MasterCard Advisors’ Michael McNamara: Retail-Data Realities

MasterCard data show an uptick.

Michael McNamara
Appeared In
Special Issue
WWD/DNR CEO Summit issue 11/17/2009

Industry executives can take comfort in the recent upward trend in retail sales, but they need to remember that nearly all sectors remain significantly below the levels of two years ago.

This story first appeared in the November 17, 2009 issue of WWD.  Subscribe Today.


“You don’t necessarily want to be popping Champagne,” said Michael McNamara, vice president of MasterCard Advisors in a presentation of his company’s SpendingPulse retail data. “Maybe you have a beer, but not any Champagne yet, in terms of celebrating where we are.”




Women’s apparel sales in specialty stores in October came through with their first positive comparison in over a year, rising 0.7 percent — but were still about 12 percent lower than in the same month in 2007. In the specialty channel, “overall apparel sales in October were up 3.4 percent over last year, so things are better than they were a year ago,” McNamara said. “However, you really do have to put this into historical context — we’re still over 5 percent lower than we were in October two years ago.”


Additionally, during what he described as an “epic downturn,” women’s has been hit harder than both men’s apparel and footwear, which have proven more resilient. Footwear has been a standout since September and registered a 7.8 percent increase in October. The recovery, he and his colleagues at MasterCard believe, is “statistical, not necessarily…fundamental.”


Sales of luxury goods, which traditionally have weathered financial storms better than more moderately priced merchandise, grew 6.5 percent last month but were still 12.6 percent below October 2007 levels. MasterCard defines luxury as the top 10 percent of price points in a variety of stores.


Apparel sales had been downtrending since the week of Sept. 15, 2008 — “almost to the day Lehman went down,” McNamara said — but consumer spending has had a few bright spots since then, one of them being the e-commerce channel. “It never went negative,” he said, pointing out that e-commerce has returned to double-digit growth. E-commerce activity spiked early in 2008, when gas prices moved well over $3 a gallon, and can help insulate retailers against inclement weather and other events beyond their control.


Although generally 5.5 percent of sales, Web-based buying occasionally moves beyond that, accounting for as much as 8.5 percent. While the post-Lehman meltdown supressed spending throughout the remainder of 2008 and well into 2009, its anniversary has made meeting or beating year-ago numbers easier for stores in recent weeks.


However, in addition to advising executives not to read too much into the positive turn in sales last month, McNamara urged caution in the interpretation of Black Friday results, often viewed as a reliable predictor of final holiday sales tallies.


Last year, the Black Friday weekend saw retail sales slip 1 percent, apparel sales downtrend 0.5 percent, women’s apparel slide 1.6 percent and luxury goods actually grow 2.9 percent.


However, the final results for holiday were dramatically different: retail sales fell 6.3 percent, apparel was down 11 percent, women’s wear was off 11.3 percent and luxury goods, despite their strong holiday start, finished the season down 20.8 percent.


“For most of the holiday season, you’re going to have easier comps,” said McNamara. “But for Black Friday weekend, you’re going to have a relatively tough comp.”


The MasterCard official came armed with numbers that entertained as well as informed. U.S. apparel sales in September totaled $7.56 billion, 12.3 percent of that amount, or about $932 million, spent in New York City, nearly twice the total spent in the entire state of Texas. However, food purchases in Texas — at grocery stores, restaurants and fast-food establishments — run well above the national average. “They eat a lot down there,” said McNamara.


Other figures offered a degree of consolation for apparel executives who’d been through what he called the “carnage” of the past year. While total women’s apparel sales for the first 10 months of 2009 are $2.3 billion lower than they were during the first 10 months of 2007, the corresponding number for furniture and furnishings is $18 billion.