The season is coming down to the wire and retailers are holding out hope.
This story first appeared in the December 24, 2014 issue of WWD. Subscribe Today.
Most are seeing a last-minute rush of business, but it’s nothing more than what was expected and planned for. As of Tuesday afternoon, there were no signs of any change in the outlook on the season. In a word or two, it’s been OK, not great, lackluster in apparel, better in accessories, home goods, toys and electronics. Several retailers cited traffic declines in their stores which to some degree was offset by their online operations continuing at a robust pace.
On Friday, the day after Christmas, retailers switch into clearance mode for fall and holiday goods, and try to generate greater full-price selling on fresh spring and resort goods to ease the pressure on margins after a month of incessant deep discounting.
“Overall, it’s been a good holiday season,” observed Tony Spring, chairman and chief executive officer of Bloomingdale’s, who added that the store’s buy-online-pick-up-in-store service is feeding some additional store traffic.
“The weekend was strong. Saturday was the biggest day of the year for us, but the last couple of days have just been flat,” said Bob Mitchell, copresident of Mitchells Family of Stores. “There’s been no big surge. It feels like a lot of people left town, though tomorrow [Wednesday] could be big.”
“The business is planned to have a surge in it. Malls are packed. Business is not terrible, but there’s nothing crazy happening,” said one chief executive officer of a specialty chain. Today — Christmas Eve — is typically a big-volume day for retailers until around midafternoon when business simmers down. However, the ceo said that heavy rains could hinder business Tuesday and today. The deep South and the East are expected to be most impacted by the storms, which according to weather reports could cause some flash flooding.
Crawford Brock, owner of Stanley Korshak in Dallas, said sales are running slightly down and the season could end up down a point or two. “Jewelry is down double digit, which is killing us,” Brock said Tuesday morning. “A year ago we had three anomaly transactions totaling north of half a million that do not look like they are going to repeat.”
But, he added, there is still Christmas Eve, and it could still happen. “These guys walk in like a deer in the headlights, panicked because they haven’t done anything, and they go over to jewelry and buy something and it comes back,” he said.
The Forum Group, a consortium of luxury stores including Korshak, is having similar results, he added.
“I’ve been on the phone the last couple days with other stores in the Forum and I’m hearing the same thing — it’s spotty,” he noted. “Their men’s is up, their jewelry is not happening in a big way, same thing [as Korshak]. I can’t explain it other than a year ago people really felt good and were coming in and buying stuff.”
Korshak’s strengths have been men’s designer apparel, men’s and women’s contemporary fashion, handbags, women’s shoes and cosmetics, which are all up at least 10 percent.
“I don’t think there will be that huge of a last-minute rush,” said Arnold Aronson, managing director of retail strategies at Kurt Salmon. “The typical after-Christmas deals have already been on the floor. Sixty percent off has been the table stakes as of a week ago. The gas is running low on that tactic.”
One department store official said online sales have continued strong but traffic in the stores was not very impressive over the last few days.
So far, the mood has been tentative, though not dire. Retailers anticipate coming out of the season with low, single-digit gains though margins will be impacted by all the promoting, including those not engineered in advance. Fall inventories are broken, meaning there’s little continuity in sizes and colors left at this point.
At Neiman Marcus, cold weather and cashmere accessories, beauty items, fine jewelry and Christmas decorations were in high demand, according to vice president of corporate communications Ginger Reeder.
Among the standouts were estate jewelry, Shinola watches, designer sneakers, BKR exclusive water bottles and “anything Tom Ford,” Reeder said. Hot beauty items included an exclusive YSL Beauté Glossy Stain Set of three lip colors, Christian Louboutin’s nail lacquer, especially in signature “Rouge,” and boutique fragrances by Creed, Maison Francis Kurkdjian and Tom Ford Private Blend.
“Brunello Cucinelli continues to be a standout in the designer area,” Reeder said.
Shoppers did open up their wallets last week, and more than a quarter of them still had buying ahead as the Christmas countdown entered its final stretch.
According to the International Council of Shopping Centers and Goldman Sachs’ chain store sales index, sales for the week ended on Super Saturday were up 3.1 percent over the comparable seven days of 2013 and 3.4 percent above the level of the prior week.
That’s the first time all year that both measures of weekly sales have exceeded 3 percent, and the unscientific but revealing combination of the two is the highest sum since it hit 6.8 percent for the week ended Dec. 14, 2013, when year-on-year sales grew 2 percent and sequential sales were up 4.8 percent.
“Business over the past week was very strong compared with the same period of the prior year as consumers unleashed a late shopping surge,” said Michael Niemira, ICSC research consultant and principal of The Retail Economist LLC. “Despite the strong demand, a historically low 11 percent of consumers have yet to start their shopping, meaning the late shopping surge should continue all the way through Christmas Eve.”
Not only have many consumers left all of their shopping until the last minute, but the percentage of those who’ve completed their shopping at this stage of the season is at its lowest point of the decade. Less than three quarters — 74.8 percent — of those surveyed had completed their holiday buying as of Sunday, a figure that has slid every year since 2010. Last year, 83.5 percent of shoppers were done shopping by the Sunday before Christmas, and that was down from 84 percent in 2012 and 89.8 percent in 2011.
Some of the decline in the completion rate could be attributable to the extra shopping day this year versus last and the wider window that online shoppers have for delivery, Niemira noted.
This year’s shopping completion rate stood at 57.1 percent one week ago, according to ICSC’s consumer survey.
While ICSC called out “particular strength” at electronics stores, the group said that wholesale clubs, dollar stores, apparel stores, online merchants, discounters and both department and drug stores enjoyed “generally strong” weeks.
Inclement weather plays less of a role in shopping activity as the Christmas holiday draws closer, but temperatures last week were 1.9 degrees warmer than a year ago and 3.9 degrees warmer than their long-term average, according to Weather Trends International.
A $1.30 reduction in the average price of a gallon of gasoline since June also benefited shopping activity.
In its calculation of shopping activity based on the monitoring of stores and malls, RetailNext found that Super Saturday generated more sales than Black Friday despite lighter traffic.
Year-on-year comparisons were less favorable, in part because RetailNext’s figures are garnered from activity in physical stores, not online.
On Saturday, net sales were down 9 percent on a 10.6 percent decline in traffic, an 8 percent decline in total transactions and a .9 percent drop in average transaction value. However, the company reported a .4 percent gain in conversion rate and 1.8 percent advance in sales per shopper.
On Sunday, sales declined 8.4 percent, traffic was down 9.4 percent, total transactions dropped 7.4 percent and average transaction value descended .8 percent, while conversion rose .4 percent and sales per shopper were up 1.1 percent.
Although Super Saturday results fell short of ShopperTrak’s projection for a 9.2 percent increase to $10 billion in sales, the .5 percent gain measured by the Chicago-based provider of store analytics put sales at about $9.21 billion, above the estimated $9.1 billion registered on Black Friday. Bill Martin, founder, said, “The final numbers will tell the tale, but we know that Super Saturday saw brisk sales with both conversion rate and average dollar per shopper increasing over last year.”
Martin remains confident that the 3.8 percent increase projected by his firm for the season over last year is still within reach, bolstered by lower unemployment, cheaper gas and “more manageable weather.”
Also, if attracting consumers to stores remains a challenge, they continue to embrace online shopping in ever-increasing numbers.
ComScore Inc. reported that online sales over the previous weekend, excluding mobile devices, rose 36.1 percent to $972 million on top of a 15.2 percent increase, to $4.85 billion, during the prior five days.
That put desktop buying for the season at $48.27 billion, 15 percent above the mark for the same point last year.