Retailers Spring Into Action
By George Anderson
Retailers looking to differentiate themselves from the competition and boost the bottom line with sales of full margin product moved swiftly to put spring merchandise out on display when shoppers entered stores the day following Christmas.
Michael Gould, chairman of Bloomingdale’s, told Bloomberg News, “We have a great deal of spring merchandise. You see color. I think that is very good for us, not just in Florida and California, but in the whole country. Our customers want to see newness.”
Robert Mettler, chairman of the West Coast division of Macy’s, said, “A lot of gift cards get redeemed this week. Making sure you have great product and a great assortment goes a long way.”
The gift card phenomenon has altered the way retailers are approaching the last shopping week of the year. According to Jane Hali of Coleman Research Group, retailers began moving in more new spring merchandise right after Christmas about three years ago. The number doing it this year is “more than last year, because everyone has analyzed the gift card scenario,” she said.
Patricia Edwards, who helps manage $6.4 billion in assets at Wentworth Hauser & Violich questioned whether retailers might be jumping the gun by rolling out so much of their spring lines. “While it seems that consumers are continuing to want to buy new and fresh merchandise, the retailers might have been a little bit better off with a softer bridge between winter and spring, rather than just jumping in,” she said.
“The pink/blue/green items at Nordstrom and other places in the mall seemed really tropical,” she added.
Moderator’s Comment: Does holding gift cards make it more likely consumers will buy full margin merchandise while after Christmas sales are going on?
Does moving right into spring merchandise make sense following Christmas or should there be some type of intermediate step as suggested in the Bloomberg News piece?
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George Anderson – Moderator
Don’t know if I’m typical or not, but I wait out retailers on seasonal clothing. Last year’s winter coat or summer bathing suit will always last a bit longer, because I know I’ll routinely see 50% savings on things after a certain trigger-point date each season. I don’t see how gift cards make a big difference this way. They’re cash in your pocket, to spend as you normally would. Why would they, in and of themselves, cause you to change your spending habits? I’ve already gotten spring catalogs, but thrown them out. And I’ve seen the spring merchandise on sale, but I’m not even a little tempted. The gift cards I received are going towards “on sale” merchandise. It’s hard for me to believe I’m unusual in this regard.
This depends a great deal on regional differences. Fresh spring merchandise in December makes sense in Florida and other parts of the South, a softer transition makes sense for parts of the east coast, mountains, and Midwest. I agree with Mr. Mettler that the most important element, especially as department stores compete against fast-fashion retailers, is keeping the floor fresh every month of the year (and thinking of every month as a full-margin opportunity). The gift card phenomena may shift sales and therefore inventory planning, however, they shouldn’t make the difference between stale or fresh!
The seasonal sales mix largely depends on the store’s customer demographics. A high-end department store in New England still has a tremendous winter clothing business ahead, but will sell some spring clothing regardless. A Target in New England is likely to sell less Spring right now. I doubt that a New England Wal-Mart will sell any Spring right now. High-end stores displaying Spring now will get an early read on item-by-item sales performance, which might help the retailer to adjust the mix of Spring orders not yet delivered. The key mistake to avoid: marking down Winter too early, since much of the country still has at least 90 days of it left.
Would the other retail veterans please weigh in here? Am I the only one who’s experienced December delivery of Spring merchandise for over 2 decades? As long ago as 1984 I bought for a specialty retailer who had a “budget C.” This was distinct open-to-buy for new, fresh, “spring” merchandise. We owned it, and released it based on the rate of sale and availability of fixture and floor space around Christmas. Since then, every single client I’ve dealt with, particularly in apparel, has a similar delivery pattern.
Hardlines and seasonal set plan-o-grams do not lend themselves to the gradual transition that apparel and soft lines do. Perhaps this is the focus, I am not sure. The retailers mentioned are primarily apparel, so I remain confused.
Gift cards are probably, in many instances “found money.” Psychological studies show that most consumers are more likely to spend “found money” on themselves or on non-basic merchandise. To the extent that basic needs have been met through the season, it is logical that gift cards would have a disproportionate spend on new product.
The probable answer here is that it depends on the bearer of the gift card. Probably, the same socio-economic-demographic variables which drive purchase behavior with other forms of payment apply here as well.
Predicting behavior is a complex algorithm. The key in any complex algorithm is to isolate the powerful variables, not the minor ones. In examining the impact of gift cards, I am wondering if the simple fact that they ARE gift cards actually qualifies as a powerful variable. My guess is that there are other variables with a much better predictive value.
I do think customers will buy full-price merchandise with gift cards because it’s “funny money” like monopoly money or casino chips — you just spend it ’til it’s gone.
Chico’s has done a great job of consistently putting new, fresh merchandise in the front of the store and the sale goods in the back. On Monday, I bought a couple of sale items as well as a great new full-price (more than I’d usually spend!) belt to go with them.
What many shoppers don’t like though, is pushing the seasons so quickly that it’s impossible to find a coat, sweater or scarf after January 15th or a swim suit after the 4th of July for an August vacation.
Unfortunately, retail has become more about the retailer than the customer!