U.S. retailers stuck in 'soft middle'

With consumers apparently holding out for holiday bargains, American retailers hit the 'soft middle' of the Christmas season during the second week of December, with traffic slowing and same-store sales lagging behind plan, the Redbook Retail Sales Average reported.

Easing off somewhat from the prior week, same-store sales inched up by 3.0 percent, following a stronger gain of 3.2 percent the week before. For the two weeks month-to-date, sales perked up by 3.1 percent from last year's levels, but were behind the targeted increase of 3.8 percent.

Predictably, the nation's mass merchants, appealing to cost-conscious consumers, came closer to their sales target than their full-price department store colleagues, the Redbook reported. Mass merchant sales rose by 4.9 percent during the week, and by 5.0 percent month-to-date, compared with a target of 5.4 percent. Department store sales edged up just 0.6 percent, following a stronger increase of 1.1 percent the preceding week. For the two weeks month-to date, department store sales have risen only half as much as expected, gaining by 0.8 percent vs. a target of 1.7 percent.

"Both department and discount store sales were below plan for the week and remained below plan month-to-date," said Catlin Levis, Redbook retail analyst. "Some said they had entered the expected 'soft middle' of the holiday season. Customer traffic was slow, which may be attributed to a trend of last-minute shopping and popularity of gift cards for presents — gift cards do not record the sales revenue until the cards are used — a trend retailers say is growing over time."

As a result, said Levis, "sales growth at discount stores continued to follow format basics: consumer staples, food, health and beauty aids and toys, rather than in clothing."

Levis added, "Alongside scheduled promotions, some department stores conceded to taking unplanned markdowns to more seasonal apparel as well as using e-mail price discounts to try to draw customers into stores. As we get closer to the holiday, the environment becomes more promotional and competitive. The critical week continues to be Christmas week, which should be helped by one more day before Christmas than last year."

Redbook Retail Sales Average
Second week of December

Week ended 12/06 12/13 12/20 12/27 1/03 Month Target
*Including chain stores and traditional department stores.
Source: Redbook Research Inc.
Department Stores* 1.1 0.6 0.8 1.7
Discounters 5.0 4.9 5.0 5.4
Redbook Average 3.2 3.0 3.1 3.8


Home & Textiles Today Staff | News & Commentary

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