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In a holiday season marked by dire forecasts and some real issues, retailers caught a ray of light last week.
Shopping picked up, breaking a deep lull that set in after Black Friday. Consumers are sensing that time for gift shopping is running out with Christmas just eight days away, and cold weather, including unusually low temperatures on the West Coast, has sparked sales of coats, sweaters, gloves and scarves.
Retailers on Monday also said that men’s wear, fine jewelry, designer handbags and luxury overall were standouts last week. They sounded the most hopeful they’ve been all season, with some offering that they’ll make or top their projection numbers, if just barely. Friday and Sunday were the busiest days, particularly in the Northeast. Saturday, typically among the top four of five largest volume days of the year, was hurt by the snowfall.
The truncated season, accelerating markdowns since the third quarter impacting profits, some bloated inventories, hard goods outselling apparel, and a string of snow and ice storms have been stirring concerns. The key to meeting fourth-quarter plans will be to effectively clear out seasonal goods to make room for fresh resort and spring inventory, which hopefully starts selling at full price after Christmas.
The mood brightened a bit last week, with shoppers more evident in the malls. “It doesn’t appear it will be a disaster,” said Kathryn Bufano, president and chief merchandising officer of Belk Inc., referring to the season overall. “We feel we are going to come in OK and might beat what we thought we’d do initially by a little bit. It was a good week, with some weather issues, though that was nothing major. It moved on. We’re quite happy about this past week and weekend.”
At Belk, gift cards, which will help the post-Christmas sales, as well as designer handbags, fine jewelry, watches and fragrances were most strong. Bufano also cited men’s wear: “It doesn’t matter if it’s Levi’s denim or dressed-up clothing, better men’s is very strong.”
Michael Gould, chairman and chief executive officer of Bloomingdale’s, also sounded a note of optimism. “Coats and all the cold weather categories have been terrific. This is the first cold December we’ve had in three years. Fine jewelry has been terrific. Luxury has been outstanding.”
“I felt good about the weekend, in spite of the weather,” said one senior retail executive running stores on both sides of the continent, who requested anonymity. “It was only a messy day in the Northeast, and I think people were smart. A lot of them were out shopping on Friday. People felt they had to get out early. We’ll see what happens.”
Ken Giddon, president of Rothmans, said his New York City-based men’s specialty stores have been strong. “I keep reading how bad it is and how customers are bargaining with stores. We’re not seeing that,” he said. “Maybe we’re in a New York City bubble, but our business has been good.”
Giddon said the snowstorm caused business on Saturday to “take a hit, especially in our suburban store, but Sunday made up for it.” Rothmans also has a store in Scarsdale, N.Y.
Top sellers include scarves and hats from Chelsey, a snood from Echo (a cross between a scarf and a hood) and sport coats from Canali. An in-store event with Citizens of Humanity was also successful, he said.
“It’s not across the board — it’s kind of item-y,” Giddon said. “But great items are selling.”
Greg Selkoe, ceo of the online streetwear retailer Karmaloop, welcomed last week’s snow. “The more the weather is bad, the better it is for us — as long as the power doesn’t go off and people don’t lose their Internet.”
Selkoe said that while last week was the slowest of the season online so far, overall business has been quite strong, with sales up 45 percent on Black Friday and 25 percent on Cyber Monday. “But when all is said and done, we should be up 20 to 25 percent,” he said.
Although Selkoe was anxious going into the holiday, with many teen retailers struggling, Karmaloop has held its own. Outerwear and sneakers are among the most popular categories this holiday season, he said, and the company’s new push toward women’s wear is gaining momentum.
And while Karmaloop can only guarantee delivery by Christmas if orders are in by Friday, Selkoe is anticipating a big surge on Christmas Day itself and the days following. “Most of our customers are 18 to 25 and they get money and gift cards for Christmas,” he said. “So while other stores are closed on Christmas, we’re open and we’ll be running a number of events.”
Craig Johnson, president of Customer Growth Partners, said the brick-and-mortar business was “crushed” on Saturday, from Wisconsin to Maine, south to the Mason-Dixon line. “In the most affected areas, same-store transaction velocity showed declines varying from 10 to 70 percent,” he said. He also said there were excessive promotions, most noticeably in apparel, with the great majority at 40 to 50 percent off.
On the positive side, Johnson said about two-thirds of the country had “fair to good” business last week through Sunday, experiencing a “normal mid-December seasonal rebound” after the post-Thanksgiving lull. He also indicated that it takes at least 10 inches of snow to shut down Manhattan retailing, which stood up against the bad weather while the outlying suburbs saw sparse business on Saturday. Johnson rates the season “subpar.”
Another bad sign for retailers came from America’s Research Group, which reported that 48.3 percent of the nation’s shoppers are 90 to 100 percent done with their holiday gift shopping, compared with 45.2 percent this time last year. Of parents with children, 60.2 percent say they’ve finished shopping for the year, versus 52.6 percent last year. ARG said the statistics are based on 1,000 telephone interviews conducted from Friday to Sunday.
Among those who have not finished their holiday shopping yet, 22.2 percent said it was because they’re not seeing big enough discounts. Last year, only 15.9 percent said they were holding back in anticipation of bigger discounts. Often, they’re awaiting 60 to 70 percent off, rather than the 40 to 50 percent currently widespread.
“With more Americans finished with their Christmas shopping, retailers need to pull out all the stops next weekend or they will experience negative sales levels for their stores for this Christmas season,” said Britt Beemer, chairman and ceo of America’s Research Group.
He also believes online Christmas shopping has slowed, with 40.1 percent of shoppers buying gifts online this year, versus 41.9 percent last year.
Taubman Centers Inc., which owns, manages and/or leases 28 shopping centers, said stores surveyed were flat to up midsingle digits last week and last Saturday, and that promotions are still consistent with plans. That could mean there is a window of opportunity to step up promotions if need be.
Among Taubman’s properties, Beverly Center in Los Angeles and MacArthur Center in Norfolk, Va., said stores were flat Saturday, on average, while stores at The Gardens on El Paseo in Palm Desert, Calif., were generally up over last year. The Mall at Partridge Creek, in Clinton Township, Mich., was strong until Saturday, when the snow hit, pushing stores down in the single digits.
Earlier last week, The Mall at Green Hills in Nashville saw icy conditions, which hurt traffic and sales. The situation turned around on Thursday, and Saturday was an “exceptionally” strong day, Taubman said.
At The Shops at Willow Bend, in Plano, Tex., “Saturday was so strong that many stores surveyed were able to make up from the ice storm that took place earlier in the week.”