Buoyed by consumers using omnichannel services, such as buy online pick up in store and curbside pickup, large chains report strong online sales growth in the third quarter.
A new Digital Commerce 360 analysis forecasts top North American retail chains will end the year with a 76.8% growth in ecommerce—the highest rate among the four types of merchants. Crossing $330 billion in online sales, chains grew fast this year in large part thanks to big retailers like Walmart.com Inc., The Home Depot Co. and Target Corp., which stayed open throughout the pandemic and have seen an uptick in buy online pick up in store and curbside orders. Q3 earnings of some top retail chains reported this week show similar trends.
Hardware chain The Home Depot Co. is one such example. Online sales grew approximately 80% in the third quarter ended Nov. 1, the company reported this week. Ecommerce sales accounted for 13% of total sales, executives said on a call discussing the results, according to a SeekingAlpha transcript. The 13% web penetration means Home Depot’s online sales reached $4.36 billion during the quarter. Roughly 60% of online orders were picked up at a Home Depot store, executives said.
“Our [site] visits are up dramatically. We’re up in mobile, desktop, mobile web,” Ted Decker, chief operating officer and president, said on the call. “Our conversion is up despite hyper growth in app and mobile web, which tend to have lower conversion rates than desktop. Our app downloads are way up, our active app users are way up, our orders are up.”
For the third quarter ended Nov. 1, Home Depot posted total sales of $33.53 billion, an increase of 23% over sales of $27.22 billion in the third quarter of 2019. For the first nine months of the year, total revenue increased 18.2% to $99.85 billion from $84.44 billion a year ago.
Similarly, Home Depot competitor Lowe’s Cos. experienced strong growth online during the quarter. Ecommerce revenue jumped 106% during its fiscal Q3 ended Oct. 30, the company said without providing more detail, according to a SeekingAlpha transcript. Total sales during the quarter reached $22.31 billion, up 28.3% from $17.39 billion a year ago. For the first nine months of the year, total revenue is up 23.4% to $69.29 billion from $56.12 billion over the same period a year ago.
Home improvement retailers are getting a boost this year because consumers are renovating their homes. Retailers selling hardware and home improvement products thrive especially when consumers move to new homes, which has been the case in 2020. As of September, sales of existing homes grew for the fourth consecutive month to an annual rate of 6.54 million, up 9.4% from August and nearly 20.9% year over year, according to the National Association of Realtors.
“Home sales traditionally taper off toward the end of the year, but in September, they surged beyond what we normally see during this season,” says Lawrence Yun, National Association of Realtors’ chief economist. “I would attribute this jump to record-low interest rates and an abundance of buyers in the marketplace, including buyers of vacation homes given the greater flexibility to work from home.”
Digital sales at Kohl’s Corp. increased 25% for the quarter ended Oct. 31. Ecommerce accounted for 32% of total sales, up from 22% in Q3 2019. That means online sales reached $1.27 billion during the quarter, up from $958.76 million a year ago. Stores fulfilled approximately 40% of online orders, executives said on a call discussing the results, according to a SeekingAlpha transcript.
“Our omnichannel customer is six-times more productive than a digital-only customer and four-times more productive than a store-only customer,” CEO Michelle Gass said on the call. “We were pleased to see a number of our store-only customers become omnichannel customers during this time, and we expect this to continue as they enjoy the convenience of shopping digitally in addition to our stores.”
Total revenue for Kohl’s, however, declined 14.0% to $3.98 billion in Q3 from $4.63 billion in Q3 2019. For the first nine months of its fiscal year, total revenue is down 25.3% to $9.81 billion from $13.14 billion in 2019.
Home Depot is No. 5 in the Digital Commerce 360 Top 1000, Lowe’s is No. 22 and Kohl’s is No. 21.
Read more in-depth analysis on how the top retail chains performed online in Digital Commerce 360’s just-released report: U.S. Ecommerce Market Report. The 2020 U.S. Ecommerce Market Report is available as a downloadable PDF for $499. It is also included in our Gold and Platinum memberships, which provide full access to all of Digital Commerce 360’s published reports and certain online retailer databases. Learn more here.
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