11/24/2015 - fung business intelligence us holiday store... · mean more spending money in consumer...

DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & [email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016Copyright © 2015 The Fung Group. All rights reserved.

• Over the past couple weeks, the FBIC Global Retail & Technology team visited six retailers in New York City to look at the different in-store promotions and strategies taking place over the holiday season

• Traditional brick-and-mortar retailers are promoting new and improved mobile apps that encourage shoppers to use their smartphones in stores.

• At Macy’s, for example, shoppers will be able to use their smartphones to guide them through the store to products they are seeking. At Target, customers use the Target Cartwheel app to scan items and receive discounts.

• Overall, we found electronics and seasonal decorations to be the most sought-after shopping items based on crowding in the store and visible inventory. Whereas winter apparel – such as coats, scarves and jackets – had more sales promotions and inventory available.

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DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & [email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016Copyright © 2015 The Fung Group. All rights reserved. 2

November is here, Starbucks’ red cups are back and the holiday season is officially under way. Retailers have good reason to be optimistic this year. Unemployment is at a postrecession low and lower energy prices mean more spending money in consumer pockets.

FBIC Global Retail & Technology estimates that total holiday (i.e., November and December) retail sales in 2015 will increase by 3%–4%, to $626–$633 billion, based on the National Retail Federation’s (NRF’s) revised 2014 sales figure of $608 billion. Consumers celebrating Christmas, Hanukkah and/or Kwanzaa are expected to spend an average of $805.65 over the holiday season, the highest amount in the survey’s 14-year history.

While US store traffic has decreased this year, US store revenues and conversion rates have increased. According to the Fourth Annual Major Consumer Purchase Study from Synchrony Financial, 73% of consumers will research products online and 87% will purchase at least one item in a store—so, the in-store shopping experience matters more than ever.

Despite favorable macroeconomic indicators that are expected to lay the groundwork for healthy holiday spending, retailers are feeling the negative effects of unusually warm weather and a downturn in tourism in the US that has resulted from the stronger dollar. According to Retail Next, October store traffic declined 10.7% year over year. Below, we look at some of the different in-store promotions and strategies that six different retailers in New York City are employing this holiday shopping season.

1 The NRF’s 2015 holiday forecast calls for 3.7% growth in holiday sales, to

$630.5 billion. The organization estimates that holiday spending will account for 19% of total annual retail sales of $3.2 trillion. The NRF also forecasts a 6%–8% increase in online sales, to approximately $105 billion.

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Our store journey began at Target’s College Point Retail Center in Brooklyn. Across the store, fun holiday-themed characters, such as Snoopy, reindeer and snowmen, were hanging from the ceiling. The holiday product offerings were extensive, including 4-foot to 8-foot Christmas trees, stockings, Santa Claus dolls, nutcrackers, an entire aisle of holiday-themed wrapping paper, Christmas ornaments and more. The stockings display featured traditional options, but also socks with popular superheroes and Disney characters from movies such as Minions, Frozen, Star Wars and The Avengers.

In the pet section, the reindeer and candy cane–themed dog collars, sweaters and ribbons were noticeably low on inventory. The NRF estimates that those celebrating the holidays will spend $28.05 on pets and babysitters. Target’s Hanukkah section featured menorahs, candles and dreidels. We observed customers in the store using the Target Cartwheel app to scan items to receive discounts. There was a toy recommendation section as well, which displayed one of the “FBIC Top 20 Holiday Toys,” the Fisher-Price Imaginext Ultra T-Rex. Relative to other stores we visited, Target appeared to be discounting holiday items only minimally.

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Our next stop was the Kmart located at Penn Plaza. While Kmart was one of the first retailers out of the gate this year, promoting its holiday layaway program in September, we found the store’s holiday decorations scarce. However, we did see plenty of classic holiday items, including Santa Claus dolls, holiday mugs, stockings, wrapping paper, Christmas bells and more. Kmart also had full-size Christmas trees decorated with lights and ornaments available for purchase.

According to a store employee, one of the hot-selling items thus far this season has been a gingerbread house kit that sells for $11.49–$13.39. Navigating throughout the store might be a challenge for shoppers, as there were large bins in some of the aisles with holiday items such as candy canes and Christmas bells in them. Besides promotional deals on a few select items, there were not many holiday-specific products on sale. However, there were many cold-weather items discounted up to 20%, including coats, and the majority of racks were full with every size.

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From clothing to decorations, Macy’s has a broad variety of offerings for the holidays this year. At the iconic Herald Square flagship store, the first floor had Christmas lights and holiday decorations in every direction. Macy’s had holiday-themed gift card stands set up on every floor, too, encouraging shoppers who were struggling with gift ideas to “let them choose the perfect gift.”

The retailer was also promoting its “Believe in the Magic of Giving” charity initiative: customers can write a letter to Santa—at the store or on the Macy’s app—and, for every letter submitted, Macy’s will donate $1 to the Make-A-Wish Foundation.

Throughout the store, Macy’s had signs that read “Star Gifts,” which drew attention to a number of items that were 15%–20% off. The retailer was also advertising its recently rolled out “Thanks for Sharing” program, where customers pay a $25 enrollment fee to receive 10% rewards on purchases through December 31. We saw many customers participating in the “Family & Friends” promotion, too, where items can be purchased now and picked up on December 2 for 25% off.

The holiday items were located on the 9th floor, in the store’s Holiday Lane. Selected items were reduced by as much as 50%. We saw every Christmas item imaginable, and a convenient gift wrap station close by. The retailer’s widespread promotional deals seem to be an effort to clear excess fall season inventories. Store traffic was moderate during our visit.

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Bloomingdale’s, the high-end department store, was already in full holiday swing when we visited. The merchandising emphasized coats, scarves, boots and gloves. The store had holiday-themed displays and many of the mannequins were dressed in holiday colors. The different designer sections throughout the store seemed to have an excess of sweaters, coats and other cold-weather items, perhaps due to the unusually warm season thus far. In the Ralph Lauren section, many items were on sale for 40% off except leather jackets. One of the more crowded areas was devoted to clothing designer Wildfox. Wildfox specializes in knit sweaters, and stylish Christmas and Hanukkah ones were on display.

Throughout the store, Bloomingdale’s was promoting its “Give Nice” initiative, under which items priced below $50 (mostly accessories) were discounted. Such items included undergarments, knit socks, earmuffs, candles and more. In the women’s department, sequins and glitter were featured heavily, including sequined tops and bottoms.

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The JCPenney department store we visited welcomed holiday shoppers with a Star Wars window display. Throughout the store, the retailer promoted the importance of giving. Green and red signs that read “Where Giving Begins,” “Give Some Cozy” and “Give Some Wow” were all over the store. In the kids’ department, there was a section dedicated to Star Wars that featured items such as a soft, long-sleeve Darth Vader onesie. JCPenney also had an impressive Disney toy section. We were surprised to see that the home section were the most crowded areas during our visit to the store.

There were many sales: jewelry items were marked down 40%–60%, holiday sweaters were discounted and, surprisingly, most of the new holiday candy was on sale, some of it discounted by 40%. While store traffic was minimal, the JCPenney order online, pick up in-store area was by far the most crowded. This was the only store we visited that had Christmas songs playing during our visit.

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Consumer electronics retailer Best Buy was the least-decorated store of the six we visited. Besides small “Win the Holidays” and “Download Our App” posters above the electronics displays, the store had no festive holiday atmosphere. Nevertheless, of all the stores we visited, Best Buy had the most items that were either limited in stock or already sold out. The Guitar Hero section had only two sets left on the shelf, and Xbox gift cards were completely out of stock. Skylander action figures have been hot-selling items at Best Buy so far this season, as have Lego Dimensions sets. The Windows 10 preview was garnering customer attention as well. Overall, it seemed to us that at this point in the holiday shopping season, consumers are buying more electronics than apparel.

11/24/2015

DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & [email protected] US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016Copyright © 2015 The Fung Group. All rights reserved.

Deborah Weinswig, CPAExecutive Director—Head of Global Retail & TechnologyFung Business Intelligence CentreNew York: 917.655.6790 Hong Kong: [email protected]

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11/24/2015 - fung business intelligence us holiday store... · mean more spending money in consumer...

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