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Michaels revamped its loyalty program with tiered membership and rewards

Mary Meisenzahl — Thu, 09 Nov 2023 14:54:18 +0000

The Michaels Companies Inc. made significant updates to its rewards program in 2022. The changes were in response to consumer feedback, which asked for a simpler program with more customization, says Heather Bennett, executive vice president of marketing and ecommerce at Michaels.

Michaels ranks No. 111 in the Top 1000, Digital Commerce 360’s ranking of the 1000 largest online retailers in North America.

A tiered loyalty program allows better targeting

The crafting retailer created Michaels Rewards, which allows all members to earn 3% back in rewards for all purchases. It’s free to join, and customers who spend $300 or more in a year can earn 6% back in vouchers that can be used at the retailer. 

“Convenience and personalization are the most important elements in any membership program,” Bennett says. “Loyalty programs should not be developed with a one-size-fits-all approach, which is why we offer three tiers in our program.”

A tiered reward system allows a retailer to offer the greatest savings to the most loyal customers, who will likely return to make more purchases in the future, Bennett says. That’s why Michaels added a credit card in the latest round of updates to its program, which comes with 9% back in rewards. Members without the credit card can reach a maximum of 6% in rewards. The credit card was something customers asked for when they gave Michaels feedback, she says.

“This benefit of 9% in rewards is really meaningful for those customers who are stocking up on supplies frequently or run their own creative businesses,” that require craft supplies, Bennett says.  

Loyalty program membership is growing

Bennett says the program has “tens of millions” of members. Membership is growing 9.75% year over year. Plus, more than 50% of Micheals customers are rewards members, she says. She declined to share a specific membership number.

“Members in the Rewards program are more likely to add more items to their baskets and make purchases more frequently than those not in the program thanks to the benefits of stacking up rewards points,” Bennett says.

For example, customers who reached the 6% reward level spend on average 2.8 times more than members in the 3% tier. Credit card holders in the 9% tier spend an average of four times more than customers without credit cards, she says.  

Retailers can use rewards strategically

Retail chains are good examples of retailers that can effectively use loyalty programs to their advantage, says Neil Saunders, managing director of retail analysis firm Global Data.

While tiered programs like those employed here aren’t “strictly necessary,” Saunders says, they make a lot of sense.

“Retailers want to give the best rewards to those who spend more so they can ensure their loyalty. They also use tiers to encourage people to spend more so they can move to a higher tier and get better rewards or benefits,” he says.

The potential downside is that consumers in lower tiers may not feel as valued. However, personalized rewards like a birthday gift can combat this and keep consumers engaged, he says.

Loyalty programs in the Top 1000

Fewer than one-third of Top 1000 retailers have a loyalty program. The number of Top 1000 retailers with loyalty programs has grown 16.8% since 2019, according to Digital Commerce 360 data. The majority of the growth took place in 2020, and has remained nearly flat since.

Though not strictly necessary, “rewards programs can be very useful for retailers both because they enable them to gather information about customers and drive certain behaviors,” Saunders says.

If a retailer does choose to use a rewards program, it must have a clear purpose, he says.

“Is it to increase loyalty, to stimulate consumers into spending more, to gather data, to improve price perceptions, and so on? Knowing the purpose is vital as it then allows retailers to work out the cost of a scheme versus the potential reward,” Saunders says.

Retail chains are far more likely than other merchant types to have loyalty programs. 48.1% of retail chains have a free loyalty program. That’s compared to 26.5% of consumer brand manufacturers, the next highest merchant type. Retail chains with loyalty programs generated $164.47 billion in web sales for Top 1000 retailers in 2022, 46.8% of total sales in the category. 

This high penetration of retail chains having loyalty programs could be because they are more likely than other types of merchants to have the resources and finances to implement an effect rewards program, Saunders says.

“Chains have a very large base of customers, so rewards schemes make sense in terms of allowing them to gather data and use incentives to encourage more buying,” he says. Because these programs are so common among retail chains, consumers are also more likely to expect them, he says.

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Successful loyalty programs give consumers an incentive to spend more

Mary Meisenzahl — Wed, 08 Nov 2023 14:44:44 +0000

Chico’s FAS Inc. made major changes to its loyalty program in June 2022 for the first time since the 1990s. “The previous programs had significant limitations of what we would be able to do in the future,” senior vice president of marketing Leana Less says. After 30 years, the loyalty programs from Chico’s competitors had […]

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Michaels launches MakerPlace online marketplace

Mary Meisenzahl — Tue, 07 Nov 2023 18:01:02 +0000

The Michaels Company is launching a new online marketplace, called MakerPlace. The marketplace listed hundreds of thousands of SKUs at launch on Nov. 1, Michaels said in a press release.

Michaels ranks No. 111 in the Digital Commerce 360 Top 1000 database.

Michaels MakerPlace competes with Etsy

The retailer launched its marketplace following a successful three-month beta test, the retailer said.

MakerPlace is positioned as a competitor to Etsy Inc. In addition to handmade products, Michaels MakerPlace sellers can sell places in virtual classes and how-to guides.

Handmade bud vases for sales on Michaels MakerPlace.

“Our research found that nearly three in four makers believe there’s a void in the online marketplace landscape today, and that existing platforms come with pain points like high upfront costs, increasing fees for product listings and competition with an overflow of mass-produced goods,” says Heather Bennett, executive vice president of marketing and ecommerce at Michaels. “MakerPlace by Michaels was designed in direct response to these challenges with the goal of helping handmade artists and makers succeed,” she says.

Michaels MakerPlace doesn’t charge a listing fee to sellers. It charges a 4% referral fee to sellers on its basic subscription plan, along with a 2% referral fee to sellers in the professional tier, which costs $9.98 per month. All sellers pay a transaction fee of 3% plus $0.20 per item.

In comparison, Etsy charges a $0.20 listing fee and a 6.5% transaction fee. Etsy ranks No. 17 in Digital Commerce 360’s ranking of the Top 100 online marketplaces by GMV.

Why add an online marketplace?

Starting an online marketplace puts Michaels in good company. 40 retailers in the Top 1000 operate a consumer marketplace, with 23 those in the Top 100, according to Digital Commerce 360 research.

“For retailers like Michaels, with specific audiences, adding a marketplace expands selection in a way that consumers appreciate,” says James Risley, research data manager and senior analyst at Digital Commerce 360.

Michaels can lend its name recognition and trust among consumers to marketplace sellers, and consumers might then feel safer buying those items from a known source, he says. It’s also a way to generate revenue beyond selling goods, with the learning component in the marketplace.

“With Michaels’ solution, there’s a little risk in moderation, making sure a woodworking class isn’t turned into a venue for how to make weapons. But I think it’s a good niche for this kind of non-goods marketplace,” Risley says.

MakerPlace will operate alongside the other third-party marketplace Michaels launched in February. That marketplace appears on Michaels.com alongside first-party goods, and expanded Michaels online offerings to more than 1 million SKUs.

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Earnings recap: What you missed from Joann, Designer Brands, and more

Mary Meisenzahl — Fri, 09 Jun 2023 16:23:26 +0000

Apparel, sports, and jewelry retailers in Digital Commerce 360’s Top 1000 list of ecommerce retailers in North America reported quarterly earnings this week. These are the highlights you need to know. Read more earnings coverage here.

Academy Sports and Outdoors (No. 136)

Net sales were down 7.3% year over year for the first quarter to $1.38 billion. The decline was due to fewer transactions and smaller ticket size, president Michael Mullican told investors. The retailer did not disclose sales data for ecommerce.

Academy Sports and Outdoors plans to open 120 to 140 stores in the next five years, with the goal of using them to grow omnichannel sales and use them as distribution centers, Mullican said.

Chico’s FAS Inc. (No. 108)

Ecommerce sales were “up low single digits and outpaced stores on very strong traffic,” at Chico’s for the first quarter, chief financial officer PJ Guido told investors.

Online sales made up just under half, 41% of revenue over the last 12 months, Guido said.

Designer Brands (No. 78)

Net sales for the shoe retailer declined 10.7% to $742.1 million. Designer Brands did not share specific information about ecommerce sales in the quarter. The retailer is on track for its goal of doubling owned brands between 2021 and 2026, with the recent addition of Keds.

Five Below Inc. (No. 584)

Five Below grew sales 14% to $726 million in the first quarter, the retailer reported. The company didn’t share specific ecommerce sales, but Five Below’s social media presence is growing and driving traffic, CEO Joel Anderson told investors. Recent influencer campaigns also drove engagement, he said.

Joann Inc. (No. 307)

Ecommerce sales at Joann declined 1% year over year for the first fiscal quarter. Net sales and comparable sales both declined more quickly, down 4% over the previous year. Online sales made up 11.8% of revenue in the quarter. Sewing and craft online sales grew during the period, while craft technology sales declined, the retailer said.

App downloads have also grown to 15 million, the retailer said, and BOPIS has been especially popular with customers. Joann didn’t disclose what percentage of sales were made through the app.

Kirkland’s Inc. (No. 510)

Ecommerce sales represented 27% of total sales in Q1, down from 28% in Q1 of the previous year, Kirkland’s reported. Total sales across stores and online were down about 4%, driven by lower traffic in stores and online. Stores performed slightly better than online channels, Kirkland’s told investors.

Rent the Runway Inc. (No. 258)

Apparel rental company Rent the Runway reported Q1 revenue grew 10% year over year to $74.2 million. The retailer reached 145,220 active subscribers, a 15% increase over Q4.

Rent the Runway is also implementing new AI technology in search in 2023, the retailer announced.

Roots Canada LTD (No. 668)

Sales were $41.5 million in Q1, down from $43.1 million in Q1 2022. Net loss was also more than in 2022, at $8 million compared with $5.3 million last year. The first quarter typically represents just 15% of annual sales, the retailer said.

A few categories were bright spots for Roots in the quarter. Apparel categories were particularly strong, with dress and skirt sales up “five fold.” Activewear grew 50% year over year, and represented 10% of sales in the quarter.

Signet Jewelers Ltd. (No. 61)

Signet Jewelers reported ecommerce sales made up 23% of total sales in the first quarter. Ecommerce revenue is up 70% over 2020, the jewelry retailer said.

Total sales were down 9.3% year over year to $1.7 billion. Part of the declining sales are due to a drop in engagements from the COVID pandemic disrupting dating in 2020, CEO Gina Drosos told investors.

Torrid LLC (No. 224)

Online sales made up more than half of total revenue in Q1, Torrid said. Net sales decreased 11.8% year over year to $293.9. Traffic was “volatile and challenging,” both in stores and online, CEO Lisa Harper told investors.

“Once our customer finds us, she extends her shopping with us through our online capabilities, resulting in a strong omnichannel,” Harper said.

Vince LLC (No. 855)

Net sales decreased 18.3% year over year to $64.1 million in Q1, Vince reported. The decline was driven by a 6.3% decrease in Vince brand products, and a 99.2% decrease in Rebecca Taylor sales as Vince winds down the brand. The retailer didn’t share ecommerce sales figures, but CEO Jack Schwefel said stores outperformed ecommerce sales, in line with broader industry trends.

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Under Armour ecommerce grows 6% in fiscal Q4

Abbas Haleem — Wed, 10 May 2023 18:20:38 +0000

Under Armour ecommerce sales accounted for 46% of the retailer’s direct-to-consumer sales in its fiscal fourth quarter ended March 31, 2023. The sporting gear retailer’s direct-to-consumer revenue grew 3% year over year in Q4, to $454 million.

Total Under Armour revenue for the quarter grew 8% to $1.4 billion, the retailer said in a May 9 statement. Revenue from sales in North America increased 3% to $862 million, and international revenue simultaneously increased 16% to $526 million.

Under Armour ecommerce growth

Furthermore Under Armour ecommerce sales grew 6% year over year in Q4. And for the year, Under Armour ecommerce increased 3% and represented 42% of total DTC business.

“From a digital perspective, we will continue to work to reduce promotional activities in our ecommerce business,” said Stephanie Linnartz, president and CEO. “However, in short order, ua.com must become a showcase for our brand. So we are investing in improving the digital experience, including better product presentation, streamlined checkout and faster mobile site speed.”

She also added that Under Armour’s wholesale business includes relationships with sports specialty stores, department stores and pure-play ecommerce companies. Under Armour wholesale revenue increased 10% year over year in the quarter.

In North America, she said, Under Armour’s “DTC business was flat during the quarter with solid ecommerce growth offset by softness in our retail stores.”

Under Armour Inc. ranks No. 102 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers by web sales.

Under Armour earnings

For the fiscal fourth quarter ended March 31, 2023, Under Armour reported:

Revenue increased 8% to $1.399 billion from $1.3 billion in the year-ago quarter.
Under Armour ecommerce grew 6% and accounted for 46% of direct-to-consumer sales.
DTC sales grew 3% to $454 million.
Wholesale revenue increased 10% to $909 million.
North America revenue increased 3% to $862 million.

For the fiscal year ended March 31, 2023, Under Armour reported:

Under Armour revenue increased to $5.90 billion. That’s up 3% from $5.727 billion the previous fiscal year.
Wholesale revenue increased 6% to $3.5 billion.
Direct-to-consumer revenue decreased 3% to $2.3 billion.
Under Armour ecommerce increased 3% and represented 42% of total DTC business for the year.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports.

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Top 5 online retailers in Sporting Goods

Farnia Ghavami — Tue, 09 May 2023 21:47:24 +0000

Top 5 sporting goods retailers ranked by annual ecommerce sales: Bass Pro Shops – 2022 ecommerce sales – $3.01 billion Dick’s Sporting Goods – 2022 ecommerce sales – $2.72 billion Peloton – 2022 ecommerce sales – $1.96 billion REI – 2022 ecommerce sales – $1.52 billion MidwayUSA – 2022 ecommerce sales – $1.17 billion More […]

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Sporting goods online retailers’ category snapshot [Next 1000]

Farnia Ghavami — Tue, 09 May 2023 21:05:36 +0000

Trends and Facts from the Next 1000 Sporting Goods online retailers: Next 1000 Sporting Goods online retailers grew online sales 2.9% in 2022. Next 1000 Sporting Goods online retailers sold over $1 billion online in goods in 2022. Total retail sales for Sporting Goods in the U.S. grew 1.7% in 2022. Total retail sales for […]

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Chewy and Petco sales were up in 2022 as pet parents spent more

Mary Meisenzahl — Thu, 23 Mar 2023 18:38:32 +0000

Competing pet retailers Chewy and Petco Health and Wellness Company Inc. both reported growing sales for the fourth quarter of 2022.

Chewy’s sales for its fiscal fourth quarter ended Jan. 29 were up 13.4% over the previous year to $2.71 billion. For Petco’s fiscal quarter ended Jan. 28, it reported sales were up 4% to $1.58 billion.

Chewy ranks No. 14 and Petco ranks No. 96 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American ecommerce retailers.

Autoship, food, and health are key for Chewy

Consumable and health care products were “pillars of strength” for Chewy in the fourth quarter, CEO Sumit Singh told investors. Sales of consumable and health products were up 18.5% over the year-ago period in the fourth quarter, and made up 82% of net sales. Their sales grew enough to offset declines in more discretionary categories, including dog beds and toys.

Food and health products are frequently sold as recurring shipments, which now make up the majority of Chewy’s sales. Autoship sales grew 18% in the fourth quarter, and made up nearly three-quarters (73%) of total sales in the quarter. $1.98 billion of sales in the fourth quarter came from autoship products, chief financial officer Mario Marte said.

Petco leverages its physical presence

Unlike Chewy, Petco has more than 1,500 North America stores in addition to ecommerce, and it is using them to its advantage.

More than 90% of customers who make online purchases through Petco choose same-day delivery or buy online, pick up in store (BOPIS) when given the option, CEO Ron Coughlin told investors. Petco uses its locations as “micro distribution centers” to get those products to customers quickly and with lower fulfillment costs than they’d otherwise require, Coughlin said. Petco did not share what percentage of total sales were digital.

The retailer also attracts customers to its stores with veterinarians and groomers. Petco hired 1,100 additional veterinarians in 2022, with a vet presence in 90% of stores, the company said. This is a valuable investment, the company said, because customers who use vet services are worth 2.3 times the lifetime spending of customers who do not.

Services, including vet and grooming, were up 15% in the quarter.

The pet market keeps growing

The pet care industry in the U.S. is massive, and both Chewy and Petco have plans to keep growing sales as people remain willing to spend money on their pets.

Singh told investors that the U.S. pet industry is valued at $130 billion, and that it continues to grow even during economic downturns. Morgan Stanley predicts the industry will be worth $230 billion by 2030. Pet care retailers in the Top 1000 collectively grew web sales 20.1% in 2021, reaching $12.34 billion.

Chewy earnings summary

For the fiscal fourth quarter ended Jan. 29, Chewy reported:

Net sales grew 13.4% to $2.71 billion.
Net income was $6.1 million, up from a $63.6 million loss in the year-ago period.
Net sales per active customer grew 15% from $430 to “nearly” $500.

For the fiscal year ended Jan. 29, Chewy reported:

Net sales grew 13.6% to $10.1 billion.
Net income was $49.2 million, up from a $73,817 loss in 2021.
Total active customers stayed steady at around 20.4 million.

Petco earnings summary

For the fiscal fourth quarter ended Jan. 28, Petco reported:

Net sales grew 4% to $1.58 billion from $1.51 in the year-ago period.
Net income increased 12.9% to $32.7 million.
Active customer base grew by 70,000 to 25 million.
The perks program launched and added 300,000 members.

For the fiscal year ended Jan. 28, Petco reported:

Net sales grew 4% to $6.04 billion, from $5.81 billion in 2021.
Net income was down 44.8% to $90.8 million.
Veterinarians grew by 40% to 1,100.
50 vet hospitals added to total 247.

Percentage changes may not align exactly with dollar figures due to rounding.

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Academy Sports and Outdoors earnings in brief: online orders surpassed 10% of sales

Mary Meisenzahl — Fri, 17 Mar 2023 19:15:37 +0000

Academy Sports & Outdoors Inc. reported overall sales were down in 2022 while ecommerce sales grew.

The retailer said total sales were down 5.6% to $6.4 billion for the year ended Jan. 28. Over the same period, ecommerce sales were up 9.1% to make up 10.7% of total sales, an increase of $56.8 million. The same held true for the fourth quarter, with total sales down 3.4% to $1.75 billion while ecommerce sales grew 1.4% year-over-year.

Academy Sports & Outdoors ranks No. 139 in Digital Commerce 360’s Top 1000 ecommerce retailers in North America.

Though online sales are only about 10% of the business as of 2022, they’ve shown large increases since 2019. Digital sales were up 175% in 2022 over 2019. This puts the company ahead of its goal of 10% digital sales by 2023, it said.

Academy Sports & Outdoors’ collection of more than 250 stores is also an advantage for fulfilling online orders, CEO Ken Hicks said in a call with investors. About half of online sales in 2022 were buy-online-pickup-in-store (BOPIS), and 75% of online orders were fulfilled by stores, Hicks said. The company plans to open 13 to 15 new stores in 2023, with the expectation that they will make omnichannel sales a larger part of the business.

Academy Sports & Outdoors earnings summary

For the quarter ended Jan. 28, Academy Sports & Outdoors reported:

Net sales decreased 3.4% from $1.8 billion to $1.75 billion.
Ecommerce sales grew 1.4% from 2021.
Average ticket size grew 1.3% over the same period in 2021.
Net income increased 11.2% from $141.8 million in 2021 to $157.7 million in 2022.

For the year ended Jan. 28, Academy Sports & Outdoors reported:

Net sales decreased 5.6% from $6.77 billion in 2021 to $6.4 billion in 2022.
Ecommerce sales grew 9.1% to make up 10.7% of total sales.
Average ticket size grew 2.0% while transactions were down 8.2% over 2021.
Net income decreased 6.5% from $671.4 million in 2021 to $628.0 million in 2022.

Percentage changes may not align exactly with dollar figures due to rounding.

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Shein rival Temu makes splashy Super Bowl debut

Bloomberg News — Mon, 13 Feb 2023 16:58:54 +0000

Chinese-owned ecommerce upstart Temu made its Super Bowl debut on Feb. 13, an unofficial coming-out party for an online shopping app that has climbed American download charts since its debut late last year.

PDD Holdings Inc.’s service ran two 30-second spots featuring a trendy shopper twirling and dancing to phrases like “Cha-ching! I feel so rich, oh yeah.” Like Shein, it has gained a reputation for cut-rate pricing and fast delivery. PDD, formerly known as Pinduoduo, said it’s also giving away a total of $10 million to users via online sweepstakes.

Temu launched in September and rapidly scaled Apple’s U.S. app store. It’s now considered a serious competitor to Shein, the fast-fashion phenomenon that has also fired up American shoppers. But PDD, which plans to launch Temu in Canada as soon as this month, offers a broader range of goods from pet supplies to groceries.

Temu momentum and Asia ecommerce leaders

Many apps that enjoy initial success fade away over time as incumbent leaders ramp up competitive pressures. Owner PDD is known in China for making inroads into markets major players cover less, including Alibaba Group Holding Ltd., such as lower-income rural areas.

Alibaba owns and operates Taobao and Tmall, which hold the No. 1 and No. 2 spots in the ranking for Digital Commerce 360 Online Marketplaces. Alibaba also owns Lazada Group, which is No. 2 in the Asia Database, Digital Commerce 360’s rankings of the largest online retailers in Asia by web sales.

Shein Group Ltd. is No. 36 in the Asia Database.

Getting its name from “Team up,” Temu wants to replicate PDD’s social commerce model in North America. If it sustains its initial momentum, the app could join just a handful of Chinese-owned internet services to have succeeded in the U.S., including Alibaba’s Aliexpress and ByteDance Ltd.’s TikTok.

Super Bowl spots like Temu’s “Shop Like a Billionaire” typically cost millions to produce and air. However, many brands have considered them essential exposure over the years. Analysts expected Sunday’s game between the Philadelphia Eagles and Kansas City Chiefs expected to draw tens of millions of viewers. The Temu ad ran twice on Sunday, during the first and third quarters.

“Through the largest stage possible, we want to share with our consumers that they can shop with a sense of freedom because of the price we offer,” PDD said in a statement.

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