Upscale and value drive US retail sales in December
Premium and value were the big winners as US retailers reported their all-important December sales results yesterday (5 January).
This year, slowing same-store sales trends levelled out at 3.6% growth in December, according to Kantar Retail, up modestly from the 3.1% same-store sales gain last month and the 3.2% gain in December 2010.
"The holiday results reflect trends we can continue to expect into the New Year," said Frank Badillo, Kantar Retail senior economist. "We're seeing weak-to-modest growth overall that hides pockets of strength skewed toward upscale retailers and value-focused retailers that win over shoppers at the expense of their competitors."
Kantar Retail said the numbers were led by stronger-than-average results at apparel and accessory stores, followed by department stores.
Indeed, retailers like Macy's, Saks and Nordstrom all recorded strong December gains. Saks said its strongest categories included women's and men's contemporary apparel, handbags, women's shoes, fine jewellery, men's accessories, and fragrances.
Michael Balmuth, vice chairman and CEO of Ross Stores, which recorded a 9% comparable store sales increase, said: "November same store sales were ahead of our expectations for a 2% to 3% increase as we continue to benefit from consumers' ongoing focus on value."
Also exceeding expectations was TJX, which saw comparable sales rise 8%. CEO Carol Meyrowitz said value remains "critically important to customers."
She added the retailer's success was down to its combination of "great value, brands, and gift giving selections" with its strategic decision to "price aggressively to reinforce our value position in a very promotional retail environment."
This holiday season saw many shoppers leave their purchasing to the last minute, with ShopperTrak reporting that consumers spent approximately US$44bn in the week ending 24 December, a 37.8% increase over the previous week and a 14.8% gain on the same period of the previous year.
Commenting on the trend, ShopperTrak founder Bill Martin said: "Holiday shopping reached a climax last week. With good weather in most of the country, and the season coming to a close, procrastinators and bargain hunters hit the stores and gave retailers the lift they needed to outpace last year".
Indeed, Target witnessed this shift towards later shopping with chairman, president and CEO Gregg Steinhafel saying that sales and traffic "were strongest in the week leading up to Christmas as guests waited to shop for last-minute gifts".
But mid-market retailers Target, Kohls and JC Penney cut their fourth-quarter earnings projections after reporting weaker than expected sales. Gap also recorded a large sales decline.
"We expected December to be highly promotional, and while we competed aggressively across our brands, our performance was below our expectations," said chairman and CEO Glenn Murphy.
While many retailers seem to have benefited from the highly promotional landscape, the reported sales growth may come at a cost to the bottom line. Indeed, its full impact will become more apparent in February, when companies report their earnings results for the period.
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