In another sign that retailing remains robust, The Retail Economist-Goldman Sachs Weekly Chain Store Sales Index showed a 3 percent gain year-over-year.
Week to week, though, the index declined by 1.2 percent. But Michael Niemira, chief economist of The Retail Economist LLC, said the week-to-week drop followed a sharp spike from the previous week.
The gains were made as the back-to-school shopping season reached its peak and the National Retail Federation, as well as other analysts and consultants, took a bullish view on this year’s upcoming holiday shopping season. Moreover, shopping is once again seen as “an experience” — which at least one analyst said is key to competing against Amazon.
In a report from Telsey Advisory Group, analysts at the firm compared this b-t-s season with prior years and noted that “contrary to rumor, retail is not dead.” Matthew Shay, president and chief executive officer of the National Retail Federation, told WWD this week that “people are shopping and they are responding positively to the new structures retailers have deployed and in the way they’re being engaged.”
In the TAG report, Dana Telsey, chief research officer of the namesake company, said during her firm’s annual b-t-s shopping tour, all “the stores were doing business, and not just at promotional prices.”
“The engagement that stores offer is greater and more collaborative than ever before, whether it be 1) the free use of washers and dryers in American Eagle Outfitters for those with a student ID; 2) monogram handbags, wallets and tote bags to make it yours at Coach; 3) providing and writing product feedback on a whiteboard at Lululemon in a convenient location right in front of the dressing room, or 4) just charging your smartphone and spending time at Athleta or Banana Republic,” she said in the report.
To add some context, Telsey said a decade ago, when the economy was deep in a recession, “and we conducted this tour, traffic was definitely quieter in the stores. The message from investors at that time was that the value-add of visiting stores wasn’t there and the sentiment expressed was that if one buys shares of Amazon, then exposure to the consumer discretionary sector could be fulfilled.”
She went to noted that this perspective held “until about a year ago when the narrative seems to have changed, with the evidence from our conversations with investors, retailers, and real estate landlords. Shopping tours and store visits have become relevant again, as everyone is on the hunt for experiential change in physical retail. There is a renewed focus on companies that can thrive in a world with Amazon.”
Carlos Castelán, cofounder and managing director of retail consultancy The Navio Group, noted that with GDP growth and discretionary spending at around 4 percent in the second quarter “and no signs of slowing down through year-end, we expect strong holiday retail sales for the fourth quarter of 2018.”
“We expect pricing to be a big focus and very competitive across retailers — particularly on brand name offerings — as stores fight for market share in one of the hottest economies in the last decade,” Castelán said.
“Finally, we have not seen tariffs play a large role on the merchandising mix yet for holiday categories given that imported product production and pricing were locked in a long time ago and are already in transit or Stateside,” Castelán added. “Any adverse impact due to tariffs would likely begin to be felt in 2019.”