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A few weeks ahead, the high expectations of retailers will be tested

Shoppers will climb up and down the escalator at Willow Grove Park Mall in Willow Grove, PA on November 14, 2020.

Mark Makera | Reuters

Are you starting to look like Christmas? Probably not this year.

With 24 days to big holidays, retailers want consumers to continue spending. Shoppers started buying holiday gifts earlier this year, but Thanksgiving weekend shopping events from Black Friday to Cyber ​​Monday weren’t as powerful as some expected.

According to Deborah Weinswig, founder and CEO of Coresight Research, analysts expect retail sales to reach high expectations, but holidays aren’t a topic.

“Usually people are like’How about your holiday shopping? What are you doing?’,” She said. “I don’t think there are any of them this year, but I don’t know why.”

She said more about the shopping approach to avoid out-of-stock and delivery delays, as consumers are distracted by family gatherings and the resurgence of large parties, fascinated by soaring prices. He said it might be because he measured it.

She expects retailers to perform well, but it would be interesting to see how much of that comes from more products bought at full price rather than inflation and increased sales. Said.

“Half time” instead of kickoff

Retailers such as Amazon, Wal-Mart, and Target exploded holiday sales and Black Friday-style promotions as early as October. Consumers also had other incentives to buy gifts early this holiday season. Many were afraid that they couldn’t find something worth buying because of supply chain problems, instead of chasing big discounts or getting hot gifts of essentials. For months, shoppers have been hearing about temporarily closed factories, crowded ports, and a shortage of truck drivers.

That early wave of shopping could have stolen some of the thunder from major shopping holidays, including Black Friday and Cyber ​​Monday. According to the National Retail Federation, the total number of shoppers and average spending fell during Thanksgiving weekends from Thursday to Cyber ​​Monday. Nearly 180 million Americans shopped on a five-day holiday weekend, compared to about 186 million in 2020 and about 190 million in 2019, according to industry groups. Made a purchase.

According to the NRF, Thanksgiving weekend shoppers averaged $ 301.27 for holiday-related purchases, compared to $ 311.75 in 2020 and $ 361.90 in 2019, reducing average spending.

Consumers spent $ 10.7 billion on Cyber ​​Monday, down 1.4% from last year’s levels, according to data released Tuesday by Adobe Analytics. This is the first time Adobe has tracked a slowdown in spending on major shopping days since it began reporting on e-commerce transactions in 2012. However, shopping holiday spending has increased by 15.1% compared to 2019 since last year’s holiday season.

According to Adobe, Cyber ​​Monday shopping cart prices have risen by nearly 14%, up 19% throughout the holiday season. This is because some shoppers bought high-priced items such as furniture, and some shoppers felt the intensity of inflation.

NRF CEO Matt Shay said early shopping rocked the role of peak sales days. Consumers began buying gifts and decorations a year ago in October to avoid congestion. This year, supply chain concerns have pushed that schedule back up.

“Especially Thanksgiving weekends and Black Friday are closer to half-time than kick-offs,” he said.

According to Shay, the NRF supports record holiday forecasts. Industry groups predict that spending in November and December will increase by 8.5% to 10.5%, bringing total sales to $ 843.4 billion to $ 859 billion.

Holiday retail sales have increased by an average of 4.4% over the last five years, according to the NRF. Last year, they reached a record high of $ 777.3 billion, an increase of 8.2% year-on-year.

Steve Sadove, a former chairman and chief executive officer of Sax and current senior adviser to MasterCard, said he expects a strong season for the retail industry. He points out the disgusting demand among consumers who have higher levels of savings.

Mastercard SpendingPulse predicts US retail sales, excluding automobiles and gas, will increase 7.4% year-over-year from November 1st to December 24th. We are seeing an 11.1% increase in sales compared to 2019.

And Sadove reiterated that expectation, even after some data showed that demand for Black Friday and Cyber ​​Monday had declined from each of the last two years. Mastercard is particularly focused on luxury spaces, jewelery and apparel compared to the 2020 and 2019 levels.

“Obviously it was a wide season,” he said. “Retailers started promoting early. Black Friday wasn’t the only day.”

New variants and rare deals

To meet high expectations, retailers need to overcome the fear of new coronavirus species, encourage shoppers to buy despite rare deals, and fight the potential December decline.

News of the Omicron variant was reported, just as Black Friday shoppers were preparing for their visit.

Some shoppers have encountered items that are not available. Out-of-stock messages surged 169% in November compared to pre-pandemic levels in January 2020, according to data from Adobe Analytics. They are more than three times (258%) the level in November 2019.

And the discounts weren’t lively, even on shopping holidays. For example, on Cyber ​​Monday, discount levels for electronics were 12% off last year’s 27%, TVs were 13% off last year’s 18%, and appliances were 8% off last year’s 20%. ..

The company predicts that these discounts will weaken further and will settle in the range of 5% to 10% in the coming weeks.

Shay of NRF said that the omicron variant could actually increase retailer sales. He said some consumers who were planning to book a trip, buy a theater ticket, or give another gift of experience might choose the product instead. ..

And even when public health officials and consumers learn more about this variant, he said, “don’t panic.” He said the background of this holiday season looks very different, thanks to the fact that the majority of Americans are fully vaccinated.

“We are confident that we will continue to maintain a very positive trajectory in the economy as a whole, especially in the retail industry, for this holiday season,” he said.

Fighting the calm of December

Craig Johnson, founder of consumer research firm CGP, said an early wave of shopping could increase the risk of a fall in December.

The December decline in the retail industry is the weeks after Black Friday and Cyber ​​Monday until the final day of Christmas Eve.

Johnson said he has been tracking calm for over a decade. Retailers promote early to early in the season, so they can steal sales later in the season without increasing overall demand, he said.

“People are losing energy or taking a break,” he said.

Black Friday’s online and in-store retail sales in the United States were up 18% year-on-year and up 12% year-on-year to a record $ 34.9 billion, according to his company’s estimates. We forecast sales for the entire holiday season, including November and December. , 6.7% increase from the previous year.

He said two wildcards (Omicron variant and increased smash and grab crime) could prevent customers from returning to the store. For the past few weeks, Best Buy, Nordstrom and Louis Vuitton have all been the targets of organized retail crime.

“It puts dampers on everything,” Johnson said. “If that activity continues to pop out, there may be a worsening December depression.”

Shay of NRF said shoppers can still buy a lot of gifts. According to a survey of about 6,000 consumers in late November by industry groups, about 84% of shoppers have already started buying on holidays. On average, surveys have completed about 52% of holiday purchases. In other words, just under half of the purchase is still left.

Long-term discounts, shoppable events, and new products are one way retailers aim to stay in the spotlight and momentum.

The day after Cyber ​​Monday, Rent the Runway sent an email to potential customers informing them that the one-day sale was extended to another day. Fashion retailer Rebecca Minkov’s marketing email, which exploded on Tuesday, says “Surprise! Cyber ​​Tuesday!”. In addition, department store chain Saks Fifth Avenue and athletic apparel maker Bandier have joined the list of retailers to extend their holiday promotions until the second half of the week.

Target will debut a limited-time collection of about 300 LEGO-themed items on its website and stores in early December. Includes colorful clothes, household items, pet accessories and more. Leading retailers have a long history of using short-term collaboration with brands such as Hunter and Lilly Pulitzer as a way to drive foot and web traffic.

And Wal-Mart will host more than 30 livestreaming events during the holidays to point out products that people may want to add to their gift list.

Delayed shipment: Blessing or curse

According to Johnson, shipping delays are a disguise for some retailers if they could receive inventory within next week or two weeks, redesign the store, and fill empty shelves. It can be a blessing.

“There may be a silver lining that alleviates some of the problems of the depression in early December,” he said. “But I think the risks are still more negative than positive.”

Adam Pressman, a partner at retail consulting firm AlixPartners, says retailers can be tempted to spend more money if they clearly communicate about new inventories and new transactions. Not everyone has the flexibility to grow their budget, but some consumers do.

“Customers who may have purchased at the end of November, while they purchased in early October, may return to additional purchases or other inventories,” he said.

Mastercard’s Sadove said the biggest challenges could occur after a vacation. Retailers may delay shipping out-of-season inventory and generate large quantities of merchandise. It will cause higher levels of price cuts.

“The supply chain can be quite confusing,” he said. “Let’s say you’re a retailer doing Christmas decorations in February.”

A few weeks ahead, the high expectations of retailers will be tested

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