking out their stores and revisiting them often. As I reported last October, Aldi is now the third largest grocery retailer, behind Walmart and Kroger

, and undoubtedly the most efficient. Having crossed the 2,000-store mark in the U.S. they are in the midst of a $5 billion expansion and renovation plan which includes penetration beyond the 36 states they already occupy.

And, to quote Coresight Research founder and CEO Deborah Weinswig, who compiled the data for the WSJ article, “It’s cool to be frugal now.” Well, cool or not it is where things are, and where they will probably stay for a long while. Our economy is likely to be impacted by the residue of COVID-19 for some time to come.

Buy Now, Pay Later (BNPL) is about to yield an Amazon-like disruption that may lead to carnage … [+] throughout the credit card industry.

Sanford Stein

By Now, Pay Later Redux

“Buy now, pay later” has been a part of consumer culture for most all our lives. Buying on credit arguably helped build the American middle class. And lord knows many consumers have gotten strangled by it. A party to that strangulation has been the credit card companies with their ginormous interest rates and “small print” added charges. There are a whole group of companies that may be doing to the credit card companies what Amazon

did to retailing. And it is led by Affirm, with its over 6,000-plus U.S. merchant partners.

Affirm allows customers to split their total purchase amount into four equal, bi-weekly payments, which are interest-free. Affirm’s Founder and CEO Max Levchin recently told CNBC “The age of credit cards is rapidly coming to, I wouldn’t call it an end, but a viable alternative in the buy-now-pay-later tools that are built around transparency, clarity, and simplicity, it’s no longer a niche.”

To add an exclamation point to the company’s lofty ambitions, Shopify
SHOP recently announced that Affirm would become its exclusive “buy now, pay later” (BNPL) partner, increasing its exposure, exponentially. As of the end of last year, 52% of Shopify’s over one-million merchants were U.S. based. The move will provide an ever more prudent and informed consumer with more options in managing personal finances while throwing down the gauntlet on an industry ripe for disruption.

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