The retail battle is at its peak during the holiday season with offers and promotions flooding the markets. This time, too, retailers swept buyers off their feet with early-hour store openings, huge discounts, promotional strategies and free shipping on online purchases.
The cash registers jingled, with holiday sales increased 4.6%, faring better than the expected 3.8%, going by the ShopperTrak complied data. First Data also revealed that retail spending grew 3.2% this season compared with a 0.5% gain witnessed in 2013.
With a rebounding economy, falling unemployment rate and gasoline prices, higher consumer confidence and improving consumer spending, the retail space was charged up with optimism and sellers did their best to tap consumers’ boosted buying power.
This prompted eye-popping discounts for the season quite early, targeting consumers with exclusive deals both online and in stores. The move turned out to be bonanza for most retailers with November and December registering comparable-store sales increase of 5.2% and 5%, respectively, according to Retail Metrics.
Favorable economic numbers such as GDP growth rate of 5% and a 3.2% increase in consumer spending in the third quarter of 2014, plus the lowest unemployment rate of 5.6% in six years set the stage for a cheerful holiday season. The bullishness in the economy drove the consumer sentiment index higher that reached its pinnacle in December to 93.6, according to University of Michigan and Thomson Reuters.
Competition was cutthroat and pricing remained aggressive. Yet, retailers had all the support of consumers’ and their higher disposable income. Retailers such as JC Penney Company Inc Holding (NYSE:JCP), Macy's Inc (NYSE:M), Gap Inc (NYSE:GPS)and Pacific Sunwear of California Inc (NASDAQ:PSUN) all came up with decent results.
J. C. Penney delivered impressive comparable-store sales (comps) of up 3.7% for the combined November and December period. Gap’s comps increased 3%, while net sales rose 4%. Macy’s reported that comps, on an owned plus licensed basis, grew 2.7% for the period, while Pacific Sunwear of California registered 9% growth in comps for December.
Urban Outfitters Inc stated that sales for the months of November and December surged 10% on the back of an impressive performance by the Free People and Anthropologie brands. Sports-related teen apparel seller Zumiez Inc (NASDAQ:ZUMZ) too had an outstanding holiday season with 6.3% comps growth in November, followed by an 8% increase in December.
However, there were some retailers for which there was no holiday mojo. Toys“R”Us saw its total comparable-store sales declining 2.7% and domestic outlets falling 5% during the period. Tiffany & Co too lacked shine with sales down 1% against growth of 4% last holidays.
It is apparent that the holidays turned rewarding for most retailers going all out to lure buyers. Of course, markdowns and promotions reflected on sales but will retailers’ margins now pay a price? We also wonder what impact these might even have on the bottom line.
Well, we’ll have to wait for the quarterly numbers for a clearer picture.