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

CANADIAN CLOTHING SALES ARE ON THE RISE

The National Retail Federation (NRF) reported today that Canadians are spending more on clothing, footwear and accessories. Statistics Canada released a report that total retail sales in the clothing segment totaled $41.9 billion in 2015, a 38% increase from a decade ago.

During that decade, many retailers exited the Canadian retail market, such as Maxx Canada and Aeropostale. Stores still in the market that primarily sell clothing and accessories made up for 67% of the sales. Retailers of sporting goods, books and music saw their clothing business increase by 50%.

The Statistics Canada report noted that although many retailers closed, most were replaced by higher-end stores. Women’s clothing and accessories totaled $17 billion of the $42 billion, while men’s clothing and accessories were at $9.4 billion. Footwear was right behind at $7.1 billion and luggage and jewelry had $4.4 billion in sales.

Source: NRF Smartbrief, CTV News

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

US BEAUTY MARKET EXPECTED TO GROW TO $90 BILLION IN 2020, AND ACCELERATED ANALYTICS COSMETICS BRANDS ARE IN THE NEWS!

Today’s $80 billion US beauty market will continue to grow according to a report by Euromonitor International. This growth rate will mean the beauty market will grow by 45% in 10 years. In 2015, the premium beauty category grew 7%, with premium foundation sales increasing 14.2%, compared to just 3% the prior year. Consumers have been shifting to premium products, looking for high quality products. Many luxury beauty brands who use Accelerated Analytics POS reporting to optimize inventory levels, track promotions and drive sales are in the news with big headlines this week, such as Parlux Fragrances, Shiseido, Inter Parfums, Estee Lauder, Elizabeth Arden, Coty and L’Oreal. Click Here to learn more about our solutions for beauty brands.

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

FOURTH OF JULY SALES KICK INTO GEAR: WHAT WILL THE BEST DEALS BE?

School just got out, and everyone is gearing up for the big Independence Day summer holiday. But retailers are already thinking about Back to School, wanting to clear out summer inventory to make way for Back to School sales that will start right after July 4. So where will the biggest savings be, and on what products?

The best deals will be on summer items such as swim and beach wear. Also, as trendy teen and youth apparel sales have suffered in the past few months, these retailers are offering extreme deals for the 4^th of July. The holiday is expected to shatter travel records due to lower gas prices. Also, as consumers spend more on experiences than on merchandise, retailers are promoting items shoppers need to have those road trips and experiences. The holiday weekend will be a great opportunity to stock up on active wear, camping gear and outdoor gear.

Wait until Back to School sales, after the holiday, for denim and electronics, when these items will have deeper discounts. Popular beauty products are not expected to be discounted, as this category is doing well and are high-margin goods for the retailers.

Source: Forbes.com 

ACE HARDWARE RANKS #1 IN CUSTOMER SATISFACTION FOR THE 10th YEAR IN A ROW

The J.D. Power 2016 Home Improvement Retailer Satisfaction Survey awarded Ace Hardware top ranking for their 10^th straight year. The study surveys 2,995 customers who purchased home improvement-related products from a home improvement retailer in the last 12 months, and was conducted in January and February 2016.

On a 1,000 point scale, Ace Hardware scored 810 in overall customer satisfaction, followed by Menard’s with a score of 803. Lowe’s placed 3^rd at 799. The overall average across retailers was 795, up from 788 a year ago. The Home Depot was just at the average with 794. The study found that average drops significantly when an initial greeting in the store takes longer than 2 minutes. Customers also want the retailer to provide advice, and be able to answer their questions effectively in the store. "The retailer's staff is most critical to differentiating the experience provided to customers, especially when it comes to the timeliness of greeting customers, answering their questions or providing advice," said Greg Truex, senior director of the at-home practice at J.D. Power. "Retailers that train their employees to engage with customers proactively and assist them are more likely to provide them with a satisfying experience during these moments of truth."

Ace scored 855 in staff and service compared to 811 average.

According to the Home Improvement Research Institute, home improvement consumer spend is on the rise, with an expected 4% increase this year to $332 billion.

Source: Chain Store Age, JD Power.com 

CONGRATULATIONS 2016 GRADUATES! GRAD GIFT SPEND HIGHEST IN 10 YEARS!

The National Retail Federation (NRF) reports that 2016 graduation spending will reach a 10-year high this year, with spending expected to reach $5.4 billion. Americans celebrating high school and college graduations give special gifts, and retailers are offering a lot of options for the best gifts possible. Retailers will need to keep graduation gift items up front and in stock, and advertise locally for shoppers who look online before going shopping.

NRF’s 2016 Graduation Spending Survey revealed the average person buying graduation gifts will spend $106.45, up 3.9% from last year. Each individual graduate should not get too excited, though – the average shopper is buying for 2 graduates this year, so the spend is higher but spread out among more recipients.

Not helping retailers is the fact that cash is the most popular gift, given by 56%. Greeting cards, with the cash inside, will make up 39% of spend. This is followed by gift cards at 31%, clothing at 14% and electronics at 11%.

While the amount of spend averages $106.45, the age group of the gift giver makes a difference. Spending by those aged 45-54 will average $120.74, compared with $78.08 from those 18-24.

Source: NRF.com 

WILL IT BE A HAPPY MOTHER’S DAY FOR RETAIL? WILL IT TOP 2015 RECORD-BREAKING TOTALS?

In 2015, 84.2% of American celebrated Mother’s Day, spending an average of $173 per person, totaling spend of $21.2 billion. This was the highest spending per person, up from $163 in 2014. Will 2016 be a strong year for retail Mother’s Day sales? Expectations are that Mother’s Day spending will be similar to last year’s record-breaking totals. 7,000 consumers surveyed by the NRF (National Retail Federation) said they will spend the most on jewelry, followed by outings (lunch/dinner/brunch), flowers and gift cards.

Department and Specialty stores had the highest retail traffic in Mother’s Day sales last year, followed closely by online sales and discount stores:

Source: Fundivo, MarketWatch

RETAIL SALES FALL UNEXPECTEDLY IN MARCH

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

2015 ONLINE RETAIL SALES GREW IN SURPRISING CATEGORY

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

NRF SAYS CONSUMERS PLANNING TO SPRING INTO RETAIL SPENDING ON ST. PATTY’S DAY AND EASTER

With two big spring holidays upon us in March, the National Retail Federation reports that consumer spending appears to be on the rise. The NRF conducted two consumer surveys that indicate that trend is coming. According to its annual St. Patrick’s Day Spending Survey, over 125 million Americans will spend $4.4 billion on today’s holiday. 56.5% of those celebrating will purchase food and beverages, 28% will buy apparel or accessories, 23.3% will buy decorations and 17.2% will buy candy.

According to the NRF Easter Spending Survey, consumers plan to shop at 13-year high levels. The holiday is expected to reach spending of $17.3 billion. Half of that spending will be on clothing, gifts and flowers. “Retailers are beginning one of their busiest times of year and are more than ready as consumers shop for Spring essentials, “NRF President and CEO Matthew Shay said.

58.4% of shoppers will head to discount stores, followed by 41.4% in department stores. Online shoppers grows to 21.4%, up from 18.8% last year.

Source: National Retail Federation

NRF SAYS MILLENNIALS WILL SAVE THEIR TAX REFUNDS INSTEAD OF SPLURGING ON RETAIL

Retailers have depended on American’s using their IRS tax refund checks to boost February and March sales. However, according to a survey conducted by the National Retail Federation (NRF), more than half of those expecting a refund are planning to save their money instead of spend it. This is the highest level since the NRF has begun conducting the survey.

Millennials, ages 18 to 24, show 57.3% planning to save and 27.4% planning to spend their refunds on everyday purchases like gas or groceries. In the 25 to 34 year old bracket, 52.3% plan to save and 45% plan to repay debt.

In addition to saving, 22.4% of Americans will save their refunds while 11.4% will plan a vacation. “Consumers are building their spending power and boosting their confidence as they set aside their checks from Uncle Sam,” NRF president and CEO Matthew Shay said. “Americans this year see refund season as a time to improve their financial health by using their refunds to get ahead on savings goals and plan for bigger purchases in the future. Money saved is money waiting to be spent.”

As refund checks start to get into Amercan’s hands, it will remain to be seen if this holds true for future retail spending and whether they will actually save the money or decide to shop instead.

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

BACK TO SCHOOL SHOPPING EXPECTED TO RISE THIS YEAR

A Consumer Pulse survey of parents of K-12 and college students found that 56% of respondents plan to spend more money per child this year on back-to-school supplies.

K-12 parents plan to spend an average of $873 per student, while parents of college students plan to spend more than $1,100 per student. 38% of parents intend to purchase technology products, on average spending $400 compared to $278 on apparel. Technology products are needed as student use of technology in the classroom increases, requiring parents to buy laptops, tablets and mobile phones.

61% of those surveyed said store sales and promotions will be the main determinant of when and where they will do their back-to-school shopping.  74% of parents said they prefer to shop at big box retailers or chains to get a better deal.

Online shopping and mobile shopping are increasing with parents. 50% of the parents had clicked on an online ad in the past 7 days and 48% had clicked on a mobile ad. Over 40% of parents stated they made a purchase within the past week based on a mobile or online ad.

Source: Retailing Today

HOME DEPOT IT INVESTMENTS IN OMNI CHANNEL FOCUSES ON CUSTOMER EXPERIENCE

The Home Depot discussed this week its IT investment and strategy that focuses on the customer buying experience. The company’s Common Order Management system, or COM, is the largest IT project in the history of The Home Depot.

COM is an inventory visibility platform that looks at millions of deliveries through small and large delivery trucks, direct fulfillment to DCs and in-store pick up transactions. COM will help identify the best fulfillment option for a customer, while allowing Home Depot to leverage its omni-channel options.

The focus on this area is based on the fact that 1) the retailer’s fastest growing ecommerce channel is buy-online, pick up in sore, 2) the average ticket for ecommerce transactions are considerably higher than physical in store transactions and 3) ecommerce chat and email are growing  in product information exchange.

“The IT investments we are making are really to optimize the whole supply chain offering,” said Home Depot Senior VP and President-online, Kevin Hofmann.

Source: Chain Store Age

LUXURY GOODS SALES ARE UP, BUT DESIGNER FLASH IS DOWN

Within the designer luxury brands market, some brands have seen increased sales while others showed decreases. While the overall market for luxury goods has grown steadily since the end of the recession, the trend for wealthy shoppers is to purchase their products in a subtle way, steering away from flashy logos.  Gucci sales were down 1.1% in 2014, Prada saw sales decrease 1.5%. Louis Vuitton/LVMH also saw sales slow in their fashion and leather goods division.

The current trend for luxury goods shoppers is to continue to purchase these goods, but show sophistication by not flaunting their wealth. Social media is also affecting the luxury brands market, as new items are becoming exposed quickly, desensitizing luxury goods shoppers to things that used to feel special to own. Smaller luxury brands like Yves Saint Laurent and Miu Miu saw 2014 gains of 27% and 4%, respectively. A professor at New York University, who teaches luxury marketing, stated, “These are brands that really control the supply, and therefore they manipulate the market and the desire for their products.”

Experts also say that high-end consumers are increasingly diverting their dollars to experiences, such as lavish vacations or extravagant dinners. To adjust to this, Louis Vuitton added a rooftop champagne bar to their Rodeo Drive store. Gucci and Prada have similar locations in Los Angeles and Las Vegas.

Source: Washington Post

RETAIL SALES DROP IN MAY

May 2015 showed a drop in retail sales by 7.6% versus May 2014. Driving the sales decline was a 9.8% decrease in store traffic and an 8.3% decrease in number of transactions.

Some metrics did show year-over-year improvement. Average transaction value rose 0.8% and sales per shopper increased 2.5%.

The highest day of selling in May was May 9, the Saturday before Mother’s Day. This day is consistently highest in sales, traffic and transaction figures. The lowest traffic and sales were at the end of the month, after the Memorial Day weekend, which was earlier on the calendar this year.

Source: Chain Store Age