There is still a little over a week left to complete your Father’s Day shopping. Apparently that is a good thing, because people are buying a whole lot of stuff for Father’s Day this year. According to the National Retail Federation (NRF), Father’s Day spending this year is estimated to hit a record high of $14.3 billion. While that is still $7 billion below this year’s Mother’s Day spending, it is absolutely mind blowing. Consumers are expected to spend an average $125.92 for the holiday, up from last year’s $115.57. So what are people spending this money on? According to the survey, consumers plan to spend $3.1 billion on special outings, $2 billion each on clothing and gift cards, $1.7 billion on consumer electronics, and $833 million on greeting cards. I thought it was pretty special when my brother and I made a card and “bought” Dad a new tie. How times have changed.
And now, on to the news.
- Walmart to test grocery delivery with Uber, Lyft
- Amazon launches grocery delivery in London
- Trucking jobs report shows another decline in industry employment
- Retail import patterns still uneven
- Target charges suppliers more to help offload unsold inventory
- Survey shows rapid growth in online shopping
- Chainalytics-Cowen Freight Indices: spot prices still depressed vs. contract
Walmart is pushing ahead with innovations in their online grocery business, driven in part by the need to compete with Amazon. The company announced this week that it will test a grocery-delivery service with Uber and Lyft, two crowd-sourced passenger transportation companies that have shaken up the transportation industry. The pilot projects are expected to roll out later this month in Denver and Phoenix. Under the pilot program with Uber and Lyft, a shopper can place a grocery order online and then Walmart employees will select the merchandise and package the order. Walmart will then hail an Uber or Lyft driver to pick up the order and deliver it to the customer’s location. The delivery will cost $7 to $10, and customers will pay Walmart, not the drivers. This is similar to another service that Walmart launched with Deliv at its warehouse chain Sam’s Club in Miami.
Not to be outdone, Amazon is also launching a new grocery initiative. The online retail giant has said its Amazon Fresh food delivery business will now be available to users of its Prime membership plan in central and east London, the first time the service has been offered outside the US. Customers will be able to order from a catalog of about 130,000 items, including those of major high street brands as well as independent local producers. Same-day delivery will be available, allowing shoppers to order at lunchtime for a delivery as soon as 5 pm the same evening. The initial 30 day trial is free, but then will be available for around $10 a month on top if its Prime membership price.
According to preliminary figures from the Department of Labor’s monthly Employment Situation report, the for-hire trucking industry’s total employment fell by 2,400 jobs in May. The troubles facing employment in the trucking industry are in stark contrast to the overall unemployment rates across the US. In fact, this was the third month of five this year where employment has fallen on a month-to-month basis. May’s trucking employment numbers represent the lowest numbers since last October. If this situation does not improve, it will continue to take a toll on trucking costs and the long term outlook of the industry.
According to the monthly Global Port Tracker report released today by the National Retail Federation (NRF) and Hackett Associates, import cargo volume at the nation’s major retail container ports is expected to be mostly down throughout the summer. Ports covered by Global Port Tracker handled 1.44 million Twenty-Foot Equivalent Units (TEU) in April, the latest month for which after-the-fact numbers are available. That was up 9.1% from March but down 4.6% in April 2015. One TEU is one 20-foot-long cargo container or its equivalent. May was estimated at 1.54 million TEU, down 4.2% from the same month last year. June is forecast to be down 1.9% from last year; July up 0.2%; August down 3%; September down 3.5%, and October up 3.4%.
Target is asking many suppliers to take on up to an extra 3-5% of the cost of promotions and price cuts after slow sales so far this year. Retailers generally offer steep discounts or bundled packages for slow-moving inventory at stores. This is all geared around making more room for newer products. Suppliers themselves have their own offers and advertising, and usually negotiate with retailers on how the cost of these promotional budgets will be split. With store sales down, Target is pushing its suppliers to take on the additional discounts to make room for new products. According to reports, most suppliers have said they have no choice but to accept Target’s terms so old stock can make way for new season products.
According to an annual survey of more than 5,000 online shoppers by UPS, for the first time, consumers have indicated they made more of their purchases online than in stores. The shoppers now made 51% of their purchases on the web compared with 48% in 2015 and 47% in 2014. This is a monumental shift in the retail market, even if the majority of revenues still come from the store rather than online purchases. This is due in large part to the availability of items online, whether that is through traditional retailer’s websites or Amazon, as well as the number of options for e-commerce fulfillment. It will be interesting to see if the percentage of revenues driven from online retail continues to creep up too.
And finally, the Chainalytics-Cowen Monthly Freight Indices continue to show spot prices still depressed versus contract. There is a wide gap between spot & contract rates in both temp-control & dry-van markets. Notably, this is happening despite recently lowered contract rates. The dislocation is more pronounced for reefers than dry-vans. Brokers remain in a better position than asset-based truckers. Truckers continue to face a weak spot market.
That’s all for this week. Enjoy the weekend and the song of the week, Money by Pink Floyd.