Major retailers’ optimism about holiday sales is being tempered by continued uncertainty around consumer buying and product availability amid the economic fallout and shopping restrictions driven by the global pandemic.

While Walmart (6.4%) and Target (9.9%) posted gains in same-store sales in the quarters ended at the end of October, those at Kohl’s (-13%) and TJX (-5%) declined as increases in home goods, beauty, toys and activewear were offset by decreases in more formal apparel amid the casual work-from-home surge.

Short-term volatility
“It is a little volatile short-term because of the uncertainty around COVID-19, but we are bullish longer term because that feels significantly better than it did at the start of the third quarter,” TJX CEO Ernie Herrman in noting that around 400 of its T.K. Maxx stores have closed temporarily across Europe amid a spike in coronavirus cases and hopes for a vaccine in 2021.

General merchandise, health and wellness and food were key categories for Walmart and Target, both of which benefited from remaining open during the retail shutdown in the U.S. earlier this year because they have large grocery sections. And while consumers may be shopping less, they are buying more during each store visit.

Visits down, purchases up
Walmart said its number of transactions dropped 14%, but the average sale increased 24%. The average sale at Target jumped 15.6%, but number of them increased 4.1%. Kohl’s and TJX also said that their average transactions had jumped during the quarter.

“We planned for a good holiday season,” Walmart U.S. CEO John Furner said. “We are planning for what we would describe as the new normal for customers this holiday, which will include staying at home, being in smaller groups. We think, of course, there will be more celebrations as groups are smaller all around the country.”

From a retail perspective, these celebrations will be omnichannel-led with consumers having an option to seamlessly buy products online or in-store, a trend long underway before the pandemic but that has accelerated. About 2,500 Walmart U.S. stores will serve at ecommerce fulfillment centers, double the amount a year ago, and Target is making fresh produce available through its Shipt delivery service for the first time at 1,600 locations, CEO Brian Cornell said. Target also is doubling the parking available for in-store pick-up.

TJX, which generates less than 2% of annual revenue online, will launch ecommerce business through its HomeGoods chain in 2021, taking advantage of the increase in demand for home goods during the pandemic, Herrman said.

Also noted as the companies reported earnings:

• Activewear is in fashion. Kohl’s is doubling the store space dedicated to category in 2021 with the addition of its FLX brand and plans to increase sales to 30% of annual revenue over three years, up from the current 20%. Meanwhile Target is planning promotions for January to mark the one-year anniversary of its All In Motion activewear brand. And both Walmart and TJX are bolstering their assortments in the category.
• The retailers also are bolstering their merchandise mix with new brands for 2021, while cutting back others. Kohl’s is dropping the Ralph Lauren’s Chaps label in women’s apparel in favor of a DTR with Authentic Brands Group’s Nine West brand, while TJX has added “hundreds” of new brands year with an emphasis on smaller niche labels that add an “eclectic” feel to the merchandise, Herrman said. Kohl’s also is doubling the number of Land’s End shop-in-shops to 300 in 2021. Target is launching 70 FAO Schwarz brand toys chainwide.
• Despite the economic downturn, the retailers are opening new stores. TJX opened 50 new locations this year under its T.J. Maxx, HomeGoods, HomeSense, Marshalls, Sierra Trading Post banners, and is planning to add more than 100 additional stores in 2021, CFO Scott Goldenberg said. Target opened 18 new stores in the third quarter and 30 for the year — 29 of which were the smaller, sub-49,000-sq.-ft. format. Meanwhile, Kohl’s has put its plans for subleasing parts of its larger stores on hold after it opened 20 such locations, including those with Planet Fitness and the grocery chain Aldi, CEO Michelle Gass. HomeGoods also is being targeted for some locations.