June 22, 2009
A survey conducted by America’s Research Group revealed that 30% of American consumers planned to spend more money in May than they had in April, but 27% would only purchase merchandise that was marked down 50% or more. The Mother’s Day Holiday promised to give May sales a boost, but rising gas prices cut shopping budgets even more. Last year’s May had the infusion of $50 billion in tax refund money, while this year’s May had the inclusion of the entire Memorial Day weekend, a phenomenon that happens only once every 11 years.
When you factor all those conditions and look at the May same store sales numbers compared to charts which no longer include Wal-Mart’s numbers, what do you get? You get a whole bunch of numbers interpreted from a whole bunch of different angles. What you don’t get are many surprises or clear conclusions.
As is the case with so many aspects of retailing, same store sales analysts were looking for a new normal in May, since monthly same store figures no longer include Wal-Mart’s numbers. The easy solution for analysts was to pull up the spreadsheets, strip Wal-Mart out of the equation for the past 15 years, and redraw the charts as if the world’s largest retailer was not part of the U.S. retail industry. Simple enough.
This statistical manipulation makes the recent past look a lot worse, but it also provides a big picture look that is somewhat comforting as well. There are other points in the past when Wal-Mart significantly outperformed the rest of the U.S. retail industry, but everybody got back into alignment eventually. We can all find comfort in the hope that retail history will repeat itself in this way again. The big question is how long “eventually” will take.
Without the Wal-Mart benchmark, and the easy Wal-Mart story angle, the significance of monthly same store sales primarily lies in the comparison of individual retailer numbers with their own past performance. Perhaps that makes more sense anyway.
For the first time in seven months, Hot Topic saw a minus sign in front of its same store sales figure in May. So far, Hot Topic has been impervious to recession due to the willingness of its fickle teen customer base to chase after trends on tees, and the adeptness of the chain to spot and deliver those trends.
The teen apparel chain deserves a lot of credit for its “Twilight” fashions inspired by last summer’s movie blockbuster, and for drawing fresh blood out of that trend for almost a year. But since “Twilight” is no longer a red hot topic, and the sequel won’t be released until November, the store needs to find another big “it” to fill in the gap. Otherwise teens won’t have a good reason to spend their hard-earned money from their hard-to-find summer jobs, and Hot Topic might find itself in the middle of this recession thing that all of its mall neighbors have been whining about for so long.
Right now Harry Potter has a prominent position on the home page of Hot Topic’s website. But if the May same store sales are an indication, the fashion of wizards is nowhere near as popular as the fashion of vampires. Perhaps that will change once the half-blood prince works its magic on box office receipts.
While Hot Topic ventured into the negative in May, another chain found its way to the plus side for the first time in over a year. Stein Mart’s same store sales in May inched onto positive territory by a fraction of a percentage point. It’s a small victory that signals huge progress for the chain. After two years of net losses, store closings, salary cuts, layoffs, and a change in leadership, a 0.2% same store sales increase looks pretty darn good.
With a selling proposition of “spending less without getting less,” it might be expected that Stein Mart would be thriving more in this budget-conscious economy. When positioned, though, against competitors like TJ Maxx and Ross, which have been faring quite well lately, Stein Mart is the high-priced luxury retailer of the discount sector. A look at the bottom of the same store sales list for the past six months will tell you everything you need to know about how well luxury retailing has been doing.
Stein Mart’s new CEO, David Stovall, said what’s helped the chain recently is a “fresh, more shoppable assortment” of clothing. I think that may be corporate speak for creating a product mix that is more affordable to more people. While shoppers have been getting 70% discounts at Bloomingdales and finding bargains galore at Saks Off 5th, Stein Mart has been getting squeezed by competition from every direction.
Stein Mart helped its numbers with more aggressive marketing lately too. “We’ve been guilty of not telling our customer what a great value we have,” Stovall said. Full TV screen shots of 50% off price tags should change that.
A well-publicized national 12-hour sale staged this weekend, and the use of real customers discovered through a public casting call in an upcoming advertising campaign should help the chain too. Like other retailers who have profited in recession, Stein Mart is gaining ground by improving its visibility.
As for everybody else, May’s same store sales numbers tell the story of an industry that has shuffled its players around a bit, and then settled into a new recessed norm. A look at the 2009 same store sales comparison chart reveals few deviations for any individual retailer with the addition of its May numbers.
New rankings, new sales levels, and new patterns have been established in the new norm. Barring any major bursts of brilliance, the new status quo will probably continue until the U.S. retail industry phoenix rises from the ashes of economic recession. That, of course, will happen “eventually.”
For further information, visit: http://retailindustry.about.com/b/2009/06/21/us-retail-industry-may-same-store-sales-holiday-boosts-and-shopping-budget-cuts-compared-to-tax-refund-spending-and-charts-without-wal-mart.htm