Author: Helen Thomas

The second week of April continued to see sluggish retail traffic. According to reports by Citi Research analyst Kate McShane and Cowen and Co. analyst John Kernan, total U.S. retail visits for the week ended April 16 declined 6.58 percent year over year. Total U.S. retail same-store traffic slid 8.75 percent year-over-year for the week while year-to-date retail visits are down 3.4 percent. In a report released this week, Cowen and Co. outline several factors contributing to the decline.

E-commerce and Mobile Growth

According to the Cowen report, holiday e-commerce sales increased about 14%, while mobile currently captures 61% of consumers’ time spent shopping online. The increased competition from e-commerce and the pressure to maintain brick-and-mortar locations contributed to several large retailers filing for bankruptcy in recent months.

Lack of Trends

Retailers continue to be plagued by what Cowen and Co. termed “product malaise”. Either brands and retailers are not creating /offering enough fresh and exciting product to compel consumers to spend, or consumers simply aren’t as interested in purchasing “stuff” these days.

Election Year Politics

Retailers have notoriously blamed sluggish traffic and sales during an election year on the hype and uncertainty surrounding a presidential election. The campaigns and debates may draw attention away from retail shopping, plus high-end shoppers may scale down their spending before an election if they fear an increase in taxes when the next president takes office.

One tactic vendors and retailers can use to weather the storm is remaining focused on inventory and consumer buying trends using POS data and analytics. Research continues to show that when people find a product that they really like, they will buy it. With comprehensive data and reports readily available, vendors can make informed decisions that help ensure their customers can find and buy their product.

Source: footwearnews.com

Since it launched in 2005, Amazon has offered its annual Prime membership plan for $99. That breaks down to $8.25 a month. This week the company launched two new subscription plans: a monthly Prime membership plan for $10.99 a month and a monthly Prime Video membership plan for $8.99. Neither requires an annual commitment.

The monthly Prime membership will include all of the same benefits you receive with an annual Prime plan, including free two-day shipping. The Prime Video membership includes all of Prime’s video content, but does not include the free shipping. Industry observers are calling the new video membership a direct challenge to Netflix and Hulu. With the success of critical hits like Transparent and Mozart in the Jungle, Amazon has worked to expand its Prime Video service over the past year and plans to release several more original series in 2016.

Though Amazon does not typically release specific Prime data, it has been estimated that there are at least 46 million U.S. members and that Prime members spend up to twice as much as non-Prime members in the course of a year. The e-tail giant has recently been making a number of competitive maneuvers designed to expand the reach of Prime. These include bundling Prime as a monthly service for Sprint mobile subscribers and making its Prime Now same-day delivery option more accessible by adding it in 11 new markets. And while the two new plans will cost consumers more than the original annual plan, they offer a way to ease into a Prime membership without a major commitment.

Source: Chain Store Age and Wired.com

Although economists projected a 0.1% gain in retail spending in March, sales fell 0.3%. Of the 13 retail segments tracked, 9 of the 13 saw spending growth, but 3 categories dropped significantly enough to create the loss: autos, clothing and dining out. Sales decreased 0.9% at clothing chains, the biggest loss since October.

The labor market is robust, so the trend of less spending comes as a surprise. The value of sales is also being hurt by low prices, as retailers are offering discounts to clear unwanted merchandise in their warehouses. Sales at online retailers dropped 0.1%.

Of the 9 categories that saw increased spending, sporting goods and hobby stores rose 0.2% and electronics and appliance outlets rose 0.1%. Building materials and garden equipment stores increased the most, up 1.4%.

Source: Bloomberg, CNBC

For the first time in a decade, online sales spending on apparel and accessories surpassed computer hardware sales in 2015. For the year, clothing generated $51.5 billion in online sales, over the $51.1 billion spent on personal computers and tablets, which held the highest sales until now. In Q4 2015, apparel and accessories sold $17.2 billion.

Retailers’ efforts to make it easier to shop online and return with less risk is a big factor. Shoppers are getting more comfortable with the fact that if a pair of pants does not fit right or a blouse is a different color than they expected, it can be returned with little hassle and little to no cost. Online shopping of apparel and accessories also grew due to the fact that, unlike a laptop or tablet purchase, these products do not require a lot of research by the consumer before they buy, and are easy to buy with an image on a small mobile screen.  E-retail sales of the apparel and accessories industry is expected to continue to grow, with total online sales estimated to grow up to $434 billion by 2017.

Source: Internet Retailer

The upscale beauty business continues to shine. In 2015, prestige beauty – makeup, fragrances and skin care products that are not found typically at drug stores, saw a 7% increase in sales. Sephora and Ulta each posted phenomenal sales results. Estee Lauder raised its sales forecast as demand for their product line are growing. The makeup subcategory was the strongest, with a 13% increase last year.
In a “selfie-ready age” and YouTube and Pinterest an easy way to get product tutorials, makeup trends are growing the sales. Thicker eyebrows are trendy, so products such as brow-enhancing serum and eyebrow mousse are becoming more popular. In our health-conscious society, products with natural or clinical orientation, which are pricier, comprise the largest share of prestige skincare sales.

JC Penney plans to accelerate its Sephora Inside JC Penney locations, and Kohl’s has redesigned its beauty area on 900 of its stores. Macy’s acquired $210 million Bluemercury, and plans to grow to 150 locations in the next 2 years. Target acquired Sonia Kashuk brand, and L’Oreal is opening brick-and-mortar locations of its NYX Cosmetics concept.

Accelerated Analytics works with a large percentage of beauty brands, such as L’Oreal, Anastasia Beverly Hills, Estee Lauder, Parlux Fragrances and LVMH. Click here to see our full list of beauty vendors, who utilize Accelerated Analytics’ POS reporting tools to track sales and inventory levels at their retailers, such as Dillard’s, Macy’s, Sephora and Ulta.

Source: Washington Post

JDA Software Group recently conducted a new survey of more than 250 store managers and found that retailers are unprepared for the “perfect labor storm” that’s brewing. It’s fueled by new and shifting labor regulations and ever-expanding customer needs.
The Voice of the Store Associate Survey found that over half of respondents feel only somewhat prepared to staff appropriately to meet customer demands. They rely primarily on outdated forms of scheduling, like pen and paper, whiteboard or an Excel spreadsheet, and have yet to develop and deploy a modern workforce management (WFM) solution into their planning process.

Retail store managers face staffing challenges due to the increased demands that come with services such as Buy Online Return In Store and Buy Online Pick Up In Store. And, the lack of automated systems to predict staffing needs is resulting in increased labor costs. In addition, state and federal agencies are proposing and passing new labor laws that will have a direct effect of how retailers manage and pay employees.

“The research raises serious questions as to how much attention retailers give to managing their staff efficiently, predicting customer demand needs and complying with new or pending labor regulations,” said Tyler Owen, senior director, global solutions strategy, store operations, JDA Software.

Source: Chain Store Age

Swedish retailer H&M recently revealed its aggressive plans for both physical and digital growth in 2016. The company will open its 4000^th location when they add 425 stores this year. H&M also plans to expand its e-commerce efforts to Japan and 10 other markets.

“Our strong expansion continues, we are gaining market share and we are confident that we can grow at a fast pace both through stores and online, in existing as well as in new markets, for many years to come,” said H&M CEO Karl-Johan Persson. “The spring will bring many store openings, for example the opening of flagship stores in South Africa, Switzerland, Hungary and India. Since 2010 we have doubled the number of stores in the group, and this April we will pass another milestone when store number 4,000 opens.”

H&M has chosen Mall of India in New Delhi as the location of it’s 4000^th store.

The addition of 11 new e-commerce markets will give H&M omnichannel capabilities in 34 markets by the end of the year. Their new markets include Japan, Ireland, Croatia, Slovenia, Estonia, Latvia, Lithuania, Luxembourg, Greece, Canada and South Korea.

Source: Chain Store Age

According to its annual financial filing released on Wednesday, for the first time since the company went public 45 years ago, Walmart’s revenues declined from the year before.

With over 11,500 store in 28 countries worldwide, the retail giant brings in half a trillion dollars in sales each year. Is it possible that they’ve hit their growth limit? In February, Walmart lowered its annual net sales growth forecast to “relatively flat” from earlier guidance that called for an increase of as much as 4 percent.  Part of the 2015 sales drop is attributed to currency impacts and a decrease in fuel sales due to lower gas prices. Sales have also suffered from ongoing store closures, including its entire fleet of smaller, “Express” stores.

But, Walmart has acknowledged a shift in the way it runs the company. They’ve moved away from their previous focus on net sales and cutting operating expenses as a percentage of sales, and are now focused on making “strategic investments” to support the “long-term health of the company.”

What has been a mostly brick-and-mortar operation is morphing into one that meets the expectations and demands of consumers operating in an omni-channel marketplace. This can already be seen in its fast-growing app and its expanding grocery pick-up program.

While its first revenue decline should serve as a wake-up call, Walmart remains a massive retail force.

In a new survey conducted by Capital Business Credit, 75% of major retailers of soft goods such as clothing and accessories expect retail sales to grow by 4% or more for the spring and summer shopping season. If they do, they will outpace core GDP growth and provide a jolt to the economy.

According to the Global Retail Manufacturers and Importers Survey, a majority of those surveyed believe that 2016 will either be better (45.5%) or the same (38.6%) as 2015.

“While retail sales for January and February were lower than initially anticipated, this hasn’t seemed to deter retail suppliers’ confidence or business activity,” said Andrew Tananbaum, executive chairman, CBC. “In fact, nearly 90% of importers and suppliers are reporting reorders for the spring/summer shopping season.”

The reorders mean that the major retail chains and individual stores are optimistic. Retailers have become increasingly reticent to stock shelves if they don’t think products will sell according to Tananbaum.

The survey results found that over 3/4 of retailers have increased their orders or stayed the same; approximately half indicated that they have increased their orders. And of those who increased their orders, 1/3 ordered 7% to 10% more, while almost 30% said that orders increased by more than 10%.

Impact of the Chinese Yuan

With so many U.S. retail goods produced in China, the devaluation of the yuan has been an important factor for importers and retailers to increase profitability while keeping prices low. Half of survey respondents are considering increasing their Chinese production due to the strong dollar vs. the yuan.

Just over a third (37%) believe that margins may increase due to the lower cost to produce goods in China, but the majority (56.7%) do not think this will translate into lower consumer prices.

“While the overall recovery from the great recession of 2008 has been sluggish, the low costs of goods produced in China has allowed the U.S. consumer to stretch their spending dollars and allowed retailers to keep costs down,” Tananbaum concluded. “In our opinion, this is the first time since the recession that manufacturers, importers and other participants in the retail goods supply chain will have the opportunity to recover some of the margins they lost over the past decade.

Source: Retailing Today

As the first quarter of the year comes to a close, consumer spending stayed soft, rising just 0.1% for the third consecutive month. Incomes have been rising faster than that rate, indicating that Americans seem to be saving rather than spending. Gross Domestic Product (GDP) growth also slowed. Consumer spending generates more than 2/3 of total US economic output. Economists are concerned but a recession is not being indicated yet since the markets stabilized and the job market appears to be on track.

On the home sales front, there is more optimistic news. Pending home sales jumped 3.5% in February, the highest level in 7 months. Pending sales offer insights into future sales activity. The Realtors’ is forecasting 5.4 million existing-home sales this year, an increase of 2.4% from 2015. The housing market in 2015 was the strongest since before the recession and 2016 seems stronger yet.

Source: Wall St. Journal