The annual holiday sales lull was deeper this year than last, making the chance of retailers beating or meeting last year’s results increasingly difficult, according to The NDP Group.
Sales for the sixth week of the holiday season were 5 percent lower than the same 2015 week. Cumulatively, dollar sales in the first six weeks of the shopping season were 4 percent behind the same period last year.
NPD Group’s chief industry analyst Marshal Cohen said retailers have no one to blame but themselves. “They drove it with deeper and deeper discounts,” he said. “This year’s trend clearly demonstrates how extreme promotions, most notably in toys and electronics, are steering retail off the path of growth.”
Yet Cohen said retailers could still potentially pull off the season. “There’s an extra weekend this year,” he said. “Will it make up for a 4 percent to 5 percent drop off? It could.”
That is, if retailers have the right products and aren’t overly promotional, Cohen added. “If they discount deeply, they’ll have a big challenge, and they’re already in catch-up mode. Inventory levels seem to be in line. Whether they prevail will be determined by how panicked they are.”
So far, Cohen said, teen retailers have panicked, “department stores are getting a little nervous and luxury retailers are looking a little nervous.”
The holiday season has been hindered by the lack of new and exciting fashion items, he said, adding that the highly promotional stance of the toy business has impacted fashion because when consumers see discounts in one category they expect them in others. Toys saw their steepest declines of the season so far, down 9 percent compared with the same week last year.
“Apparel is finally starting to kick into the traditional holiday business you expect to see,” Cohen said, noting that apparel was the only category to outperform the same week last year. However, it was only up 1 percent.
Top-performing categories in week six included women’s outerwear, PCs and notebooks, men’s outerwear and stereo headphones.
“Technology is boring and that favors the apparel business,” Cohen said. “Apparel usually does well early and it does really well at the end of the season. This year, it got a late start due to weather and the absence of new trends.
“The ath-leisure movement costs a lot less than sportswear,” he continued. “We’re seeing product going out the door at lower prices, aggressive discounting and an absence of driving trends.
“As we pass the shipping deadline, brick-and-mortar will recapture some of what online continues to steal, including emphasizing online shopping with in-store pick-up,” Cohen said. “Colder weather across the country is also changing the equation, with an awakening for outerwear sales.”