2016 WAS A GREAT YEAR FOR DIY RETAIL

The holiday season is upon us, and how DIY retail will fare remains to be seen, but 2016 by most accounts has been a great year for DIY retail. The North American Retail Hardware Association (NRHA) is estimating industry growth for 2016 to end at 5.8%. The Home Improvement Research Institute (HIRI) is estimating a little higher, at 6%. The US Census Bureau reports home improvement industry sales through September at 6.7% growth over 2015.

Building materials and home improvement retail sales are 3 to 1 higher than overall retail sales increases for this year.

What has led to the success, and which areas in the DIY space have seen the best results?

Most economists agree that the renewed housing market seen in 2016 will continue into 2017. Add to that higher consumer confidence rates, multi-family housing construction has led to higher sales at home centers and lumber dealers. Remodeling projects and big-ticket purchases are stronger. Big ticket items, such as appliances, have seen the biggest sales uptick in the segment.

Accelerated Analytics DIY customers, using their retailer POS data to analyze sales and inventory, are experiencing the same trends. Across the Accelerated Analytics customer index, June and July showed poor results, followed by an improving August and strong September. 20% of Accelerated Analytics customers’ sales tickets are big ticket items, over $900 per sale. These items were identified as appliances and other expensive items, along with supporting/supplemental products.

The NHRA is predicting 2017 sales to continue this trend and that home improvement product sales should continue to outpace overall retail sales in 2017, anticipating DIY industry growth in the range of 5%.

For more industry stats and observations, download the Accelerated Analytics Retail Industry Briefing Book, which is a monthly publication of key retail industry trends, published to over 7,000 subscribers per month.

Sources: Accelerated Analytics, Hardwareretailing.com

HOLIDAY SHOPPING IS HERE …..ARE CONSUMERS WAITING UNTIL AFTER ELECTION RESULTS?

The National Retail Federation (NRF) conducted a survey last week, and found that more than 25% of shoppers say the election will affect their spending.  43% of consumers also state they are being more cautious with their spending because of election uncertainty.

Retailers are seeing this effect and are making adjustments. Target and Wal-Mart are adjusting their holiday season marketing ahead of November 8.

In addition, retailers are challenged to get their marketing messages out amid all of the election noise. “Everywhere you turn — whether you’re picking up a newspaper or watching television — political advertisements are taking up ad space that retailers typically use to get holiday shopping on the minds of consumers across the country,” NRF President and CEO Matthew Shay said.

Once November 9 rolls around, the NRF predicts the holiday shopping season will kick up. The NRF is still predicting a 3.6% increase in retail spending in November and December, which would make 2016 the most successful holiday shopping season in years. This forecast is in alignment with other predictions from Deloitte, RetailNext and Kantar retail, reports CNBC. This spike is expected regardless of who wins the presidency.

Source: WSJ, NRF, CNBC

FALL IS HERE…WILL ECONOMIC FACTORS RISE?

Economic indicators for August dropped, but 2016 overall is still growing.

Home Sales: Existing-home sales dropped .9% in August, marking the second month in a row of decline. However, year-over-year sales are up .8% over last year. While new home sales have been steadily rising, existing-home sales make up 90% of the home sale market. The National Association of Retailers reports that with the housing market in 2016 being the strongest sector of the economy over the past two years, the market may be a “victim of its own success”. Sales early this summer reached the highest levels since 2007, which has led to an increase in prices and a shortage of inventory. The average home price is $240,200, up 5.1% from 2015. The NAR feels an increase in home building would solve the issue. A Commerce Department report this week indicated building permits for single-family homes, the largest segment of the housing market, increased in August.

Manufacturing: The Conference Board reported its leading economic index, weighing 10 different economic indicators, dropped .2% in August. The decline in attributed to the average workweek of production workers and the amount of new orders. However, in the six-month period ending in August, the index increased .9% to an annual rate of 1.8%, which is in line with slow growth reported in gross domestic products. It is forecasted to grow at a 3% pace.

Retail Sales: US retail sales were up 1.9% in August, which was down from 2.4% in July. Retail sales had shown strong gains in the spring but has slowed through the summer months. Sales at department stores fell .6% and general merchandise store sales were flat. Building and garden equipment store sales dropped 1.4%. Retail sales are expected to be on the rise, with Halloween sales expected to boom and the 2016 holiday outlook expected to be positive, especially in e-commerce sales.

Sources: Wall St. Journal, Market Watch

WILL RETAILER DISCOUNTING HARM BRAND VALUE?

In an effort to get out of this year’s retail doldrums, department store retailers have been reducing prices on fashion brands they typically do not run promotions on. Promotions reached an all-time high in the last quarter, and in July over 2,000 emails advertising specials were sent to shoppers across the US. Some prices in May, June and July were reduced as much as 80%.

Luxury brands most heavily discounted included Michael Kors, Ralph Lauren and Eileen Fisher. Michael Kors is trying to rectify the situation by ending all coupons and friends-and-family sales at department stores. Ralph Lauren is reducing excess inventory. The brands hold the power with the ability to push sales in their own stores and online web sites.

How much are department stores discounting? Saks is leading with an average discount of 60%. Neiman Marcus’s average is around 50% and Bloomingdale’s and Nordstrom are averaging 40% discounts. 

With massive discounting, consumers will expect these luxury brands to be available at the lower price points, bringing down the value of the brand.

Source: Bloomberg Pursuits, Chain Store Age

BACK TO SCHOOL AND COLLEGE SALES HELP RETAIL SUMMER SLUMP

Back to School sales helped raise retail sales by .3% over the previous week and 2.5% over one year ago, following a four-week decline in June into July. Expectations are that Back to School sales will rise another 2.5% from July through September, which will be a successful repeat of the 2015 season.

Discounters and wholesale clubs were the strongest contributors to the rise in sales last week, with focus on electronics, clothing, shoes and books. Back to School season is highly promotional as retailers clear inventory for the upcoming holiday season. The National Retail Federation expects total spending to reach $75.8 billion, up from $68 billion in 2015. 60.5% of consumers plan to shop in discount stores, followed by 59.6% shopping in department stores. This rising trend over 2015 is significant, as 2015 was a drop from 2014’s splurge year by consumers in the Back to School/Back to College season.

Source: WWD.com, NRF

HOME IMPROVEMENT SPENDING EXPECTED TO REACH $321 BILLION BY MID-2017

After the housing crash of 2006, the US home remodeling market saw its worst downturn in history. Growth in home improvement spending has grown on average about 4.9% since then. Now, with home equity back and home prices on the rise, people are putting their cash to work to remodel and repair their homes.

Growth is expected to reach 8% by the start of 2017 and annual spending should reach an estimated $321 billion by the middle of next year, according to a new report from Harvard’s Joint Center for Housing. Kitchen and bath remodels are popular, along with high-yielding investments such as replacing insulation. Many are choosing to do multi-room remodels at the same time, up 67% from a year ago.

Growth in home remodeling is sure to boost sales for retailers such as The Home Depot, Lowe’s and Sherwin Williams.

Vendors who want better insights into their sales and inventory at their DIY retailers can CLICK HERE to learn more about our POS reporting solutions. 

Source: CNBC

TAKEAWAYS FROM ACCELERATED ANALYTICS’ GS1 CONNECT 2016 SESSION: ‘The Importance and Value of Data Sharing – Using Point-of-Sale Data to Deliver Outstanding Customer Experiences’

I had the opportunity to lead this session last week and came back with some takeaways that I wanted to share, as I feel they are reflective of the state of retail today and how retailers and vendors are using point-of-sale data to manage their business in this time of OMNI-channel, customer-experience driven retail.

Customers want a single-vision of brands and be able to have a consistent, complete and winning experience every time they shop, in whatever channel they shop in. To ensure products are available when and where the customer shops, retailers need real-time inventory visibility, a seamless order management system and the ability to deliver. Retailers and brands realize they need to work together to have both a single view of the customer and a single view of their data in order to be successful.

Some interesting, yet not surprising, statistics were gathered from the retailers and vendors represented in the room. When asked about managing their POS data week to week, 66% were using POS data that was not provided via an EDI 852 file, eliminating their ability to automate the collection and processing of the data electronically, and instead having to work with multiple sources and formats of data. This process of data management and then trying to create usable reports to have meaningful partnership conversations between retailer and vendor is extremely time consuming: 83% of the retailers in the room spend 11-50+ hours per week managing and processing their POS data. More staggering was 95% of the vendors in the session were spending 11-50+ hours per week: 30% spending 11-20 hours, 40% spending 25-50 hours and 25% over 50 hours per week!

The good news is over half of the attendees in the room felt they are getting better at managing and using POS data each week, but 30% still admit to ‘Barely Using’ their POS data. Recognizing that heavy resources are needed to use POS data, especially on the vendor side, is making vendors ask, “Do we build an in-house solution to manage this, or outsource it?” CLICK HERE for an infographic detailing the pros and cons of each, and the differences in resource and financial investment.

Based on the time and effort being made by most of those represented, it is clear that POS data sharing is important for effective collaboration between retailers and vendors to “get it right for the customer”. POS data can be used to not just track units sold overall, but can give product/store level details on out-of-stocks, weeks of supply, sell thru %, average sales, geographic trends, inventory investment and lost sales opportunities. CLICK HERE for our industry sell thru % guidelines infographic.

We need to do everything we can to exceed our customers’ expectations and deliver an outstanding experience for them when they come across our brand. Sharing POS data and then using it to partner together to analyze it will help shape the customers’ experiences and give us inventory visibility and fulfillment across channels to meet customer expectations.

Want to learn more? Contact Jennifer@AcceleratedAnalytics.com to start a conversation. CLICK HERE to download whitepapers on analyzing POS data like a pro.

- Jennifer Freyer, Director of Sales and Marketing, Accelerated Analytics

US ECONOMY STARTS 2016 SLOW YET STEADY AS CONSUMER SPENDING GOES UP IN JANUARY

Consumer spending grew in January, showing an improvement in retail sales and home purchases. On Friday, the Commerce Department reported personal spending rose 0.5% in January from the prior month. Americans’ pretax earnings from salaries and investments increased at about the same pace. US consumer confidence dropped slightly in January but recovered slightly in February, a sign of slower but steady economic growth.

Reports Friday also revealed that gross domestic product advanced at 1%, higher than the estimate of 0.7%. Inflation still runs below the Federal Reserve’s 2% inflation target.

Improvement in overall economic growth for the quarter ending January 30 was mainly due to the fact that companies pulled back on inventory less than originally expected. Economists have cautioned that first quarter growth may be slow as companies take longer to work through their well-replenished stock.

Source: The Wall St. Journal

NORDSTOM IS RANKED FAVORITE RETAILER IN RECENT SURVEY

A survey of over 5,700 consumers found that Nordstrom ranked first among retailers in customer satisfaction. It specifically ranked highest scores for atmosphere, checkout speed and finding the correct size/product the customer was looking for. One in five customers surveyed indicated they were dissatisfied in general with their fashion retail experience across all retailers. 40% of these customers indicated that the sales experience was very important to them, and that less than half of them were approached by a sales associate, which was key to their satisfaction. Nordstrom’s sales associates assisted customers the most and received the highest satisfaction scores.

Coming in behind Nordstrom were Marshalls, H&M, Ross, Kohl’s and Macy’s.

With merchandise selection and ease of finding items and size selection the top of customers’ needs, retailers and vendors recognize the importance of partnering to share point of sale and inventory data in order to optimize store assortments. Many vendors, such as Brahmin Leather, Anastasia Beaute and The Sak, utilize Accelerated Analytics to monitor and act on inventory levels and customer buying patterns in Nordstrom and other retailers to maximize their effectiveness in this area.

Source: Chain Store Age

US CONSUMER SPENDING IN SECOND QUARTER INCREASES AND MAY HELP THIRD QUARTER

US economic growth in second quarter 2015 saw a 2.3% increase in gross domestic product over first quarter. This gain was boosted by 2.9% growth in consumer spending.  Also, consumer personal savings rate went down to 4/8% from 5.2%, showing that consumers are starting to open their wallets and start spending again. 

Business investment for the period contracted and inventories remained flat. However, consumers and transportation companies are benefitting from lower oil prices. A growth in consumer spending in the third quarter will get more product flowing through supply chains.

Source: Wall Street Journal

JUNE CONSUMER SPENDING REPORT SHOWS OVERALL DECREASE BUT HOME IMPROVEMENT SPENDING IS STRONG

The US Consumer Spending Index increased 0.4 points in June. The percentage of consumers who rate the economy as excellent or good has continued to increase each month, at 30.9%, though is much lower than the 68% who felt the economy is fair or poor. When asked if personal finances were getting better or worse, 30.7% answered better, 33.1% answered worse and 35.2% answered the same.

The Retail Spending Index decreased 0.5 points in June. Expected spending for July slightly decreased in every category except discretionary personal entertainment expenses, which increased to 14.9% in June versus 13.7% in May. The category with the largest percentage of expected spending was household improvements at 22.9%. Expectations are that spending next month will remain about the same as 51.3% expect to spend the same. However, 28.2% say they will spend more in July, the majority being adults with children.

Source: Chain Store Guide

US CONSUMER SPENDING INDEX DECREASES IN JUNE

The US Consumer Spending Index decreased by .4 points in June. Confidence in the economy was mixed, as 10.6% of males reported the economy as excellent, versus only 2.9% of females reporting the same. 33.5% of respondents viewed the economy as excellent or good, but 65.2% reporting it fair or poor. When asked about personal finances, 46.8% of those identified as white rated it excellent or good. Those identified as black felt their personal finances were getting better at 37.5% versus 30.2% in May. Republicans in June increased in number who believe the economy is getting better, up 22.7% versus 18.9% in May.

Source: Chain Store Guide           

MAY CONSUMER SENTIMENT INDEX FALLS TO 88.6

Data released Friday indicates consumers are more skeptical about the economy. May sentiment unexpectedly fell to 88.6, down from 95.9 in April and an 11-year high in January of 98.1.  Economists surveyed by the Wall Street Journal projected the May index would stand at 95.5.

"Confidence fell in early May as consumers became increasingly convinced that there would be no quick and robust rebound following the dismal (first) quarter" even if the underperformance was exaggerated by inadequate seasonal adjustments, said Richard Curtin, chief economist at Michigan's Survey of Consumers that compiles the sentiment index.

So far this year, consumers have not rushed to increase spending. Retail sales were flat in April. The one-year inflation expectations are now 2.9%, up from 2.6% in April. Consumers have chosen to save money or pay down debt.

Source: Fox Business.com

KOHL’S, DILLARD’S AND NORDSTROM’S REPORT ON Q1 RESULTS – NORDSTROM REPORTS HIGH LOYALTY PROGRAM SUCCESS

Kohl’s, Dillard’s and Nordstrom’s released Q1 sales results yesterday, on the heels of announcements of Q1 losses from JC Penney and Macy’s.

Despite launching a loyalty program and expanding advertising, Kohl’s reported weak consumer spending, but did report a gain. Kohl’s reported a profit of $127 million, up slightly from $125 million a year earlier. Sales grew 1.3% to $4.2 billion. Kohl’s operated 1,164 stores this year versus 1,160 last year. Kevin Mansell, Kohl's chairman, chief executive officer and president, said: "Sales were modestly below our original expectations for the quarter, but accelerated in the March/April combined period after a weak February. We are very pleased with our earnings results, with a more balanced promotional calendar driving merchandise margin combined with strong expense control."

Dillard’s reported Q1 sales at $109.6 million compared to $111.7 million prior year. Same store sales decreased 1%. Net sales were $1.574 billion, up 1.5% from last year. Sales were strongest in junior’s and children’s apparel, followed by shoes and ladies’ apparel. Sales were weak in the home and furniture category. The company noted that sales in Texas were below company average for Q1. "We are disappointed with our first quarter performance. Our 1% sales decline hampered our ability to leverage operating expenses and to drive net income growth," said Chief Executive William Dillard. "Although inventory is higher than we would like, we believe the levels are manageable."

Nordstrom’s also reported a drop in earnings for Q1. It reported a profit of $128 million, down from $140 million a year ago. However, Nordstrom.com and NordstromRack.com had a combined 70% increase in sales. Net sales increased 9.8% and same store sale increased 4%. Nordstrom’s loyalty program contributed greatly to its results. Members shopped 3 times more frequently and spend 4 times more on average than non-members. With 4.4 million members, sales from members increased 11% in the first quarter and represented 38% of sales.

Source: Retailing Today

HOME DEPOT APPOINTS ITS FIRST CHIEF INFORMATION SECURITY OFFICER

Home Depot Inc. has hired Jamil Farshchi as its first CISO. He will manage information security, data protection and vulnerability management, and will report to CIO, Matt Carey.

Mr. Farshchi was CISO at Time Warner Inc., where he created a federated, risk-based security program. Prior to that, he was vice president for global information security at Visa Inc.

This announcement comes months after the home improvement retailer confirmed its payment systems were breached, resulting in stolen email and credit card information at 2,200 US and Canadian stores.

 Source: The Wall Street Journal

CONSUMER SATISFACTION WITH RETAIL IS ON A DECLINE

The American Consumer Satisfaction Index (ACSI) reports that consumer satisfaction with retail is on the decline for the first time in four years.

The ACSI report states brick-and-mortar customer satisfaction fell flat or weakened, while Internet retail is up from last year. By category, overall satisfaction with department and discount stores stayed flat at 77, while the gap between best- and worst-ranked companies grew. Nordstrom was the top rated, gaining 4% to 86. They are followed by Dillard’s (81), Kohl’s (-1% to 80) and Macy’s (79). Walmart dropped 4% to 68 and is at the bottom of the category behind Target (+4% to 80), Meijer (78) and Sears (-5% to 73).

Among home improvement chains, Lowe’s rated best at 81, while Home Depot falls to the category’s bottom dropping 4% to 76.

Amazon remains at the top of the Internet sector, at 86. Netflix improved for the third straight year gaining 3% to 81. Overstock and eBay both dropped to 77 and 79, respectively.

The ACSI is a national economic indicator of customer evaluations of the quality of products and services available to household consumers in the US. The ACSI uses data from 70,000 customers annually for measuring satisfaction with more than 230 companies in 47 industries.

Resource: Retailing Today

SLUGGISH US CONSUMER SPENDING START TO 2015

January US consumer spending barely rose .1 percent, despite cheaper gasoline and a buoyant labor market. Economists are speculating that consumers were using their extra income to pay down debt and boost savings. This was below Wall Street’s expectations for a .4 percent increase.

"Should we be worried about the weakness of underlying sales over the past two months? Possibly," said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

"But all the conditions are in place for a period of very strong consumption growth. We still expect to see that strength come through in the retail sales data soon."

The economy has added more than a million jobs in the past three months and the number of those seeking jobs hit its lowest level since 2007 in December.

Resource: Reuters

Consumer Spending Keeps Leading The U.S. Economy In Fourth Quarter

January 30, 2015

The U.S. Bureau of Economic Analysis today reported 2.6 percent annualized growth in real Gross Domestic Product for the fourth quarter of 2014, which is a little below consensus, but closer to the long-term trend growth rate of the economy.  The long-term trend is about 2.0 percent.

The resiliency of consumer spending shouldn't be surprising as it is fundamentally supported by strong job growth, falling oil prices and relatively optimistic consumers, as suggested by The Conference Board Consumer Confidence Index released earlier this week.  The fundamental factors supporting spending are the strongest they've been in this expansion.

Investment in equipment dropped by 1.9 percent, mostly due to weakness in investment in industrial and transportation equipment, which is probably related to investment cuts in the energy sector.

The current pace of economic growth is likely to sustain strong job growth in the coming months and further reduce the unemployment rate.  The Employment Cost Index, released today as well, showed ongoing acceleration in wage growth, with wages in the private sector moving up to 2.3 percent year on year.  Further acceleration is to be expected.  The acceleration in wage growth increases the likelihood of an increase in the Fed interest rate by mid-2015.

Despite the current strength in economic activity, the downward pressure on profits, the strong dollar, and the weakening global economy are likely to partly offset the strength in consumer spending.  We do not see further acceleration in GDP growth as a likely scenario.  Moving forward, we expect the U.S. economy to grow at about a 2.5 percent rate in the coming quarters.

Source: The Conference Board

The Conference Board Consumer Confidence Index Increased Sharply

January 27, 2015

The Conference Board Consumer Confidence Index, which had increased in December, rose sharply in January.  The Index now stands at 102.9, up from 93.1 in December.  The Present Situation Index rose to 112.6 from 99.9, while the Expectations Index increased to 96.4 from 88.5 in December.

Lynn Franco, Director of Economic Indicators at The Conference Board, said: "Consumer confidence rose sharply in January, and is now at its highest level since August 2007 (Index 105.6).  A more positive assessment of current business and labor market conditions contributed to the improvement in consumers' view of the present situation.  Consumers also expressed a considerably higher degree of optimism regarding the short-term outlook for the economy and labor market, as well as their earnings."

Consumers' assessment of present-day conditions was considerably more favorable in January than in December.  Those saying business conditions are "good" increased from 24.7 percent to 28.1 percent, while those claiming business conditions are "bad" decreased from 18.9 percent to 16.8 percent.  Consumers were also much more positive in their assessment of the job market.  Those stating Jobs are "plentiful" increased from 17.2 percent to 20.5 percent.  Those claiming jobs are "hard to get" decreased from 27.3 percent to 25.7 percent.

Consumers' optimism about the short-term outlook improved in January.  The percentage of consumers expecting business conditions to improve over the next six months rose from 17.8 percent to 18.4 percent, while those expecting business conditions to worsen declined from 9.9 percent to 7.7 percent.

Consumers' outlook for the labor market was also more optimistic.  Those anticipating more jobs in the months ahead increased from 14.6 percent to 16.7 percent, while those anticipating fewer jobs declined from 16.5 percent to 15.0 percent.  The proportion of consumers expecting growth in their incomes improved from 16.2 percent to 20.0 percent.  However, the proportion expecting a decrease increased marginally, from 10.2 percent to 11.3 percent.

Source: The Conference Board

The Conference Board Consumer Confidence Index Bounces Back

December 30, 2014

The Conference Board Consumer Confidence Index, which had declined in November, improved in December.  The Index now stands at 92.6, up from 91.0 in November.  The Present Situation Index rose to 98.6 from 93.7, while the Expectations Index decreased to 88.5 from 89.3 in November.

Says Lynn Franco, Director of Economic Indicators at The Conference Board, "Consumer confidence rebounded modestly in December, propelled by a considerably more favorable assessment of current economic and labor market conditions.  As a result, the Present Situation Index is now at its highest level since February 2008.  Consumers were moderately less optimistic about the short-term outlook in December, but even so, they are more confident at year-end than they were at the beginning of the year."

Consumers' appraisal of current conditions was considerably more favorable in December.  Those saying business conditions are "good" was unchanged at 24.8 percent, while those claiming business conditions are "bad" decreased from 21.8 percent to 19.6 percent.  Consumers were also more positive in their assessment of the job market, with the proportion stating jobs are "plentiful" increasing from 16.2 percent to 17.1 percent, and those claiming jobs are "hard to get" decreasing from 28.7 percent to 27.7 percent.

Consumers' optimism about the short-term outlook eased moderately in December.  The percentage of consumers expecting business conditions to improve over the next six months edged down from 18.3 percent to 18.0 percent, but those expecting business conditions to worsen declined slightly from 10.4 percent to 10.1 percent.  Consumers' outlook for the labor market was marginally less optimistic.  Those anticipating fewer jobs rose from 16.1 percent to 16.9 percent.  The proportion of consumers expecting growth in their incomes declined moderately from 16.9 percent to 16.4 percent; however the proportion expecting a decrease also declined, from 11.0 percent to 10.0 percent.

Source: The Conference Board