Why Levi’s is opening 100 new stores as Covid online sales boom grows
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A Levi’s logo on the window of a Levi Strauss & Co. store in London.
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In the face of the pandemic shoppers shop more online and both businesses and investors are trying to make ecommerce work for them.
E-commerce sales accounted for just 3.6% in total U.S. retail sales, according to data from eMarketer.
AmazonIts business grew tenfold during the 2010s. WalmartIt has also been able to attract new users through its online platform. WayfairE-commerce boomed and nearly every retailer brand made sure it was online. Online sales accounted for 14% of all retail sales by 2020.
Covid-19’s pandemic has accelerated that growth, and e-commerce is now predicted to account for about half of all e-commerce sales. 15.3% of total retail sales by the end of this yearAccording to eMarketer, it is currently at 23.5% of total sales. That is not expected to slow down — that figure is predicted to increase to 23.5% of total sales by 2025.
Consumers want a seamless shopping experience. He or she wants to be able to interact with us in our stores as well as on our website and so building an omnichannel experience has been critical during the pandemic,” Harmit Singh, CFO of Levi Strauss & Co, said at the recent CNBC @Work Summit.
Combining online and in-store shopping
Levi Strauss & CoThis company operates about 3,000 retail stores as well as shop-in shops. In addition to selling products online, it has also focused on expanding its investments in digital. However, the focus on customer experience shopping in store is still important.
Fast a fourth (44%) of Levi’s fiscal 2020 sales were made online, either through Levi’s website or via the digital presence of wholesalers. Online sales accounted for less than 10% in 2015
Levi’s opened a brand new store called “NextGen” in Palo Alto last year as part of its efforts to increase direct-to-consumer sales. The store’s “NextGen”, which is digital-focused, features include integration with its app, curbside pickups and contactless return, as well as an assortment driven by local customers.
Singh stated that 100 stores were opened last year by the company and plans to open over 100 more this year. Singh previously stated that the company will open some new experiences stores.
Singh stated that they increased their investments to drive more digital experiences. We were able “to test things, scale things at speeds not possible prior to the pandemic,” Singh stated.
In addition to the changes Levi Strauss has made in its approach to distribution infrastructure during the pandemic, it has also seen a shift in how they think about the online and in-store experience.
Singh said that the omnichannel strategy on the consumer-facing side of the business led the company to take a look at legacy distribution centers — some that were only fulfilling products for wholesale customers, while other distribution centers were servicing the needs of e-commerce consumers. The company reintroduced the omnichannel strategy for West Coast distribution when it adopted the ship from-store strategy. He said this leads to lower inventory costs and improved service quality.
It will be a huge difference, I think. Singh explained that now we have expanded our ship from-store worldwide and are setting up more omnichannel distribution center in Europe and the rest of Europe.
Estee Lauder also strives to improve the in-store and online experience, including virtual try-ons and online beauty advices, Tracey Travis (CFO of Estee Lauder) said. The Estee Lauder CompaniesAt the CNBC event, he said:
She said that “our in-store experience is so strong, it’s fundamentally what the company has been focusing on for many, many decades.” It was crucial to ensure that online customers have a seamless experience.
Deepening your online sales focus
“One thing that has certainly happened in this pandemic was an acceleration. [a]Travis explained that our online business has experienced a three-to-five-year acceleration.
Estee Lauder still believes that brick and mortar plays a vital role in the success of her company, although she also noted the impact of the pandemic on some of its strategies.
She stated that the focus of the past 12 months has been online, adding capabilities to our online channel and trying to determine how bricks and mortar will recover. Also, assessing where bricks and mortar might recover and where to invest and disinvest.
Estee Lauder owns brand names like Clinique and Mac as well as Origins and the eponymous beauty range. According to their earnings report, 28% of $16.22 billion in global net sales during its fiscal 2021 year was made through online channels. According to filings, 40% of Estee Lauder’s business was online in North America.
Although online sales of Estee Lauder are more than twice as high in 2019 than they were in 2019, physical retail still plays a significant role. The department store accounted for 21 percent of the company’s global sales, and sales from travel retailers, like duty-free shops located in airports, represented 28%.
Future of e-commerce, retail
As more people shop online, it will become increasingly important for retailers to consider how the balance between brick-and-mortar and ecommerce evolves.
Saks Fifth Avenue was purchased by the original owner earlier this year. split apart the luxury retailer’s websiteA separate company from the existing 40 shops. It stated that the company’s new digital business would be worth $2 billion or nearly double its annual sales.
Jana Partners, an activist investor, bought a stake last week in Macy’sI wrote a letter to the board of directors calling for a similar move. Jana previously stated that Macy’s online store could be. worth about $14 billionThis is almost twice the current market capital of the company.
Macy’s sales through e-commerce have almost doubled during the last four year. Macy expects that 2021 sales will be between $8.35 billion to $8.45 billion.
Did you miss this year’s CNBC At Work summit? The full session recordings are available on demand. https://www.cnbcevents.com/worksummit/
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