By  on August 18, 2017
People carry shopping bags in New York, New York, USA, 01 August 2017. A report released today by the United States' Commerce Department showed moderate consumer spending growth in June of this year.US Consumer Spending, New York, USA - 01 Aug 2017

After a long retail drought, shoppers seem to be starting to return.And while no one’s looking for that trickle to turn into a monsoon, there are some hopes that the declines hitting stores hard over the past year are starting to level out.The most distinct signs of life amid what some have sought to dramatize as a retail apocalypse came from Wal-Mart Stores Inc., Target Corp., Kohl’s Corp. and perennially strong TJX Cos. Inc., all of which singled out traffic momentum when they reported second-quarter results this week.Most recently, Wal-Mart said Thursday that its U.S. comparable sales rose 1.8 percent with traffic growth of 1.3 percent. The company’s sales online grew 60 percent, fueled by Marc Lore’s Jet-led push. Chief executive officer Doug McMillion said, “Traffic increases at store level and the e-commerce growth rate are key highlights.”RetailNext, which tracks footfall in thousands of stores, said traffic showed its smallest decline since January 2016 last month — but still slipped 5.5 percent. Conversion, or how many of those shoppers became buyers, was more promising, rising 0.5 percent in June and July, the best showing in about a year.Anna Vichitcholchai, senior manager of retail consulting at RetailNext, said she’s “expecting traffic to level out” eventually and if there is an upward trend, it will become clearer in the months ahead.Vichitcholchai said retailers that are doing a good job of engaging with their customer, online and in stores, are seeing their traffic improve.She pointed to increased coffee and food offerings in some stores as well as loyalty programs, such as those at Ulta Beauty and Sephora, which connect consumers with discounts or other incentives that keep them coming back for more.Retailers are learning more from each other, studying their approaches and picking up on what works, Vichitcholchai said.“We’re still seeing the need for customers to touch and feel the product,” she said. “Even for companies that are digital leaders, they’re starting to open their own locations because customer acquisition, the costs of it are lower than online business and provide margins that are higher. The storefront is the new homepage for retailers.”While nobody disputes the importance of e-commerce, retailers are keenly aware that brick-and-mortar stores still represent 91.1 percent of all retail sales and that most of their money comes when shoppers are within their four walls.Kohl’s ceo Kevin Mansell talked up “traffic momentum” for the second quarter and said that although foot fall was “slightly negative” that “improvement in traffic was the driver of the improved performance in sales.” Kohl’s comparable sales went from down 2.7 percent in the first quarter to off just 0.4 percent in the second quarter.“The fundamental message I'm giving is the improvement in our sales trend was driven entirely by an improvement in traffic,” the ceo told Wall Street analysts. “And I think we believe that's going to continue. You can look at all these other numbers monthly, weekly, forward-looking, backward-looking, but it's about traffic. And so we've got to get traffic positive. We do that, there's a lot of good things coming.”Of course, the intense desire to drive traffic can also lead retailers into a dangerous territory.“There's been a conscious investment in lower prices over the last few months,” said Pete Madden, a director in AlixPartner’s retail practice. “It's starting to pay off with the higher traffic, but there's risk, too. Retailers need to be careful not to go too far and erode their brand and margin."Target said the number of transactions in the second quarter grew 2.1 percent, but was offset by a 0.7 percent decline in the average ticket amount, leading to a 1.3 percent comp-sales increase.Mark Tritton, chief merchandising officer and executive vice president at Target, assured analysts: “At first glance, reporting a slight decline in average ticket might not sound like good news, but when it's more than offset by an increase in traffic, the picture is more positive. As we dig into the drivers, the change in basket reflected two key factors. The first was a reduction in general incentive offers, which were replaced with better daily-value pricing and more category-focused discounts. The second was a meaningful increase in the number of quick trips and fill-in trips we saw from our guests.”Simple mathematics might also be driving traffic gains: There are fewer stores.Retailers from Macy’s Inc. to J.C. Penney Co. Inc. to Guess Inc. and Abercrombie Fitch & Co. have been closing doors en masse, winnowing down the brick-and-mortar base to stronger locations that have the potential to gain.Fung Global Retail & Technology projected 9,452 store closings this year, up 53 percent from the doors that went dark during the Great Recession in 2008.

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