It happens every year — a lull in holiday sales and traffic right after Cyber Monday that persists until mid-December.
Last week was no exception, although the dip, according to some retail and real estate sources, may not have been as sharp as past years, as Cyber Monday promoting was nonstop through the week and consumers in record numbers took to their mobile phones to seize bargains. Unseasonably warm weather in much of the country got people out on the streets but did little to help move inventories of outerwear and cold weather accessories.
It’s now clear that retailers are on course for an OK — but far from great — holiday season with moderate gains of around 3 percent, though many remain skittish about discussing business and are increasingly concerned about margins for the fourth quarter.
Related Galleries
“I’d say there was a midholiday lull. We checked in across the board,” said Deborah Weinswig, executive director of the Fung Business Intelligence Centre for Global Retail & Technology. The weather and a lack of events in stores impacted the level of business, Weinswig suggested. “There has been an increase in promotions, unplanned, to move product,” she said. “This week, friends and family promotions should start to help.”
“People are cautious and discerning but it does not mean they are not spending,” said Daniella Vitale, chief operating officer and senior executive vice president of Barneys New York. “We have found that our local and loyal customers are committed to Barneys, and we are always trying to make sure we value them in every way possible.” Barney’s e-commerce business is “spectacular, and we do not see this waning in any way.”
Vitale said that unlike most of the competition Barneys goes on sale twice a year and tries to follow the same cadence every year regardless of the business climate. “We always have a small portion of everything we carry on-sale at this time of year. It’s no different than in years past, and we actually are holding many, many things at full price. A selection of coats, cold-weather accessories, many shoes and certainly the exclusive collections are categories that we mark down in less frequency,” she said.
“Retail is challenging. Consumers are not willing to shop so much,” said one chief executive officer of a national retail brand who requested anonymity. “Black Friday and Cyber Monday were amazing but those were just two days. The rest of the days are tough. This will pass. Consumers are coming back slowly.”
The retailer agreed that last week saw a lull in business though compared to the corresponding week of years past, the trend was positive.
Jewelry, toys, home, ath-leisure, electronics, teen apparel, and fashion boots are among the categories performing well, while luxury, outerwear and most of women’s sportswear have been off. Retailers said to be experiencing momentum include L Brands, American Eagle Outfitters, Athleta, Express, Kay Jewelers, Zale Corp., and Restoration Hardware. Department stores have in most cases been soft, and Dick’s Sporting Goods, while recently experiencing soft business, could come through a good season.
“I’m not going to tell you I’m exuberant about the season, but it’s been consistent. Steady. Traffic is up,” said Michael P. Glimcher, vice chairman and ceo of WP Glimcher, the retail real estate investment trust. Glimcher, like other executives, noticed last week’s lull. “It was a little bit of a valley. It’s an arc — not a cliff. Mid-December, there should be a mad rush up until Santa comes down the chimney.”
“There is a good and a bad about the unseasonable weather,” observed Arnold Aronson, managing director of retail strategies, Kurt Salmon. “It might not generate much reaction to cold weather clothing but there’s certainly a lot of people in the streets and shopping. I was in the Apple store and it was absolutely mobbed. People are buying technology.”
Other parts of the city, including SoHo, Meatpacking and Fifth Avenue were busy, but Manhattan isn’t necessarily indicative of retail traffic around the country. In addition, Manhattan had a heavy police presence over the weekend given the alleged terrorist attacks in San Bernardino, Calif., and Paris.
According to sources, suburban malls did see decent traffic, though they were not packed with people.
Stanley Korshak is running a double-digit increase this month largely due to strong sales of gold and diamond jewelry, said Crawford Brock, owner of the luxury emporium.
“All the divisions are just sort of hanging in there, but jewelry seems to be driving it,” Brock said. Sylva & Cie just had a “great show,” he said, and Loree Rodkin is coming this week.
Korshak’s business has been challenged since April by extensive construction around the store at the Crescent complex. Completed last month, it gave the store 150-linear feet of display windows on two sides, a new front entry, expanded parking, better pedestrian access and a renovated courtyard with a flat water feature.
Inventories are in good shape, he noted, because fall buying was cut in men’s and women’s apparel due to the construction issues. The strength in its women’s apparel is in upper contemporary brands, including Zero + Maria Cornejo.
According to Aronson, the negative impact of unseasonably warm weather and the lack of tourist spending due to the strong dollar are being counterbalanced by the general condition of the U.S. economy, which has improved. “People feel more comfortable spending money, and they’re finding alternative uses to spending money, experiential uses,” Aronson said, citing minimum wage increases, historically low gas prices, employment gains, and “fortified” savings.
“It’s going to be a massive mobile season, if retailers don’t fully embrace the mobile platform they are going to miss out in a big way,” said Ben Fischman, founder of Rue La La, and founder and ceo of M.Gemi, a direct-to-consumer luxury footwear brand launched last March that offers new handcrafted Italian shoes every Monday, priced $200 to $500. “We are seeing 70 percent of our traffic coming through mobile devices. Transactions are probably closer to 60 percent,” Fischman said.
Commenting on the general retail landscape, Fischman predicted, “Discounts will get bigger and bigger in an effort to drive the consumer, and retailers will scream as loud as they can to get attention. People don’t feel a tremendous urgency to purchase yet, though as discounts get greater, they will probably purchase more. At the end of the day, it’s the innovators that are going to win, not the ones with the biggest megaphone or discounts.”
Adobe Digital Index released data Monday that online sales for Dec. 7 and 14 will each eclipse those seen on Thanksgiving Day. Adobe expects Dec. 7 to be the fourth-highest day for online holiday shopping this year, reaching $1.92 billion. Estimates for Dec. 14 are slightly higher at $1.95 billion. Percentage of e-commerce sales occurring on a mobile device for the first week of December dipped to 27 percent from an all-time high of 32 percent during the Thanksgiving holiday weekend.
“Online shopping growth, however, has slowed to 7.7 percent after a huge Thanksgiving weekend which is 2.3 percent lower than November growth,” said Tamara Gaffney, principal research analyst at Adobe Digital Index. “Discount levels seen last week are gone but consumers should still shop as early as possible since the prices will continue to climb through the month of December.” As Christmas Day approaches, and deadlines for receiving packages arrive, cyber deals start to be less evident.
American Apparel is having a challenging season, particularly after filing Chapter 11 bankruptcy in October and not having enough product. “One of the things I see consistent is the customer is coming in with a very specific either price point or item in mind,” said Christine Olcu, the retailer’s global head of retail. “I think [that’s instead of] the customer coming in and kind of browsing and piling up on a whole bunch of goods because they’re enticed. I think they’re coming in with a very definitive list. I don’t know if it’s price sensitivity as much as it is budgeting for the holiday.”
Amazon.com is about as promotional as any marketer, on Sunday starting “12 days of deals” featured daily by theme such as “kids, globe-trotter and tech enthusiast.” In addition, Amazon customers will continue to find at least five “deals of the day” every day and hundreds of daily “lightning deals” across product categories through the 12-day event.