Thursday, January 31, 2013

National Retail Federation reports less than expected sales for 2012 Holiday Season

As I predicted, retail sales for the 2012 holiday season came in under the projections. With so many people still out of work and so much uncertainty about where the economy is headed, I think consumers did the prudent thing in pocketing their cash.  It didn't help that all we heard about during November and December was that the debt ceiling is falling in, that we were about to jump off a fiscal cliff, and that heavily armed demented sociopaths lurked around every corner.  Add a Hurricane Sandy to this melancholic mix, and it is hardly surprising that holiday sales could be best described as tepid.

Following are 2 articles that give an excellent summary of the seaon. One is from the National Retail Federation (NRF) website that covers retail sales in general. The other is from California Apparel News that is specific to the apparel world.

Holiday Retail Sales Up 3.0 Percent to $579.8 Billion - NRF website
NEW YORK, January 15, 2013 – Solid consumer spending in the month of December helped retailers finish the year with a healthy holiday shopping season, however economic uncertainties sent a cautious consumer to the stores. According to the National Retail Federation, the world’s largest retail trade association, December retail sales (excluding automobiles, gas stations and restaurants) increased 0.8 percent seasonally adjusted from November and  increased 2.1 percent unadjusted year-over-year.

Total holiday retail sales increased 3.0 percent, below NRF’s projected forecast of 4.1, to $579.8 billion.

Additionally, non-store holiday sales grew 11.1 percent. in October forecasted a 12.0 percent growth in online sales in the months of November and December.

“For over six months, we’ve been saying that the fiscal cliff and economic uncertainty could impact holiday sales.  As the number shows, these issues had a visible impact on consumer spending this holiday season,” NRF President and CEO Matthew Shay said. “We can’t expect consumers to continue to carry the burden of growing our economy—Washington must put political differences aside and do what it takes to get our country growing again and Americans back to work.”

December retail sales, released today by the U.S. Department of Commerce, showed total retail and food services sales (which include non-general merchandise categories such as automobiles, gasoline stations, and restaurants) increased 0.5 percent seasonally adjusted month-to-month and increased 4.7 percent adjusted year-over-year.
“While non-store retail sales increased a hearty 11 percent this December, total December sales could not make up for shortfalls in certain categories like electronics,” NRF Chief Economist Jack Kleinhenz said. “Heading into 2013, consumers could continue to think twice about their discretionary purchases as they face decreases in their paychecks and other concerns with their household budgets.”

Other findings from the December retail sales report include:
•    Clothing and clothing accessories stores' sales increased 1.0 percent seasonally-adjusted month-to-month and increased 2.5 percent unadjusted year-over-year.
•    Electronics and appliance stores’ sales decreased 0.6 percent seasonally-adjusted month-to-month and decreased 0.4 percent unadjusted year-over-year.
•    Furniture and home furnishing stores’ sales increased 1.4 percent seasonally-adjusted month-to-month and increased 3.0 percent unadjusted year-over-year.
•    General merchandise stores’ sales were unchanged seasonally-adjusted month-to-month and decreased 3.4 percent unadjusted year-over-year.
•    Health and personal care stores’ sales increased 1.4 percent seasonally-adjusted month-to-month and decreased 0.7 percent unadjusted year-over-year.
•    Nonstore retailers’ sales increased 0.5 percent seasonally-adjusted month-to-month and increased 9.6 percent unadjusted year-over-year.
•    Sporting goods, hobby, book and music stores’ sales increased 0.6 percent seasonally-adjusted month-to-month and increased 4.7 percent unadjusted year-over-year.

After Tough Christmas, Retailers Squeeze Last Business Out of Season - California Apparel News
December 27, 2012

The initial reviews of this year’s holiday retail business were mixed.

The season saw last-minute shopping, which had retailers biting their nails for the weeks leading to the end of the holiday, said Fraser Ross, owner of the Kitson chain of specialty boutiques headquartered in Los Angeles.
“We were on pins and needles,” Ross said. Many retailers were on edge debating on whether to offer more promotions. But relief came on the last Saturday before Christmas, and consumers crowded stores. “It beat Black Friday,” Ross said.

The manic highs and lows of the season affected retailers across the nation, according to ShopperTrak and other leading economic-analysis groups.

Chicago-based ShopperTrak said foot traffic for the week ending Dec. 22 skyrocketed 32 percent over the previous week.

But compared with the same week last year, retail sales declined 2.5 percent and foot traffic dropped 3.3 percent, ShopperTrak found.

An index tracked by the International Council of Shopping Centers and Goldman Sachs also found mixed results. For the week ending Dec. 22, ICSC found retail sales increased by a wan 0.7 percent over the previous week. However, compared with the same week last year, sales increased by 3.2 percent, the ICSC index found.
Retailers and analysts hoped the last week of the year would be a shopping spree when consumers equipped with gift cards had the means to splurge on themselves, said Matthew Shay, chief executive officer of the National Retail Federation. “The week after Christmas is one of the biggest weeks of the year, and given the bargain-hunting mentality we’ve seen these last few weeks, we could see some strong shopping levels over the next few days,” he said.

Revenue from the last week of December can make up from 10 percent to 15 percent of holiday sales activity, said Adrienne Tennant, an analyst with Janney Capital Markets, in a Dec. 27 research note.

She also found that the 2012 holiday discounts and promotions did not give away the store. They were even with last year or, in some cases, less, she said. However, the promotions could still be generous. Abercrombie & Fitch offered discounts of up to 50 percent from Dec. 21 to Dec. 24. At Chico’s, one sale offered up to 60 percent off and an extra 30 percent off of already-reduced merchandise.

However, promotions could cut into retailers’ profits, said Jeff Van Sinderen, an analyst with B. Riley & Co. Even if 2012 promotions were even with last year, Van Sinderen argued that this year’s promotions lasted longer than the previous year and got more aggressive the last few days before Christmas.

This season’s shopper procrastination should not have been a surprise, Van Sinderen said. “The consumer has been trained by the retail industry to wait until the big sale and wait until the last minute,” he said. “They took advantage of aggressive Black Friday promotions, then went into hibernation. Then they took advantage of increased promotional levels the final weekend before Christmas.”

This year’s business was made tougher by the still-sluggish economy and national tragedies, which dominated headlines around the globe. Across the board, economists forecast that anxiety over the “fiscal cliff” would put a damper over holiday shopping. The fiscal cliff refers to a series of federal tax hikes and spending cuts that will go into effect in 2013 if current tax and budget laws are not changed.

Devastation from Superstorm Sandy reverberated throughout the national economy after the storm hit New York City on Oct. 29 and created more than $65 billion in damage on the East Coast. A national outpouring of grief after a massacre of schoolchildren in Newtown, Conn., on Dec. 14 also took a heavy toll on consumers, Ross said. “They didn’t want to shop after that,” he said. “The shooting and Sandy had a giant emotional effect on people. You do not buy for yourself when you see hardship on TV.”

However, December remains one of the top months for shopping. At Citadel Outlets, near downtown Los Angeles, parking lots were full throughout the month for this mall of off-price retailers, said Nicole Arend, a mall representative. Some boutiques, such as Harper’s boutique in Corona del Mar, Calif., also reported profits even though no discounts were offered. Fred Levine of Agoura Hills, Calif.–based contemporary chain M.Fredric said his business increased 20 percent compared with the 2011 Christmas season. “[We’re] hoping the consumer remains upbeat,” he said about 2013 business.

Paul Brindley
paul brindley consults

Wednesday, January 16, 2013

The fabric of our lives –

Want to know more about the future of fashion?  Follow the ever growing world of Wearable Tech …
The fabric of our lives –

Paul Brindley
paul brindley consults

Monday, January 14, 2013

2013 off to a cautious start for US Fashion Industry

I don’t want to tell you that I told you so but …

I ended my review of the final 2012 Los Angeles Fashion Market Week in November with a “I’ll believe when I see it” about the optimism heading into the holiday retail season.  With so many people still out of work and so much uncertainty about where the economy is headed, I think consumers did the prudent thing in pocketing their cash.  It didn’t help that all we heard about during November and December was that the debt ceiling is falling in, that we were about to jump off a fiscal cliff, and that heavily armed demented sociopaths lurked around every corner.  Add a Hurricane Sandy to this melancholic mix, and it is hardly surprising that holiday sales could be best described as tepid.  I’ll have more to say on this in a post later this week.

So after a limp holiday sales season, it was energizing to bowl up to the first domestic trade show of 2013, Agenda.  Agenda is a streetwear, surf, skate and fashion show mostly for men that was held on Friday and Saturday. January 4–5 at my adopted hometown Long Beach Convention Center in lovely downtown Long Beach, California. The 10-year-old show was the biggest I have seen.  There were more than 550 brands, up from 450 brands this time last year.  I was there Friday afternoon and it was humming.

Registration at Agenda

It is obvious that the show is growing beyond it’s original target audience of young contemporary stores and surf and skate retailers.  The offering of product is broad.  From the expected logo tees and caps, surf and skate apparel and accessories through contemporary denim collections, quality eyewear like Raen and Mosley Tribes, premium footwear fashion lines (Onitsuka Tiger, Puma), contemporary menswear (e.g. Astronomy), watches (G-Shock), headwear, headphones, and on and on.  A full list of exhibitors is available on the Agenda website.

I caught up with Adam Redhead, the LA Showroom Manager at The Park Showroom.  The Park is a highly regarded young contemporary/contemporary men’s agency with showrooms in NY and LA.  The Park were showing 3 of their collections – Athletic Recon, Australia’s Zanerobe and the hip accessories of M. Cohen.

Adam was having a busy show.  I cruised past the booth a couple of times to speak with him but kept going because he was with buyers.  Adam thought the show was “big and busy” and “was very happy with the quality of the accounts and buyers they were working with”.

Adam echoed some of the feedback I received from the vendors regarding the new Friday and Saturday scheduling.  Many thought that moving to a Saturday didn’t work.  I’m told that a lot of vendors have requested a return to the Thursday and Friday format.  Adam also thought the 8AM was way too early.  I agree.  I doubt buyers need the early start. Plus it makes it an awfully long day for vendors in the booths.

The Australian-owned fashion wholesaling and marketplace technology innovators, NuORDER were exhibiting.  It is definitely worth your while to take an extensive look at the website, and take advantage of free demonstration if there is a fit.  The technology facilitates easy and efficient product ordering and follow-up, and smooth communications between buyers and manufacturers and agents.

NuORDER is pointing the way to the future of technology within the fashion industry.  The scope of automation within the industry is vast.  It may scare some of the players in the market who see these technological advances as pushing them to the margins, and on to obsolescence but as with other sectors, it is unstoppable.

NuORDER booth at Agenda
NuORDER booth at Agenda

The fashion industry has been slow to embrace technology and thereby innovate within the industry.  The entrenched way of doing business has been in-person and hands-on which is understandable on some levels, such as the need to see and feel a garment before ordering.  However, the technology available to, say, view and order product remotely is making the need to travel to trade shows or spend your store open hours on the phone to vendors and agents less crucial.  There are many other examples.

And these changes are picking up steam.  Heath Wells, one of the owners of NuORDER, told me, “In just over 12 months over 1 million styles have been ordered and independent research has shown an average increase in sales of 17.6% per order. We have 45,000 registered retailers and some amazing brands including, Helmut Lang, Citizens of Humanity, Elizabeth & James, Ted Baker, Parker, Alternative Apparel, Hurley, Adidas, Supra/Krew, Hudson Jeans & LEVIS.”

It would seem Agenda’s status as a required show is growing.  If you are looking to sell into the men’s young contemporary streetwear or activewear demographic, you should seriously consider doing the show.  I’m not sure I would do the show if I was a true contemporary collection but that may change as the mix of contemporary labels continues to grow.

This week is Los Angeles Fashion Market Week in the downtown fashion district.  The showrooms I spoke with last week aren’t expecting much.  If a label has short turnaround on production, you’ll see some new styles for Summer delivery starting at the end of April. Otherwise, buyers will be filling in with immediate goods.  For a lot of buyers, the focus will shift to the Fall collections debuting in Las Vegas next month.  I’ll be downtown tomorrow and Wednesday speaking with as many people as possible.  I’ll get you a full report by the end of the week.

By all accounts, 2013 fashion retail has gotten off to a cautious start all around.  It will be interesting to see how the coming months unfold.

Paul Brindley
paul brindley consults