Consumers are being more selective, heading online, leading retailers to work harder for their money.
As the final tallies of the 2015 Holiday shopping season are being recorded, it is clear that there were both winners and losers among the retailers this year.
On the positive side, retail sales grew 3.3 percent for the quarter ending Jan. 4, remaining steady year-over-year, according to credit-card payment processing company First Data Corp., which analyzed credit-card payments at 1.3 million retailers.
And stores experienced steady traffic during what in-store analytics company RetailNext’s Ray Hartjen says “has essentially become a five-day holiday shopping event, Thanksgiving through Cyber Monday.” Although store traffic fell year-over-year, the drop was smaller than the monthly declines stores had seen in spring, summer, and autumn throughout the year.
RetailNext reported that physical-store traffic was down 6.4 percent in November and December, and sales were down 2 percent, with store traffic falling 5.8 percent and store sales dropping 0.4 percent in December alone.
But despite the drop in traffic, the average transaction value increased 3.6 percent in December, representing the third straight month of greater than 3 percent growth. And RetailNext says sales per shopper also increased 5.7 percent in December and 4.8 percent in November and December combined, reflecting that shoppers went to brick-and-mortar stores with a “strong intent to buy.”
Retailers did not experience the same numbers across the board. Macy’s has just announced that it is slashing 4,800 jobs and closing 40 stores in response to its sluggish holiday sales, while Toys “R” Us saw surprisingly positive results, especially online, with same stores sales increasing 2.9 percent domestically. While the company did not disclose a percentage growth rate for its online sales, it said that they were particularly strong, with core toy, learning and seasonal categories generating the strongest growth. “Our positive holiday same store sales results demonstrate our ability to execute our holiday plan in a highly competitive marketplace,” asserted Toys “R” Us CEO Dave Brandon.
Meanwhile, Barnes & Noble said its “core” same store sales for the nine-week holiday period ended Jan. 2, increased 1.6 percent on top of a prior year increase of 1.7 percent, while retail sales, including in-store and online purchases, declined 0.8 percent to $1.1 billion. CEO Ron Boire said the company was pleased with the performance of its bookstores, adding, “We were also encouraged by the improved performance of BN.com during December, as the site remained stable and traffic improved through the holiday period. As we look ahead, we see further opportunities to improve the experience and increase conversion on BN.com.”
It is clear that two major forces were at work this holiday season that had a serious impact on retailers’ margins: shoppers’ incredible patience for bargains and the shift to online shopping. “You can’t just look at the mall and say the consumer is weak,” Citi analyst Paul Lejuez told the Wall Street Journal. “Some of those guys are losing share. The consumer is spending, but the question is what are they spending on? They want newness, and they are finding it in technology and experiences. They are going to see 'Star Wars' and going out to eat.” The major lesson for retailers is that the must continue to invest in mobile and online channels and work to understand the behaviors and needs of their customer base.
