Holiday Shoppers in Midtown NYC

“Challenging” was the word for the day among retailers at the ICR Retail and Consumer Conference in Orlando, Fla. Mall traffic, warm weather and an unmotivated shopper seemed to plague all the retailers no matter the brand.

And if mall traffic was weak during the holidays, it’s even worse in the post-Christmas season. “A” malls weren’t great and “B” and “C” malls were even worse. Retailers said mall traffic is not improving, and they are adjusting to this new reality as they realize they have to take matters into their own hands. Ascena Retail Group said slow mall traffic was its biggest challenge and seemed relieved that only 31 percent of its locations are in malls. Many retailers are also using those quiet brick stores to fulfill online shopping orders.

American Eagle Outfitters has created a clothing reserve option. They offered shoppers the option and then reserve a product online to buy in person at the store. Forty percent of those reserved orders resulted in the customer following through and coming into the store to pick up the item. Additionally, shoppers ended up buying three more units for every one they reserved. American Eagle Outfitters plans to leverage this up-selling trend moving forward. And stores that get stuck with a random pair of returned shoes will now ship it out if the item is sold online, which results in recaptured sales.

American Eagle Outfitters also plan to launch a newly designed mobile site for shopping this year. The company found that creating a desktop online store, didn’t necessarily translate into a good mobile shopping experience. Ascena Retail Group also noted it has worked on an improved mobile shopping site design.

Regarding winter’s slow arrival, GIII’s Wilson Leather chain suffered from negative 4 percent comps as a result of the unseasonably warm weather in November and December. However, the company said a new cold snap has quickly driven shoppers back to the stores. GIII said it reduced its dependency on outerwear so it doesn’t have to hang onto the weatherman’s report. The company also said shoppers are responding well to its Calvin Klein and Eliza J dresses as these brands are top sellers in department stores.

GIII was equally optimistic about the coming year. They have had a strong start to its Karl Lagerfeld products, and will be launching the Lagerfeld shoes his year. The company said it will be looking for acquisitions to make this year in the range of $100 million to $1 billion. Although the high yield market has been choppy, they said the company can still borrow at good rates. The preference is for a domestic woman’s brand.

Some retailers are capitalizing on the bad winter like Gordman’s department stores, which plans on buying lots of unsold winter merchandise and “hoteling” it until next year. They are also transitioning seasonal goods earlier this year. Gordman’s operates 102 stores in mostly upper Midwest states and while many similar chains like Kohl’s are closing stores, this value brand plans to add six more stores in 2016.

Others have put the warm winter in their rearview mirror, setting their sights on spring instead. American Eagle Outfitters said it was seeing a nice sell-through for its transitional spring clothes. The company said it bounced back from Christmas, and are very optimistic moving forward. Retailers said the comparison between this year’s warm winter to last year’s sales (where an extraordinarily bad winter pushed people to buy lots of winterwear) is apples to oranges.

And this challenging retail environment has prompted many companies to leave their “open-to-buy” unused. They are preferring to wait and see how shoppers respond before committing funds to inventory.

One positive for the industry has been the raw cost of cotton. American Eagle said it would use this cost benefit to improve product quality. The retailer thinks other companies will probably use the savings as a promotional effort to pass on to the shoppers.

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