Greater use of credit and less saving by consumers might make for happy holidays for U.S. retailers this year, but the good cheer isn’t likely to carry over into 2012.
Speaking at the WWD Summit Monday, Michael McNamara, vice president and global solutions leader of MasterCard Advisors, pointed out that retail sales have continued to grow on a year-over-year basis, but that second-half results have been marked by a deceleration. Including gasoline and groceries, October sales expanded about 5 percent, down from gains in the 8 percent range for most of the year.
“How are people paying for retail sales now?” he asked the audience. “A reduced savings rate and increasing consumer credit. You can live on that for a little while, but that’s not sustainable over the long term.”
What’s needed, he said, is meaningful improvement in payrolls, wages and unemployment. Without these, “when I look at all the pieces of the economic puzzle, it becomes harder and harder to fit them together.” Retailers will also face more formidable same-store sales comparisons next year, he pointed out.
Apparel was one of several categories that has weakened late in the year, whereas groceries, electronics and hardware were trending upward and “eating away at other categories.” Luxury sales were off slightly in October, he said, with New York and other key markets affected, but had resumed a healthier pace so far this month.
“As long as the stock market holds up, [there’s] no need to worry about gas prices with this customer,” he said.
He said it’s unlikely that gas prices during the remainder of the year will fall to $3.15 or below, the price at which consumption would be likely to accelerate among average consumers.
Pressed on how the political climate could affect performance at retail, the MasterCard executive said the Federal Reserve Board rarely takes steps in an election year that are damaging to an incumbent president. However, he is keeping a wary eye on the Congressional Super Committee scheduled to release its report on the federal budget, debts and deficits on Nov. 23, the day before Thanksgiving and just two days before so-called Black Friday, expected again to be the highest-volume day of the year.
“Whoever put those dates together obviously didn’t know retail,” he quipped.
McNamara projected that, “as long as the weather cooperates, Black Friday this year should be the first $20 billion day in this country,” with sales estimated to reach $20.3 billion.
He expects growth in e-commerce to continue to outpace retail sales in general, noting that a few years ago, online sales exceeded $1 billion just three days of the year, a number likely to climb to “at least” 10 in 2011. Overall retail sales for the season, spanning Nov. 1 to Dec. 24, are expected to hit $657 billion, more than $41 billion of that attributable to e-commerce.
Additionally, he surprised many in the audience with his finding that 40 percent of holiday sales are made before the Monday after Thanksgiving, using it to put listeners on notice that “you really have to get it done before Halloween.”
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast