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Omnichannel Shoppers May Be Omni-Disappointed

Just when retailers are saying, “hey look over here at online and forget about our flailing in store traffic,” FedEx (FDX) goes all Grinch today.

In its disappointing report this morning, the delivery behemoth suggested West Coast port issues are more significant than maybe retailers have been letting on.  That raises my Grinch red flag for retail stocks.

This callout is particularly interesting as we just finished the Q3 reporting season when very few retailers called out the West Coast port jams as a real issue. To be sure, only a few retailers cited delivery delays and those retailers were the ones you would expect to point to just about any excuse (ANN (ANN), Ascena (ASNA)).  So, maybe these retailers were not crying wolf after all?

The West Coast port delay raises two separate issues.

First, while mall traffic continues to decline maybe consumers show up and don’t find what they want. Second, I expect online penetration to be up as much as 500 bps year over year this holiday season.

If stock gets to distribution centers at the last minute, there is little chance that even omnichannel retail champions will be able to deliver. Throw in last-minute capacity issues at FedEx and UPS (UPS) (like last year) and Santa might have to wait for a thaw to come around. As a result, the consumer is omni-disappointed.

Can you say gift cards?


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