The development of American electric power business

Lead: The Wall Street Journal's online edition, published in Tuesday, "web sales are still minimal for many retailers" (remain Sgt for Many Retailers) said that although the internet had revolutionized people's shopping habits 20 years earlier, But the share of online sales in large U.S. retailer revenues remains small. In the second quarter of this year, online sales accounted for only 5.8% of the total U.S. retail share, an increase of only 0.7% per cent.

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Change your shopping habits

While the internet has revolutionized consumer shopping habits about 20 years ago, many of America's big retailers still have trouble connecting the Internet to its business. We can get some clues from the latest documents from Target, Wal-Mart, PetSmart, Fifth & Pacific, to the US Securities and Exchange Commission (SEC).

In these documents, the SEC requires companies that often boast online business capabilities to provide detailed details of online sales of goods. The details are still rare in the entire U.S. retail industry, even though they have long been a cause for concern among investors. U.S. retail sales grew 18.4% per cent year-on-year in the second quarter of this year, compared with a 4.7% increase over the U.S. total, the Department of Commerce data showed.

Taking target, which has always emphasized its online business performance, the company told investors last week that its digital sales have been growing at double-digit rates, and that it is "moving quickly to ensure that we do not become outsiders in the fast-growing digital market." ”

In June this year, when the SEC asked Target to provide specific data on its online business, the latter said that "the share of digital sales in our total sales remains small". Target also acknowledged that the company is still making positive adjustments to the trend of growth in consumer net purchases, but its strategy is to input sales of various digital channels, so it is not convenient to list the operating data of the online business separately.

Target is one of more than 10 U.S. retailers who have been questioned by the SEC recently. The SEC is concerned that retailers are deliberately expanding their online capabilities, claiming that the business accounts for a high percentage of its overall revenue, but at the same time never disclosing the impact of that growth on overall sales. According to the feedback from many retailers, it is quite clear that the absolute value of the online business is still relatively small.

Amazon Ride the Dust

Amazon's network sales exceed the sum of 12 of its top rivals, including Staples and Wal-Mart, according to the business magazine Internet retailer. While the size of Amazon's online business is growing, the business is still growing fast, with a sizeable share of new online sales across the United States. In the second quarter of this year, Amazon's North American sales rose by 30%, outpacing the growth of the entire US electricity and some competitors.

Fifth & Pacific said in a filing to the SEC in May this year that it was unwilling to disclose the contribution of its business to the company's overall revenue, since the separate disclosure of data for a particular business "is irrelevant to investors". Fifth & Pacific owns Juicy Couture, Kate Spade and other fashion brands.

But in late July, the SEC challenged fifth & Pacific's response. The Commission noted that fifth & Pacific had said in an investor conference meeting a few months ago that "the company's electrical business has grown rapidly".

Fifth & Pacific finally made a compromise by discussing online business performance in its second-quarter earnings release this month. It said that although online sales boosted Kate Spade's overall sales growth by several percentage points, the Juicy couture and lucky were less stimulative.

Fifth & Pacific CEO Bill Mccomb (Bill McComb) said in an interview: "Our company will be the entire channel (omnichannel) direct sales of retail business as an important strategy covering all our brands." We are happy to disclose more information. ”

Electric Business

Wal-Mart is the world's largest physical retailer by sales, and launched its business in 2000. The company raised its forecast a few months ago in June this year that online sales would reach $10 billion trillion this fiscal year, but it never disclosed specific revenue for its online business.

Wal-Mart has repeatedly highlighted the progress of its online business with investors. Earlier this month, Wal-Mart's global electric business chief attended the company's second-quarter earnings call, saying that Wal-Mart's global online sales rose 30% in the quarter, with a 200-person business team. In the conference call, Mike Duke, Wal-Mart's CEO, said that "winning competition in the Mack Duck market" was one of the company's six major tasks, and he was satisfied with the current progress.

After the SEC pressed for more information, Wal-Mart submitted a paper this July that disclosed the contribution of the online business to the overall growth of the company's sales. The paper showed that in fiscal year 2013, Wal-Mart in the United States compared to store sales (Comparable-store sales) growth of 2.4%, slightly higher than the 2012 fiscal year 1.6%. Wal-Mart also said it would regularly disclose such information in future earnings.

A Wal-Mart spokesman said: "The electric business is a fast growing piece of our business, and we are increasing our investment in this business." We believe that it is time to provide the relevant information to investors. "The U.S. Department of Commerce data show that in the second quarter of 2013, online sales accounted for the total U.S. retail volume of 5.8%, the year-on-year growth of only 0.7%."

Line Down line transfer

Still, retailers have a strong incentive to follow the trend as consumers ' purchases continue to shift from physical stores to online stores. In the eyes of professional investors such as William Smid (William smead), the growth of online sales has become an important indicator of whether retailers can achieve long-term success.

Smid is the portfolio manager of Smead Capital Management of the fund management company. The strength of online sales, he said, "bodes well for how far retailers can follow the new trends in consumer shopping and how long it will be before rivals." "Smead Capital Management, which manages 620 million of billions of dollars, invests 10% of them in Nordstrom and Cabela ' s, and the two companies have a sizeable online presence.

Online and catalog sales accounted for around one-third per cent of Cabela's 2.7 billion dollar sales last year, while sales of direct business (including online sales) accounted for nearly 10.7% per cent of last year's total sale by department store operators Nordstrom.

Office-supply retailers like Staples have built huge online businesses, largely because many corporate customers have placed orders through the Internet. Retailers, such as Target, Belk and PetSmart, said in a filing to the SEC that the disclosure of online sales alone did not accurately reflect their sales growth, because the user's buying behavior was changing over three channels such as physical stores, Web sites and mobile apps.

Retailers have labeled the practice "full channel", saying they don't care which way users shop, as long as they don't buy from rivals. "The line between several shopping channels is becoming so blurred that it doesn't make sense to differentiate between online sales or in-store sales," said Casey Carl Kessi Carl, head of target channel project. ”

Long-term growth opportunities

In fact, Target has been slow to respond to new online shopping trends. Initially, Target outsourced most of its online operations to Amazon, which later withdrew control and launched its own target.com platform in 2011. As early as about 10 years ago, rivals such as Wal-Mart and Sears had already entered the electricity market.

Target announced that the company's online business has grown significantly over the past few quarters, such as a three-digit increase in mobile-end sales, but the problem is that the base is inherently small. In a letter to the SEC in June this year, Target said: "We have provided information on the growth of digital sales on recent earnings calls to show that our investment has started to pay off." However, for each quarter, digital sales are still very small in our overall sales share. ”

Target provided the SEC with specific data on the online business, but also required the SEC to keep it secret. A Target spokeswoman said the company had informed investors that the online business currently accounted for less than 2% per cent of its total sales of 73 billion dollars.

A spokesman for the PetSmart said the company viewed the electricity business as a long-term growth opportunity, but because the business was less than 1% per cent of its overall sales, it did not contribute substantially to the company's overall business.

Hold high the acquisition of the banner

Target is starting to take further steps this year to drive online business. In the past few months, Target has been in the market for a row, acquiring high-end cooking equipment website chefscatalog.com and the beauty products website Dermstore.com, the company's first acquisition since 1998.

In addition, Target is opening new offices near new retail technology developers, and the company may be able to integrate these technologies into its own business. Target is planning to launch a new service in this year's Christmas shopping season, allowing users to send online orders to a physical store for selection. Wal-Mart and Sears have launched similar projects in 2007 and 2001 respectively.

The company's online sales "account for a small share of our total net sales", PetSmart in a filing with the SEC in May this year. PetSmart also said that disclosure of such data, "will let us in the market competition in a very disadvantageous position." ”

PetSmart believes that competitors will take full advantage of the confidential information disclosed in the SEC document, which will "negatively affect our financial performance, and it would do more harm than good to our shareholders to disclose competitive secret information". (Qing Chen)