As consumers continue to shift toward online purchasing, the latest monthly sales data from RetailNext Inc. show the relevance of the in-store shopping experience.
In its monthly Retail Performance Pulse released today, the firm said August experienced a 7.3 percent year-over-year drop in retail sales on a 9.9 percent decline in traffic for brick and mortar stores.
Shelley Kohan, vice president of retail consulting at the company, said results were not surprising as they reflect “the changing nature of shoppers and their new shopping journeys. Retailers are, however, seeing a more committed shopper when she enters the store, and one who is more compelled to purchase once there.”
Kohan said both average transactions and conversion rates for the month showed gains. Average transaction values rose 1.6 percent, which follows a decline in July. Sales transactions as a percentage of traffic, known as the conversion rate, rose 0.2 percent.
There’s a lesson for retailers in these numbers: don’t neglect the in-store experience. “The online business is now the retailer’s front door,” Kohan said, adding that retailers are indeed stepping up their game in regard to making a “more seamless experience” for the consumer as she begins the “shopping journey” online, and which may conclude in a physical store.
Aside from the shift toward online purchasing, Kohan told WWD there were other factors negatively impacting overall traffic and sales in August. The shift of Labor Day by one week was troublesome since many retailers peg events to the holiday. Additionally, the back-to-school season has contracted, and it’s been lackluster as savvy consumers know they don’t need to buy everything all at once — and can wait for retailers to slash prices later.
“As a season, back-to-school did not provide the lift like it had in past years,” said Kohan in the report. “Much like Thanksgiving, today’s shoppers are reinventing the back-to-school season, expanding the season both forward and backwards as they seek greater value. Other contributing factors to August’s performance were a late Labor Day weekend and a dip in disposable income for apparel and other segments due to the tremendous month experienced by automobile sales.”
The research analytics firm said the first two weeks of August “were the best-performing weeks, driven in part by psychological appeal to customers of sales tax-free holidays and corresponding rises in store traffic and conversion. The last week of the month was the worse performing week.” Coincidentally, the last week of the month was a tough one on Wall Street, and several economists note that consumer confidence eroded during these episodes due to the “headline effect” of lousy financial news.
“While August was a tough month for many stores, indicators suggest lots of opportunities for holiday as employment, income and interest rates remain positive,” Kohan added. “It will be important for retailers to maximize this holiday season, as holiday 2016 will be challenging, especially with distractions around the presidential election.”