Holiday shopping has yet to slip into high gear but traffic returned to relatively normal patterns last weekend, lifting retailers out of their early December doldrums and raising hopes for a big weekend ahead.
Stores are on track for 3 percent holiday sales gains on average, and Dec. 19, otherwise known as “Super Saturday,” could be the biggest volume day of the year, according to store executives and industry experts contacted Monday.
While no one has been ecstatic over selling results thus far, the upside is that most consumers still have to complete their gift shopping — and many haven’t even begun.
Traffic last week and weekend improved from the first 10 days of December due to Christmas getting closer, sustained price promotions and record high temperatures that got people out on the streets and into the malls but killed any interest in outerwear. In New York on Sunday, the thermometer went up to 70 degrees and the weather was warm throughout the weekend. Temperatures are expected to drop to the 40s this coming weekend, giving hope that there might be a last-minute rush on knitwear and outerwear.
Retailers said to be performing best this season include Victoria’s Secret, Lululemon, American Eagle Outfitters, Costco, TJX Cos., Ross Stores, Best Buy, Express, Kay Jewelers and Zale Corp., as well as dollar stores. Wal-Mart and Target are said to be experiencing OK, not great, results.
Department and luxury stores — including Saks Fifth Avenue, Neiman Marcus, Macy’s and Bloomingdale’s — are said to be on the softer side, continuing trends seen last quarter. Neiman’s on Monday reported weak results for the third quarter ended Oct. 31, fueling views that the luxury segment has struggled this fall even before Christmas trading. The specialty store sector has been mixed as far as performance for holiday.
Many retailers are grappling with excess inventories that will have to be cleared, putting profit margins at risk.
Karen Katz, president and chief executive officer of the Neiman Marcus Group, said during a conference call Monday that “holiday selling is in full swing,” though she noted December represents “an important markdown period” as well as a time to sell resort wear at full price. Espadrilles, Loro Piana sportswear, Tom Ford sportswear and the Neiman Marcus private label collection are selling highlights, she noted, but Katz added, “We, like many other retailers, are experiencing several headwinds causing disruption.” She said the company has experienced these cycles before and knows how to navigate them.
Upscale retailers have all been hit by the decline in tourist spending in their gateway city stores this year due to the strength of the dollar. Also, consumers are shifting their spending to restaurants, theater tickets, spas and other types of experiences, and away from spending on fashion. Neiman’s said it will take a several-quarter process to bring inventories down to desired levels.
Through the retail industry, the categories said to be performing best are fashion boots; products related to the new “Star Wars” movie opening Thursday, “The Force Awakens”; traditional toys such as dolls and action figures; jewelry, and scarves.
Weaker categories include outerwear, sportswear and much of electronics, though television sales are up in units sold but down in dollars due to sharp price compression. Handbags have generally been slumping all year but seem to be picking up lately.
“Last weekend, 30 percent off was like the opening ante, but most retailers are at least 40 percent off,” observed Craig Johnson, president of Customer Growth Partners. “It’s still a lackluster season — not great by historical standards. Promotions are very heavy. Profitability will be challenged very significantly.”
Traffic, he suggested, has been impacted by the rash of terrorism seen around the world. “Shoppers are very wary. They’re out shopping but keeping one eye out,” Johnson said. “They’re not lingering as much in the stores. The shopping is more efficient, more focused. There is a big drive to value across the board. There is less browsing.”
He said business last week was “modestly up” from a year ago. “The lull was shallower this year than in past years. By this weekend, it was back onto a normal traditional buying pattern. We think overall sales for November were up 3.1 percent, in line with our 3.2 percent forecast. December numbers will come in about the same.”
Johnson cited a “huge inventory issue, literally across categories, in teens, missy, high-fashion, designer, which is exacerbated by the situation in outerwear. There is also a glut of sweaters out there.”
Underscoring how bargain-hungry consumers are, Steven B. Tanger, president and ceo of Tanger Factory Outlet Centers Inc., said, “Over Thanksgiving weekend, traffic was up in most of our centers across the country and that has remained consistent for our centers throughout this holiday shopping season. Value remains a top priority for most consumers and savvy shoppers have come to expect outlet stores to deliver their favorite designer brands at a great value.”
At J. McLaughlin, it’s “so far, so good. Our comps are up. Margins are up and we are less promotional this year,” said Steve Siegler, ceo of the specialty chain, who was in Princeton, N.J., on Saturday, where J. McLaughlin operates a store. “Princeton is really a regional draw. Parents come to pick up their kids” in college. “The town was buzzing. People had their down coats folded over their arms and were eating ice cream at the same time.”
He said the company decided not to repeat last year’s cashmere promotion, and that despite other reports about sweater gluts, J. McLaughlin women’s sweaters have been selling. So have items with fur trim, scarves and other “giftables” and novelty looks. J. McLaughlin goes on sale right after Christmas and doesn’t do a big outerwear business. “That’s a blessing in disguise,” Siegler said.
Amid this season’s rampant price-promoting, “Super Saturday is a different type of event, based less on finding the best deal and more around last-minute wish fulfillment. Shoppers can expect to pay more for items that were more heavily discounted leading up to Black Friday,” said Traci Gregorski, vice president of marketing at Market Track. “Shoppers waiting until the eleventh hour will be met by ease of checkout and less overall discounting than those who shopped early.”
Susan Davidson, ceo of Scoop NYC, said the upscale specialty store has been “making its numbers but comps haven’t been great….We are gaining momentum. I am expecting and hoping for a really strong Saturday.” Unlike the industry trend, Davidson said Scoop’s outerwear has been “fantastic,” led by fur and shearling and such labels as Zac Posen, Iro, Moncler, Herno and Stone Island. Cashmere sweaters have also been selling, whereas cold weather accessories have not fared as well.
But one ceo of a national retailer who requested anonymity said, “The weather is impossible for business. Whatever pickup we had at the end of November, we lost again. People are not buying cold-weather accessories. The moment people start feeling it’s Christmas time, things will get going again. But now they are definitely not shopping as much. I have heard from many people that they haven’t even started their Christmas shopping, so our expectations are that things will pick up.”