It's becoming increasingly common for analysts to release less-than-encouraging reports on this or that brand's online sales potential. So much so that these doom-and-gloom reports can be used to wallpaper the average retail executive's office. However, when Goldman Sachs decides to give a retailer's eCommerce operations two thumbs-up, it's a rare enough occasion to make even the cynics pay attention.
In a Thursday (June 16) interview with CNBC's "Squawk on the Street," Goldman Sachs Internet Analyst Heath Terry pegged Ralph Lauren and Nike as two brands expected to do very well in online sales as 2016 wears on. On the whole, Terry predicted overall eCommerce growth of 22 percent by year's end, and while he was equally bullish on pure-play online retailers, he predicted the two traditionally brick-and-mortar brands would pick up from their current online sales doldrums to capture substantial pieces of that 22 percent growth pie.
Terry also elaborated on the recent changes Ralph Lauren has made to its in-store business model — namely, the shuttering of 50 stores and the firing of 8 percent of its entire full-time workforce. These adjustments could save the merchant up to $220 million annually, which can't hurt in the world of razor-thin online profit margins.
Notably, Terry differentiated between the expected success of distinct brands, like Ralph Lauren and Nike, as opposed to umbrella merchants, like Kohl's, which often sell items found at comparable or lower prices on other online marketplaces. Essentially, Kohl's offers "all things that can be sold by Amazon," and as such, it's picking a digital fight it has no hope of winning, let alone coming out profitable.