Posts Tagged 'NRF'

Diminishing returns for Black Friday

With the release of the NRF’s annual holiday shopping forecast comes a RetailWire discussion about Black Friday. The debate? Whether the event itself is essentially dead as a volume driver. My opinion? Not so fast:

“Killed” is too strong a word, because Black Friday still represents one of the biggest shopping days on the retail calendar. But the day has lost its punch for a number of reasons:

1. Most obviously, the shift from brick-and-mortar to e-commerce. With the growing number of store closings and “zombie malls,” this will be a bigger problem than ever throughout the 2017 holiday season.
2. The Thursday paper stuffed with promotional circulars doesn’t reach the huge number of Gen Y and Z shoppers who don’t even read the paper.
3. As stores have extended Black Friday opening hours into Thanksgiving itself, they have simply cannibalized their own business.

I could go on, and these are tough “macro” challenges for an individual retailer to overcome. Some of the potential solutions involve greater use of targeted social media and other messaging to reach younger customers…and this is true from early November all the way to the last crucial weekend before Christmas.

But the biggest challenge may be to make the sale offerings and merchandise content more compelling. Easier said than done (without months of advance planning), but the recent focus on putting entire assortments on sale — instead of key items at compelling price points — has drained Black Friday of its former sense of urgency.


NRF’s 2016 fourth-quarter forecast: Blue skies ahead?

I published the following comment on RetailWire after the NRF forecast a 3.6% sales increase for Q4 but before the outcome of this week’s election:

If somebody tracked the annual NRF holiday forecast compared to actual results, I think they would find that this trade organization is consistently too optimistic. I feel the same way about their 2016 number.

And does their number include surging growth by e-commerce retailers, especially Amazon, or strictly brick-and-mortar and multichannel retailers like Macy’s? There isn’t much evidence from the numbers we’ve seen all year (especially from midtier retailers) to expect a sudden surge in demand. Some retailers have especially easy comparisons to 2015 (which will help), but I’d be pleasantly surprised to see numbers beyond the 2-3% range.

And I’m adding a couple of other comments posted just before and just after the election:

Consumer confidence measures are rising, along with the GDP, but the rosy forecasts for 4th quarter sales still feel high. General merchandisers are likely to benefit from soft comparisons and colder weather than last year, but there is nothing in the sales trends so far this year pointing to a huge comeback. There also isn’t much evidence of a big merchandise idea or key item likely to drive customers to stores.

Without tipping my hand, I also believe that next Tuesday’s election results could provide a “relief rally” by providing some closure one way or the other. Of course, I said the same thing before the 2000 election…

Now, a post-election post-mortem:

I’m trying to set aside ideology here, because the split verdict on the election leaves voters uncertain on both sides. Will Mr. Trump live up to his harshest platform promises or try to moderate his views? Today, nobody knows whether the answer to that question will chill 4th quarter sales or stimulate them.

So the only way to answer this over the long haul is to look at the economic impact on consumers. Tax cuts and infrastructure spending are good for businesses and consumers but (on the other hand) protectionism and tariffs will lead to higher prices. And any effort to restrict (or reverse) immigration patterns will stall the population growth that our economy depends on.

Finally, the plans to “repeal and replace” the ACA may have a huge impact. On one hand, lower costs benefit consumers and small businesses; on the other hand, if millions lose insurance coverage they will face an economic threat that will crimp their spending for the foreseeable future.


Another over-forecast by the NRF

Retailers are optimists by nature, but the NRF seems to deserve a prize for blue-sky forecasting on a consistent basis. This time, the NRF has projected an 11% increase in Back to School sales, and they issued their forecast before most retailers reported lackluster 2nd quarter sales. Here’s my comment, from a recent RetailWire panel discussion:

What jumps out is the 11% increase forecast by the NRF. The NRF’s forecasting is consistently too high (retailers are chronic optimists) but this number is really over the top. Yes, retail spending seems to be normalizing but there is little evidence — at least from general merchandisers’ 2nd quarter sales results — that consumers are going to be delivering these kinds of increases. And within those sales gains — whether they are really 11% or more realistically in the mid-single digits — you can expect to see Amazon and other online retailers continuing to gain share at the expense of brick-and-mortar stores.

Second half outlook getting shaky?

I wrote the following post on RetailWire in late July, as the NRF revised its sales forecast downward for the second half of 2015. This preceded the various market disruptions in August and early September that have probably put a dent into plenty of consumers’ 401k accounts (and their sense of well-being). Here’s my commentary:

I didn’t buy the overly optimistic NRF number in the first place, and even 3.5% for the full year may be on the high side. If you assume a 40/60 split between first half and second half sales (and 40% may be too low for some retailers), you would still need to hit almost 4% growth in the second half to achieve the forecast for all of 2015. It’s hard to see where 4% growth is coming from, based on the first-half trend.

For all of the positive macroeconomic metrics (especially the unemployment rate), we are living in an “age of anxiety” as far as overall sentiment and consumer spending are concerned. (Just look at the “right track/wrong track” survey results.) Not sure how to explain it, but retailers are showing some signs of strain as a result.

Too early to be bullish about 2015 sales

The National Retail Federation issued its full-year forecast at its annual gathering in January. The NRF is projecting sales over 4% for the full year — which, in my view (per the following RetailWire comment), is on the high side:

As usual, the NRF is very optimistic (too much so) about a year that has just kicked off, and not with the greatest sales momentum so far. While improving employment numbers and low gas prices continue to provide tailwinds, there is still not enough evidence that consumers are spending at the rates the NRF suggests. (Usually they hold their optimism for their holiday forecast.)

Shoppers continue to be very selective about where they spend their money: No problem buying the latest iPhone in huge quantities, but this kind of purchase takes customers out of the market for a lot of other goods. So the joy among other electronics, home goods or softlines retailers may be a little more muted than the NRF suggests.

NRF: Blue skies ahead for holiday 2014?

This is probably not the first time that a RetailWire discussion on the topic of the National Retail Federation has shown up on this blog. The NRF has a habit of being optimistic, not matter what the headwinds or external circumstances. Here’s my viewpoint:

It’s as predictable as tomorrow’s sunrise that the NRF will issue an optimistic forecast for the holiday season. They are correct about some tailwinds (improving employment, lower gas prices), and consumer sentiment measures appear to be on the uptick, but there is no consistent trend yet. The economy needs to “raise all boats” before we can expect this kind of result.

As long as sales of electronics (other than the new iPhone) and apparel continue to be soft, it’s hard to see where the 4% increase is coming from. But there will be some clear winners: Stores like Costco with a strong existing trend, stores like Target with easier comps, companies who lost traffic last year due to weather, and retailers who execute their “omnichannel” logistics better than last year’s fiasco.

Cyber Week vs. Black Weekend

It’s no surprise that extended hours on Thanksgiving took the wind out of the sails of “Black Friday” volume. (No sense of urgency.) It’s also not shocking that more and more consumers avoid the malls as long as they can get better deals online before or after the holiday weekend. This year’s “Cyber Monday” results were strong, and I comment at RetailWire on the outcome:

I’m not sure you can read too much into the Cyber Monday numbers, except as a counterpoint to the NRF-reported decline in weekend sales across all channels. It’s likely that brick-and-mortar numbers dropped even more, with retailers’ extended hours draining any sense of urgency around Black Friday sales events.

Meanwhile, yesterday’s big number underscores the overall health of e-commerce, even though many retailers have turned “Cyber Monday” into “Cyber Week.” (My e-mail box is full of extended Cyber offers today.) So the same sense of urgency is put at risk, often by the same retailers who mismanaged their brick-and-mortar results over the weekend.