Marshal Cohen, Chief Industry Analyst, The NPD Group, is continuing to monitor business for US retailers, after observing that a Saturday Christmas followed by a Sunday snow-out for much of the East knocked a big hole in expected After-Christmas sales receipts. Monday was not much help.
“So how will retailers fare after a ‘lost weekend’ in December…and not just any weekend…the ‘weekend’ after Christmas?” Cohen asked, and then answered his own question.
“Retailers along the east coast and mid-west tried to re-coup the loss of ‘the big day after’ and found that Monday was only a part of the loss. Some stores in malls didn’t even get to open on Monday. In some cases employees were ‘no-shows’ as they found getting to work at the mall more challenging than many consumers,” Cohen said.
“By mid-day Monday traffic in malls was robust but the damage had been done. Retailers offered 50% off on selected items,” the analyst said. “A very different story than last year where the general rate of discounts was 50 off storewide,” he added.
“So now retailers find themselves in an interesting position,” said Cohen, “Do they get more aggressive with the discount to make up for lost days, or do they just extend the sales longer? There is no right answer. The decision will be based on two major factors: 1) The inventory position, and 2) the timing of new merchandise heading their way for January receipts.”
He is optimistic about overall sales, but notes that Wall Street tends to have a very short-term focus. “Retailers have enough momentum from pre-Christmas but financial analysts won’t like the loss of momentum in the December numbers. Even though much of the loss will be recaptured in January,” observed Cohen.
“The real issue, I feel, is the loss of impulse purchases while the consumer is in the holiday spirit,” Cohen says, “With consumers postponing shopping the dynamic will be very different come January. The urge to pick up a few extra items diminishes and consumers will likely spend less than their usual 16% more with their gift card redemptions or their merchandise returns.”
RBR-TVBR observation: Christmas will also pose some calendar issues for retailers next year. December 25, 2011 falls on a Sunday, but most businesses will be closed on Monday, December 26th, which presumably will be a big shopping day if the weather cooperates.