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Amazon, Chain Stores Crowned Victors of Coronavirus-Ravaged Retail

While widespread store shutdowns have caused panic in the retail sector, data shows that some brands and retailers have made meaningful inroads with consumers through virtual channels.

E-commerce has been on the rise in recent years, and the current crisis has propelled online shopping to a new level of necessity for consumers searching for goods ranging from food to apparel.

A report released by retail marketing technology company Bluecore on Thursday revealed that brick-and-mortar store closures have indeed increased online sales for department stores, chain stores and digitally native brands across the apparel, luxury, beauty, and sport and outdoor sectors—and that shift is likely to last beyond the pandemic.

Among those retailers turning to online channels, a perhaps surprising set has emerged as winners.

Bluecore data shows that among retail types analyzed, chain stores are seeing the highest increase in online sales, with a sizable 80 percent increase from the same period last year. With a 119 percent increase in first-time buyers and an 89 percent increase in second-time buyers, these stores are seeing a majorly successful migration from in-store to online.

Before the crisis began, brick-and-mortar retailers captured just 15 percent of sales online. That number was projected to increase to 50 percent within three years, but the unprecedented and unexpected retail landscape presented by COVID-19 has measurably accelerated the transition.

Direct-to-consumer brands also saw significant increases during April, with sales up by 53 percent from the same period in 2019. These digitally native labels saw a 53 percent increase in first-time buyers, a 38 percent increase in second-time buyers, a 53 percent increase in product views and a 25 percent increase in email sign-ups since last year.

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Predictably, department stores have seen the least traction in the shift from physical to digital commerce.

Despite a 44 percent increase in online sales since April 2019, the number of first-time buyers decreased by 24 percent, and second-time buyers fell by 37 percent. The influx of new traffic could be coming from repeat customers, analysts said. While customer loyalty is undeniably valuable, a lack of investment in new digital experiences and marketing efforts could be preventing department stores from making inroads with new shoppers.

Among the verticals analyzed, apparel has seen significant increases but still ranks lowest when compared with beauty, luxury, and sport and outdoor. The category saw a 20 percent year-over-year increase in online sales, and a 27 percent increase since February. Data showed a 43 percent increase in first-time buyers and a 78 percent increase in second-time buyers since last April.

Analysts conjectured that as a mature e-commerce vertical, apparel retailers would naturally see fewer new faces shopping on their sites.

While the luxury sector exceeded every other vertical when it came to first-time buyers with a 181 percent year-over-year increase, “window shopping” plagued the category. Luxury brands saw 102 percent more people adding products to their carts versus the prior year, but not all of that interest converted to sales. Still, an 82 percent sales increase online from last April is notable, considering the category represents the polar opposite of essential goods.

The pandemic’s impact notwithstanding, the value of the world’s top 75 retail brands has grown by 12 percent to $1.5 trillion over the past year, according to an annual report from BrandZ conducted by WPP and Kantar.

The retail database’s ranking report, launched in conjunction with the World Retail Congress, predicted that its top brands are most likely to succeed in a post-pandemic landscape.

Not surprising, Amazon ranked No. 1. The e-tailer’s 2020 value came in at $415.9 billion due to its unparalleled assortment and speedy Prime delivery, while Chinese online mega-retailer Alibaba took the No. 2 spot at $152.5 billion. According to analysts, one of the company’s many subsidiaries, Ali Cloud, has used its AI expertise to help medical experts in China shorten coronavirus diagnosis times.

Representing the luxury sector, Louis Vuitton ranked No.5 with a value of $51.8 billion. The label’s parent company, LVMH, sprang to action upon news of the outbreak, converting its production lines to make hand sanitizer within just 72 hours.

Nike ranked No. 6 on the list, with about a $50 billion valuation, falling from the No. 5 spot last year. Walmart came in No. 8 at $45.8 billion, jumping one ranking from last year’s list. The big-box chain’s massive retail footprint and wide-ranging assortment of groceries, home goods and discretionary items like footwear and apparel have made it a go-to destination for shoppers in need of essentials as well as a retail pick-me-up.

Chanel and Hermes took the No. 9 and No. 10 spots on the list, respectively, reflecting the staying power of classic luxury labels.

Athletic wear brand Lululemon ranked No. 25 on the list with a $9.7 billion valuation. The company grew 40 percent year over year, marking it as the list’s highest riser. In the wake of the coronavirus outbreak, Lululemon began offering online at-home training programs to keep consumers engaged. Adidas also adopted the web workout marketing tactic, earning the company the No. 18 spot with a valuation of $14.8 billion.

“The coronavirus crisis underscores the essential role that retail plays in both our daily lives and the overall global economy,” David Roth, CEO of The Store WPP EMEA and Asia and chairman of BrandZ, said in a statement. “We are seeing some heroic examples of retail companies stepping up to meet consumer need and keep the world turning.”

While the story is “fast-moving and ongoing,” Roth said the results of the report indicate the brands that are “potentially better able to withstand the current shock.”

“Twenty-two years of BrandZ data analysis consistently confirms that strong brands help their businesses to survive turbulent times,” he added.