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Ecommerce will be 'fastest growing' sales channel of 2023, says WD-40

Ecommerce gains helped to boost sales at Albertsons and WD-40.

WD-40 cans

Photo by Flickr user Mike Mozart, used under a Creative Commons license. www.flickr.com

Investments in digital commerce are continuing to pay off at publicly-traded retail and consumer goods companies.

This week, ecommerce growth showed up in a pair of earnings calls to recap the third quarter, as Albertsons and WD-40 both saw outsize gains. Notably, the year-over-year comparisons here are being made with the time in 2021 that ecommerce demand was at its most elevated.

Let’s take a look at the results, and CEO commentary:

Albertsons: Digital and loyalty boost top-line gains

Digital sales at Albertsons increased 33% in the quarter ended Dec. 3, as the grocer boosted its loyalty membership by 16% to 33 million.

These results headlined a quarter in which the Safeway, Vons and Jewel-Osco parent saw identical sales increase 7.9% over the third quarter of 2021.

As with many retailers, the gains in top-line revenue are the result of high inflation, which continues to stick around in the food category. The company saw its gross margin decline 47 basis points, as product, supply chain costs and fewer COVID-19 vaccinations weighed on profits. Albertsons also saw an increase in picking and delivery costs related to the growth in digital sales, but the company is at the same time conducting productivity initiatives to rein in costs.

"Our investments in digital transformation, differentiation in [private label] and Fresh offerings, and the modernization of our operational capabilities contributed to these results,” said CEO Vivek Sankaran, in a statement.

Intriguingly, the combination of growth in digital sales and loyalty memberships is similar to recent results at Kroger. The companies, which are the nation’s top two pure-play grocers, have an agreement in place to merge in a $24.6 billion deal announced in October. However, the deal has yet to close as the companies face regulatory scrutiny. Digital, delivery and data are three of the keys to the merger, as the companies look to pool resources in ecommerce and retail media to compete with Walmart, Amazon and Costco.

Looking ahead to the rest of Albertsons’ fiscal year, Sankaran said that the company believes it is positioned “to continue to drive top-line growth and deepen our customer and community engagement both online and in-store. At the same time, our ongoing productivity engine is expected to continue to support our investments and partially offset anticipated inflationary cost increases, declines in COVID-19 vaccination and at-home test kit revenue, and macro-consumer headwinds."

The company did not host an earnings call with investors as a result of the merger deal with Kroger.

WD-40: Big gains in ecommerce

WD-40, the maker of penetrating oil and other home maintenance products, saw a big boost in ecommerce in the quarter ended Nov. 30. Sales on the online channel were up 51% when compared to the same quarter of 2021. The company said this was driven by triple-digit growth in the U.S. and double-digit growth in Asia Pacific.

WD-40 characterizes ecommerce among the “must-win battles” that will help propel future revenue gains at the brand.

“We're focused on developing a data driven marketing strategy that empowers us to engage directly with end users in meaningful ways online,” CEO Steve Brass told analysts on a conference call. “We expect ecommerce will be the fastest growing retail sales channel globally for the duration of fiscal year 2023. We see a world where almost every transaction in the future will be influenced by a digital touch point somewhere on the path to purchase and we believe we’re well equipped to thrive in that world.”

For the quarter as a whole, WD-40 reported that gross margin ticked up to 51.4%, and increased 400 basis points when compared to the previous quarter. Meanwhile, net sales declined 7% year-over-year to $125 million. WD-40 is continuing to raise prices as a result of inflation in some geographic markets, but also rebuilding profit margins as it halts increases in others such as the US.

Brass said promotional momentum is starting to come “roaring back” in the U.S., while Europe is about a quarter behind that.

“Overall, underlying volumes remain in-line with our expectations and we would expect volume performance to improve sequentially in the second half of fiscal year 2023 as price related disruptions abate,” Brass said.

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Shipt launches ecommerce accelerator for local retailers

LadderUp is aiming for 50% LGBTQ+ and BIPOC participation. Shopify will provide access to its platform.

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LadderUp will include an 8-week ecommerce course. (Courtesy photo)

Shipt is launching a new accelerator program designed to provide ecommerce tools for local retailers.Called LadderUp, the program is centered on equity. Target-owned delivery owned Shipt said conversations with business owners have revealed that local entrepreneurs face “gaps” in technology, but they also want to participate in ecommerce platforms. The COVID-19 pandemic was especially difficult for Black business owners, who saw earnings drop between 11-28% in 2019-2020, as compared to the earnings decrease of 5-17% for the rest of the population.

With the new program, the company’s goal is to reach at least 50% LGBTQ+ and BIPOC participation in the program.

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