Delivery wars heat up as two more retailers expand same-day services
Best Buy and Macy’s are stepping up their same-day delivery efforts as they continue to bolster their defenses to compete with Amazon and other rivals.
Best Buy announced on Thursday it is expanding its same-day delivery of online orders from 13 metro areas to 27, with more to come. The retailer expects that customers in nearly 40 cities will be able to take advantage of service for the holiday selling season.
In addition, Best Buy is slashing the fee for the service, dropping the price per order from $14.99 to $5.99. Also, more products are being made eligible for the service.
The retailer said its same-day deliveries will be handled by two companies that use a crowdsourced labor model, including our original partner, Deliv.
Also on Thursday, Macy's announced that, starting this fall, it is expanding its same-day delivery of products purchased online to 15 more markets across the United States, which will bring the program to a total of 33 markets. Bloomingdale’s will expand into two additional markets.
The fee for same-day delivery service is $8 for all online purchases that meet Macy’s ($99) or Bloomingdale’s ($150) free shipping thresholds, and $8 plus standard shipping costs for anything less. Macy’s same-day delivery program is done in collaboration with Deliv.
Best Buy began testing same-day delivery in the Bay Area in late 2015, and expanded it to Atlanta, Boston, Chicago, Dallas, Houston, Las Vegas, Los Angeles, Miami, New York, Philadelphia, Seattle and Washington, D.C., in 2016. Beginning Sept. 6, same-day delivery will expand to the following cities: Austin, Charlotte, Cincinnati, Columbus, Denver, Kansas City, Minneapolis/St. Paul, Orlando, Phoenix, Pittsburgh, Sacramento, San Antonio, San Diego and Tampa.
Macy’s launched its same-day delivery service in 2014. It is currently available in the following markets: Atlanta; Boston; Chicago; Dallas; Houston; Las Vegas; Los Angeles; Miami; New Jersey; NYC Metro (Manhattan, Brooklyn, Queens, Yonkers); Orange County, California; Philadelphia; San Francisco; Seattle, and Washington, D.C.
The new markets being added are: Austin, Texas; Charlotte, N.C.; Cincinnati; Columbus, Ohio; Denver; Grand Rapids, Mich.; Kansas City, Mo.; Minneapolis-St. Paul; Orlando, Fla.; Phoenix; Pittsburgh; Sacramento, Calif.; San Antonio, Texas; San Diego, Calif; and Tampa, Fla. Bloomingdale’s will expand into two additional markets: Orlando, Fla., and San Diego, Calif.
Target Q&A with its new chief strategy and innovation officer
On Sept. 11, Minsok Pak will step into the role of executive VP, chief strategy and innovation officer, for Target Corp.
In the Q&A below, posted on Target's website, the retailer spoke with Pak about his past work with consumer brands, and the challenges facing retail today.
You’ve worked for consumer brands, including The LEGO Group and LG Electronics, and have two decades of experience as a consultant with McKinsey & Company. How did you get your start in your career and what keeps you going?
I thought I was going to be a PhD in Economics but during my senior year I realized I didn’t have patience for academia. I wanted to be doing stuff – having impact – not just focusing on research. I was fortunate enough to join McKinsey & Company fresh out of college and quickly learned a lot about different business industries and functions. It was fast-paced, intellectually stimulating, and I got to work with some terrific people. Before I knew it, I’d spent nearly two decades there.
I love tackling new challenges and working with great teams to drive growth in a business. I get energy from staying curious and looking for ways to create impact. Throughout my career, I’ve had the privilege of being a part of a number of significant transformations. It‘s the idea of being in an environment where there's a lot of change happening and the opportunity to make a difference that excites me.
I‘ve focused on consumer and retail industries because they‘re tangible and real – we’re all consumers and we all shop. And retail today is one of the most dynamic industries, with seismic changes in both competitive and consumer behavior.
What do you think is the biggest challenge retailers are facing today?
Retailing used to be about brick and mortar – having convenient locations, the right products on shelves, and the best prices. That’s no longer the case. With digitization, consumers have a lot more options and access. They have higher expectations when it comes to experiences, personalization, and engagement. In order to succeed, retailers must fundamentally change their business models.
You’re a triathlete. What has that taught you about business?
Training for and competing in long-distance triathlons forces you to have a long-term goal, make difficult trade-offs, execute with discipline, and adapt when variables change. I‘ve also learned not to put boundaries on myself. I believe we are often our worst enemy because we self-impose limits on what we can accomplish. And these lessons apply in my professional life, too.
Your first day is coming up. What’s your top priority once you’re settled in?
Buying a winter coat! In all seriousness, my top priority will be to get up-to-speed quickly. Target is a nearly $70B retailer with 1,800 locations competing in an extremely dynamic retail environment. My goal will be to learn about all of the terrific things already underway and to work with the team to continue building for the future.
Disappointing Q2 for Lowe’s; to boost store employee hours
It was another disappointing quarter for Lowe’s Cos., which on Wednesday reported lower-than-expected adjusted earnings and revenue and gave notice of slower growth in profit margin for the second half.
The home improvement company reported that its revenue rose 6.8% to $19.5 billion for the quarter ended Aug. 4, which was short of estimates. Same-store sales rose 4.5%, exceeding Street forecasts.
Lowe's reported net income of $1.4 billion compared to $1.2 billion a year ago. Adjusted earnings were $1.57 a share for the quarter, missing analysts' estimate of $1.62 a share.
“While our results were below our expectations in the first half of this year, the team remains focused on making the necessary investments to improve the customer experience and drive sales,” said Robert Niblock, CEO. "This includes amplifying our consumer messaging and incremental customer-facing hours in our stores which will put pressure on our operating margin. We believe this is the right strategy to more fully capitalize on strong traffic trends in what we believe is a supportive macroeconomic backdrop for home improvement."
Lowe's spokesperson Colleen Penhall told USA Today that the company planned to "add additional hours of store staffing during peak traffic times."
"To more fully capitalize on our strong traffic trends and ensure we are delivering an excellent customer experience, we are reinvesting in store hours at the customer service associate level," she stated.
Lowe’s, which operates 2,141 stores in North America, announced that it would add 25 home improvement and hardware stores this year.
Product categories that performed above average in the second quarter were appliances, lawn & garden, lumber & building materials, and rough plumbing & electrical. Paint, flooring, and seasonal & outdoor living were among the underperformers.
Shares of Lowe’s were down more than 6% in mid-day trading as the company missing both its top and bottom line numbers spooked investors.The news comes a week after Home Depot reported its highest quarterly revenue in company history.
To boost profits and play catch up to Depot, Lowe’s has been investing in its Pro business. It has also restructured parts of the company, including layoffs of more than 120 corporate tech workers this summer.