This holiday season, retailers and brands slashed prices early in order to secure high sellout rates online. According to Edited, a real-time data platform, these deep cuts resulted in a year-over-year increase of total sellouts of 102 percent.
And in a separate report from Telsey Advisory Group, retail store traffic was seen lower versus last year — but buy-online-pick-up-in-store was better executed, and on leaner inventories.
Katie Smith, retail analysis and insights director at Edited said “2017 has been a tumultuous year for the retail sector, characterized by record-breaking bricks-and-mortar retail bankruptcies and store closures on the one hand, and skyrocketing e-commerce sales on the other.”
“While the retail industry has banked on aggressive discounts weeks before Black Friday and Cyber Monday to boost consumer spending, they need to make sure that this does not sacrifice margins in the long term,” she added.
Edited analyzed more than 11,000 apparel, footwear and accessories brands to understand the quality of the deployed efforts. Perhaps an attempt to secure more revenue, Edited’s data confirmed that retailers and brands were especially proactive in the timing of their deal and promotion launches.
“Forty-eight percent of the entire U.S. online apparel retail market was discounted by an average of 46 percent off over the holidays, compared to 44 percent of the market with an average of 36 percent off one year ago,” said an Edited spokesman.
The luxury vertical offered the highest discounts, according to the firm’s analysis. Over 26 percent of products in stock were discounted between 26 and 50 percent, said the platform’s spokesman, compared to 20 percent of mass-market items.
Accessories were the most marked-down products — the category amounted for 35.5 percent of reductions. Tops and footwear were the other highest discounted segments with almost 22 percent and over 13 percent, respectively, of lowered prices.
These strategies paid off — literally. According to Edited’s analysis, accessories sold out the fastest, followed by tops, footwear, dresses and bottoms. Retailers with the most product sellouts were Wal-Mart, Farfetch, Shopbop/East Dane, J.C. Penney and Miss Guided. To achieve the high sellouts, Wal-Mart discounted its products an average of 54 percent, researchers at the firm said.
In the Telsey Advisory Report, in-store checks revealed apparel, consumer electronics and toys are categories “with strength” over the holiday weekend. Analysts said “most promotions were similar to or lower versus last year” while noting that “retailers were lean on inventory” and buy-online-pick-up-in-store “was better executed” and the “service [was] faster, while mobile continues to gain share.”
From here, analysts expect a more tempered cadence with markdowns along with tight inventories. Online, analysts will keep an eye on out-of-stocks, which could frustrate consumers. From a higher view, both in-store and online, Sarah Quinlan, senior vice president and group head of market insights at Mastercard Advisors, told WWD that the overarching consumer trend will continue to be a preference of spending on experiences versus “buying stuff.”
“Consumers are spending, and they’re spending like mad,” Quinlan said, adding that expenditures are up about seven percent for the airline industry and down about the same amount at department stores. But Quinlan was quick to note that shopping malls “are not dead” and the most successful ones “offer a mix of dining and retail shopping” as well as smaller, niche businesses, which are experiencing twice the growth of larger chains.
“When they buy it’s typically at a smaller business, which really shows the health of the economy,” she said, adding that these purchases are also at full price.
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