With store closures, one-day shipping wars between Amazon and Walmart, the ongoing tariff debacle with the U.S. and China and multiple CEO shakeups, 2019 was yet another volatile year for the retail industry.
The industry saw some gains as well, with numerous acquisitions of digitally native brands and more store openings such as in the Hudson Yards mall development.
Let’s look back at 2019 to see some of the biggest news that defined the past year.
Some of the biggest store openings
While plenty of store closures happened this year—9,302 as of December 13, 2019—new developments opened big doors. Hudson Yards in New York flashed its seven-story mall dubbed “The Shops at Hudson Yards” in March, with legacy retailers such as Neiman Marcus finally arriving in the Big Apple. Other notable openings included Nordstrom’s homecoming to New York in October, with 320,000 square feet devoted to its usual offerings, tailoring services and direct-to-consumer brands. The long-awaited (and ill-fated) American Dream mall also opened that month, with its first retail outpost finally opening for business on December 16.
Other digitally native retailers are expanding footprints as well, with Glossier testing out numerous pop-ups across the country and the pond, Everlane opening stores in Williamsburg and Los Angeles, and Neighborhood Goods landing its second store in New York’s Chelsea Market. Per Coresight Research, 4,392 stores have opened up this year so far—more than this time in 2018.
M&A is still strong and well
Plenty of surprise—and welcome—acquisitions occurred this year. One of the biggest deals included LVMH acquiring Tiffany & Co. for $16.2 billion in November.
Over in the digitally native brand space, Wacoal Industries bought lingerie brand Lively for $85 million. In November, PayPal shocked the industry by acquiring popular shopping coupon and rebate extension Honey Science Corporation for $4 billion. Meanwhile, clothing subscription brand Le Tote acquired Lord & Taylor for $100 million and brought back the famed store to New York for a short pop-up.
Other industries saw shakeups as well, with McDonald’s acquiring Dynamic Yield to help with the QSR giant’s ongoing digital transformation. Google, long struggling with its own wearable ambitions, bought Fitbit for $2.1 billion in November. Google wasn’t the only tech giant in the M&A game. In March, Amazon acquired WiFi router company Eero with the terms of the deal undisclosed.
Shopify continues to dominate
It was yet another big year for the ecommerce platform, with Shopify reaching 1 million merchants in late November. At the company’s annual developer conference in June, the platform furthered its plans to become more than just an ecommerce platform with the rollout of the Shopify Fulfillment Network (SFN). Not only is the fulfillment network a move to compete with Amazon, but it provides another channel for businesses to ship orders—without the dangers of working with Amazon as a 3PL. Also that month, Shopify announced Shopify Email, its own email service provider to compete with the likes of Mailchimp and offer merchants a customizable solution to ramp up its email marketing.
One-Day shipping wars
Amazon remains the thread that unites all retailers, whether it’s out of fear and competition or a necessary evil to work with. In April, Amazon announced Amazon Prime Members now get one-day free shipping, as opposed to two-day shipping. Walmart, not to be left behind, announced free next-day shipping in May—without any membership fee. It’s the ongoing war between the two retailers, competing on every front from ecommerce, to third-party marketplaces to grocery. While one-day shipping will end up costing Amazon $4 to $5 billion to implement, analysts points to numerous Amazon investments in first and last-mile delivery they say will ultimately pay off as it stops outsourcing of its logistics to other parties.
Other similar trends, such as buy-online-pickup-in-store (BOPIS) is on the rise, with players like the Home Depot, Lowe’s, and Target seeing it pickup. According to Adobe Analytics, BOPIS grew 40.9% year-over-year during Cyber Weekend and Monday, with 20% of consumers more likely to buy something with a retailer that enables BOPIS.
The tariff wars
The ongoing tariff wars between the U.S. and China remain, despite the two countries coming to what the Wall Street Journal calls a “first-stage trade deal.” As part of the deal, China is expected to buy more farm products from the U.S. and the U.S. would halt its tariffs that were to take place on December 15. However, while the talks are still ongoing and could change on a whim.
Amazon, among hundreds of other ecommerce retailers, is expected to take a hit if the tariffs take place, with first and third-party merchants paying more for the goods and eventually passing on that cost to consumers. For marketers, the tariffs could mean a change in budget allocation for advertising and media buys, as well as numerous other concerns. While the tariff war appears to have calmed for now, expect it to continue to dominate 2020, as retailers and digital upstarts prepare for it regardless.
Digitally native brands grow up
Earlier this year, digitally native brands such as Casper, Away and Glossier reached a much-coveted status among startups: a $1 billion valuation. While becoming a unicorn company points to success and investors’ faith in said DTC brands, the designation comes at an eventual price.
In addition to WeWork drama, ThirdLove and Away faced numerous allegations about CEO behavior towards employees. A report from The Goods by Vox detailed how ThirdLove’s co-CEO Ed Razek and the company’s overall behavior towards employees was abusive and harmful such as no negotiating on salaries, no leaving the office before 6.pm, and supposedly orchestrating a movement against Victoria’s Secret fashion show.
In another report from The Verge, slacks at Away exposed a company culture that didn’t tolerate private Slack groups, worked through the holidays and in one scenario and rewarded work through New Year’s Day with a month off. While ThirdLove remains the status quo, Steph Korey was ousted as CEO at Away, with Lululemon COO Stuart Haselden Lululemon taking over the leadership position.
As DTC brands continue to grow and become companies bigger than their initial products, C-Suite movement is expected—particularly when it comes to toxic culture.
The CEO shuffle
In short amount of time, the CEOs of Under Armour, Nike and Gap Inc. all stepped down from their roles. Under Armour CEO Kevin Plank stepped down in October, but will remain executive chairman and brand chief of the company. Nike CEO Mark Parker left his position in October, and will still stay on as executive chairman. Long-time Gap Inc. leader Art Peck, after being with Gap Inc. for 15 years, stepped down from his role as CEO and the board in November after a series of poor earnings results. McDonald’s CEO Steve Easterbrook resigned for engaging in a relationship with an employee.
In total, 55 retail CEOs left their roles, the greatest increase in one year since 2010. This leaves 2020 open for a new age in retail, one less dominated by digital transformation talks and one in which CEOs actually implement those necessary changes to resonate with the consumer.
Goodbye to all the brands we used to know
2019 was no stranger to brands filing for bankruptcy and leaving the industry. Iconic brands such as Barneys joined other ill-fated retailers such as Henri Bendel in closing its doors. Charlotte Russe, Gymboree, and Forever 21 all filed for Chapter 11, ending the era on a low note. As the retail industry continues to change and adapt to changing consumer behavior, expect more losses to come in the next decade.