The retail landscape is changing, but the last year has proven the fundamental importance and centrality of physical retail. The result is not a doomsday, retail apocalypse scenario but instead a newer, more sophisticated ecosystem that places emphasis on the full range of value driven by an offline location.
Admittedly, we have always taken a more bullish approach to Macy’s. The willingness to try new concepts and strategically deploy rightsizing efforts are elements that deserve recognition. But in light of the recent announcement of an expansion of Backstage “store-within-a-store” efforts, we felt it necessary to dive in once again.
The wider fitness sector is seeing all the signs of a significant offline recovery, and one brand that could be poised for a huge year is Planet Fitness. Planet Fitness, one of our 2021 winner predictions, hit an impressive milestone the week beginning April 12th.
Returning retail normalcy is driving visits up across sectors, but there may not be a brand better positioned to enjoy the unique post-COVID environment than McDonald’s. The brand is seeing visits bounce back quickly. Comparing weekly visits to the chain in 2021 to the equivalent weeks in 2019 shows a clear marked recovery. Visits the weeks beginning March 29th, April 5th and April 12th were down just 10.5%, 7.1%, and 16.0% respectively. This is far better than January and February respectively when visits were down over 30% each week on average.
In this Placer Bytes we dove into the QSR and sit-down sectors to analyze Bloomin’ and Yum! Brands. In order to effectively analyze the true recovery of brands from both groups, we looked at month over month data from November 2020 to March 2021 in order to break down the wider trend of recovery. And both Yum! Brands and Boomin’ Brands are certainly on strong trajectories to a rebound. Visits for each restaurant in the Yum! Brands’s portfolio, including KFC, Pizza Hut and Taco Bell, saw month-over-month traffic rise in December before dipping in January and February. Yet, as states began to open up, visits skyrocketed in March, with KFC showing the most impressive growth at nearly 53%. The combination of improved weather and re-opening retail drove a clear and significant boost.
In this Placer Bytes, we dive into Starbucks and its impressive recovery and the resiliency of New York retail. As if another reminder was necessary, the latest metrics from Starbucks have reiterated the problematic nature of betting against the brand. Looking at weekly visits year over year shows that the significant declines seen throughout the pandemic have normalized with visits up throughout March. And while this is clearly a misleading metric, they do signify the rebound.
From serving as the one-year mark since the onset of the pandemic in the U.S. to potentially highlighting the beginning of retail’s return to normalcy, Q1 was very important. One of the most significant trends in Q1 retail was signs that normal shopping patterns were returning. In the apparel space, our Q1 Quarterly Index showed that weekend visit percentage rose for the third quarter in a row with a quarter-over-quarter jump of 10%. This is critical as many apparel players rely on shoppers being willing to spend more time getting to a regional mall in order to drive sales.
In this Placer Bytes, we dive into Disney’s theme park recovery and analyze whether to jump back on the Whole Foods or Trader Joe’s bandwagon. Disney World is back on the upswing after seeing visits in January and February down just 49.8% and 53.6% year over year, respectively. This is about the level the theme park had been at since the late summer. While visits were actually up 33.8% in March, the number is misleading because it is being compared to a month in 2020 that already saw COVID-related closures.
In this Placer Bytes, we dive into recent announcements from Best Buy, Dick’s Sporting Goods, and Nike. All three are launching new initiatives aimed at leveraging their strength in the current retail environment to drive long-term benefits. Best Buy recently announced a new annual membership to its Geek Squad service, Dick’s is testing new experiential components in stores and Nike is cutting more wholesale partnerships. All of these share a common trait – they are pushed by top-performing retailers to leverage a unique level of short-term strength to drive long-term benefits.
The grocery sector experienced a fundamental shift during the pandemic, and while the changes were generally good for most brands, others were very poorly positioned. And these differences largely centered around critical changes in consumer behavior that elevated certain brands because of distinct characteristics. As an example, traditional grocery brands saw a significant advantage as they enabled customers to do more with a single visit and were well aligned with mission-driven shopping. And while many of these changes are likely to normalize over the coming months, some may have a surprising amount of staying power. Should these prove capable of continuing, as new factors arise from lingering COVID effects, some brands could be extremely well positioned for the coming months.
The home improvement and home goods sectors have been among the strongest in retail throughout the pandemic. When COVID initially hit, home improvement leaders like Home Depot and Lowe’s benefitted from essential retail status allowing consumers to embark on DIY projects with their newfound time at home. Visits in Q1 2021 for the sector were up 22% year over year when compared to the same period in 2020. This was actually the largest visit increase over the last four quarters, something that can be attributed to both Q1 not being a normal peak period for the sector, and the comparison to 2020’s dip in March.
More than almost any other sector, the restaurant industry suffered one of the hardest COVID-19 hits. Yet, location data provides a hopeful sign of recovery across dining segments, with some, like the QSR and coffee sub-sectors, expected to reach a full recovery faster than others. The change that the pandemic brought to the daily schedules of many impacted the various dining segments differently. Those relying more heavily on daily routines, like the coffee and breakfast space, were affected more. But despite the differences, there was one strong pandemic-related trend experienced by all segments – a significant rise in the overall proportion of mid-day visits. As flexible work became more common, mid-day lunch outings to a local cafe or restaurant – either as a short escape from the work-from-home monotony or as a refreshing place to work for a few hours – became a more valuable asset.
Unsurprisingly, malls were hit especially hard by COVID with visits declining dramatically in the spring before beginning a slow comeback to normalcy in May and June. Yet, there are real reasons to believe that the sector could see a strong revival in 2021. Looking at an index of over 50 top tier malls throughout the country shows the steady pace of return that the sector saw throughout the summer. Following a dip in November as COVID cases surged a week before Black Friday’s shopping peak, the sector recovered with year-over-year gaps shrinking each month from November through January.
With 2020 behind us and signs of recovery abound, we checked back in on the travel industry to see how it’s been rebounding thus far and what 2021 could have in store for hotels and airports. Last time we checked in, visits to airports were rebounding at the end of the year following the holidays, and that progress continued into 2021. Almost every airport showed year-over-year growth from the end of 2020 into the new year. Only DFW airport in Dallas showed an increase in the year-over-year gap between January and February – likely because of the unprecedented weather the state experienced at the beginning of the new year.
In this Placer Bytes, we break down the latest performances of two home furnishings leaders – Bed Bath & Beyond, and Conn’s, and analyze Amazon’s latest grocery push. There were fairly widespread concerns just a few years ago that Bed Bath & Beyond’s long-term prospects were anything but rosy. But, the brand saw a strong year that was only expected by a handful of observers. And it looks like that strength could continue into 2021. After seeing visits decline steadily week over week following a peak in mid-December, visits began to steadily rise again after a wave of inclement weather that hit across the US in late January and early February. By the week beginning March 15th, visits had risen 15.1% week over week.
Grocery was one of the stronger performers throughout the pandemic, and there is real reason to believe that sector could be heading into an extended period of strength. However, the coming year is going to be defined by a high degree of complexity when attempting to measure the performance of top grocery brands. Year-over-year analyses are an especially useful tool to account for seasonality and understand brand strength over time. As a simple example, you’re more likely to visit an ice cream store when it’s hot so looking at said parlor in June year over year will tell far more than looking at the same June month compared to the January or March that preceded it. But 2021 is going to be mired in the unique challenge of trying to make sense of certain sectors in a world where year-over-year data could be heavily misleading.
As a result of the pandemic, there has been a significant shift happening in major cities with many, if not most, seeing an exodus of residents. This has led some to speculate that the impact on city-oriented retail could be especially severe. Looking at net change in populations across some of the larger CBSAs in the country shows a clear pattern of decline. In January 2021, the New York CBSA saw a year-over-year difference of -1.2%, while San Francisco, Los Angeles, and Boston saw declines of 2.4%, 1.9%, and 1.7% respectively. While these drops are not massive, they are heavily offset by new residents making their way to fill gaps in these areas. And there are powerful indications that what is truly taking place is less about an exodus than a revival.
In this Placer Bytes, we dive into the recent recovery data from pharmacy leaders CVS and Walgreens and analyze their potential in the coming months. Visits to Walgreens, Rite Aid and CVS locations were trending in a very positive direction in late 2020. While the sector saw the same dip that other retailers did because of a resurgence of COVID cases, by December visits were again moving in a positive direction. CVS saw monthly visits down just 2.7% year over year, while Walgreens and Rite Aid were down 6.2% and 24.2% respectively – marking the lowest visit gap for Rite aid since the start of the pandemic.
While the change in migration during COVID was not as dramatic as some expected, even small shifts in migration patterns could have major implications for strategic business decisions. The way Americans move can impact the way retailers reach their audiences, which office space strategies top employers must utilize, and how cities and regions drive key tax revenue. State-level migration data shows that the population change that most states experienced between January 2021 and the previous January did not exceed 1%. This limited net change shows the ‘stickiness’ of a home area, which is heavily influenced by work, family, schools, the cost of living, and more.
In this Placer Bytes, we dive into At Home’s continued strength, the recoveries of Lululemon and Nike, and recently announced off-price expansions. Since early spring, At Home has been one of the most impressive brands in retail cashing in on the home furnishings surge that has lasted into 2021. The brand saw year-over-year growth deep into 2020 with visits in November, December, and January up 19.6%, 3.5%, and a massive 43.3% respectively. And while February did see a 1.1% dip year over year, the situation is hardly ‘bad’ with the month seeing fewer overall days than a year prior.
