The retail battle is at its peak during the holiday season, with offers and promotions flooding the markets. Retailers tried to sweep buyers off their feet with early-hour store openings, huge discounts, promotional strategies and free shipping on online purchases. Despite these efforts, retailers did not hear their cash registers jingle as much as expected. Cheap gasoline, a better job picture and increased consumer confidence also failed to perk up holiday sales, leaving investors perplexed.
The holiday period is crucial for any retailer as it accounts for a sizeable chunk of yearly revenues and profits. So what actually happened?
Data compiled by the National Retail Federation revealed that retail sales during the holiday period (November/December combined) increased 3% to $626.1 billion, falling short of the projected 3.7% jump as well as 4.1% growth registered in 2014. The only bright spot was the digital business. Online sales rose 9% to $105 billion, surpassing the retail trade group’s expectation of 6%–8% growth.
Despite an increase in online sales, the overall holiday season was a disappointing one for retailers. Industry experts blamed unfavorable weather conditions, a strong dollar and shift toward online shopping for the debacle. Demand was weak for cold-weather goods such as coats, sweaters, boots, hats, gloves and scarves. Also, competition was cut-throat and pricing remained aggressive. Macy’s, Inc. (M – Analyst Report), The Gap, Inc. (GPS – Analyst Report) and Zumiez, Inc. (ZUMZ – Analyst Report) delivered dismal performances.
Macy’s informed that comparable sales (comps) on an owned plus licensed basis fell 4.7% in the combined November/December period of 2015. However, Macy’s online sales witnessed an increase of 25%. On the other hand, Gap recorded comps declines of 8% and 5% for November and December, respectively, while Zumiez’s comps fell 13.8% and 8.9% over the same periods.
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