How many stores does Target have worldwide
US retail is booming - thanks to checks from the state
The supermarket giant Walmart, for example, achieved nine percent more sales in the US in the second quarter than in the previous year and exceeded all expectations with its high profit. But CEO Doug McMillon did not want to give an outlook for the rest of the year until it was clear whether and how the state aid from Washington would continue. There, Democrats and Republicans are currently negotiating the amount of aid in the middle of the election campaign.
Corona clearly helped the business: "The factors that have had a positive impact on our business were firstly the economic stimulus package, secondly meals at home and thirdly the desire to make everything in and around the house more pleasant," said the Walmart boss on Tuesday. But customers had already become more reluctant in July after they had used up the government's last check.
Unsafe to return to schools
Even the head of the retail chain Target, Brian Cornell, did not want to give an outlook for the second half of the year despite record results in the second quarter. It is difficult to predict shopping behavior in the pandemic.
In addition to state aid, Cornell also cited the uncertainty as to whether the students will return to schools as a reason. Since the coronavirus is still rampant in many states, it is still not clear whether and how many students will actually start the semester in the classroom during these weeks. For Target, the “back to school” sales of notebooks, stationery and new clothing are always an important source of revenue. But right now there is a lot of chaos all over the United States when it comes to planning for schools.
"As I sit here today, I don't know whether the number of returning students will be six percent or 96 percent in 30 days," said the Traget boss. "That's why we have to be flexible."
The home improvement stores also urge caution. Craig Menear, head of Home Depot, exceeded all expectations in the second quarter because so many people used the time at home to beautify their homes. But speaking to investors, he warned that the tailwind from the second quarter is unlikely to continue in the third quarter. Competitor Lowe had already withdrawn its outlook in May, but announced that the positive trend has so far continued in August.
What all US retailers have in common: Their online business is booming. Walmart has been trying successfully for several years to position itself as a competitor to Amazon, which also has nationwide stores. This course has accelerated even further with the corona pandemic. Walmart doubled its online business in the second quarter. This applies to both deliveries and the orders that can be placed online at Walmart and picked up on the roadside in front of the store.
Walmart wants to compete with Amazon Prime
Since online trading is going so well, Walmart now wants to build a member service based on the model of Amazon Prime. CEO McMillon has not yet given exact details or a schedule for the new program called "Walmart +". But members are supposed to get their deliveries faster.
Charlie O’Shea, vice president of Moody’s rating agency, praised Walmart's strong online business. The retailer "keeps raising the bar for multi-channel retail by combining its massive physical presence with its e-commerce initiatives," he wrote. The fact that, despite the enormous increase in volume and the high costs due to Covid-19‧, profit margins also increased, is a very good sign.
Competitor Target is also considered a success story in the online area. The chain with the red and white target as a trademark has, according to its own statements, gained ten million new online customers since Corona and almost tripled its sales in the digital sector. The “curbside pick-up” business - order online, pick up at the roadside - was even able to increase eightfold.
The same applies to the home improvement stores. They are also expanding their online business and relying on social media. Home Depot, for example, wants to expand its digital tutorials. There, customers are explained how to build a wooden deck in front of the house or a stove.
How much Americans will spend on beautifying their houses and apartments in the future will depend above all on whether the economy picks up again and how high the checks from Washington will be in the coming months. The dispute is currently still going on.
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