Two stories today illustrate how e-commerce is changing the U.S. economy.
First, there are indications that demand for shipping boxes is rising fast enough to give the manufacturers of containerboard used to make these boxes sufficient market power to both raise prices and make price increases stick. Investment Analysts from both Goldman Sachs and Jeffries both released Goldman Sachs both raised their ratings of containboard manufacturers to reflect their belief that the pricing power that these manufacturers now have is sustainable.
Second, in its conference call yesterday, Wolverine Woldwide, a manufacturer of a broad range of casual and work shoes and boots stated that nearly 15% of its sales were now sold in a direct to consumer channel. Wolverine Worldwide’s estimate of the proportion of its sales that are direct-to consumer sales is important for understanding the online retail marketplace as the brands it sells cover a full range of footware sold to a very broad range of consumers. The breadth of Wolverine Worldwide’s consumer reach can be seen in its portfolio of brands which includes: Merrell, Saucony, Wolverine boots, Caterpillar Footwear, Bates, Sebago, Harley-Davidson, Sperry Top-Sider, Stride Rite, Hush Puppies, and Keds.
Wolverine Worldwide’s direct to consumer channel is only a subset of the sale of its shoes online. Its brands are also sold online through internet only shoe merchants Zappos.com, OnlineShoes.com, Shoebuy.com and Shoes.com as well as the online channels of brick and mortar retailers. As the share of sales sold through e-commerce channels is expected to continue to grow at a rapid pace, delivery firms should expect to see continued growth in the number of relatively light weight parcels for household delivery.
Worldwide sales through the direct-to-consumer channel as well as online shoe merchants shifts sales away from Wolverine Worldwide’s traditional brick and mortar retail partners including REI, Sports Authority, Dick’s Sporting Goods, Sears, Macy’s, JC Penney’s, Brown Shoe (Famous Footware), Genesco (Journey’s) and DSW. Given the amount of retail space that shoes consume in department and sporting goods stores and in stand-alone stores in enclosed malls, strip centers and outlet centers, the shift in sales to direct to consumer and online retail channels will have a significant impact on the market for retail focused real estate.