Holiday Season Retail Sales Forecasts Are Down – Yoshitsu Could Be Well Placed To Make The Most Of Potentially More Robust Wholesale Trends As Demand Is Pulled Forward By Gita Karunakaran, Benzinga
Detroit, Michigan
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December 14, 2022 08:00 AM Eastern Standard Time
Consumer behavior has changed in many ways since the COVID-19 pandemic hit the world in 2020. One of the key changes was in the way people did their shopping. Most people had to work from home at the time and due to the stay-at-home orders and multiple lockdowns, consumers looked for avenues to shop online and avoid indoor venues like shopping malls and restaurants. E-commerce witnessed an all-time peak in 2020 increasing by $244.2 billion or 43%, rising from $571.2 billion in 2019 to $815.4 billion in 2020.
Two years on, these consumer behavior changes continue to be evidenced and e-commerce seems to be here to stay with many brands pivoting their business strategies to include e-commerce in a more significant way to remain competitive.
Even with e-commerce, the holiday season is usually the perfect time for a boost in sales, when holiday discounts, gift-giving, festivities, parties and social pressures create a massive influx of consumer spending.
Holiday Ecommerce Sales Growth In 2022 Could Likely Drop Below Pre-Pandemic Levels
Although the fabulously high levels of e-commerce sales reached during the pandemic and its corresponding holiday season may have been something of an exception, typically the U.S. has always seen a double-digit increase in e-commerce growth during the holiday season.
During 2021 the increase in retail e-commerce sales dipped to below pre-pandemic levels to 8.6%, seemingly on account of the post-pandemic economic slowdown –- with cash-strapped consumers being hesitant to open their wallets.
The downward trend may continue this year, with reports estimating that U.S. consumers will spend even less in the 2022 holiday season. E-commerce sales seem set to grow by an underwhelming 2.5% according to Insider Intelligence.
One of the factors affecting this number could be the sales events that e-commerce giants like Amazon and Walmart initiated in October, ahead of the holiday season which have likely pulled demand forward.
While the retail e-commerce scenario seems not so encouraging, wholesale e-commerce could continue to thrive regardless of seasonal trends, as the key drivers of the business are quite different for wholesale e-commerce as compared to retail.
Wholesale Businesses Might Benefit Greatly From Using Ecommerce
Wholesale e-commerce is a business-to-business (B2B) e-commerce model where businesses sell products in bulk at a discounted price to other businesses, instead of selling products individually to consumers – essentially acting as the intermediary between the manufacturer and the distributor or retailer.
A significant advantage of e-commerce for wholesale businesses is that they aren't bound by physical location and can reach customers all around the globe via their website, social media and various marketplaces.
Moreover, e-commerce makes life much more convenient for wholesalers by enabling them to research options and make their purchases right from their mobile phones while on the move, without having to involve sales.
In addition, by using e-commerce platforms, wholesalers can lower or even eliminate unnecessary costs even as they expand their online presence, resulting in improved profitability.
Yoshitsu’s Wholesale Businesses Could Help It Sail Through The Holiday Season
Tokyo-based Yoshitsu Co. Ltd. (NASDAQ: TKLF), a Japanese retailer and wholesaler of beauty and health products, home goods and food has seemingly benefitted from its mixed model approach of straddling both the wholesale and retail business worlds and selling its products through the use of e-commerce as well as via brick and mortar stores.
Yoshitsu has an extensive business network both in Japan and abroad, including over 200 wholesale clients, numerous online stores in China, Korea and Japan, several franchise stores in the United States, Canada, China (Hong Kong) and the United Kingdom, apart from company-operated stores in Japan.
The company’s online stores, franchised stores and wholesale operations account for up to 95% of its revenue, which hit $221.51 million in 2021, up from $139.57 million in 2020.
The company has been expanding its warehouse operations to support its wholesale businesses and as part of its proposed global expansion in Europe, recently leased its first 2,362-square-foot warehouse in London.
Yoshitsu also recently opened a new retail store in China (Hong Kong) as part of the company's long-term plan to expand its presence in China. China reportedly contributed 75% of the company's annual revenue in 2021 and the company was also featured as one of the top five stocks to buy to invest in China in a recently published article on WealthyVC.
The health and beauty products market in Japan is expected to grow from $24.6 billion in 2022 to $29.7 billion in 2025. In North America, it is projected to do even better and reach $455.1 billion, and in China it's expected to grow to $137.7 billion during the same time frame.
With its growing footprint in all the right markets, and a strong wholesale and retail presence straddling both e-commerce and brick-and-mortar approaches, Yoshitsu could be positioned for growth in the coming years.
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