As retailers continue to shutter doors and reframe e-commerce strategies under the growing shadow of Amazon Inc., which garners about 37 percent of all online sales, several analyst reports this week noted that not all is “doom and gloom.” Strong brands are thriving, and there are opportunities for continued growth.

Moreover, brands and companies such as Nike Inc., LVMH Moët Hennessy Louis Vuitton SE, Tiffany & Co. Inc., Wal-Mart Stores Inc., TJX Cos. Inc. and Ross Stores as well as home improvement chains and warehouse clubs possess “long-term staying power” over the next decade. In the near-term, though, it’s clear that the market has been transformed by omnichannel retailing.

In an analysis of physical store productivity, Deborah L. Weinswig, managing director of Fung Global Retail & Technology, said that as “e-commerce continues to grow apace, it may seem reasonable to presume that sales densities in physical stores are falling or, at best, increasing only slowly, across the board. But, in fact, a number of major retailers saw substantial uplifts in sales per square foot in their physical stores over the five-year period we examined.”

After removing e-commerce sales of “12 major U.S. non-food retailers over the past five years” to determine the real change in sales density or sales per square foot, Weinswig found “it is not all bad news: even once we strip out e-commerce revenues, which have grown rapidly, Home Depot, Lowe’s, Ross Stores, T.J.Maxx/Marshalls and Costco all grew sales densities very strongly between 2011 and 2016.”

However, in-store sales density at Sears and J.C. Penney dropped by over 20 percent in the same period. But Weinswig said “declines in in-store sales density have been much milder — below 5 percent — at major names such as Macy’s and Target.” She concluded in a theoretical scenario that Sears “would need to reduce its selling space by 27.4 million square feet, equivalent to 197 stores, to return to its 2011 in-store sales density.”

For J.C. Penney, the retailer would need to reduced store space by 26.2 million square feet, or 257 stores, to reach its 2011 levels. And Kohl’s would need to cut 10.6 million square feet or 147 stores. “These closure estimates are theoretical, as they assume no loss of sales from closures: in reality, sales transference from closed stores to existing stores within the same chain can be very low,” Weinswig noted.

The store density growth of the home improvement giants along with TJX Cos. brands and Ross Stores reflects two key trends in the market: consumers continue to favor off-price apparel retailers to satiate their “bargain hunting for brands” appetite; and a tight housing market is seeing more consumers stay in place and refurbish their nests (which has also resulted in an overall lack of inventory of single family homes).

In an industry update report from Telsey Advisory Group analysts at the firm were bullish on Lowe’s and Home Depot citing them as retailers that “will maintain and enhance their relevance over the next 5 to 10 years.” The TAG analysts said aside from having brand relevance with consumers, staying power is “derived from companies that continue to reinvent themselves, through supply chain, marketing, and merchandise and service enhancements.”

The list of companies and brands with “staying power” include Estée Lauder Cos. Inc., PVH Corp., VF Corp., Coach Inc. and Costco as well as Nike Inc., LVMH Moët Hennessy Louis Vuitton SE, TJX Cos., Tiffany & Co. Inc. and Wal-Mart Stores Inc. In regard to competing and “defending” against Amazon, the TAG analysts said “brands matter and providing an offering, in terms of both service and product innovation, that is limited to certain distribution channels creates desire.”

“Over time, many brands may sell on Amazon as long as the integrity of the brand, along with an appropriate presentation, are provided,” they added. Eric Beder, analyst at FBR Capital Markets & Co., said in a separate report that “brands continue to rule.”

“It is becoming even more obvious in the age of omnichannel, that strong brands, with well-defined segmentation and a compelling story to buyers are grabbing material market share and gaining traction with the potential for higher returns,” Beder said.

For More Business News From WWD, See:

Amazon, Wal-Mart and Apple Top List of Biggest E-commerce Retailers

Consumer Preferences Reshaping Retail Landscape

As IoT Grows, AT&T Sees Broad Deployment of Connected Devices and Products

How Malls Can Satiate Consumer Desires for Experiences

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