Most retailers generally got what they wanted over Super Saturday weekend — a pickup in traffic and sales to help with the holiday selling season.
But the weekend wasn’t quite the knockout retailers hoped for because of frigid weather and snow and ice storms in a lot of the country. Now the key question is whether the last-minute rush over the weekend and this week will be enough for stores to hit their holiday targets of 3 to 4 percent growth — and at what price to margins those sales will come.
Marshal Cohen, retail industry analyst at NPD Group, said, “Saturday was actually pretty busy. It was almost the equivalent to last year’s final Saturday, and we still have another [Saturday] to go. Up until this point, we’ve been slightly behind in traffic. With one more weekend to go, [the extra Saturday] will be a nice opportunity for retailers.”
So far traffic at the malls has been lagging, mostly because the holiday selling season has been spread out, beginning before Black Friday and extending out due to the extra shopping weekend this year. Cohen said the holiday sales data will be both “front-loaded and back-loaded, in comparison to last year when it was just back-loaded.”
According to Craig Johnson, founder and president of retail research firm Customer Growth Partners, shoppers were definitely at stores where feasible, but not necessarily buying unless they saw a sizable discount. CGP had a team out at the malls across the U.S.
“Nationally, it was a good weekend, retrospectively, but not great. Weather for the upper third of the country was tricky. It got better later in the morning but if you go to the Central States, they had snow and ice coming in in the middle of the afternoon, which trimmed things in the evening [hours],” Johnson said.
By segment, Johnson said traffic was fractionally up compared with last year, with much of that growth due to online sales. “Store traffic was essentially flat, and if you peel apart the malls, store traffic was down 3 to 4 percent. Off mall, where the majority of sales took place, that was up,” Johnson said.
By sector, the retailers with the “strongest sales were had at the value-oriented destinations, such as off-pricers like TJX and Century 21. The discounters such as Wal-Mart and Target were not great like in the olden days, but at least sales were still up,” he said.
In terms of pricing strategies, Johnson said that in softlines, which includes apparel, the “stores had to offer 40 percent off just to get people into the stores. Almost all specialty stores were running promotions that were 40 percent to 50 percent off.” He noted that 50 percent off became the “tipping point,” the discount that converted browsing to actual purchases.
“Typically for Black Friday, 50 percent off is almost always planned promotions. This past weekend, maybe a few were planned promotions, but we had the feeling most were unplanned. The [retailers] we saw that had 50 percent off were promoting because they still had inventory overhang, mostly in outerwear and the heavier sweater assortments….There’s still a lot of goods out there and the good news is that if a store is offering 50 percent off, the sales were quite robust,” Johnson said.
Simeon A. Siegel, analyst at Instinet, said the sales “have been deeper” and with the crunch time over the next few days, it’s likely even deeper cuts are ahead.
“I would venture that because promotions are deeper, the management teams are not thinking this was a successful holiday. They did everything they could that was under their control. What this shows is that at the end of the day, the control has shifted from retailer to consumer,” Siegel said.
He also cautioned that retailers may be getting the sales now, but it will be the returns that could be the big question next week. “Three years ago, the general return rate was low to mid single digits. With the growth of online, we are hearing that returns can be as high as 40 percent to 50 percent,” the analyst said.
He explained that the problem with free shipping and free returns — which Siegel said is how retailers address the need to be “seamless” and convenient for apparel shoppers — is that now consumers don’t need to be shopping in stores since they can try on at home. But while the sales may be completed initially at higher prices, the items that are returned and subsequently sold will be at the lower prevailing selling price. All that — shipping and return costs that retailers absorb, as well as a selling price for the returned item that could reflect a third or fourth discounted price — will have an impact on the retailers’ margins for the fourth quarter.
Bill Lewis, senior vice president of consumer products, retail and distribution for Capgemini Consulting, also saw “a lot of foot traffic” when he was out at several malls over the weekend. “I also saw people on their phones, using the devices to competitively shop while in the stores or to determine whether or not to ship from another store,” he said.
Dana Katz, president and owner of Miltons The Store for Men, which has two locations in Braintree and Chestnut Hill, Mass., characterized business so far this year as “pretty good.”
“Super Saturday was not quite as super as we’d hoped because we got three to five inches of snow, but we made up a lot of what we lost on Sunday — despite the Patriots game,” he said.
Katz added that while sales were strong, “there was not as much of a sense of urgency since we still had six days to go. But Monday is off to a very good start and all in all, it’s shaping up to be good.”
Katz said Miltons had the best Black Friday in the company’s history, which dates to 1947.
Mike Zack, owner of Circa 2000 in Plano, Tex., has had the opposite experience.
“Our vendors are opening stores and between them and the discounters and the Internet, it’s tough,” he said.
Zack continues to battle against the headwinds and has added women’s wear, which now accounts for 25 percent of sales, and has seen some strength in sport coats, sport shirts, socks and other accessories for men. “There’s not one really hot thing though,” he said.
Zack said that for independents, it boils down to finding merchandise “that no one else has” as a way to stay in business and he’s looking forward to the men’s market in January when he can refresh his assortment for the future. “The year ahead will see a lot of changes,” he predicted.
Walter Loeb, president of Loeb Associates, said that retailers he spoke with “were very unhappy about the snowfall and the business on Super Saturday. It deters people from coming to stores and made it impossible for them to respond to doorbusters.”
While shopping on Saturday afternoon was more easily accessible, Loeb said “a lot of retailers were left with merchandise because the momentum never really accelerated. While everybody had attractive offers, none of it was any different than the offers earlier this month or on Thanksgiving.”
Loeb said he’s looking for a 3 percent increase for the season, and that’s “with fingers and toes crossed that this materializes. That would be at the upper end of my expectations.”
TechStyle Fashion Group — parent of the JustFab, ShoeDazzle, FabKids, Fabletics, FL2 and P.S. by JustFab brands— reported a strong Saturday. New registrations to its sites — which are built around a membership model — were up 28 percent on Saturday compared with the year-ago period, while orders from existing members across its portfolio of brands rose 36 percent during the same period, according to TechStyle’s corporate marketing officer Shawn Gold. The company’s Fabletics brand, which also operates 18 brick-and-mortar stores, saw same-store sales up 29.89 percent, although extreme cold weather temperatures in certain parts of the country may have hampered the performance.
Taubman Centers’ Beverly Center in Los Angeles saw a strong Saturday and expects that to continue this week, according to its marketing and sponsorship director Susan Vance.
The shopping center, which is undergoing a major renovation, expects visitor levels to continue ramping up this week with a big push coming Friday when many will be off of work or winding down their workdays early. That’s expected to lead to one final push Saturday for Christmas Eve and the start of Hanukkah.
Overall, foot traffic into the center — which runs the gamut from fast-fashion retailers such as H&M and Forever 21 to contemporary brands such as Sandro and Maje and luxury along the lines of Burberry, Saint Laurent and others — has been about on par to slightly up this holiday season as compared with prior years, according to Vance. She added this year’s performance is about on par with the National Retail Federation’s outlook, which projects holiday sales to be up 3.6 percent this year.
Joe Nastri, market executive for the Metro New York area at Capital One Bank, which lends to many apparel firms, said, “From what I’m hearing, 3 to 4 percent growth [for holiday sales] is realistic.”
He said that colleagues on the bank’s apparel team who were at the malls over the weekend said the department stores were “heavily promoting” this past weekend, but the good news is that “inventory levels looked fairly low and in good shape.” That has Nastri concluding that “most of our clients will make plan” — banker-speak for noting that apparel suppliers will end the year meeting their targeted 2016 sales goals.
Jefferies’ retail analyst Randal J. Konik said pent-up demand and the deep freeze throughout the Northeast, combined with shoppers making last-minute purchases “led to busy stores throughout the weekend.” He noted that “promotions for the most part remained largely in-line with last year for the vast majority of retailers we visited, which we believe speaks to lean inventory positions” exiting the third quarter.
Konik said that Victoria’s Secret/Pink remained heavily promotional over the weekend. Bras were $35 on average, while bralettes were ticketed at $9.99. Customers who spent $75 received a $20 reward card. Beauty was “buy two get two free.”
One beneficiary of the sudden cold freeze was Ugg, which saw promotions remaining “in check,” Konik said. He said there was “solid traffic” around boots and other seasonal product and, in the case of Ugg, the “Classic II line continues to sell at full-price at major department stores, whereas at this point in the season last year, they had already began taking 15 percent discounts on core styles.”
Konik also noted that Lululemon Athletica was using rare promotions to drive holiday traffic. Lululemon selectively e-mailed customers with gift cards for $25 off, with no minimum purchase, that are valid through Jan. 29. “This is particularly noteworthy because Lululemon rarely offers this type of discount,” the analyst said. He also added that the company re-ran its offer for a $25 gift card on Apple Pay orders of $150 or more. “The deal initially ran from Nov. 7 to 21” and is being re-run from Dec. 5 through today.
Still, despite all the cited sales, Konik concluded that holiday promotion remained mostly in check. “In the final weeks before Christmas, store-wide promotional levels are generally flat to up slightly versus last year, although we believe inventory is generally cleaner this year,” he said.