Super Saturday on Dec. 17 — potentially a record-breaker this year — and the year’s first arctic blast could put retailers on a Merry Christmas path overcoming last week’s post Cyber-Monday lull and extended promotions.
Retailers hope that as temperatures continue to drop later this week, the pain of the presidential election subsides and the holiday draws closer, sales of outerwear, cold weather accessories and women’s products overall will perk up. Weather experts indicate that temperatures will be 10 to 20 degrees colder than typical for December at least through next weekend and into next week. The cold temperatures are moving in from the West and should hit the East Coast and Southeast towards the end of the week.
Sources said last Tuesday, Wednesday and Thursday were weak for retailers, while traffic last weekend wasn’t as bad as comparable weeks in recent years. A lift came from upscale shoppers, who tend to avoid big and crowded shopping periods and were more noticeable at higher-end stores and malls such as Short Hills in New Jersey and South Coast Plaza in Costa Mesa, Calif., according to observers.
Still, as one retail ceo said, “I don’t think it’s so rosy. There was a pronounced lull last week, post-Black Friday/Cyber Monday and many retailers extended their Cyber Monday events well into this past weekend.”
Another top-level retail source told WWD: “There’s been continued general softness [relatively] in stores. Very busy online. Our general top-line trends overall remain pretty consistent. Holiday seems to happen later every year…we shall see.”
According to analyst Susan Anderson at FBR Capital Markets, “Following Black Friday, we have continued to see higher promotions year-over-year, and higher clearance as some of [the companies in our coverage arena] likely got more aggressive clearing product after Black Friday. We believe traffic got a bit worse sequentially last week after a better traffic period over Black Friday, as consumers are likely settling into the lull before the holidays.”
Anderson said Francesca’s continued to have higher promotions this past week, with By One Get One 50 percent off jewelry, apparel, accessories and gifts, as well as 25 percent off dresses. Both Abercrombie & Fitch and Hollister had “flattish targeted promotions,” while at Chico’s, the chain has 50 percent off select styles compared with 30 percent off all full-priced styles a year ago. At sister brand White House | Black Market, the analyst said the entire store was 25 percent off, higher than the year-ago promotions of buy-one-get-one 50 percent off tops and pants.
Anderson also said that store checks for Lululemon showed that the brand didn’t have any sale product out. She noted that clearance items in the stores were in-line with a year ago with two clearance racks for both years.
Many retailers, including Macy’s, extended Cyber Monday deals, but Macy’s said the extension was pre-planned and not a response to any market conditions. Macy’s had a record Cyber Monday and extended its Cyber Monday offers to Wednesday, offering cold weather boots at $39.99, pajama sets at 65 percent for purchasing at least two, contemporary women’s and designer brands at 60 percent off and clearance handbags at 40 to 75 percent off.
Some brands went the other way, pulling back on the depth of price promoting as J. Crew shifted to 30 percent off from 40 percent; Abercrombie went to 30 percent off, from 50 percent, and Ann Taylor, which was also at 50 percent off, shifted to 40 percent off this past weekend, according to Craig Johnson, president of Customer Growth Partners.
“Super Saturday December 17 will be the biggest day of the year. It could hit $30 billion,” said Johnson. “This coming Saturday [Dec. 10] may be the second-biggest day of the year. Winter is finally arriving. People are getting in the mood to shop. The stock market is hitting record days.” The Dow Jones Industrial Average on Monday closed at a new high, up 0.2 percent to 19,216.24. Stocks have been performing well since the U.S. presidential election.
F. Scott Ball, president and chief operating officer at Starwood Retail Partners, the shopping center group of Starwood Capital Group operating 30 centers across 15 states, said traffic at its malls so far is “consistent” with the 3 to 4 percent sales projection by the National Retail Federation for holiday. “We’ve seen low-to midsingle digit increases. The retailers are being fairly promotional to get those sales increases. I have no idea how margins are going to look, but the topline should be within the 4 percent range.”
Ball said that from walking tours of Starwood malls, as well as in conversations with tenants, the retailers “are not so heavy in inventory that they have to slash prices just to move goods. My sense is that the [equity] markets performed so well of late that consumers are probably feeling better financially, even if they didn’t like the [presidential election] results. People are pretty bullish.
“We’ve noticed that while there may be less traffic, sales are still increasing,” Ball said. “The consumer is better educated, whether they are using a smartphone or the computer at home to make for a much more efficient shopping trip for them. It’s less about browsing. They have a specific gift they want to buy when they come to the mall.”
The Artisanal L.A. one-day event holiday market relocated to smaller digs in Arcadia, on North 1st Street at Huntington Boulevard, from its former home in Pasadena, but managed to draw 5,000 people last Saturday, seen roughly on par with past years. The market sells gourmet snacks, home goods, jewelry, accessories and gifts.
Dana Telsey, analyst at Telsey Advisory Group, on Friday hosted a holiday shopping tour — visiting 11 specialty retailers — at General Growth Properties-owned Natick Mall in Boston. She said mall traffic was somewhat modest Friday morning but picked up around noontime. “Overall, the season is promotional as expected, with sales in the 30 percent off to 50 percent off range,” Telsey said.
Telsey noted Abercrombie and The Gap were the most promotional, with product categories 50 percent off at Abercrombie and different sales at Gap that included 50 percent outerwear and 30 percent off sweaters. Telsey also said that outerwear sales were noted across the different store visits, adding that the “season has been unseasonably warm.”
Inventory levels seemed appropriate in the stores visited, with Telsey giving shout-outs to H&M, Urban Outfitters and Zara for their “clean presentations.” She said that Gap seemed heavier on inventory, with “temporary shelving racks stacked high with product.” Further, she said that warmer-weather tanks were available for sale at Gap, “which is either very early in the season or very late, when viewed next to hoodies, flannel shirts, puffer vests and jackets.”
Telsey said those with her on the tour “were most impressed with Urban Outfitters, with a compelling offering and no sale signs. Zara also received high marks for its fun fashion assortment that draws in customers.” They were critical of Anthropologie — which is part of Urban’s umbrella of retail concepts — where the fashion was described as “off” by one of the tour members and for its expansive sale section, as well as Gap, which some tour members said was “uninspiring, with little holiday buzz.”
Among popular product trends across the store visits were velvet and body suits, Telsey said.
Craig Johnson said his team scouted 90 centers across the country last week, and determined that last weekend’s lull was not as deep as years’ past. “This is shaping up to be a fairly decent holiday, so far. We are seeing better traffic trends than in the past. It’s very promotional but not as promotional as it’s been in the past,” he said.
T.J. Maxx, Ross Stores, Best Buy, Apple, Home Depot, Lowe’s, Williams-Sonoma, Pottery Barn, Tiffany, West Elm, Ulta and Sephora in both freestanding and J.C. Penney locations, drew strong traffic, Johnson said.
“It’s not that middle- and moderate-income consumers aren’t shopping — they are — but the big buying impetus is coming more from the highest-income quintile, who were holding off on big-ticket items until after the election and are reacting to stock market records and the rise in portfolios,” Johnson said.
Randal J. Konik from Jefferies said, “Despite the expected post-Black Friday drop-off in traffic, we still noted solid traffic and conversion this weekend, driven by some cooler weather and compelling promotions [although] less deep than Black Friday [sales].”
Konik said promotions in the past week at most retailers his firm tracks are “mostly flat to last year.” Michael Kors was one of the few that was more promotional, this year offering 30 percent off handbags and wallets compared with 25 percent a year ago. He did raise a red flag at Victoria’s Secret, noting that the chain “remained highly promotional in the bra category this weekend, offering a free $20 reward card with the purchase of two bras.”
The retailer also had select bras at $20, where the regular prices were from $34.50 to $49.50, which he said made some bra styles “less expensive than during Black Friday when the store offered 50 percent off select bras.” He said bras in the clearance bins were $14.99 and up, and some bralettes were priced at two for $25.
Further, he said, “Victoria’s Secret has quietly re-ticketed its Body by Victoria Cropper Bustier bra to $49.50 from $58.50 previously, and was also including this bra in the $20 bra promotion. We view this as another sign of deflationary pressure in the bra category, as customers become accustomed to lower tickets.”
On top of the pricing compression in bras, the retailer stepped up the level of discounting in panties, with Konik noting that this past weekend “panty bundles were 10 for $35 for Angel Cardholders, replacing the standard seven for $28 deal.”