The Fourth of July was a time to celebrate — but apparently not by shopping for much other than hot dogs and hamburgers.
Retail sources said Tuesday that the industry malaise seen all year so far has continued into July. Consumers seem deterred by all the depressing news around the world, from Brexit to terrorist attacks in Baghdad, Dhaka, Istanbul and Orlando, and the incessant political rancor surrounding the U.S. presidential election. That has led to stepped-up promoting, in part to help clear excess inventories. Tuesday after the holiday weekend, new promotions and extensions of old ones popped up.
Garnet Hill was running a promotion Tuesday for up to 40 percent off swimwear, while Macy’s Inc. was running a special sale event on dresses, with between 25 and 50 percent off. Aerosoles was pushing a special that provided an extra 50 percent off any second pair of sandals.
Talbots has been holding its traditional semiannual “red hanger” sale, but added 40-percent-off-one-sale-item and 50-percent-off-two-or-more-sale-item promotions for the holiday weekend. On Tuesday, following the end of the promotion, the discount offered on sales merchandise was upped to as much as 60 percent off the original price of selected items. More styles were added to the event, as well as a promotion for selected pants for $19.99 that was sent to customers in an e-mail.
“There’s no momentum at all,” one senior retail executive, who requested anonymity, told WWD. “We are pretty much on our forecast but there’s a low bar.”
“From a traffic point of view, things still remained difficult,” said another top executive from a different retail chain, who also wanted to remain nameless. “I don’t think anything has changed. The Fourth of July was still depressed overall.”
“It’s not a pretty picture,” said Craig Johnson, president of Customer Growth Partners. “Overall, business was soft, particularly for apparel and home soft lines. Memorial Day weekend was good but very promotion-induced.” Right after Memorial Day, the slow pace of retailing resumed, Johnson noted, and Fourth of July weekend was not a repeat of the uptick seen Memorial Day weekend.
Johnson did see a few bright notes. “The off-price sector was really quite strong — T.J. Maxx, Ross Stores and Burlington Coat Factory.”
In addition, “The retailers, especially apparel retailers, are reacting to the weakness by keeping inventories very thin. That will hurt sales somewhat, but at least they won’t get crushed on the profitability. We didn’t see that in Q1.”
Amazon is more of a factor than ever, particularly with Amazon Prime Day, offering special deals on products and deliveries, coming up July 12. “Retailers are fighting for a smaller share of online wallet by getting promotional while Amazon’s share grows,” according to Sarah Engel, senior vice president of global marketing at Dynamic Action, which provides retailers with solutions for analyzing millions of data points.
The week ending July 4 showed consumer orders using a promotion were up 38 percent from 2015, and during the week up to the Fourth of July, full price units sold were down 9.5 percent, according to Dynamic Action data.
“It is the summer of promotions,” Engel said. “We’ll be seeing it straight into back-to-school. Unfortunately, it has been the year of promotions and today, we’re seeing retailers extending sales an extra day….All retailers are watching to see how Amazon is going to tread these waters, and making conscious choices” to either promote on Prime Day with products they don’t expect Amazon to promote or deciding to be “a little more systematic” and promote at other times.
“It did appear retailers had kicked up promos ahead of July Fourth,” said Corinna Freedman of BB&T Capital Markets. “Traffic had slowed from the negative headlines of Brexit and was still a little pressured over the weekend. Promotions seemed to hold steady during the weekend.”
On the other hand, Jefferies’ analyst Randal J. Konik said, “We believe retailers wrapped up June with a solid July Fourth weekend, as the combo of weather and promos drove healthy traffic and conversion.”
Konik said Old Navy saw some of the “strongest traffic and conversions within the mall,” although sales were “partially aided by compelling price points and promotions.” Konik said the entire store was up to 60 percent off, with varying promotions by category, including T-shirts and tanks that were 50 percent off. He noted that on Saturday, women’s tanks were only $2.
Konik said Gap ran a promotion of 40 percent off the entire purchase and featured select “semiannual sale items” for $19.99, or up to 50 percent off. A year ago, the markdown was 35 percent off the entire purchase and 50 percent off for cardholders. He also said, “We sense that the brand is seeing pressure in its basic T-shirt collection. [T-shirts] were marked down to $7.99 from original prices of $26.95.”
At Banana Republic, Konik said the chain was offering 40 percent off regular-priced product and an extra 60 percent off sale merchandise, up from the 30 percent off all regular-priced goods and an extra 50 percent off sale items last year.
He also said reaction to the Victoria’s Secret semiannual sale appeared more muted after running for nearly a month.
Most retailers were “modestly more promotional” year-over-year as they cleared through leftover summer product to make room for fall merchandise, Konik added.
Jan Rogers Kniffen, chief executive officer of the consulting firm that bears his name, said June was the best month in a long time, and that the Fourth of July weekend was a little more promotional than last year, though he added, “The Fourth itself is pretty unimportant, but despite increased travel this year, the weekend in front of the 4th was good versus plan….July is the second smallest retail month of the year, and is almost exclusively promotion goods.”
Ebags.com, which specializes in luggage, totes, handbags, backpacks and other types of bags, on Tuesday extended Fourth of July deals with up to 80 percent off 500 items. Shoppers who took advantage could also on Tuesday take 20 percent off one’s entire order with a special code on the order.
Some retail workers took to Twitter to post pictures of empty stores and complain that they had to work on the holiday instead of going to cookouts. Patriotic clothes seemed to be the most popular items, including a women’s tank top with an American flag print on Amazon.com.
Barney New York “had a ton of European tourist shoppers, which is always great,” a source at the retailer said. According to a spokeswoman, bestsellers over the July Fourth weekend included Valentino’s embellished ankle boots, $1,795; Gianvito Rossi’s Rikki wedge sandals, $725; Aquazzura’s Wild Thing T-strap sandals, $585; ATM Anthony Thomas Melillo’s crepe V-neck blouse, $345; Maison Mayle charmeuse slip dress, $395, Sies Marjan’s striped sweater, $890 and Banjanan’s Belinda dress, $325.
A sales associate at J. Press men’s wear store on Bleecker Street in Manhattan, who would only give his first name, Robert, said the holiday weekend did not necessarily goose business. “We had a pretty slow Sunday, although Friday and Saturday were pretty successful,” he said. “It was primarily American tourists. We sold the gamut of items. We don’t really have bestsellers since we’re a lifestyle aesthetic. The spend by tourists was comparable to locals. In general, Sunday sales are from locals and they go out of town.”
“It was extremely busy yesterday,” said Wendy Miranda of Lee Lee’s Forest women’s fashion store, located in the South Street Seaport. “We stayed open until almost 11 p.m. on Monday. We usually close at 9 p.m. It was a good mix of tourists and locals. There’s always tourists here constantly.” Asked about bestsellers, she said, “It was just so hectic you didn’t have a chance to stop and think. We sold a lot of July Fourth-themed stuff in red, white and blue. We were all wearing red, white and blue clothing, flag scarves and hats. It was very patriotic. We sold a lot of jewelry. The rest of the weekend was good because the weather was nice.”
William Okpo, a ready-to-wear store also in the Seaport, was “very crowded,” a sales assistant said. “Specifically yesterday. We had a lot of people coming in throughout the weekend, but we did get a little more business yesterday.”