November sales results are out and there were lots of positive numbers. December comp sales announcements will start appearing the second week of January. But plenty of people have educated guesses on what happened.
Retailers used every opportunity to grab sales and certainly 2014 was the year of the Internet. With mall traffic down, big box retailers put mobile apps to use. Whether consumers were avoiding traffic or comparison shopping, they were looking at items online and potentially purchasing their selection right there. Or, if in-store pickup was available, savvy customers shopped online and let the retailers gather their items for them so they could go straight to the register when they arrived at the store. These are just a couple of ways retailers maximized multiple channel retailing and those who did it best are expecting nice results, including Macy’s, Nordstrom and Walmart. (What I have just described is omni-channel retail at its best, but if it is a new term for you, go to Wikipedia for a fuller description: http://en.wikipedia.org/wiki/Omni-channel_Retailing.)
Shipping was not the hot topic this year. Even though 13% of the holiday packages did not arrive in time for Christmas (a slight improvement over 2013), it wasn’t the shipping companies who let us down. Retailers themselves caused most of the issues by promising goods they didn’t have or by not selecting appropriate shipping methods. Luckily the weather cooperated so the delays were minimal, but those retailers who worked with their shipping partners fared better than the rest.
Analysts are predicting the holiday sales results to be as good as projected but there’s a catch: Margins are expected to take the hit. Thanks to Black Friday promotions starting November 1, post-Thanksgiving promotions exceeding 50% or more, and customers waiting until after Christmas to make clearance purchases, retailer’s margins are projected to be lower than desired. Branded performers will help pay the retailers’ bill but those who are heavily embedded with private labels will have to shoulder the promotional expenses on their own. Don’t expect the profits to be pretty.
What should we expect for 2015? There are three top retail themes:
1. High end consumer goods – Luxury products will continue to be important.
2. Value – Recession or not, consumers are trained to look for values.
3. Internet – They say Internet but it’s really “Omni-Channel Retailing”.
Another year has come and gone, so let’s use 2015 as an opportunity to get it right.
Cheers and Happy New Year!
Retail Information Systems offers Retail Planning and Business Solutions. If you need help with financial planning then contact our specialist, Toni Rumley, at ToniR@goretailpro.com.