Don’t Worry Guys – Retail Is Doing Just Fine
January 2, 2019
For those worrying about the state of the retail market in the United States, it’s certain to say it’s been doing just fine. With slight scares and hiccups in 2018, such as the closing of Toys “R” Us and Sears, the remaining retailers have seen an increase in spending during this holiday season. This may be due to the current quality of the economy, the fluctuation of the stock market, and the recent drop in unemployment rates. But, with a 5.1% increase in overall sales from November 1st to December 24th, the total increase sits shy of $1 trillion in a month alone. That’s a major win for U.S. retailers.
The Best Shopping Season in 6 Years
For those of you not keeping a day-to-day update on the quality of the retail market, an increase in company profit this large may not surprise you. For the rest of us, this large $850 billion increase in total sales may come as somewhat of a shock, especially with the recent closures listed above. Thanks to the efforts of overall purchase tracking provided by Mastercard, we can determine that $850 billion was amassed between online and in-store purchases from varied retailers – with online sales showing an increase of 19.1% from last year. This has proven to be a very strong year for e-commerce and retail in general.
With the increase in sales occurring alongside a heavily fluctuating stock market and a partial government shutdown, many are wondering how this was achieved. This may be attributed to the good year most businesses have been experiencing, with most providing bonuses to their employees early this year thanks to large tax cuts imposed by Donald Trump. With this prior increase in the year, many companies were able to provide low prices and more robust sales with little projected loss overall. With the drop in prices and larger sales percentages offered by retailers, consumers were more likely to purchase based on the sale exclusively.
Clothes and Home Improvement
With many different verticals to track during a typical consumers holiday spending a majority of grown was found from Apparel and home improvement. Though, it should be no surprise apparel would succeed during any form of large sale the interest and purchases of home improvement products is an area worth keeping in mind going into 2019. This holiday season apparel sales increased roughly 8%, which is a notable increase with the last major increase occurring in 2010. Home improvement products were up 9%, which is an exceptionally large jump considering the difficulty of the vertical.
Apparel’s increase could be due in part of accurate sales expectations estimated by the companies, allowing them to adjust inventory levels accurately based on the previous year’s numbers. By reviewing the numbers and predicting a trend, apparel retailers were able to overstock their stores with inventory so there was no need to back-order or ship-to-home for eager customers looking to purchase on the spot. Though, not all apparel retailers did well, with many stores still being over-encumbered with the quantity of stock and lack of purchases. This will most likely result in a large after-Christmas sale in the coming weeks to attempt to recoup the loss from production.
With the large increase in sales, there should be no surprise that the stocks surrounding major retailers would increase. In the last few days, retailers have had a decent increase in overall stocks and performance. According to an article posted on CNBC’s website, Abercrombie had an increase of 6%, Ross gained a near 6% increase, Burlington stores rose by 4%, Kohl’s rose by 7% (making it the most profitable of the list), and Macy’s increased by 5%.
The Big Guys
With a large increase in profit seen from smaller mall-based shopping centers, it’s curious how large big-box retailers fared in the 2018 shopping spree. Without fail, Amazon was leading in the overall quantity of online sales opposed to large retailers. Though, with a large focus on optimizing their websites and ease of purchase process, stores like Target and Walmart were able to see a large increase in online sales. With Amazon amassing 81% of the overall sales in only the first 19 days of December, it was a clear win for the large online retailer. In the coming days later, Amazon announced they had the largest sale season in history this year thanks to sales from products from their Alexa and Fire lines, as well as Bose and Nerf.
With Christmas ending just a few days ago, more companies will begin to release holidays sales figures for the public. This will provide us with any more statistics from other retailers that may have had a currently unreported increase.
Regardless of the increase from the different retailers being reported, the overall conscious is that the increase in sales this year vastly profited retailers.
