Amazon didn't report financial results Thursday, but its footprints were all over the results of Kohl's and Macy's, two retailers making omnichannel and digital pivots, and Blue Apron, which saw higher costs due to building out fulfillment centers for its meal delivery service.
Let's start with the two department stores. The brick-and-mortar retail sector has been rattled by Amazon and changing buying habits. Simply put, the growth is in the clicks not the bricks when it comes to retailing.
Remember the pervasive Amazon storyline. The e-commerce giant is entering every market and disrupting incumbents. This storyline is a bit overblown, but Amazon is still the elephant in the room on multiple earnings conference calls. Here's a quick tour:
Macy's works digital
Macy's is in the middle of a broader digital transition. Overall, the retailer said it is making solid progress with fulfilling online orders from its stores, driving more engagement and developing loyalty. Of course, Macy's is also closing down stores too. The digital second quarter business update from Macy's CEO Jeffrey Gennette goes like this:
Buy Online Pickup in Store is gaining traction. Twenty five percent of Macy's digital demand could be satisfied with online store pickups.
When a customer picks up online orders, there's typically an upsell of 25 percent of additional purchases.
Inventory availability has improved online and Macy's mobile app will allow a customer to see all the inventory in a store near them. That Shop Your Store feature is in beta and close to launch.
Digital sales are seeing double-digit growth.
"The omnichannel customer is clearly a potent one when they buy in both channels, so all good things come from that," said Gennette.
Takeaway: Macy's isn't going to be an Amazon killer, but can bring together enough physical and virtual touch points to compete.
Kohl's has a similar tale when it comes to omnichannel. The company said online demand sales grew 19 percent in the second quarter and stores fulfilled 31 percent of that demand. Kohl's was also to lower its costs on shipping and fulfillment due to ship and pick up from store programs.
"We have greater conviction than ever than leveraging our store base to accommodate continued growth in customer online ordering is the right strategy for us," said Kevin Mansell, CEO of Kohl's.
In addition, Kohl's is aiming to provide better customer experiences via its smartphone app. Mobile accounted for 66 percent of Kohl's online traffic and 42 percent of its online revenue.
Mansell said the company has been investing to improve its app since it is the front-end of an omnichannel experience.
On the supply chain front, Kohl's said it is launching its fifth e-fulfillment center next week. This launch is aimed at the holiday season. On the analytics front, Kohl's is focusing on personalization and digital to cut its marketing expenses.
Takeaway: Kohl's sounds a lot like other retailers, but it has an installed base and a loyalty program it can leverage.
Blue Apron is a well-regarded meal service company that is increasingly being known for one hideous initial public offering.
The company is getting shellacked on the idea that Amazon will copy the Blue Apron model and do it better.
That perception wasn't exactly refuted when Blue Apron executives said they were seeing increased competition from grocers and other meal-kit delivery services. Meanwhile, Blue Apron's costs surged as it opened a new distribution center and lost customers quarter-over-quarter because it marketed less. And it marketed less because it raised less cash from that IPO debacle that priced at $10 a share. Blue Apron is barely holding the $5 mark.
Blue Apron isn't focusing on market share as much as quality, but competition is everywhere. Amazon and Whole Foods can easily compete and Kroger and grocers are in the market too.
The company reported a second quarter net loss of $31.6 million on revenue of $238.1 million, up 18 percent from a year ago.
Takeaway: Meal-kit delivery isn't likely to be a zero sum game. Blue Apron, which is still the dominant player in the space, can compete, but will have to improve operations and technology. What's unclear is whether Blue Apron can trump the perception is that the company will be Amazon-ed.