Inside This Issue - News
Holiday sales take turn for better in ’10
January 10th, 2011
NEW YORK – The holiday selling season that ended two weeks ago was a particularly gratifying experience — for those retailers that sold food, catered to high-end shoppers or sold much of their merchandise online.
For the remainder of the retailing community — and particularly for America’s mass retailing segment — Christmas 2010, while acceptable, could not be classified as exceptional.
While sales at each of the three major mass retail trade classes surpassed the volume turned in a year ago — aided by a recovering economy, acceptable December weather in much of the country, and an additional shopping day between Thanksgiving Friday and Christmas Eve — most mass retailers were privately disappointed that the season was not as robust as forecasters had predicted — and department and specialty stores enjoyed.
Shoppers came late, bought selectively and resisted many of the frivolous gifts that had put the glow into past holiday selling seasons. Indeed, one of the brick-and-mortar stars of the season was food, an indication of the mind-set with which consumers approached the holiday season.
For the 29 days between November 26 and December 24, total sales for the discount store segment advanced by 5.1%, while same-store sales increased 2.8%. These were the strongest sales figures the segment had recorded since 2006. But they often fell short of internal projections.
Much the same could be said for chain drug store sales, which increased 5.4% (with a 3.4% same-store gain). While the performance was acceptable, it did not match the segment’s year-earlier results.
As for the nation’s grocery retailers, they had more to cheer about: A sales increase of 3.3% and a comp-store gain of 1.8%. Both numbers were the strongest the segment has registered in the past five years.
The factors that traditionally impact holiday sales were much in evidence. Treacherous patches of winter weather throughout parts of the nation, especially in the West, and a still-struggling middle class beset by near-record unemployment battled with a consumer determination to enjoy this holiday season, a more favorable economic climate for many Americans and favorable December weather for much of the country.
Unhappily for many in the mass retailing community, however, department and specialty stores were the principal beneficiaries of these economic, cultural and meteorological circumstances. By contrast, many working-class Americans, still burdened by economic hardships, restricted their Christmas shopping to what they deemed necessary.
An additional factor that hindered sales was the consumer habit, increasingly in evidence in recent years, of putting off purchases until the week before Christmas. This played havoc with inventories at some retailers, resulting in crowded back rooms and an inability to get good-selling items onto sales floors when they were most needed.
What sold best? As mentioned, food was a pleasant surprise, even for such nontraditional food retailers as Walmart and Target. Seasonal merchandise, such as trim-a-tree — where such accessories as gift wrap, ribbons and bows rebounded from a poor showing last year — and greeting cards sold briskly, with the latter enjoying a renaissance generated in part by the growing popularity of sending cards personalized by family photographs and messages. Toys proved a pleasant surprise, enjoying robust sales, as did beauty care products. However, many of the categories that anchored holiday sales last year — pet products, apparel, furniture and other home-related products — did not fare as well this year.
Electronics, surprisingly, proved disappointing in a mass retail setting, due in large part to unprecedented price competition from specialty retailers and the fact that mass retailers didn’t always offer the electronics consumers most wanted to buy.
In the end, though, mass retailers managed the holiday selling season more effectively than ever before, expanding store hours, remaining open late on Christmas Eve and, in some cases, into Christmas Day, and managing their customers and their inventories more professionally than they had in past years.
They were further aided by the fact that department and specialty stores did not always offer the pre-Christmas sales to the degree consumers had come to expect, with the result that, as the selling season unfolded, mass retailers became increasingly appealing options.
Finally, a word about online retailing, a segment that enjoyed its best year ever during the 2010 holiday selling season. That its success hurt brick-and-mortar companies can’t be denied. However, the bright side is that all retailers benefited from the growing popularity of online retailing, even those that traditionally make their living by welcoming consumers into their brick-and-mortar establishments. Moreover, as online retailing continues to grow, traditional retailers will certainly share in that growth.
On balance, then, while not the record-breaking season the media keeps trumpeting in its aftermath, Christmas 2010 was one that, given the economic backdrop against which it unfolded, mass retailing was reasonably happy to accept.