text-2 (15)

L2 released today the first Digital IQ Index: Big Box, which assesses the digital performance of 64 Big Box brands in the US. The study finds that real estate has become the salvation for many big box brands. In the early 2000’s growth of online-only retailers such as Amazon led many to view retail stores as a financial drain. But that sentiment is beginning to change as shipping costs weigh on e-tailer margins. Amazon – which spent $6.6 billion in transportation services last year and collected just $3.1 billion in shipping fees – is moving distribution centers closer to population centers to cut costs.

Big Box retailers already have urban warehouses, a.k.a. stores. And a few have leveraged them to create digital/in-store experiences that surpass Amazon in convenience. Macy’s is piloting same-day delivery in eight U.S. cities and Walmart is rolling out the Savings Catcher program, which compares receipts and matches discounts to competing local retailers. Over 70% of Big Box brands allow consumers buy online and return in-store and over 50% enable in-store pickup of online purchases.

text-1 (12)

Yet, just a small fraction of stores are adopting a digital-savvy approach overall. Just 25% of brands in L2’s Big Box Index ranked Gifted or higher, a small group compared to other categories. And the divide in digital competence could lead to a divide in valuation, and in turn a two-class sector. For more on how Big Box brands in the US are adapting to digital, download an excerpt of the L2 study.

Daily Insights in Your Inbox

Edit your preferences or unsubscribe