Mask Mandates Re-instated; Amazon 2Q Recap; Supply Chain Optimization
With the COVID-19 Delta variant on the rise, last week the CDC recommended that all individuals should wear masks in public indoor areas, regardless of vaccination status. In response to the CDC’s announcement, big-name retailers have started to re-instate their mask-mandates including Target, Walmart, Kroger, Home Depot, Kohl’s, Publix, and Apple. The degree to which these mask mandates extend does vary, with some retailers requiring employees to wear masks, and others just recommending that employees and customers wear them.
SKU mix optimization appears to be key in driving a profitable omnichannel supply chain:
Our thought leader partner, Menasha, recently completed its 2021 propriety industry study with CPG executives. The survey revealed that 56% of respondents leverage an existing SKU mix as the top strategy for winning omnichannel retail (in-store and online) followed by 47% who cited eCommerce resources.
Amazon business slowed in 2Q due to vaccinations and eased restrictions:
This quarter Amazon saw a reversal of revenue growth trends vs. prior quarters, with physical stores returning to growth while the 1P, 3P, and subscription businesses reported a deceleration in growth. Amazon pointed squarely to tough comparisons and consumers “getting out more” as the driver for slower sales growth in its online business.
Management noted that the pandemic-neutralized trends. This includes 2-year compounded annual growth rate of 25-30% vs. the pre-pandemic rate of ~20%. Amazon added 50 million new Prime members in the last 18 months and is seeing positive engagement and retention from those new members.
Amazon lowered 3Q guidance significantly to 10-16% net sales growth (vs. 27% this quarter) based on the expectation that the softer consumer trends they saw in 2Q will continue. However, with retailers re-implementing mask mandates, consumers may return to increased online shopping behaviors.
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