The retailer continues to adjust how it engages with subscribers, says Sydney Hamilton, senior director of digital marketing.

“When we started this program back in 2021, it was about ‘how do we just get out there and make a name for ourselves in the college space?’” Hamilton says.

Shoppers can opt out. But, once subscribed, the retailer can re-engage with shoppers during other busy shopping periods.

This year, college-related sales exceeded expectations, Hamilton says, without revealing more. The retailer shared sign up details through signage in-store, online, email and through the header of the retailer’s website. The retailer’s back-to-school messaging campaign is growing in popularity. In 2022, The Container Store enrolled more than 121,000 subscribers, which was 61% higher year over year compared with 2021.

The Container Store shared sign up details through signage in-store, online, email and through the header of the retailer’s website for its college back-to-school messaging campaign.

Back to school SMS text campaign

The Container Store began texting college-bound shoppers last spring — well before school started, Hamilton says.

“We understand this isn’t necessarily the time when people start purchasing,” Hamilton says. “But we looked at when college-bound high school graduates start getting gifts at graduation parties. So we started engaging in April and May about e-gift cards.”

The retailer uses mobile marketing vendor Vibes to reach customers. It’s not always about a sale, Hamilton says. The engagement rate for SMS, MMS and in-app push messages around types of products have increased, she says. The software looks at the list of recipients and their engagement history to determine who is likely to convert at one of three send times a day, Hamilton says. Vibes then sends messages out during their respective engagement times.

“We’ll share the types of products we have and show items they could potentially be using,” Hamilton says. “It’s been a great way to keep people engaged outside of those prime shopping moments.”

Click through rates and promotions

The click through rate (CTR) varies. This year, the retailer sent a text featuring a $20-off promo code for coffee machine and accessories manufacturer Keurig that resulted in 9% CTR. The retailer’s benchmark is 5%. Click through time is best at about 10 a.m., Hamilton says. The text was optimized for send times, meaning that they sent the message on a single day but split it to send in the morning only to SMS subscribers who had shown to engage more with text messages in the mornings. The same logic was applied to texts sent in the afternoon. This resulted in higher engagement versus sending it to all college SMS subscribers at the same time, according to the retailer.

Click through rate is a metric that measures how effective an ad is by calculating the percentage of people who view an ad and then click on it. A benchmark is the typical percentage of consumers who click on a retailer’s content.

The Container Store also sent an SMS text with a 20% discount on 3-tier storage carts, stacking drawers and other storage items. These also saw strong engagement, particularly because the promotion was targeted to only subscribers that previously purchased storage products.

Filling in the Bed Bath & Beyond gap

In addition to targeting text subscribers to maximize engagement, the retailer also noticed an opportunity in 2023 after Bed Bath & Beyond filed for bankruptcy. Online-only home goods retailer Overstock.com purchased it and has rebranded as Bed Bath & Beyond in June 2023. The website went live in August 2023. The retailer was a go-to shopping destination for many back-to-school college students.

“With Bed Bath & Beyond no longer in the market, it did leave a whitespace [this year],” Hamilton says. “So we asked ourselves, where can we fill in?”

Hamilton says The Container Store customer is looking online as well as shopping in-store. A popular promotion is the retailer’s 25% off offer that shoppers can add to their wallet pass on the app, similar to Bed Bath & Beyond’s promotional discounts.

Going forward, Hamilton says the retailer also uses its app to connect with shoppers. In fiscal year 2022, which ended in March 2023, the retailer had 450,000 first-time app downloads.

The Container Store Inc. ranks No. 345 in the Top 1000, Digital Commerce 360’s ranking of North America’s online retailers by web sales.

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Read more ecommerce earnings coverage here.

Here are four key takeaways.

1. Consumers were pickier about spending discretionary income

Consumers across the board are hampered by budget constraints, and multiple executives called out economic challenges. 

Shoppers are reluctant to spend discretionary income on goods, preferring to save or spend on experiences instead. That’s hitting apparel retailers particularly hard. Old Navy in particular is experiencing decreased demand from lower-income consumers, The Gap Inc. said in a press release. The brand is not benefitting from consumers trading down from more expensive retailers, according to Katherine O’Connell, chief financial officer.

“Some of the brands that are really winning with our consumers are T.J. Maxx, Amazon, Shein,” she said.

Designer Brands Inc. noted the same trend.

“The health of the consumer and overall macroeconomic headwinds” led to declining sales and made predictions difficult,” said Jared Poff, chief financial officer.

Another shoe brand, Zumiez Inc., cited similar headwinds facing consumers.

Other types of retailers were also impacted by consumers tightening their belts. Sportsmans Warehouse interim CEO Joseph Schneider attributed declining sales to “challenging macroeconomic conditions [that] continue to pressure consumer discretionary spending.”

2. Spending on home improvement and furniture is down

La-Z-Boy reported total sales declined 20% to $482 million in its fiscal first quarter of 2024. Online sales of furniture brand Joybird declined 17% year over year due to “more cautious online consumer demand,” the retailer said.

“In general, furniture consumers sort of hit that saturation point of who’s going to want to purchase online and who’s going to want to purchase in-store. And the majority of consumers do more in-store,” CEO Melinda Whittington said, according to a Seeking Alpha transcript.

Other online furniture retailers’ reports supported Whittington’s suggestion. Overstock, which has since taken over Bed Bath & Beyond’s website, reported revenue declined 20% in its fiscal Q2 ended June 30. The retailer also said customers were ordering less frequently, and spending less when they did order. Wayfair Inc. also reported declines, though they were less severe. Net revenue declined 3.4% in its second quarter ended June 30.

Lowe’s Cos. Inc. and The Home Depot Inc. in the adjacent home improvement category also noted declines in spending on home products. Lowe’s and Home Depot executives both pointed to a pullback in consumer spending on large DIY projects in the quarter. Meanwhile, consumers remained willing to spend on smaller projects. For example, transactions of $1,000 and up decreased 5.5%, Home Depot said.

3. Discount retailers were the winners in second-quarter earnings results

Discount retailers like Dollar General Corp. and Five Below are reaping the rewards of these pressures on consumers. Dollar General grew average ticket, even as traffic declined slightly. Dollar Tree reported sales of discretionary items grew 3.9% in its fiscal quarter ended July 29, 2023, as consumers traded down to dollar stores for those purchases.

TJX Cos. Inc., which owns T.J. Maxx, Marshall’s, Sierra, Winners, and Homesense, also benefited. Sales were “well above the company’s plan, and entirely driven by customer traffic,” the retailer said. 

ThredUp grew revenue 8% by appealing to customers on a budget who are “feeling the pinch across their discretionary purchasing power” from broader economic trends, CEO James Reinhart told investors. 

Not every discount retailer automatically benefits from consumers trading down, though. Big Lots shows that simply having low prices isn’t enough to win in 2023.

“Our results for Q2 illustrate that we remain in a very challenging environment, in which our core lower-income customer remains under significant pressure and has limited capacity for higher-ticket discretionary purchases,” CEO Bruce Thorn said in a written statement.

4. Omnichannel drove second quarter sales

Omnichannel sales aren’t as buzzy as they were early in the COVID-19 pandemic, but retailers still rely on them to reach customers. Walmart Inc. and Target Corp. both credited omnichannel sales for leading online sales in their second fiscal quarters. Both retailers cited their versions of online order pickup as standouts in the quarter.

Several retailers noted that omnichannel customers tend to be more loyal or make more additional purchases.

Bath & Body Works Inc. reported positive results for BOPIS, which it first implemented in Q1 2023. In its fiscal second quarter, adoption grew 25%, the retailer said. About 30% of BOPIS customers buy something else when they pick up their orders, driving further sales, it said.

Similarly, BOPIS and curbside pickup were responsible for most of the online sales growth BJ’s Wholesale Club reported, the retailer said.

Ulta Beauty announced intentions of growing its omnichannel business. Its omnichannel customers purchase 2.5 to three times more than single-channel customers.

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Academy Sports & Outdoors Inc. (No. 136)

Academy Sports and Outdoors reported net sales declined 6.2% in the second quarter ended July 29, 2023. The retailer did not share specific information on online sales, but it says it is working to expand omnichannel capabilities.

Best Buy Co. Inc. (No. 7)

Best Buy reported ecommerce earnings this week. Online sales declined 7.1% in the second quarter ended July 29, 2023. 

Online sales made up 31.0% of total revenue, staying flat with the previous year. Total domestic revenue also declined 7.1% to $8.89 billion. The decline can largely be attributed to a 6.3% decline in comparable sales. Read more here.

Big Lots (No. 252)

Big Lots reported net sales declined 15.4% to $1.14 billion in the second quarter ended July 29, 2023.

“Our results for Q2 illustrate that we remain in a very challenging environment, in which our core lower-income customer remains under significant pressure and has limited capacity for higher-ticket discretionary purchases,” CEO Bruce Thorn said in a written statement.

Big Lots did not share specific online sales data. The retailer said it focused on creating a “curated experience, better site navigation and eliminating friction” for online customers in the quarter. 

Chewy Inc. (No. 13)

Chewy reported net sales grew 14.3% to $2.78 billion in the second quarter ended July 30, 2023. Autoship orders remained significant at the online pet retailer, accounting for 76% of net sales and growing faster than overall sales.

Chewy Health also grew to penetration among 20% of Chewy customers. Consumers required more “nudging” to spend than in previous quarters, the retailer said, but non-discretionary categories like food and health remain strong. 

Chico’s FAS Inc. (No. 108)

Chico’s reported net sales declined 3.0% to $545 million in the second quarter ended July 20, 2023. Online sales made up 41% of net sales, which was flat with Q1 of 2023.

“For all three brands, full-priced sales remained healthy, we attracted new customers, and we gained market share,” CEO Molly Langenstein said in a written statement. Chico’s improved website experience and grew online conversion rates, the retailer said. 

Five Below (No. 580)

Five Below reported net sales grew 13.5% to $759.0 million in the second quarter ended July 29, 2023. The discount retailer said online sales remain a “low single digit” portion of the total business.

“With every seasonal change, we get it up online first and it helps us prepare and set up the stores,” CEO Joel Anderson told investors about the value of digital sales for Five Below. 

Dollar General Corp. (No. 753)

Dollar General reported net sales grew 3.9% to $9.8 billion in the second quarter ended Aug. 4, 2023. Same-store sales declined 0.1%, and operating profit declined 24.2% to $693.2 million.

Customer traffic declined, while average transaction amount grew. Dollar General didn’t share specific online sales data, but it said online active monthly users grew 20%.

Joann Inc. (No. 307)

Joann reported online sales grew 3.0% in the second quarter ended July 29, 2023. Online sales accounted for 12.1% of revenue in the quarter.

Meanwhile, net sales declined 2.1% to $453.8 million, and comparable sales declined 2.0%. Online sales outpaced in-store sales growth due to expanded online offerings, technology improvements and increased traffic to Joann’s website and mobile app. 

Land’s End Inc. (No. 79)

Land’s End reported global ecommerce sales declined 8.7% to $218.7 million in the second quarter ended July 28, 2023. U.S. ecommerce sales decreased 3.6% over the same period due to promotions and discount pricing. Net revenue declined 7.9% to $323.3 million.

The retailer also described efforts to incorporate AI into the business. Land’s End recently launched an app for merchants and designers using ChatGPT to “analyze our customer data to identify gaps in our assortment to improve buying decisions,” it said.

Lululemon Athletica Inc. (No. 27)

Lululemon reported online comparable sales grew 17% in the second quarter ended July 30, 2023. In-store comparable sales grew 9%, and total revenue grew 18%.

Lululemon online sales made up 40% of total revenue, at $894 million. Online traffic also grew 20% in the quarter, Lululemon said.

Signet Jewelers Ltd. (No. 60)

Signet Jewelers reported total sales declined 1.9% to $1.8 billion in the second quarter ended July 30, 2023. That’s up 29% over Q2 of 2020, the retailer said.

Same-store sales, including brick-and-mortar and ecommerce sales, declined 8.2%. The retailer did not share specific online sales figures for its online-only brands James Allen and Blue Nile. Signet says it expects consumers to delay more spending than usual to Black Friday because of inflationary pressures.

Vera Bradley Retail Stores LLC (No. 276)

Vera Bradley reported net revenue declined “modestly” to $128.2 million in the second quarter ended July 29, 2023. The Vera Bradley brand’s revenue declined 1.2% in the period, primarily due to store closures. Pura Vida brand sales declined 3.6% due to a decline in wholesale customers, the retailer said. Vera Bradley plans to implement a “strong focus on driving ecommerce growth,” after online sales moderately declined in the quarter, it said without revealing more.

Victoria’s Secret & Co. (No. 52)

Victoria’s Secret reported total sales declined 6% in the second quarter ended July 29, 2023. The sales environment was “particularly challenging” for the digital intimates market in North America, the retailer said in a statement.

Traffic and average basket size declined both in stores and online during the quarter. Conversion rates and average unit retail are below where they were a year ago, but they remain elevated over 2019 levels, the retailer said.

1-800-Flowers.com Inc. (No. 47)

1-800-Flowers reported total revenue declined 17.9% to $398.8 million in the fourth quarter ended July 2, 2023. Net loss for the quarter equaled $22.5 million. Like many other retailers, 1-800-Flowers cited the impact of decreasing consumer spending on non-essential goods.

“As consumers were challenged by ongoing inflationary pressures, escalating interest rates and higher credit card debt, they reduced their discretionary spending,” William Shea, chief financial officer, told investors.

Lower-priced products saw the largest decline, Shea said.

So what does it mean?

• This week’s ecommerce earnings show that consumers remain reluctant to spend on non-essential goods. Discount retailers like Dollar General and Five Below are reaping the rewards of these pressures on consumers.
• Not every discount retailer automatically benefits from consumers trading down, though. Big Lots shows that simply having low prices isn’t enough to win in 2023.

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Walmart ranks No. 2 in the Top 1000, Digital Commerce 360’s ranking of North America’s online retailers by web sales. It is also No. 9 in the Global Online Marketplaces Database, Digital Commerce 360’s ranking of the top 100 online marketplaces.

Emphasizing omnichannel and fulfillment 

Walmart emphasized its strengths through both online and physical retail repeatedly at the event. Becoming an omnichannel retailer was the largest and most important transformation for the company in recent years, Walmart U.S. CEO John Furner told an audience of third-party marketplace sellers on Aug. 30. 

Walmart is giving sellers on its platform access to more tools and services to make fulfillment better for customers, it says. The retailer announced it will now offer local pickup and delivery for products on the marketplace if they have physical stores.

“This will lower sellers’ fulfillment costs, create new ways to convert sales and delight customers along the way,” Manish Joneja, senior vice president of Walmart Marketplace and Walmart Fulfillment Services (WFS), wrote in a blog post.

The retail giant will also give sellers a better ability to ship big and bulky items through WFS. This will also apply to products that come in multiple boxes, like patio sets. Products shipped using WFS then get a “Fulfilled by Walmart” tag online. Walmart says the tag drives conversion, with sellers seeing an average 50% growth in GMV when they switch to WFS.

Throughout the event, Walmart emphasized the seamless experience for consumers between shopping online and in Walmart stores. The retailer noted that highly successful online products can then be selected to appear on store shelves. During the event, Walmart announced it would begin selling Solo Stoves in select stores after successful sales on the marketplace.

New announcements for Walmart Marketplace

Walmart announced some other updates for third-party sellers on its marketplace at the event. 

The big box retailer is rolling out online brand shops and brand shelves. These are digital storefronts that retailers can curate to highlight seasonal collections or other product lines and boost conversion, Walmart says. Brand pages are complemented by customer tools, like the recently added Virtual Garage where consumers can store details about personal vehicles. That information is integrated with Walmart auto centers to schedule maintenance and recommend products, Walmart says.

Walmart also announced plans to expand its third-party marketplace to another international market. Walmart Marketplace will be available in Chile beginning in early 2024, in addition to the U.S., Mexico, and Canada. 

Walmart Marketplace is growing

Walmart’s Marketplace is growing substantially, according to results from the second fiscal quarter ended July 28, 2023.

Marketplace customers grew 14% year over year in the quarter. Sales were strong across consumables and general merchandise, with double-digit growth in home, apparel and hard goods, John David Rainey, chief financial officer, told investors. 

The number of sellers using WFS also grew by 50%, he said. Products have increased about four-fold on the marketplace since Q2 the previous year. The majority of merchandise sold during Walmart+ Week came from third-party sellers, too, Walmart said.

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Online sales made up 31.0% of total revenue, staying flat with the previous year. Total domestic revenue also declined 7.1% to $8.89 billion. The decline can largely be attributed to a 6.3% decline in comparable sales.

“Our financial results were better than expected, and they reflect a consumer electronics industry that remains challenged due to the pull-forward of demand in prior years and the various macroeconomic factors that we are all too familiar with,” CEO Corie Barry said in a written statement. “We continue to expect that this year will be the low point in tech demand after two years of sales declines. Next year, the consumer electronics industry should see stabilization and possibly growth driven by the natural upgrade and replacement cycles and the normalization of tech innovation.”

Best Buy ranks No. 7 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers.

Best Buy online sales

Mobile sales now make up a significant portion of online sales due to improvements to the app, Best Buy said. 20% of online revenue comes through the mobile app. Customers who use Best Buy’s app engage with the retailer three times more often than consumers who use other digital platforms, the retailer said.

Buy-online-pick-up-in-store (BOPIS) sales also remain popular with Best Buy customers. BOPIS sales account for slightly over 40% of online sales.

Though online sales declined year over year, they remain about twice as high as they were before the pandemic. As a result, “we needed to more efficiently allocate our labor cost considering the higher online sales have resulted in a decline in physical store traffic and sales,” Barry said in an earnings call. 

Sales by category

Appliances, home theaters, computing and mobile phones all declined in the quarter, the electronics retailer said in a statement. Some of the decline was offset by growth in gaming, but not enough to stop an overall decline.

Computing and mobile phones made up 41% of revenue, more than any other merchandise. Sales were down 6.4% year over year. Consumer electronics made up another 30% of revenue, down 5.7%. Appliances saw the largest decline, down 16.1% year over year to 16% of sales. 

Best Buy is suffering from the dual trends of a cost-of-living crisis impacting its customers and a decline in home sales, according to retail analyst Neil Saunders of retail analysis firm GlobalData. 

As consumers lack disposable income to buy new electronics and aren’t in the market to renovate their home appliances, they’re less likely to have a reason to visit Best Buy, Saunders says.

“So Best Buy not only loses out on the big-ticket buys but sales in smaller value areas like accessories and cables also weakens. Other non-specialists selling electronics, like Amazon, Target, and Lowe’s, at least drive traffic for other reasons and have a greater possibility of converting someone to buying electronics products,” he says.

Best Buy earnings

For the quarter ended July 29, 2023, Best Buy reported:

• Domestic online revenue declined 7.1% to $2.76 billion.
• Best Buy online sales drove 31.0% of revenue.
• Domestic revenue declined 7.1% to $8.89 billion.

For the six months ended July 29, 2023, Best Buy reported:

• Comparable online revenue declined 9.7%.
• Domestic comparable sales declined 8.4%.

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Walmart ranks No. 2 in the Top 1000, Digital Commerce 360’s ranking of North America’s online retailers by web sales. Target ranks No. 5 in the Top 1000.

Walmart is also No. 9 in the Global Online Marketplaces Database, Digital Commerce 360’s ranking of top online marketplaces.

Online sales comparison

Walmart’s online sales were a highlight for the big box retailer in a quarter with already impressive results. U.S. online sales grew 24% for the fiscal 2024 second quarter ended July 28, 2023. International ecommerce sales grew 26%. Growth was particularly strong in comparison to comparable in-store sales, up 6.4%, excluding fuel. That’s still above analyst expectations of 4.1% growth. Total revenue grew, too, by 5.7% to $161.6 billion. 

Walmart did not share what percentage of total sales took place online. 

Target’s digital sales declined 10.5% year over year in the fiscal 2023 second quarter ended July 29. Meanwhile, comparable in-store sales declined 4.3% versus Q2 last year. Target’s total revenue in Q2 reached $24.8 billion. That’s down 4.9% year over year. 

The diverging results are evidence of the same trends impacting consumers, says Neil Saunders, managing director at retail analysis firm GlobalData Retail. Consumers are “cutting back on discretionary spending and prioritizing essentials” at both stores, he says. Walmart, unlike Target, made up the difference by growing grocery sales more than enough to offset discretionary losses.

Digital Commerce 360 analysis: Walmart vs. Target ecommerce sales growth

Target had a “huge early-pandemic advantage,” Digital Commerce 360 senior analyst James Risley said.  “Not only was its Drive-Up program well-advertised (in front of every store), but shoppers, unable to spend on experiences, had more money to spend on goods that Target specializes in like home décor and small appliances. Now that consumers can save for experiences or are just feeling the pressure of inflation and economic uncertainty, they are turning to budget-friendly alternatives.”

Now, Walmart is seeing bigger gains than Target.

“Walmart passed Target in online growth for the quarter in Q4 last year, when the last pandemic worries ended in many consumers’ minds and experience spending picked up. Most ecommerce retailers have experienced slower growth amid changing (and lower) consumer spending,” Risley said.

He also pointed out that some Target customers may be more likely to shop in stores for the types of merchandise that Target specializes in.

Pickup and delivery

Walmart and Target consumers made it clear they still value the convenience of omnichannel offerings.

Walmart credits pickup and delivery sales for the major jump in online orders. 

“Around the world, our customers and members are prioritizing value and convenience. They’re shopping with us across channels — in stores, Sam’s Clubs, and they’re driving ecommerce,” CEO Doug McMillon said in a statement. 

Customers especially respond to the time-saving advantages of curbside pickup, McMillon said.

Target cited its version of curbside pickup, Drive-Up, for leading digital sales, too. The retailer plans to add to the popularity of the service by adding Starbucks orders and returns to the Drive-Up process, CEO Brian Cornell told investors.

Fulfillment centers

Walmart chief financial officer John David Rainey said the retailer’s automated ecommerce fulfillment centers are improving efficiency. More specifically, they’re achieving efficiencies of 30% higher units per hour than non-automated buildings.

“We’re also seeing increased productivity from the more than 15% of stores now being served by automated regional distribution centers,” Rainey said. 

McMillon said Walmart wants to improve each leg of the fulfillment journey. Walmart plans to “densify our inventory at the first mile, make the middle mile as efficient as possible and then shorten the last mile,” he said. He added that the retailer’s more than 4,700 locations in addition to fulfillment centers enable it to do so.

Comparably, Target has “invested billions of dollars in our existing store base, modernizing their shopping experience while optimizing those facilities to support digital fulfillment,” Cornell said.

Target has been expanding its network of sortation centers to improve this process. Cornell said the centers have “delivered meaningful savings while increasing our speed over the last-mile delivery.”

Up to 70% of the packages these facilities process remain in their local markets, said John Mulligan, chief operating officer at Target. In markets where Target has a sortation center, the average time from when an order is purchased online to when it is delivered is nearly 1.5 days shorter than the network average, Mulligan said. And about a third of the packages arrive in one day, he added.

Target expects the current group of sortation centers to process more than 35 million packages this year. That would be a more than 20% increase from 2022 and more than six times what it was in 2021.

Sales events

Chief growth officer Christina Hennington said Target learned last year that Target Circle members “love exclusive events, so we repurposed last year’s deal base and met our Target Circle Week in July bigger than ever.”

Target enrolled more than 3.5 times as many new guests during Circle Week than it does in an average week, she said. The retailer acquired an additional half a million members, she added.

Walmart’s Rainey said the retailer has been working with suppliers to offer select seasonal baskets “at the same prices as last year, essentially removing the impact of inflation.” 

And customer response has been strong, he said, as sales exceeded Walmart’s expectations during the Memorial Day, July 4 and our Walmart Plus Week Savings events. 

“We’re taking a similar inflation-fighting approach to Back to School, with a basket of 14 of the most popular classroom essentials for under $13,” Rainey said.

He added that the retailer “achieved record member acquisition tied to Walmart Plus Week and continued to enhance the value of the Walmart Plus membership.”

Where do Target and Walmart go from here?

While Walmart had the more successful quarter, things aren’t actually as bleak as they might appear for Target, Saunders says. Target made a lot of gains during the pandemic, even more so than Walmart, he says. 

Through the first fiscal half of 2023, Target’s total revenue was about 39% higher than in 2019, Cornell said. Target total revenue was about $50.1 billion in the first half of this year. It was about $36 billion in 2019’s first half. Long term, Target is “still a real winner,” according to Saunders. In 2023, Target is resetting after a period of sustained sales growth since 2020.

Meanwhile, inflation and consumer focus on essentials make Walmart’s outlook positive in the near term, as reflected in the retailer’s increased guidance for the rest of 2023.

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Grove Collaborative (No. 281)

Grove Collaborative announced net revenue declined 16.6% to $66.1 million in its fiscal second quarter ended June 30. The retailer, which sells home and cleaning products, attributed the revenue decline to lower ad spending in 2023 as part of a focus on profitability.

Total direct-to-consumer orders also declined in the quarter, to 974,000 from 1.3 million in the year-ago period. However, revenue per order grew to $65 from $58 per order.

Grove Collaborative also announced Amazon and Shopbop alum Jeff Yurcisin will take over as CEO.

The Home Depot Inc. (No. 4)

Home Depot reported sales declined 2% to $42.9 billion in its fiscal second quarter ended July 30. Digital sales, meanwhile, grew 1% over the period.

“We know the vast majority of our customers engage with us in an interconnected manner. Whether it be through project inspiration and research, transacting, fulfillment or support, our customers blend the physical and digital world,” Billy Bastek, executive vice president of merchandising, told investors in a call.

Just under half of online orders were fulfilled through stores, he said. Sales on items for small projects outpaced big-ticket items, and Pro sales also outpaced DIY sales, Home Depot said.

Tapestry (No. 45)

Tapestry reported revenue declined 8% in North America in its fourth quarter ended July 1. Direct-to-consumer sales grew 3% year over year. Online sales represented about 30% of revenue in the quarter, Tapestry said, triple pre-pandemic levels. Online sales were down slightly year over year, though, the retailer said.

Target Corp (No. 5)

Target announced that digital sales declined 10.5% year over year in the fiscal second quarter ended July 29. The retailer’s Drive-Up service led online sales, Target says. 

Meanwhile, comparable in-store sales declined 4.3% versus Q2 last year. Target’s total revenue in Q2 reached $24.8 billion. That’s down 4.9% year over year. Operating profit after taxes was $3.89 billion, down from $4.63 billion in the year-ago period. Read more here.

TJX Cos. Inc. (No. 70)

TJX reported net sales grew 8% year over year to $12.8 billion in the second quarter of its fiscal 2024. Comparable store sales also grew 6% in the period, “well above the company’s plan, and entirely driven by customer traffic,” the retailer said in a statement.

TJX owns Home Goods, T.J. Maxx, Marshalls, Sierra, Winners, and Homesense.

Overall, ecommerce remains a “very small percentage” of total business, the retailer told investors in a call. Digital Commerce 360 research estimates that ecommerce made up about 10% of total TJX sales in 2022, growing 4.8% year over year.

Walmart (No. 2)

Walmart announced that U.S. online sales grew 24% for its fiscal second quarter ended July 28. International ecommerce sales grew 26%. Ecommerce sales were fueled by pickup and delivery orders.

Over the same period, comparable in-store sales grew more modestly, up 6.4%, excluding fuel. Total revenue grew, too, by 5.7% to $161.6 billion.  Read more here.

So what does it mean?

• Consumers are trading down to less expensive items and focusing on essentials, leading to less discretionary spending. That’s excellent news for Walmart and TJX, where consumers turn for deals and discounts. It’s not so promising for Target and Home Depot, where consumer reluctance to spend on discretionary items and home improvement products translates to slowing sales.
• Pickup and delivery services can give significant boosts to online sales. Both Walmart and Target credited the omnichannel services as the backbone of their digital sales.

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Meanwhile, comparable in-store sales declined 4.3% versus Q2 last year. Target’s total revenue in Q2 reached $24.8 billion. That’s down 4.9% year over year. Operating profit after taxes was $3.89 billion, down from $4.63 billion in the year-ago period.

Through the first fiscal half of 2023, Target’s total revenue was about 39% higher than in 2019, said CEO Brian Cornell. Target total revenue was about $50.1 billion in the first half of this year. It was about $36 billion in 2019’s first half. Cornell said the “growth reflects significant increases across our entire business in all five merchandising categories in both our stores and digital channels.”

Target ranks No. 5 in the Top 1000, Digital Commerce 360’s ranking of North America’s online retailers by web sales.

Target digital sales

Cornell said growth in the retailer’s Drive-Up service led Target digital sales. Still, Target digital sales in the first half of 2023 declined 7.0% year over year.

Target digital sales, or those that originated online, accounted for 16.9% of total sales in Q2. That’s down from 17.9% of Target sales originating digitally in Q2 2022. Similarly, Target digital sales in the first half of fiscal 2023 accounted for 17.2% of total sales. That’s down from 18.1% in the first half last year.

“Consistent with our ‘Stores as Hub’ strategy, more than 97% of our second quarter sales were fulfilled by our stores,” Cornell said.

Chief growth officer Christina Hennington said Target continues to invest in its in-store experience, starting with new stores and remodels, she said.

“And just like we remodel our stores to reflect our latest thinking and guest feedback into the shopping experience, will begin rolling out a remodel of our digital experience this quarter,” Hennington said. “Based on guest feedback, we’re investing to create a digital experience that enhances the love of discovery while balancing the ease of navigation. This will include different landing experiences, more personalized content, enhanced search functionality, ease of navigation and other updates to bring more joy and convenience to our digital guests.”

Fulfilling online orders

Chief operating officer John Mulligan said Target’s flow centers allow the retailer “to fulfill certain digital orders beyond their primary role in replenishing store inventories.”

Chief financial officer Michael Fiddelke said Target benefitted in terms of fulfillment costs and supply chain in Q2. Target digital sales were lower, and there was a “favorable mix of same-day services.” That meant fewer packages shipping to consumers’ homes.

“If you look at the first six months of this year compared to 2019, we’ve got almost well over 20% higher traffic coming to our business than we were pre-pandemic,” Fiddelke said.

Target sortation centers

Mulligan said Target’s new sortation centers “are delivering outstanding results.” Sortation centers are mini-warehouses the retailer uses to help increase the speed and efficiency of last-mile delivery, he said.

“Up to 70% of the packages processed by these facilities stay in the local market,” Mulligan said. That allows Target “to partner with Shipt to handle the last mile. This integration with Shipt allows us to achieve meaningful efficiency and cost savings while offering much greater speed of delivery to our guests.”

In markets where Target operates a sortation center, the average click-to-deliver time is nearly 1.5 days shorter than the network average, Mulligan said. About a third of the packages arrive in one day, he said. He added that Target expects such speed metrics to continue improving as the retailer opens new buildings and tests more operating model iterations.

Target already operates 10 sortation centers. It expects to open at least six more “over the next few years,” Mulligan said.

Target expects the 10 sortation centers it currently operates to process more than 35 million packages in 2023. That would represent more than a 20% increase from a year ago. It would also be a more than sixfold increase from 2021, Mulligan said.

New stores

Mulligan said Target plans to open about 20 new locations this year, ranging in size from 20,000 to 137,000 square feet. The mass merchant completed and opened five new stores in Q2. That brings the year-to-date total to 11, he said.

Target earnings

For the fiscal second quarter ended July 29, 2023, Target Corp. reported:

• Total sales declined to $24.38 billion. That’s down 4.9% from $25.65 billion in Q2 2022.
• Target digital sales declined 10.5% year over year. They represented 16.9% of total sales in Q2 this year, down from 17.9% last year.

For the fiscal first half ended July 29, 2023, Target reported:

• Total sales declined to $49.33 billion. That’s down 2.3% from $50.48 billion in first half of 2022.
• Target digital sales declined 7.0%  year over year. They represented 17.2% of total sales in the first half this year, down from 18.1% last year.

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

Check back for more earnings reports. See Target’s previous earnings release story here.

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Allbirds Inc. (No. 342)

Allbirds reported net revenue declined 9.8% year over year to $70.5 million for the second quarter ended June 30. The decrease can be attributed to a decline in average sales price due to promotional activity, the online shoe retailer said in a statement. Allbirds also reduced inventory 24% as part of a plan to cut costs and get rid of out-of-season styles, it said.

Arhaus Inc. (No. 370)

Arhaus reported net revenue grew 2.2% to $313 million in the second quarter ended June 30. Retail sales from Arhaus showrooms were flat, while online sales were up “double digits,” the home retailer said. However, revenue was lower than expected due to delivery delays from updates to the retailer’s IT and distribution systems, said CEO John Reed.

Beachbody LLC (No. 233)

Beachbody reported total revenue was down 24.7% to $134.9 million in the second quarter ended June 30. Digital revenue declined from $78 million in the year-ago period to $65.2 million. Subscriptions were down 12% to 1.53 million subscriptions, the retailer said. 

Blue Apron Inc. (No. 190)

Blue Apron reported net revenue declined 14.5% to $106.2 million in the second quarter ended June 30. However, average order value grew 12.7% year over year to $75.66, and average revenue per customer grew 21.3% to $397. That’s largely due to a price increase implemented during the quarter, the meal kit company said in a statement.

Blue Apron also lowered its costs when adding new customers. Cost per acquisition declined 30%, and conversion rates improved by 25%, per CEO Linda Findley.

Brilliant Earth LLC (No. 196)

Brilliant Earth net sales grew 1.3% to $110.2 million in the second quarter ended June 30. The jewelry retailer said it reached a record number of orders in the quarter, up 21.2%. Sales grew more slowly due to a 16.4% decline in average order value. 

Brilliant Earth started as an online retailer, and in Q2 it focused on further growing omnichannel capability by opening four showrooms for a total of 32.

Cricut Inc. (No. 473)

Cricut reported revenue declined 3% to $177.8 million in the second quarter ended June 30. Subscription revenue, meanwhile, grew 13% to $76.1 million. Cricut has 2.7 million subscribers, up 15%, the company said. The total user base, including subscribers, amounts to 8.7 million, up 17% over last year.

On July 18, following the end of the quarter, Cricut launched its newest machine exclusively via online channels. 

Fossil Group Inc. (No. 236)

Fossil recorded worldwide net sales declined 13% to $322 million for the second quarter ended July 1. Comparable retail sales grew 3%, offset by a 4% decline in direct-to-consumer sales and 19% decline in wholesale. Traditional watch sales grew, while smartwatch sales declined, the retailer said.

HanesBrands Inc. (No. 276)

Hanes reported net sales declined 4.9% to $1.44 billion in the second quarter ended July 1. Gross profit declined 16% to $483 million, the retailer said. Innerwear sales grew 3%, ahead of expectations, while activewear sales declined 19% due to “soft consumer demand and excess channel inventory,” the retailer said in a statement. Direct-to-consumer sales also declined, though Hanes did not specify by how much. 

SmileDirectClub Inc. (No. 199)

SmileDirectClub reported a 19.1% decline in revenue to $102 million for the second quarter ended June 30. CEO David Katzman cited the “continuing challenging economic backdrop impacting our core customer” in a call with investors. SmileDirectClub raised prices in July, and it says it expects that to help with revenue in the next quarter.

The retailer also began rolling out its mobile scanning app using AI to create dental treatment plans in the U.S.

ThredUp Inc. (No. 580)

ThredUp reported revenue grew 8% to $82.7 million for the second quarter ended June 30. The clothing resale retailer said active buyers declined 0.8%, but total orders grew 5% to 1.8 million in Q2. ThredUp’s target is a budget customer who is “feeling the pinch across their discretionary purchasing power” from broader economic trends, CEO James Reinhart told investors. 

In Q2, ThredUp also added new resale partnerships with 11 retailers including American Eagle and SoulCycle. 

Warby Parker (No. 339)

Warby Parker reported net revenue grew 11% to $166.1 million in the second quarter ended June 30. The eyewear retailer said average revenue per customer grew 9.2% to $277. Active customers also grew slightly, up 1.2% to 2.28 million.

Warby Parker continued to invest in its retail strategy, opening 13 new stores in the quarter and on track to opening 40 for the year. Eye exams offered in these locations are “the gateway to prescription eyewear and contact purchases,” the retailer said. Exams made up 3.4% of revenue in the quarter, up from 2.4% in the year-ago period.

Yeti Holdings Inc. (No. 134)

Yeti reported sales declined 4% in the second quarter ended July 1, to $402.6 million. That’s partially due to a product recall in the quarter costing $24.5 million. DTC sales grew 1%, mostly in drinkware, while wholesale sales declined 10%. DTC accounted for $226.4 million, more than half of total sales.

So what does this all mean?

• Wholesale sales aren’t faring well for ecommerce retailers, with Fossil and Yeti reporting significant revenue declines. Meanwhile, DTC sales are relatively healthy in comparison.
• Consumers remain hampered by budget constraints, and multiple executives called out economic challenges. That’s to the advantage of retailers like ThredUp, which continued to grow sales by appealing to budget-minded customers.

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Lindsay Mikos, senior director, retail omnichannel, Walgreens told Digital Commerce 360 that digital orders drive incremental value for the retailer.

“We’re able to engage with them more often [online] and give them more relevant offers,” she said.

Walgreens Boots Alliance Inc. reported U.S. retail digital sales were up 19% in the second quarter 2023, ended May 31, on top of a 25% gain in 2022.

Walgreens digital sales

When compared with Digital Commerce 360’s Top 1000 retailers in the category, Walgreens 2022 web sales growth reached 35.0% compared with 2022. The only retailer to outpace this was Rite Aid, which increased web sales by 65% in 2022.

Other retail chains in the top five include:

• Ulta Beauty
• Bath & Body Works Inc.
• CVS Caremark Corp.

Key takeaways

• In 2022, Walgreens completed 35 million pickup orders and one-hour deliveries from its stores.
• 21.1%: Walgreens’ 2022 share of 2022 digital sales in the Top 1000.
• Walgreens is in the Top 1000 fastest growers in the health/beauty category.
• 52.7%: Walgreens’ share of 2022 web sales in the Top 1000 health/beauty retail chains

The median average ticket for the 56 ecommerce retailers in the Digital Commerce 360 Top 1000 in the health/beauty category hit $93 in 2022, a rise of more than 12% from the $83 recorded in 2021.

However, much of that rise can be explained by inflation, which stood at 6.5% year-over-year in December 2022.

Walgreens Boots Alliance Inc. ranks No. 19 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American online retailers.

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