Tuesday, December 29, 2009

Retailers Are Okay This Holiday Season

There is an article over at Advertising Age (click here) that discusses holiday sales this year, while mentioning J.Crew.
Retailers Get Some Good News on Early Holiday Sales Forecasts
But Comparisons Are Easy With Disastrous 2008; More Data Expected in January

By Natalie Zmuda
December 28, 2009

Early estimates from one analyst group indicate that retailers may have escaped a year of disastrous holiday sales -- not that besting 2008 is any huge feat.

MasterCard Advisors tentatively estimates retail sales increased 3.6% between Nov. 1 and Dec. 24. But there is still plenty of reason for caution; accounting for an extra shopping day this year over last year could drag that figure down between 2% and 4%, the group said.

The MasterCard Advisors figure is based on sales activity in the MasterCard payments network, as well as estimates for other payment forms. Sales figures utilizing data reported by retailers will not be available until Jan. 7, while numbers from the Department of Commerce will not be available until Jan. 14.

The National Retail Federation, meanwhile, is sticking by a lot less bullish forecast, a 1% decline for November and December, or $438 billion in 2009 holiday sales. Even so, that's a better performance than 2008, when holiday sales slid 3.4% to $442 billion compared to $458 billion for the same period in 2007. Forecasts for this year ranged from a 1% decrease in sales to a 1% increase in sales.

"Knowing how important the week [after Christmas] is, we think it's a bit premature to say how the holiday season has fared," said Kathy Grannis, a spokeswoman with the NRF. The industry group added that "we're still not seeing consumers splurge like we did two years ago."

MasterCard Advisors also reported positive growth in six out of 10 areas tracked between Nov. 1 and Dec. 24. E-commerce sales rose 15.5%, while sales since Black Friday were up 18%. Since Nov. 1, apparel sales declined 0.4%, electronics rose 5.9% and jewelry rose 5.6%, according to the group.

Patricia Edwards, a retail analyst and founder of Storehouse Partners, expressed surprise at some of the numbers reported by MasterCard, particularly the increase in jewelry, which saw steep double-digit declines a year ago. "January 7 is going to be very interesting to see the real numbers," she said.

Regardless, retailers should be given credit for better managing a tough holiday season with well-planned inventories and more strategic promotions. Margins and earnings will certainly be stronger than they were a year ago, as a result, said Ms. Edwards.

Tight inventories could present some issues for retailers in the important weeks after Christmas, however, when consumers are redeeming gift cards. Retail analyst Jennifer Black observed empty shelves at J.Crew stores after Christmas.
And Ms. Edwards noted an early shift to spring transitional goods in stores such as Chico's and J.Jill, as well as a lack of some holiday decorations even before Christmas.

"Inventories were so lean that people expecting to go in and get the wrapping paper and decorations for next year didn't find anything,"
she said. "So, how did you bring people in on Dec. 26 and Dec. 27? ... The market is supposed to be forecasting the future and everyone is getting euphoric about what just happened. I don't want to be a wet blanket, because this shows us the customer is not dead, however, they're not out of the hospital yet."
It's no surprise that retailers were limiting inventory levels this holiday season in response to last year's overabundance of product & merchandise. However, I wasn't expecting to see such lean inventories! I stopped by a Target (or "Tar-jay" as some like to say) store this morning and practically all the holiday merchandise was gone. (The amount left is what I expected to see after two weeks post-holiday, not three days post-holiday.)

As for J.Crew stores with "empty shelves", several JCAs confirmed this in various posts. They mentioned that their local J.Crew brick & mortar (B&M) stores had very few final sale items left. Although on a bright note, several JCAs have mentioned that this week (if not today), J.Crew is introducing its 2010 Resort Collection.

What are your thoughts on the article? Do you disagree or agree with any of the points made? Did you notice retailers carrying fewer items this year?


  1. The lean inventory is dissuading me from shopping altogether. It's not just J.Crew that has this issue as you mentioned Alexis. There is nothing more annoying than taunting me with a pretty item that isn't available anywhere in my size, despite being a recent release. Inventory management is the enemy of discretionary income.

  2. I agree with you roxy. I've almost stopped shopping. I'm pretty disappointed with low inventory at J. Crew and else where. I wish I had stocked up during last post Christmas sale.

    I've noticed other retailers with fewer stocks as things sell out pretty quickly.

  3. Usually a JC gift card burns a hole in my pocket, but here it is five days later and haven't spent it yet. Same old stuff, now on final sale so no returns if there is a fit or quality problem, and much not available in my size anyway. Not tempting me right now.

    Alexis, I share your observation about Target. I went in to pick up some basics as had been avoiding the store pre-Xmas, and not only did I see very little holiday stuff on sale, but I saw none of the typical promotions on things like shampoo, laundry detergent, etc.

  4. I'm definitely one with a couple of gift cards and nothing I want in my size. I don't think I'll be asking for gift cards next year.

  5. I went into Bloomies at 8:15am the day after Christmas and most of the Christmas stuff was gone. No wrapping paper whatsoever.

  6. The same here too, the inventories were really low for X-mas. I went into BR today and their Spring clothes look promising. They are coming out with a whole new jean line in 5 different styles, changing the fit etc. They also had a cute cardigan in wool-cotton that looks just like the Merino Microstripe pullover with the buttons on the sleeve. I think BR is going to be getting my money over JC this Spring.

  7. casual-crew did you receive the email from BR featuring their Martin skinny pant? I like the Martin pants and the skinny looks quite nice. I didn't like J.Crew's Minnie pant - it seemed to sag in several places - so I'll definitely give BR's Martin a try.

    Disappointed in the lack of J.Crew sale stock online. Money to spend, no great deals to be had.

  8. I'm with Hexicon and Baybaybay. I received a gift card as a gift but there's nothing I want to buy right now.

  9. I too received several gift cards, and while I normally use them immediately, I have no reason to right now.

    re: Target. Ahhh. I went to my local target on December 24th right before closing to stalk items that I thought would be 50% on December 26th. After arriving at Target 10 minutes after they opened on 12/26, I found that almost the entire holiday section was GONE.

    I asked a salesperson exactly what happened, and she let me know that Target puts away all "decent" selling Christmas merchandise after closing on December 24th. What I saw on December 26th were all the leftovers that would only sell at a percentage off. Everything else was neatly packed away, sent to storage and will be placed out on shelves next November.

    So much for getting good wrapping paper and cards!

  10. For those of you looking for deals on paper/ribbons/bows, my local IKEA had a nice selection for 50% off (already less expensive than average in my book)...and much of the paper could be used year-round!

    I don't mind the lean inventory as much - at least it shows that the retailers are watching the bottom line, paying attention to wastefulness/excess inventory. I've cut back myself, so I imagine others are doing the same...I just don't need that much -- stuff...

    The mall was hopping today though. And man, when/if LEGO goes public - I'm so buying! :)

  11. xoxo: I did not receive the email, I have to get on their mailing list. I have not been excited about BR in years until I saw their Resort collection yesterday.

  12. casual-crew the BR mailing list is pretty good. I signed up during the in-store promotion when sharing your email resulted in a % off your next purchase. I've received several generic promo codes that I share among friends and also some that are one-time use. Of course, they are specific to their Canadian stores, which is great.

    The BR emails aren't crazy frequent like some stores but like J.Crew they are sometimes just to feature new items and not a promo. Next time you are in the store ask if you can share your email and get a discount on a future purchase. The offer may still be available if you ask.


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