A Sweet Valentine's Story (for retailers)

According to the National Retail Foundation's 2011 Valentine's Day Consumer Intentions and Actions Survey, consumer spending will continue through Valentine's Day this year bringing the holiday total to an estimated $15.7 billion. Couples will not only be doting on each other, the average man spending twice as much as the average woman, but will also be generous with friends and co-workers in addition to Fido, Spot and Whiskers. 

With Valentine's Day two weeks away, will you have your heart or your cash (perhaps both) 

in your hand?

• Couples this year will spend an average of $68.98 on significant others or spouses, up from $63.43  last year
• The average man plans to spend $158.71 while the average woman plans to spend $75.79

• The average person will spend:
• $116.21 on traditional Valentine's Day merchandise up 11% over last year's $103
• $5.04 on pets up from $3.27 last year  

• Consumers will spend an average of:
• $6.30 on friends
• $4.97 on classmates and teachers
• $3.41 on co-workers

52.1% of consumers are planning to purchase greeting cards, the most popular gift option, while 17.7% of consumers are planning to purchase jewelry, up from 15.5% from last year

• Consumers are planning to spend on:
• Shiny, happy...ears, fingers and necks?
• $3.5 billion on jewelry up from an estimated $3.0 billion from last year
• $3.4 billion on dining out up from $3.3 billion last year
• $1.6 billion on clothing up from $1.5 billion last year

• Stop and smell spend money on the roses
• $1.7 billion on flowers
• $1.5 billion on candy
• $1.1 billion on greeting cards

• Where will consumers spend their heart-earned money?
• 36.6% discount stores
• 30.5% department stores
• 19.4% specialty stores
• 18.1% online

• Greeting Card Fun Facts
• According to the Greeting Card Association, as estimated one billion valentine cards are sent each year, making Valentine's Day the second largest card-sending holiday of the year (behind Christmas)
• Approximately 80% of all valentines are purchased by women
• In addition to the United States, Valentine's Day is celebrated in Canada, Mexico, the United Kingdom, France and Australia

• A Little History
• Valentine greetings were popular as far back as the Middle Ages, although written valentines didn't emerge until after 1400
• The oldest known Valentine card is on display at the British Museum
• The first commercial Valentine's Day greeting cards produced in the U.S. were created in the 1840's by Esther A. Howland, known as the Mother of the Valentine
• Howland produced handiwork with lace, ribbons and colorful pictures known as "scrap"

Image:Patchareeya99 / FreeDigitalPhotos.net/freedigitalphotos.net

Sources:
Love Is In the Air this Valentine's Day According to NRF, nrf.com, 1/27/11
About Greeting Cards - General Facts, greetingcard.org
Valentine's Day, history.com

Holiday Retail Darling 2.0 - Mobile Commerce

"In 2008 and 2009 , mobile started out as a science project. It's accelerated so fast that it's becoming more mission-critical for retailers to deliver a mobile experience in a professional way."  

- Dave Sikora, Digby

In our 2009 post-holiday blog we declared online shopping as the holiday retail darling of the holiday season. But this year there' s a new darling in town - it's that handy portable device we call a mobile phone. Mobile commerce, or m-commerce, made a significant contribution as the new tech trend for the holiday season as more shoppers were going online than ever before.

People used their phone just like their computers at home for online shopping: comparing prices, purchasing items and finding the nearest store location as well as inventory in stock locally.


Retailers hopped on board as they invested in m-commerce to prepare for the holidays. That's a smart move considering how m-commerce promotions encourage impulse buys, and knowing the exact location of shoppers lets merchants deliver coupons and offers to users when they're most likely to spend. Mobile apps like Foursquare  encourages consumers to "check in" and retailers took advantage of the information. They offered the ability to scan barcodes or get discounts on their mobile device while out shopping. With moves like that, retailers presented a seamless shopping experience online and offline.


M-commerce expected to triple this year, and double again next year; but US lags behind others

• m-commerce is expected to triple to $3 billion in the U.S. this year and reach $6 billion next year
• However, U.S. consumers are still behind foreign consumers in terms of purchasing with a mobile phone
• 7.9% of U.S. consumers have bought something with a phone vs.
• 32% of consumers in Taiwan have bought something with a phone (This tops the list of major industrialized countries (per IE Market Research Corp)
• About 13% of consumers in Finland have bought something with a phone (#1 European country)

M-commerce played a significant role so far in the 2010 holiday online shopping experience

• Almost 60% of mobile consumers expect to use their phones to help with shopping plans and holiday celebrations this season
• Nearly 4% of all Cyber Monday shoppers used smartphones and other devices to make their purchases
• According to research data from Google/OTX:
• 52% of U.S. smartphone users plan to use their phone to compare prices during the holiday shopping season
• 40% plan to use their phones to read product reviews
• According to the 2010 eholiday pre-holiday survey from National Retail Federation
• Shoppers using smartphones will account for at least $127 billion, or 28%, of the $447 billion the NRF predicts consumers will spend this holiday season 
• Over one quarter of consumers said they definitely planned to use their smartphone to research or make holiday purchases

Are you planning to ride the m-commerce wave this holiday season? You won't be alone!

Image: Carlos Porto/freedigitalphotos.net 

Sources:

7.9% of U.S. consumers bought item on smart phone, SFgate.com, 12/3/10

It's a holly, jolly (mobile) Christmas, shop.org, 12/2/10
Best Buy, Amazon.com Try to Reach Shoppers Through Their Phones, businessweek.com, 12/2/10
U.S. Online Sales on Cyber Monday Climbed 16%, ComScore Says, bloomberg.com, 12/1/10
Cyber Monday sales hit record $1B, bizjournals.com 12/1/10

Retailers Seeing Green on Black Friday Weekend

Several predictions for the 2010 Black Friday weekend came true! 

1. There were more shoppers in stores and visiting websites over this Black Friday weekend 
2. More money was spent than a year ago  
3. Shoppers purchased more fun gifts (jewelry) instead of practical gifts (coffee makers)  

But hold on! Black Friday 2010 weekend looked good, but consumers are still concerned with the economy, so retailers are urged to continue their low pricing and can't-pass-up offers.

"As retailers look ahead to the first few weeks of December, it will be important for them to keep momentum going with savings and incentives that holiday shoppers simply can't pass up."

Matthew Shay, NRF President and CEO

By The Numbers...

• 212 million shoppers visited stores and websites over Black Friday weekend, up from 195 million last year
• The average shopper this weekend spent $365.34, up fro last year's $343.31
• Total spending reached an estimated $45 billion
• The number of people who shop on Thanksgiving day, both online and in stores, has doubled over the past five years, from 10.3 million in 2005 to 22.3 million in 2010

Consumers clad in PJs visited stores earlier than ever

• The number of people who began their Black Friday shopping at midnight tripled this year from 3.3% last year to 9.5% in 201
• By 4 a.m. 24% of Black Friday shoppers were already in stores

Some purchasing highlights

• The number of people who purchased jewelry over the weekend rose from 11.7% last year to 14.3% this year
• Gift cards rose from 21.2% last year to 24.7% 
• Toys came back from 32.2% to 33.6%
• Books and electronics rose from 40.3 last year to 42.1%

Department stores saw increase in traffic
Both department stores (52% this year vs. 49.4% last year) and clothing stores (24.4% vs. 22.9%) saw an increase in traffic while the percentage of people who shopped at discounters declined 7.2% from 43.2% last year to 40.3% this year

Retailers paid more attention to online deals, and shoppers responded
The percentage of people who shopped online this weekend rose 15.2% from 28.5% last year to 33.6% this year

Image: Simon Howden/freedigitalphotos.net 

Sources
NRF: Black Friday Weekend Sees Bigger Crowds, $45 Billion in Spending, nrf.com, 11/28/10

"I'm Dreaming of a (cautious) Christmas"

While retailers experienced a decent back-to-school season this year, experts warn not to expect too much for the holiday season. Sales are predicted to be up, but experts say consumers will shop with caution and wait until the last minute to shop for the best deals.  They advise retailers to offer promotions, rewards and coupons to draw in consumers. Why? Consumers are expected to do even more comparison shopping and purchasing online than last year. Although the high unemployment rate (holding at 9.6%) continues to put a damper on retail sales, positive September sales for department stores and teen retailers (discount retailers struggled!) might give a glimmer of hope for the holiday retail season.

September sales soar...for some
September sales for many retailers show a light at the end of the recession tunnel, especially departments stores and teen retailers. Surprisingly, discount retailers did not fare as well.

Here are some highlights:
Teen retailers

• Abercrombie and Fitch posted an increase total comp store sales of 13% vs. an 18% decrease from last year
• American Eagle Outfitters, Inc. posted an increase in comp store sales of 4% compared to flat from the year before

Department stores

• Macy's same store sales increased 4.8% vs. a 2.3% drop from last year
• JC Penney Company, Inc. reported a 5.1% increase in comp store sales vs. a 1.4% decrease from last year
• Limited Brands comp store sales rose a whopping 12% vs. a 1.7% decrease from last year

Discount stores

• TJX Companies posted a 1% increase in consolidated comp store sales vs. a 7% increase from last year
• Kohl's reported only a 3% increase vs. a 5.5% increase for the same period last year
• Ross Stores, Inc. posted same store sales of 2% vs. an 8% increase from last year
• Although Walmart doesn't report monthly sales any more, they have posted five consecutive quarters of negative same store sales.

What does this shift foretell? Perhaps just having low prices isn't enough - retailers may need to show they have the right merchandise to bring consumers into their store.

Overall Holiday Sales Predictions from the Experts
Deloitte predicts that retailers can expect about a 2% rise in sales, beating last year's 1% increase, and most of the boost will come from non-store sales such as catalog, interactive television and online. In fact, Deloitte expects a 15% jump in non-store sales, nearly two-thirds of which will be online and the rest of which will come through catalogs and television.

"Online activity may also influence in-store shopping this holiday season, as social networks and mobile applications are playing a more prominent role in the shopping process."  

-Alison Paul, Deloitte Retails Sector Vice Chairman

Kantar Retail calls for fourth quarter retail sales to rise 2.5% better than the 0.5% gain from the same period a year ago. Although they predict the holidays will be a soft spot, Kantar says it's not an indication of a double-dip recession. The slow-rising economy, though, will keep consumers in a thrifty mode, which means consumers will be looking for discounts and deals, as well as shopping at dollar stores and small-format value retailers. Kantar found that one-third of consumers plan to comparison shop online before heading to the stores, and that one in every 20 customers will bypass stores completely.


National Retail Federation expects holiday sales to rise 2.3% over last year and that sales will reach $447.1 billion, the biggest increase in three years in part because of more aggressive pricing. This would be a vast improvement over lat year's 0.4% rise and the 3.9% holiday sales decline in 2008.

"Though the retail industry is on stronger footing than last year, companies are closely watching key economic indicators like employment and consumer confidence before getting too optimistic that the recession is behind them." -NRF President and CEO Matthew Shay

The International Council of Shopping Centers released its forecast Tuesday with the most optimistic predictions of an increase in holiday sales landing between 3% and 3.5%

What are consumers thinking?
Kantar Retail's September ShopperScape survey shows early spending plans by shoppers.

• 7% of shoppers are planning to spend more for the holidays vs. 9% from last year
• 19% of Gen Y shoppers plan to spend more - the strongest among all generations
• 38% of shoppers plan to spend less on holiday gifts vs. 40% from last year
• 42% of Baby Boomers plan to spend less - representing the greatest cutbacks between all generations
• 49% of shoppers plan to spend about the same compared with 46% from last year
• 55% of seniors are most likely to hold their holiday spending steady

Although the retail industry experienced a good back-to-school season and many stores saw positive September same store sales, with nearly 15 million people out of work, and until unemployment changes, retailers may not see a strong holiday season this year. Sales are certainly expected to be up, especially compared to the last two years, but the recession continues to have an effect on consumer spending. The holiday season shouldn't be completely dreary though, as long as retailers offer discounts and promotions, the consumers will shop.


Image: dream designs/freedigitalphotos.net


Sources:
September Retail Sales Lift Holiday Sales Expectations, 123jump.com, 10/9/10
Employment Situation Summary, bls.gov, 10/8/10
September Same-Store Sales Grow Slightly Slower, Kantar Retail Reports, retailforward.com, 10/7/10
September Retail Sales Rise; Holiday Looks Happy, multichannelmerchant.com, 10/7/10
Retailers' Holiday Hinges on Discounts, wsj.com, 10/6/10
Retailers Need 'Promo Mojo' to Survive Holiday 2010, cnbc.com, 9/30/10
Deloitte: Online will drive small uptick in holiday sales, bizreport.com, 9/26/10
Retailers Cautious As They Hire Holiday Temps, npr.org, 9/19/10
Analysis: As school starts, retail thoughts turn to holidays, reuters.com, 9/3/10

Frighteningly Empty Stores for Halloween, or a Bewitching Economic Rebound?

About 148 million Americans are expected to partake in some sort of Halloween celebration, and according to National Retail Federation's Halloween Consumer Intentions and Actions Survey, people will be spending considerably more than they did last year, perhaps even back up to the levels of 2008. That being said, 30% of consumers say that the condition of the U.S. economy will still influence their Halloween plans. Total spending for the holiday is expected to reach $5.8 billion.
For some people Halloween is not an "all-out" spending holiday, with people doing the same thing from year-to-year regardless of the economy, certain spending boundaries remaining of course. Costumes appear to be where the most money is spent, and is not necessarily affected by economic circumstances while  decorations don't really come in to play regarding the economy. The state of the economy seems mainly to affect those throwing a party, forcing people to pull back on certain provisions.


Costumes - clearly the crux of the holiday
Consumers are expected to spend $23.37 per person on costumes this year
Spending on costumes might be the least economically affected aspect of Halloween this year, which seems to demonstrate that costumes are the nucleus of the holiday. While parents probably don't want to spend a ton of money on a costume their child will most likely wear only for one night, parents might pay anywhere from $10 at Sam's Club to $50 or $60 at Target or a Halloween pop-up store.

Married couples without children might spend $40 or $50 on an outfit, but they may recycle one or two pieces for an outfit the following year. Younger folks just out of college will head to thrift stores such as Goodwill or even look for accent items in their closet. Overall, costumes seem to dominate people's wallets with minor thought to economic conditions.

In fact, of those from NRF's survey:

• 40.1% of consumers are planning to wear a costume, up from 33.4% last year
• 69.4% of 18-24 year olds say they will dress up, the highest of any other age group

Decorations - reuse and recycle
Consumers are expected to spend $18.66 on decorations this year and 50.1% of consumers will decorate their home or yard
Halloween decorations seem to be something people don't buy every year, unlike Christmas where maybe new ornaments or bulbs are purchased yearly for a tree; therefore decorations don't appear to be a factor when people consider what or if they are going to cut back on in terms of spending for Halloween.

Some might bargain shop for decorations or pick up one or two new inexpensive items if they happen to see it in a store (like Target or Big Lots), while others might use what they have accumulated over the years. Some people agree that decorations can get expensive and money is better spent on costumes or parties.


Halloween Parties - I wanna party like it's 2008
Halloween parties might be the most affected aspect, in terms of spending, regarding the state of the economy. Perhaps those who went big the previous year, particularly purchasing alcohol, might scale back and instead have a BYOB party. Economic conditions may not completely stall someone from throwing a party, but it might be a more prominent factor from year-to-year.

NRF's survey revealed:

• 33.3% of people will attend or throw a party
• 55.4% of young adults are more likely than any other age group to throw or attend a party

Still Cutting Back
Although some say their Halloween spending will not change, or perhaps they will cut back on one or two aspects, 86.8% of those surveyed said they will spend less overall.

In addition...

• 45.1% will be buying less candy
• 30.7% will be using last year's decorations and not buying new ones
• 18.5% will be using last year's costume
• 19.5% will be making a costume

While some of those in NRF's survey say they will be loosening their wallets, there are still those who will continue to watch their spending. Perhaps this holiday season will be filled with cautious optimism where some party-goers and throwers will pinch their pennies where they can.

Image: Simon Howden/freedigitalphotos.net

Sources:
After Spooky 2009, Halloween Spending Bounces Back to '08 Levels, According to NRF, nrf.com, 9/23/10

Back-to-School 2010 - A step in the right direction

Overall back-to-school sales for 2010 were up compared to sales from last year. Oppressive heat drove people inside to air conditioned stores that not only had severely  discounted merchandise (as much as 50%), but were discounting as early as July. In addition, some states had tax free shopping weeks. Although sales are up for back-to school this year, they are still below those of 2008. With consumer confidence up for now (barely), retailers hope the positive back-to-school sales will be a good sign for the holidays.   

A Few More Predictions

• 2010 Consumer Intentions and Actions Back to School survey found the average American family will spend $606.40 on clothes, shoes, supplies and electronics, compared to $548.72 last year, and close to the $594.24 in 2008.
• Total spending on school-aged children in grades K-12 is expected to reach $21.35 billion.
• Combined K-12 and college spending will reach $55.12 billion.

What Really Happened

Reuters tracks same-store sales for a group of 27 national retail chains, the following results are based on the information they gathered

• Retailers posted a 3.3% gain in same-store sales for August, ahead of the 2.5% rise that analysts projected
• This follows a 2.9% drop a year ago and a 2.7% rise in July
• Among the clear sales winners in August were clothing and stores catering to teen and young adult shoppers
• Electronics sales rose a modest 2.3% from the year before but were down 9.9% from two years ago
• 67% of the retailers that reported same-store sales beat expectations, with mass merchants and apparel retailers doing so by the widest margins
• The last week of August was particularly strong
• Spending on many non-essentials like fashions are still below 2008
• With high unemployment and weak consumer sentiment*, shoppers were still focused on low prices when choosing what to buy
• *An index of consumer confidence released the last week of August by the Conference Board, a private research group, rose just 2.5 points in August, to 53.5
• The International Council of Shopping Centers said forecast September sales would rise 3%

Clothing

• Limited Brands posted a 10% surge in sales last month, beating analysts' estimates for a 7.3% increase
• 40% discounts at Abercrombie & Fitch jumped 6% in the month, passing estimates for a gain of 5.7%
• Note: In August last year, when Abercrombie was holding on to its "no discounts" strategy, sales sank 29%
• Wet Seal reported a 1.1% sales gain vs. estimates for a 3.5% decline
• Macy's 4.3% gain in same-store sales was ahead of projections for a 4% rise
• Possible reasons: 1) Macy's shift to tailoring merchandise to local tastes and more centralized operations that allow quicker decisions. 2) A strong reception to merchandise such as the new Madonna-inspired Material Girl line
• Kohl's Corp. also had a solid showing, with a 4.5% increase in same-store sales, when 2.6% was projected
• TJX Companies posted a 2% increase in same-store sales, just missing the 2.4% expectation
• JC Penney Co. had 2.3% rise that beat analysts' expectations for a 1.6% gain
• American Eagle Outfitters Inc., reported a 1% comparable-store sales gain when analysts' projected a 1.1% rise
• Only Aeropostale Inc.'s same-store sales fell 1% for the month, compared with expectations for a 1.2% rise and a 9% gain a year ago

Discount Stores

• Overall, discounters saw a 4.3% increase, compared with expectations for a 3.1% gain

Walmart Stores Inc., among other retailers reported rising inventory levels as part of their quarterly earnings in August, a sign that they may be forced to mark down merchandise more than anticipated in order to clear stocks.

• Walmart Stores Inc. has posted five straight quarters of declines in U.S. comparable-store sales
• Target Corp. reported a 1.8% gain in same-store sales for the month, falling just short of expectations for a 2% increase

Why?

• Pent up demand

• Mike Gatti from National Retail Federation says that "People may not have bought new shoes last year, so this year there's a bit more of a need."

• Coupons, sales, promotions

• More families this year say their school purchases were influenced by coupons, sales and/or promotions. 17% of families with children in grades K-12 say 100% of their purchases were influenced by bargains and coupons, up from 14.7% of families last year
• The level of back-to-school discounts, as much as 50% off, was the highest seen in a number of years
• Sales also came much earlier than usual as retailers were cutting prices in early July

• Weather

• Consumers sought shelter in the air conditioned stores
• August 2010 was the warmest since 1983 and second warmest in 50 years
• Off-price retailer TJX Companies Inc even said its sales were hurt slightly because it did not have enough summer clothes in stock

• Economics 

• Tax-free shopping weeks in several states, designed to boost school-related shopping in the month, likely boosted traffic and purchases in stores

Winners of TV

NRF's latest Back-to-School/College Consumer Intentions and Actions survey showed that...

• The top ten back-to-school commercials came from Walmart, Target, Staples, JC Penney, Kmart, Kohl's Old Navy, Office Depot, Office Max and Sears.
• 27% of families say the commercials from those retailers influenced them to shop at that particular store

Data from Ace Metrix revealed...

• A Kohl's ad promoting a "Vote for Your School" contest tie-in with Facebook is the early winner (614 out of 950)
• Target has been the most active back-to-school advertiser with 13 national breaking ads, they are also running the worst scoring ad, "The Roommate and her Gathering" (355) also featuring a Facebok tie-in
• Target had just one ad in the Top 10 retail back-to-school ads
• Walmart ran three back-to-school ads with one, "Last Night of Lightning Bugs" making the top ten, yet the overall number of ads was down from last year
• Interesting to note that both the highest scoring and the lowest scoring ad feature a tie-in with Facebook 

September Predictions

Although the monthly figures are on par with those posted in the beginning of the year, when people were starting to feel good about the economy, retailers will endure an uphill climb in September as they will be facing comparisons against positive same-store sales results for the first time in a year.

Image: Maggie Smith/Freedigitalphotos.net 

Sources:

Discounts, heat fuel August retail sales beat, reuters.com, 9/2/10

Limited Brands, Abercrombie report solid sales gains for August, dispatch.com, 9/2/10

Retailers Show Surprising Strength in August Sales, wsj.com, 9/2/10

Back to school sales get an A, cnn.com, 9/2/10

Retail Sales Prep: Back-to-School Edition, cnbc.com, 9/1/10

Back-to-School Shopping Bust Heralds Holiday Woes, wsj.com, 8/31/10

Who's Winning the Back-to-School Television Advertising Battle? Businesswire.com, 8/19/10

Average Family Has Completed More School Shopping Compared to Same Time Last Year, nrf.com, 8/19/10

Modest Rise in Back-To-School Spending, brandweek.com, 8/10/10

Back to School Sales Up As Parents Replenish Children's Needs, According to NRF, nrf.com, 7/15/10

Uh-Oh: Frugality Is the New Reality For BTS Shoppers

Early predictions about the 2009 Back to school shopping season are starting to make their way into the media. And it's not looking good for retailers.

Most parents of kids K-12 say they will cut back in spending this year due to the economy and the increased frugality that is becoming more of the shopping norm. NRF’s 2009 Back to School Consumer Intentions and Actions Survey (conducted by Columbus’ own BIGresearch) is showing a decline of 7.7% from BTS 2008 spending. The only spending this is expected to increase? Electronics, which is expected to increase by 11% as the prices of computers continue to become more affordable.

An unexpected benefactor to this upcoming BTS season may be drug stores (like Walgreens, CVS, et al.) where more people than last year are expected to shop these stores for BTS. Why? Drugs stores have expanded their merchandise mix, and customers have noticed. However, the most popular destination for BTS shopping is still the discount store. Almost 75% of shoppers will be shopping discount.

On the other side of the education spectrum – College spending is expected to increase slightly over last year (up 3%) however, fewer people are planning to attend college for advanced degrees so total spending is down. In addition, more kids are planning on living out their college years at home instead of on-campus, which may impact retailers that focus on the Back to dorm segment.

What does this mean for retailers? Time to embrace the new norm if you haven’t already. Give consumers what they are looking for: coupons, sales, BOGOs, and early season specials.

[photo: freedigitalphotos.net]