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How was the Christmas 2013 in the Retail Business?

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How was the Christmas 2013 in the Retail Business?

It is almost Christmas – there are only twos shopping days left – and everyone is wondering how Christmas business has been so far?  Nobody really knows, because regulation FD insured that most retailers keep their facts and figures to themselves until they are ready to disclose the numbers broadly to all.  For some retailers this may not be until February. However, based on my observations this is my guestimate.

I think retail sales were below retailer’s conservative plans. Customers were buffeted by uncooperative weather – in the South there were ice storms that closed stores but in the North it was so cold that it actually stimulated sales, especially in coats, sweaters and outerwear. Such chilly weather is typically very profitable.  This is very different than last year when retailers lamented the warm pre-Christmas weather and took substantial markdowns.

Internet sales continue to be a help; increasing by at least 15% in the period between Thanksgiving and Christmas. The offerings were intense and well presented this year – people could see and understand the values.   Even though we know Internet sales were important the impact is difficult to quantify because many retailers now include Internet sales in their store figures thereby giving stores the credit for fulfilling orders. An IBM study showed that in the period from Black Friday to Cyber Monday Internet sales increased by 16.6% with Health and Beauty leading the way, followed by home goods and apparel.

The word is, budget priced stores – from Walmart to Old Navy — had a tougher time than anticipated. Their cost conscious customer generally shops late and looked for values. She was encouraged to rush to Old Navy in response to this past Sunday’s ad promoting the chance to buy now for 75% off in a Post Christmas sale. Target lost consumer confidence because of the credit card hacking during the black Friday week. Their “guests” were encouraged to come back with an offer of 10% discount on total purchases.

Mid price department stores were also promoting heavily with Sunday specials. These Super Sunday one-day only promotions suggest the need for an extra incentive for shoppers. It says to me that stores found sales weaker than they had planned. In some cases, I believe that the Internet sales were significant in offsetting the shortfall of store sales. I estimate that Macy’s will report an increase of 2½% to 3%; J.C.Penney is at 7% to 9% and Kohl’s at -1% to +1%.  I estimate that Nordstrom will be up by 2½%.

Luxury stores probably did quite well. To high-end customers, the stock market’s substantial rise was an incentive to shop. Nonetheless Bloomingdale advertised a clearance sale and a special fur ad (40% to 50% off) and Saks Fifth Avenue had a fur at (30% to 50% off). Junior specialty stores probably had a tough time since many of the junior customers bought more electronic hardware and smart phones instead of apparel. Urban Outfitters had a sign on their doors with a 20% reduction on total purchase.

Shopping Centers (and credit card companies) may actually brag about sales since mall stores like Apple and Microsoft had strong business in smart phones and tablets. I believe the transfer from apparel sales to “must have tech gear” is a serious shift of the discretionary spending pattern.

In the post Christmas sale period, we will see a very strong effort by most stores to drive customer spending.  Some stores call it their “thirteenth month” offering special incentives for shoppers. In many years this period has shown the ability to actually reignite some momentum that was lost during the Christmas selling period.  In the end, we need to wait for the full results in early February before we can understand what really happened in this difficult year with 6 fewer selling days between Thanksgiving and Christmas.

Source: Forbes

 

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