3 brick and mortar stores that can thrive in the e-commerce age
Bed bath and beyond (NASDAQ: BBBY) shares fell recently after the company reported a sharp drop in sales. This illustrates the fact that some physical stores continue to struggle in a new digital age, even as in-person shopping begins to make a comeback. But some traditional retailers are thriving. In this segment of “The 5” on Motley Fool Live which was broadcast September 30, Fool.com contributors Brian Withers, Toby Bordelon and Nicholas Rossolillo present three retail stocks that are booming right now.
Brian Withers: Bed bath and beyond. Itâs a shock. Shares plunge after sales of Bed Bath and Beyond fell. Home Stuff, Brick and Mortar Retailer. I’m shocked. Net sales fell 26 percent. I imagine a combination of increased fair competition along with the coronavirus and the company has reduced sales and adjusted profit expectations for the year as it anticipates new supply chain challenges. Traditional retailers selling commodities during a pandemic, what could go wrong? Let’s do the opposite. What is the opposite of Bed Bath and Beyond? Is there a traditional retailer that is being set up to compete with the current wave of slot machine e-commerce? What are they doing well? Pseudo?
Nicolas Rossolillo: Super boring, Target (NYSE: TGT). I guess they are a bit boring. Any brick and mortar is going to have some boredom built into the story. But I like Target in particular because I think an acquisition they made a few years ago really went unnoticed when they acquired Shipt. They have now fully integrated Shipt into their operations as a type of last mile delivery service. I think it’s absolutely huge for Target to have this in-house, like Amazon (NASDAQ: AMZN) has its own in-house last mile delivery operation. Not just from a business or operational standpoint, but also simply because it aligns the delivery service with Target and with Target’s customers. I think that’s the problem a lot of consumer reviews have highlighted, like with the Instacarts last year. You just like another party with their own interests involved now rather than having this nice, well-rounded company that is on the same page. I think Shipt is a real differentiator there.
Then combine that with the fact that Target led the way in reimagining the way brick-and-mortar stores, turning the existing store base into a kind of distribution center. The total percentage of orders fulfilled by an actual Target store versus a fulfillment center somewhere is huge. It’s like 95% of all orders at Target filled from an actual store. It’s also huge like. They just re-used the big box concept completely and I think this will continue to be a game-changer for them in the years to come.
Withers: Yes, I have been very impressed with Target over the past few years. I used their online store pickup service. They have Starbucks in the store. Most of them have groceries, so you just have to buy whatever you need, run. Just been impressed as a customer to see what they can do and not just pick up in store you can get it delivered. You can park in the parking lot without even getting out of the car. It’s pretty cool. Toby, how about you?
Toby Bordelon: i will go with Home deposit (NYSE: HD). I think it’s probably pretty obvious. But I found myself looking for something I needed there because I don’t want to wait overnight for Amazon if I want to get the job done. So I want to take what I need now. I need to know what we think about supply chain issues and things that take a little longer. This is even more true now because it’s not just about waiting overnight, you could wait two or three days. I don’t wanna do this and you can’t do this.
The other thing I love about The Home Depot is one thing they have going forward is the employees I’ve found, they know what they’re doing and they’re a great resource for questions and quick advice, especially if like, which of these products may be better for this particular application? They tend to have very good suggestions as to which way to go. This is useful in that it collects your things quickly. But you can also get this suggestion or advice eagerly if you are not sure what exactly you need.
Withers: Yes. Not like when you ask us about what stocks you should buy and we say we can’t give you advice. [laughs]. Well, those are two excellent ones and I was the last to sketch the notes and those were the two I was going to tackle. But one business that we’ve covered before, Toby and I did a deep dive with Vicki, was Tractor supply company (NASDAQ: TSCO), pretty impressive company.
He recently has a new CEO who arrived just before the coronavirus and was very impressed with the leadership he put forward. He said right away that we are hiring 6,000 people, we are investing in our stores and the health of our other teams, we are providing masks for our employees, we have done a ton of things to make sure their employees are well taken. in charge, and the fact that it’s an agriculture and food store, that was essential during the coronavirus, they were open all the time, and they added a ton of customers through the coronavirus, and these customers have chosen to come back again and again because of the service they receive and the products available there. You might not be a customer of the store, but if you ever get a chance to go, go for it, it’s a pretty impressive run business. They also have an online presence, but the foundation of their store is their bread and butter.
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