The impact of Hurricanes Harvey and Irma on retail sales
Hurricanes Harvey and Irma had a similar impact on retail sales and the toll was significant on online spending as well as spending in physical stores.
First Data found that Retail spending plummeted 58.7% week-over-week (43.7% year-over-year) in Houston and its surrounding areas at the peak of the hurricane, according to First Data, released two reports analyzing the magnitude of the impact that Hurricane Harvey and Hurricane Irma had on consumer spending. Across the state of Florida, spending dropped 55.7% week-over-week (or 39.1% year-over-year) at the apex of Hurricane Irma.
“Our data shows that consumer spending in both impacted regions followed a similar trajectory," said Rishi Chhabra, VP, information & analytics, First Data. "Spending increased the week before the hurricanes, with people stocking up on key items like gasoline and groceries, and dropped significantly during the storm. After the worst of the hurricanes, consumer spending rebounded as people began to rebuild.”
Both brick-and-mortar stores as well as e-commerce saw a significant drop in sales, First Data found. In Houston during the week of Hurricane Harvey, online spending dropped 41.4%. By comparison, total U.S. e-commerce business was down only 4.3% during the same week. Post-storm, Houston e-commerce sales continued to drag while national e-commerce sales rebounded.
The same was true for Hurricane Irma. In Miami, online activity started dropping the week before Irma, declining significantly by 39.3% during the week of the hurricane (U.S. online spending was up 3.9%). After the hurricane, Miami e-commerce sales increased 0.6%, dragging behind national spending which was up 12.9%.
Smart Energy Management Trends for Brick-and-Mortar Retailers
Commercial retail is a unique and rapidly changing space. With the rise of online shopping, retailers are creatively adapting to improve the experience of being in a physical store. Strategies like experiential retail make shopping a personalized and engaging experience instead of a simple transaction.
Retailers are also providing customers with a more tech-friendly brick-and-mortar shopping experience in response to online competitors – the prevalence of self-serve check-out stations being just one example.
Other tech-driven strategies are being used to improve operations. Smart energy management is of growing interest to retailers seeking to cut costs, and while many of these strategies don’t have a direct impact on the shopping experience, the upgrades ultimately benefit customers. Savings accumulated from strategic energy management are significant and can be used to improve operations or be invested in other areas. Energy is the fourth largest in-store operating cost for U.S. retailers, and decreasing energy costs by 20% can have the same bottom line impact as a 5% sales increase.
Communicating through the cloud
Cloud-based software is becoming increasingly popular – from smart devices for schedule-based plug load shutdown to integrated data collection platforms. Removing paper and clipboards from the energy management process makes it accessible and efficient for time- and resource-strapped facility managers. Of course, as cloud use continues to grow, new challenges arise.
Security is a concern for many, and software not only has to be optimized for top performance but also ensure protection against any potential threats. Congress is even paying attention to this need, most notably in recent legislation introduced this summer requiring baseline safety features for Internet of Things (IoT) devices at federal facilities.
Another emerging trend in retail efficiency is automated demand response (ADR), a utility-commercial partnership that capitalizes on IoT solutions to effortlessly shift resources for cost savings on both sides of the meter. Utilities have worked with select smart energy management companies to further ADR programs and participation from retailers, helping them automatically cut back during times of peak demand, which adds to the easy savings that already come from such devices. These types of programs are especially helpful for stores with set operation hours, providing resource control beyond scheduled store shutdown times.
ADR partnerships also benefit the larger community by stabilizing the grid for another changing industry: utilities. Because of this, utilities sometimes even offer monetary incentives through rebates and bill incentives for businesses that participate in ADR programs.
The frequency and duration of major outages are on the rise, and power problems are estimated to cost the U.S. economy more than $150 billion annually. If U.S. businesses were to fully embrace ADR, the nation’s peak load in 2019 could be reduced by as much as 150 GW over 2009, according to a Federal Energy Regulatory Commission report. Both utilities and businesses have an incentive to work together through ADR programs.
Consumers are increasingly looking to brands and retailers to adopt more sustainable practices. A recent Unilever study found one-third of customers are choosing to buy from brands they believe are doing social or environmental good. The highly coveted millennial market lists green packaging as a top priority, resulting from the increasing importance placed on social responsibility. The greenhouse gas reductions from energy cuts shine bright in a company sustainability report. If all U.S. commercial and industrial buildings improved their energy efficiency by 10 percent, the environmental benefits would be equal to removing emissions from about 49 million vehicles – or about 19% of all registered highway vehicles in the U.S.
Smart energy management is a clear path in an evolving landscape for retailers to benefit their bottom line and benefit the planet.
James McPhail is CEO of Zen Ecosystems, which provides intelligent energy management solutions to businesses and consumers. Zen HQ is an energy management system designed for the unique needs of businesses and utilities to provide insights and control over multisite commercial energy usage with a fast payback.
Amazon to embark on Big Apple hiring spree
Amazon is about to put down some new roots in New York City — and is hunting for new employees to support the operation.
The online giant plans to open a 359,000-sq. ft. office in Manhattan in 2018 that will serve as the home base for its Amazon Advertising business. Amazon will invest $55 million to outfit the office space with equipment that meets energy-efficient standards. To encourage Amazon's expansion in New York State, the company was offered up to $20 million in performance-based taxed credits through Empire State Development's Excelsior Jobs Program.
The expansion will also create 2,000 new jobs in finance, sales, marketing, and information technology — roles that will earn an average of $100,000 annually. These jobs will support Amazon’s advertising business, as well as Amazon Web Services, Amazon Fashion, and other divisions, according to MarketWatch.
Amazon Advertising will complement other operations already entrenched in The Empire State. For example, The Amazon Fashion Photography and Videography Studio in Brooklyn, New York, supports more than 300 jobs. Amazon also has a 350,000-sq.-ft. administrative office in New York City that employs 500 associates.
"We're excited to expand our presence in New York — we have always found great talent here," said Paul Kotas, Amazon's senior VP of worldwide advertising. "Last January, we announced our plans to create 100,000 full-time, full-benefit jobs in the U.S. by mid-2018 — and we are on track to reach that goal."
To help the company reach that goal, Amazon will open a new fulfillment center in Staten Island, New York. A $100 million investment, the 855,000 sq.-ft. facility will employ 2,250 full-time associates working alongside advanced robotics solutions.
The company is also evaluating where it will open its second headquarters, which it is calling HQ2.